Automatic Data Processing Inc at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : A lot of areas -- there's a ton of interest in the space nowadays. I'd love to hear -- first of all, let's get a picture of end-market demand. Employment has been kind of interesting, how the numbers have all of a sudden changed or been resketched. I'd just love to hear from your perspective as it relates to the employer services business, after growing 7% bookings after last quarter, which was truly impressive and reaching the high end of your [4% to 7%] full-year growth guidance, how would you characterize end market demand tonight? What's driving share gains? And what are you hearing from customers?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : That's really encouraging. And you're seeing that on Workforce Now. You're seeing that at enterprise, RUN, all these different areas. Is there anything to call specifically across those particular channels?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : That's encouraging. Now I love having a line manager at a conference. It's great, because we really -- we get a chance to do a little bit of nuts and bolts in their specific areas. It's very eye-opening for investors and particularly for us. But let's step back a little bit. I would love to understand, how is ADP sales and marketing? How is it structured? And how do you run the business, and what's your day to day like?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : Right. Now I think what was it? Maybe 1.5 years ago, you kind of got to the sales headcount that you needed. Now it's been about that productivity. You talked a little bit about AI, and Maria has talked about the propensity modeling, all that kind of stuff. Maybe walk us through some of those components that have improved some of your sales force productivity.

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : We've had a thesis -- I'd love to hear your perspective on this. We had a little bit of thesis during COVID. Well, it was just tough to prove. It's always tough to get that market share pie chart -- [Matt] knows what I'm talking about. But during COVID, you saw tech demands from your end clients increase quite a bit. So those who were with regional providers, self-filers, naturally gravitated to the national offerings, the larger offerings, the global offerings because they just had the tech -- they were able to meet those tech requirements and to be there. Do you feel like that was a part of the growth story that we've seen since COVID?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : That sounds great. So back to the productivity part on the sales side, sounds not so much like hunter, more gather, more relationship management, trying to sell those adjacent products, the modules on top of that. Are those some of the key priorities that investors should think about where the sales force is going from here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADP.OQ - Automatic Data Processing Inc at Citi Global TMT Conference

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : That's helpful. Now you did talk about continuing to add sales headcount, which is interesting because I think some of your competitors in some of your areas have actually pulled back on their headcount. Walk us through that onboarding process for a new salesperson. How long does it take to ramp them up before they're a quota carrier, that kind of thing? And how easily can you flex your sales force capacity up and down?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : And maybe you can explain -- you touched upon it a little bit the role of partners and channels throughout the ecosystem -- how that has evolved and maybe playing more to ADP sales strength there?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : And having them use the technology as well, they can be an evangelist for the platform for sure. I think --

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : I want to pivot a little bit to the existing client base. Clearly out of COVID saw this big move to ASO, HRO, more outsourcing of services. Walk us -- take a minute to talk about the upselling/cross-selling opportunity that you see now maybe where you're seeing the heat and where you're the most excited.

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : How would you characterize the runway or the TAM that you have within your existing client base?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : So we'll connect the dots kind of tool that -- hey, it empowers your salespeople quite a bit. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADP.OQ - Automatic Data Processing Inc at Citi Global TMT Conference

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : Earlier this morning, we had a light, and we were talking about healthcare -- rising costs there. I think they were quoting something like 9% to 12% for the next 12 months, which is insane considering the compounding that we've had over the last couple of years. So it sounds like the value proposition for PEO is just getting even more and more attractive. Are you seeing recent trends in healthcare costs actually moving that needle additionally or getting more excitement for PEO?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : That's great. Very exciting to hear that. I do want to touch upon pricing. And I feel like there has been some mixed messages across the industry. Would love to hear your perspective on promotion levels of -- are you still seeing attractive retention with escalation, that kind of stuff? Any thoughts on -- are there any irrational pricing that you're seeing out there?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : Steady Eddie. That's good to hear. I know that -- before being the Head of Sales that you also were President of ADP Small Business Services. But I want to dig a little bit more into some of the strength that we're seeing in RUN in the downmarket, which has been really impressive: reported great bookings and retention, added 50,000 new clients in 4Q, clearly showing some momentum here. Just love for you to talk a little bit about why RUN is continuing to win and how you see your competitive position there?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : New business formation is a big component of that, obviously. And it's still at healthy levels, although moderating from COVID. Maybe we'll see if a Fed pivot can inch that forward. I think that's part of the thesis in the stock's performance of late. What are you seeing on the new business formation side? Why are people coming to ADP first perhaps? And love for you to talk about some of the sales dynamics there.

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : And balance of trade market share? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADP.OQ - Automatic Data Processing Inc at Citi Global TMT Conference

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : That does sound encouraging. I do want to touch upon Next Gen Payroll from a sales perspective, and how that -- maybe that makes you drive a little bit easier (technical difficulty) a little easier, shorten sales cycles. But I'd love for you to hear opine on that perspective. How does Next Gen Payroll help you drive higher attach rates, module sales, what have you?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : (multiple speakers) includes product packaging, per se, I guess, right?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : That's great. I do want to pivot on the enterprise side, which is a totally different animal. In many respects, I'm thinking pre-COVID, Lifion was rolling out. And right after that, you got everyone upgraded, which is a herculean task from what my understand, new Cobalt engineers and all that kind of stuff. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADP.OQ - Automatic Data Processing Inc at Citi Global TMT Conference Can you give us now Next Gen HCM -- can you give us a little bit of a state of the union on the enterprise side of the business? What are you seeing in terms of sales cycles, implementation cycles? Any type of decision delay? How are enterprises thinking about that transition to a Next Gen HCM kind of infrastructure?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : I guess in that vein, though, maybe you could talk a little bit like RFP cycle that you're kind of seeing or inbound interest. What's driving the motivation for some of these large enterprise potential clients, new logos to come in to ADP, like what are some of the key elements there? What are they looking for?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : We constantly hear, consumers drive tech, and it seems like the underlying users. And we see this in a bunch of areas within HCM are driving more tech-enabled solutions, more insights, higher engagement, that kind of thing, and that's driving more enterprises to look at -- and new platforms and new platform solutions. Are you seeing any of that in the decision-making process from the enterprise side?

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : That's great. I do -- we're almost up on time, but I definitely want to touch upon international, and the opportunity there. Certainly, Maria has made this a priority for the company. It is a huge TAM opportunity, getting into new markets. From a sales manager perspective, where are we -- what inning are we in really trying to scale things, scaling Celergo, the GlobalView product to more markets? A status report kind of question there.

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : And it's a great cost synergy to -- for a global organization who is using multiple in-country providers to have one kind of -- one throat to choke kind of solution in that, but also to leverage more of the technology to drive insights. I would -- a tremendous value proposition. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADP.OQ - Automatic Data Processing Inc at Citi Global TMT Conference

Question: Peter Christiansen - Citigroup Global Markets Inc. - Analyst : That's great. Well, that was an exciting conversation, Joe. Really appreciate you chatting with us today, giving us a little bit of an inside view on the sales perspective at ADP. Great to have you. Thanks, again.