Automatic Data Processing Inc at Citi TMT Conference Summary

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

Question: Bryan Keane - Citi - Analyst : <_ALACRA_META_ABSTRACT>I think I wanted to kick it off and ask the obvious question, just thinking about ADP, having such a great look at the macro environment. How would you characterize the macro? And I'm thinking about pays per control, wage growth, bankruptcies and the overall spending environment.

Question: Bryan Keane - Citi - Analyst : How about new business starts and bankruptcies? Any changes in those two metrics?

Question: Bryan Keane - Citi - Analyst : I wanted to ask, ADP being the largest player in the HCM market and just kind of thinking high level here, given your size. How can the company reach that 6% to 7% midterm revenue growth that you guys have outlined, I think, in the Analyst Day? And that would be above kind of industry average growth of kind of mid-single digits. I mean, slightly above. But just thinking of your size, how do you guys able to grow above kind of industry growth rates? 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 04, 2025 / 2:10PM, ADP.OQ - Automatic Data Processing Inc at Citi TMT Conference

Question: Bryan Keane - Citi - Analyst : Yeah. I was going to ask about some of the history, just thinking high level again on the top line. I know previous Analyst Days, I think two Analyst Days ago, the target for revenue was kind of 7% to 8%. I think the most recent one we've been talking about 6% to 7% for revenue. And then you guided fiscal year '26 revenue growth of 5% to 6%. So just these are slight moderations. Can you help us understand how much of that is just economically driven or maybe some maturity in the market?

Question: Bryan Keane - Citi - Analyst : Great. I want to ask about -- and you mentioned the enterprise capabilities, and those have meaningfully enhanced with the launch of Lyric and the acquisition of WorkForce Software. When do you expect those to have a more meaningful impact on the revenue growth?

Question: Bryan Keane - Citi - Analyst : Yeah. Yeah, definitely. One of ADP's greatest assets, I always think about, is its distribution ecosystem. Can you provide color on the ecosystem and specifically the new embedded payroll channel?

Question: Bryan Keane - Citi - Analyst : I know ES new bookings get a lot of attention, came in just slightly below expectations in fiscal year '25. What gives you the kind of the confidence that the growth will accelerate in fiscal year '26?

Question: Bryan Keane - Citi - Analyst : What's the typical growth rate you guys grow the sales force every year? And what is it going to be this year?

Question: Bryan Keane - Citi - Analyst : Yeah. Can you talk a little bit about how the bookings number, employee services hits the revenue and organic growth number? I know we all look at the bookings number so heavily, but it only has a minor impact on the organic growth of the company.

Question: Bryan Keane - Citi - Analyst : Yeah, because international, those deals take a little longer to close and implementation, I assume is a little longer than the US.

Question: Bryan Keane - Citi - Analyst : Yeah. I did want to ask about client retention. I know it improved 10 basis points to 92.1% in fiscal year '25. That's a high number, obviously, as you said. Is there room to grow there? Or is that pretty a stable number? And what was driving kind of the improvement to begin with?

Question: Bryan Keane - Citi - Analyst : You mentioned PEO and the strength in PEO bookings you saw towards in that fourth quarter. What would it take to get back to that double-digit growth rates in PEO?

Question: Bryan Keane - Citi - Analyst : Yeah. I got to ask you the popular question on rate cut potential. So 25- to 100-basis-point rate cut, how do we think about that impact to the model?

Question: Bryan Keane - Citi - Analyst : I think we got about 60 seconds, so I'm going to do what every analyst always tries to do, which is cram in two questions, long questions that you're going to try to answer in 60 seconds. The first one, just there's been tremendous margin expansion at ADP over the last five years. How much more is there left? And any key drivers you can point out in 30 seconds? And then I got another one.

Question: Bryan Keane - Citi - Analyst : And then I'll leave you with this. You've been a couple of months at -- in your CFO seat here at ADP. What surprised you the most?

Question: Bryan Keane - Citi - Analyst : Great. With that, Peter, thanks so much for being here.