Automatic Data Processing Inc at JPMorgan Global Technology, Media and Communications Conference Transcript

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

Question: Tien-Tsin Huang - JPMorgan - Analyst : Of course. No, it's always great to have you. It's a privilege. I gathered a lot of questions from investors to go through with you, if that's okay. So we'll do this fireside chat, and feel free to come back and ask me questions, and we'll have -- make this a good discussion. But I think without just to get it out of the way, we have to ask you about the macro. It's the obligatory question I think that everyone is going to be getting today. So you have an amazing view of the economy from an employment standpoint. We, of course, follow what you published, but can you just update the audience on what trends you see on the ground across your different client bases and where are you optimistic? And maybe where are you a little cautious?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Yes. No, I think having followed the space for the sector for this name for a couple of decades now. I think you've taught me this and reminded me this, Maria, that it's mostly about selling and retention.

Question: Tien-Tsin Huang - JPMorgan - Analyst : And so when you look at the data, it looks like bookings have been strong. Retention has been strong and you've been pushing us to the higher end the guide. So let's dig in on that a little bit more. I think the only call out was that international bookings is a little bit softer or lumpy as we call it, what else would you say is -- or how else would you characterize demand? Just to dig into that a little bit more?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Yes. I feel like for the last few years, we've had you at the conference, we've talked about strong bookings and strong retention, which always brings me to the question that we debate this with investors of, is there a shift towards outsourcing again versus software do it yourself? How do you see that. Is there a discernible trend that's worth calling out?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Perfect. So you have obviously a great seat in the past around on the sales side. You mentioned it. So what are you hearing from the sales force with respect to competition and is there any change in terms of who they're seeing or pricing? We talked about outsourcing in general, but just broadly, the balance of trade conversation that comes up a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 1:30PM, ADP.OQ - Automatic Data Processing Inc at JPMorgan Global Technology, Media and Communications Conference

Question: Tien-Tsin Huang - JPMorgan - Analyst : Okay. Good. Now that ties out well because I would -- it feels like some of your peers would say ADP is stepping up and being successful. I think part of that is Lyric. So let's talk about Lyric. I know that was part of the bookings commentary. And of course, it's new. So there's new -- I think you mentioned on the call, Maria, that you probably would not have been able to bid on some business without it. And so just explain to us maybe for those that are less familiar, what is Lyric? How do we get here? And what's your vision here on how big this can become?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Good. And so think about Lyric. I know I've always asked you about this modernization journey that ADP has been going through and the company has done it right within the framework of your margin expansion, which I think is underappreciated probably. I wonder if you agree with that or not. But just with Leerink being in the market, what's next with respect to modernizing? What else is there to do, whether it's transitioning to the cloud or digital transformation? Anything to mention here?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Good. Good. I remember, I have to say real quick from a modernization of agency. But I remember I first started covering ADP that the majority of the business we used to talk to, they would fax in their (inaudible) to ADP. So when you -- we're talking about that, I trigger that memory. So sticking with the growth and the cost, I have to ask on GenAI, just like we asked last year, you probably learned a lot in the last year. But do you favor the growth potential of deploying GenAI across ADP? Or is there more potential on the cost or productivity side? Do you have a bias one way or the other?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Yes. Now we'll look for more at HR Tech. I'm sure when we get to the conference and see more on AI. Yes, I wish we had more time to talk about it. But that's a good summary. We're about 9 minutes left. I just want to -- there's a few topics I want to hit. Let me see. I do want to pick your brand. I know it's a small thing, Maria, but I do think it's interesting thinking about how you see the chessboard with this acquisition of PEI and getting into Mexico. I know it's small, but I think it fits this idea of being more local and going after local markets. But you tell me, I'm just curious how strategically important is this not financially. And is this more of a desire to get local, especially in foreign countries like or LatAm, for example.

Question: Tien-Tsin Huang - JPMorgan - Analyst : Thematically international is a big thing for us. That's why I wanted to ask. So it does make sense that you want to extend that way. So we have 5 minutes left, I want to make sure we had 2, maybe 3 questions, so I'll try to rapid fire. We may not get to PEO, Andrew, don't be mad. Consolidation. So we'll have Paychex here later. They are buying Paycor, big acquisition for them. Paylocity bought Airbase. which was an interesting deal as well. And we've been debating this depth versus breadth, scale versus verticalization debate for a bit. Do these moves change your thinking on inorganic additions for ADP?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Good enough. Figured I had to ask it. So you did mention the Fiserv distribution deal. So I have to ask about that. There's a lot of investor interest in it. And it reminds me in the old days of First Data, ADP, there was always discussion around distribution and how that can be leveraged and now this seems more formal. So give us the time line of run in Clover being integrated and then, of course, cash flow Central coming to run later this year, the question people have for us, Maria, is what's the motivation, the incentive for your channel to promote and vice versa on their side? Are those interests aligned? Do you think it will really move the needle for both companies?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Good. All right. We have 1 minute left. We'll get to PEO next time, but I thought I'd ask about the Investor Day. I know you can't -- you're not going to give us all the details now. You still need to have a reason for us to come and will absolutely be there. I think it's my anniversary, by the way, June 12. So I make reservations with my wife. What can you tell us? What's the reason? What's the pitch for us to go? What can we expect without spoiling anything, of course, with this update?

Question: Tien-Tsin Huang - JPMorgan - Analyst : Yes, it's a good teaser, Maria. Thank you for the update. I always enjoy the conversation. I really do.

Question: Tien-Tsin Huang - JPMorgan - Analyst : So we'll hopefully get you back next year. We'll see you in June.