Automatic Data Processing Inc at Nasdaq Investor Conference Transcript

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

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : So Don, maybe perhaps we start with a quick state of the union on ADP and, in particular, what you're most excited about in the coming years.

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Perfect. I think one of the biggest questions we often get from investors is just the correlation between what's happening in the broader macro unemployment backdrop with ADP, generally. You're clearly exposed across customer sizes, both small, middle, and large. How do you sort of think about that exposure and the go-forward growth of those segments in particular?

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Perfect. That's helpful. Maybe just on the competitive front, how would you say your market share has evolved over the last five to seven years? I think, again, there's this conception in the market that if you sort of look at some of the payroll software players on a pure revenue growth basis relative to ADP, it would imply that they're gaining share. But I think if you look at the underlying data and sort of how relative share has evolved, particularly with some of the regional players as well as if you just look at your own P&L statement, right, it wouldn't imply that there has been really any impact. And I would argue that you've actually gained in relative strength. So how would you sort of bucket that for us?

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Perfect. I wanted to dig into a few of your individual businesses. But before we do that, perhaps, we start with international since we're here in London. I know it's a place that's relatively close to your heart. How do we sort of think about some of your key priorities internationally, some of the competitive distinctions between the international market and the US market, and how you think about international as a growth driver over the medium run?

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Perfect. Maybe transitioning to the PEO segment. Can you maybe just explain for us, just given this is a very US-centric concept, what exactly a PEO is? And then if you sort of think about the guide that you sort of gave at the 2021 Investor Day for 10% to 12% growth, about 7% to 8% of that was driven by worksite employee growth. We're obviously operating at a level, a touch below that today. How do you sort of think about the right level of growth for that business that the management team is happy with? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 8:00AM, ADP.OQ - Automatic Data Processing Inc at Nasdaq Investor Conference

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Perfect. Maybe just on that bookings inflection that you've seen of late, is there anything that you've done in terms of either re-incentivizing sales force or tweaking some of the sales strategy to induce some of that bookings momentum? And obviously, what we coin as selling season towards the end of the year where people elect some of their benefits following year, is there any early results that you can share just in terms of how you might be tracking on that front? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 8:00AM, ADP.OQ - Automatic Data Processing Inc at Nasdaq Investor Conference

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Perfect. Maybe transitioning to employer services. As I sort of think about the revenue bridge there, I think one of the most telling signs of whether or not a business is being successful is, are they able to take price without any impact on churn. And you've sort of been operating at this level where you haven't seen any churn inflection even though you have been anticipating it for quite some time. You're still taking price towards the upper end of your historical range. Is that fair to assume? And how sort of persistent do you think that dynamic might be? And what sort of competitive reactions are you seeing in the market?

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Great. Maybe transitioning to WorkForce Software, just given how meaningful the acquisition was for you. Maybe just walk through the strategic rationale and how you're anticipating and [betting] some of the time and attendance capabilities with ADP Lyric to sort of attack the global enterprise space?

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : A lot of new product innovation. I just wanted to ask on potential synergies associated with WorkForce Software. They have about 1,000 clients in over 100 countries. Any sort of rough framing as to how many of those 1,000 clients may be ADP customers today and what you think the potential synergies could be?

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Perfect. I wanted to spend some time on the small business segment, particularly with the partnership that you announced with Fiserv in the small business space. Can we just spend a couple of minutes talking about what exactly is involved in the relationship there, and what the potential [unpack] you think could be for ADP?

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Makes a ton of sense. Maybe just on AI, how do you think about measuring the ROI there? I know it's still fairly early, but you sort of called out some of the areas like call summarization and virtual knowledge assistance that can be helpful there. Where are you in the AI journey so far? And how are you thinking about the return that you're seeing in early stages?

Question: Michael Infante - Morgan Stanley & Co. LLC - Analyst : Perfect. I think that's a great place to conclude. Don, thanks for joining us this morning. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 8:00AM, ADP.OQ - Automatic Data Processing Inc at Nasdaq Investor Conference