Automatic Data Processing Inc Q4 2025 Earnings Call Transcript

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

Question: Bryan Bergin - Cowen and Company LLC - Analyst : I want to start with demand here and maybe just dig into the areas of the ES signings underperformance versus the plan. It sounded like HRO and international. Can you share more thoughts on the HRO softness just despite the efficiency proposition there. I'm curious on that. And is that mid-market softness specifically?

Question: Bryan Bergin - Cowen and Company LLC - Analyst : Okay. That's helpful. And I guess just a follow up on broader bookings. Just -- can we double-click on the confidence in reaccelerating off that 3%? I heard product maturity as part of it. Are there also some specific kind of go-to-market or pricing initiatives that you're implementing? And can you just comment on how July performed? Just curious if it was any better than the June exit? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 30, 2025 / 12:30PM, ADP.OQ - Q4 2025 Automatic Data Processing Inc Earnings Call

Question: Bryan Bergin - Cowen and Company LLC - Analyst : Just July.

Question: Bryan Bergin - Cowen and Company LLC - Analyst : Okay. Thank you for the detail.

Question: Ramsey El-Assal - Barclays Services Corp - Analyst : I wanted to ask about the pricing contribution in fiscal '26 whether it's more analogous to what we've seen maybe historically or whether it remains a little bit elevated just given inflation is also a little bit elevated? And I had a second question, I'll just throw it in here. It was just on the better-than-anticipated retention result this quarter, whether there was any particular call-outs or drivers or reasons why you saw the outperformance?

Question: Ramsey El-Assal - Barclays Services Corp - Analyst : Got it. Thank you very much.

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : With regards to WorkForce Software getting integrated more fully. What are you seeing in terms of just the early results from WorkForce Software? I know that they're still selling independently. And to what extent do you think you will end up getting a lift on the upper enterprise side once it's fully integrated with Lyric?

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : Great. And then I demoed Workforce Now Next Gen at SHRM. And I thought it was pretty impressive. And I'm wondering to what extent are you selling the Next Gen product now relative to the old Workforce Now? And what sort of lift would you expect to see there from some of those improvements?

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : Perfect. Thank you.

Question: Tien-Tsin Huang - JPMorgan Chase & Co - Analyst : Just building on that last answer. Just the confidence in overall bookings accelerating in fiscal '26. Just how much is driven by head count investments that you put into place versus higher sell-through attached new products, that kind of thing, versus '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 30, 2025 / 12:30PM, ADP.OQ - Q4 2025 Automatic Data Processing Inc Earnings Call

Question: Tien-Tsin Huang - JPMorgan Chase & Co - Analyst : Terrific. Just -- and then quickly on retention, still very high, impressive. Just I know it's reasonable to assume some decline from that high this year. But is the 10 to 30 assuming more on the voluntary versus involuntary attrition? I'm just trying to understand if there's anything more specific that you're paying attention to as you go into the new fiscal year?

Question: Tien-Tsin Huang - JPMorgan Chase & Co - Analyst : Perfect. Makes great sense. Thanks, Peter. Thanks, Maria.

Question: Scott Wurtzel - Wolfe Research LLC - Analyst : Thank you for taking my questions. Just wanted to ask on the PEO guidance and sort of the widening gap between reported revenue growth and revenue growth ex pass-throughs, I'm just wondering if you can talk about what's driving those higher expected contribution from zero margin pass-through revenue for fiscal '26 versus '25?

Question: Scott Wurtzel - Wolfe Research LLC - Analyst : That's helpful. And then just as a follow up on the Embedded Payroll side and particularly around the Clover partnership. Just wondering if you can kind of update us where you are sort of on the integration and getting that into market as well as sort of what you're expecting from the Clover partnership and other Embedded Payroll offerings for fiscal '26 in terms of contribution to bookings?

Question: Scott Wurtzel - Wolfe Research LLC - Analyst : Great. Thanks, guys.

Question: James Faucette - Morgan Stanley - Analyst : Appreciate all the details here. Wanted to ask Maria, you just emphasized your range of partnerships, et cetera, and I think it creates a lot of opportunity. Just wondering how that's impacting your kind of sales channel management and forecasting. Just -- are you seeing improvement? Does it become more reliable? Or does it become more difficult? Just trying to think through how expanded use of partnerships can impact your visibility?

Question: James Faucette - Morgan Stanley - Analyst : Great. That's really useful color and insight into how that's developing. I wanted to touch on one of those partnerships, and that's Wisely and (inaudible) access. I don't think we've gotten much of an update on that product in quite some time. How is that attached trending? And I think more specifically, you introduced a fee-free earn wage access program with Daily Pay a few years ago. And I know it's a small product in totality, but just curious to hear how [PWA] attach among RUN clients has evolved over the last 12, 18 months?

Question: James Faucette - Morgan Stanley - Analyst : Great. Appreciate that, Maria.

Question: Dan Dolev - Mizuho Securities USA LLC - Analyst : I have two quick questions. So going back to mid-market software bookings, can you maybe elaborate a little bit how it did this year versus your initial expectations? And then I have a quick follow up.

Question: Dan Dolev - Mizuho Securities USA LLC - Analyst : Got it. And then just as a quick follow up. You've had a big merger, your competitor acquired, took a page out of your book and acquired [pay corp]. Can you maybe talk a little bit about the competitive landscape that you're seeing right now following that merger?

Question: Dan Dolev - Mizuho Securities USA LLC - Analyst : Great. Thank you. Great results here.

Question: Daniel Jester - Bank of Montreal - Analyst : Thank you for taking my question. I just wanted to follow up with Peter on a question earlier on the margin front. I appreciate kind of AI is still in the net investment position. If you think about maybe some of the other puts and takes on margin, it looks like maybe you're maybe lapping some of the investments and integration of WorkForce Software in the forward year. You have a little bit of FX volatility. \ So any sort of other things you'd call out with regards to the margin guidance that we should be considering? And just with regards to the seasonality, you talked about how margin is going to ramp throughout the year. Maybe what are the drivers of that?

Question: Daniel Jester - Bank of Montreal - Analyst : Great. Thank you very much.