Accessibility StatementSkip Navigation Download ADP's Embedded Payroll Product Information, Including Partner Benefits ROSELAND, N.J., Sept. 29, 2025 /PRNewswire/ -- ADP, a global leader in HR and payroll solutions, now offers ADP® Embedded Payroll, a solution that enables SMB software providers to launch integrated payroll solutions tailored to their small business clients' needs. This embeddable platform supports payroll processing, payments and tax compliance, powered by ADP's trusted technology, servic ...

Financial Data and Key Metrics Changes - The company reported Q2 2025 EPS of $0.26 and adjusted EBITDA of $32 million, slightly below the forecasted range due to higher than expected benefits costs [5][6] - Average paid worksite employees increased by 0.7% year-over-year to 309,115, with new sales contributing to a 2% increase in worksite employees [5][6] - Gross profit per worksite employee decreased to $240 per month from $282 in Q2 2024, primarily due to increased benefits costs [6][9] Business Line Data and Key Metrics Changes - Client retention averaged 99% per month, consistent with prior year results, while net hiring within the client base showed slight improvement [5][6] - Benefits costs per covered employee increased by 9.6% year-over-year in Q2, with pharmacy costs being a significant contributor [8][9] Market Data and Key Metrics Changes - The company noted that large claim frequency remains elevated, particularly for cancer and heart-related conditions, but did not observe adverse selection among new clients [8][9] - The overall economic environment for small and medium-sized businesses is showing signs of stabilization, which may lead to improved hiring trends [26][30] Company Strategy and Development Direction - The company is focused on executing a pricing plan and implementing plan design changes to address elevated benefits cost trends [34][30] - A strategic partnership with Workday is being leveraged to enhance HR solutions, with a new product architecture aimed at expanding the total addressable market [17][19] - The company plans to launch a fall sales campaign earlier than previous years, with strong incentives to drive sales and retention [25][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving accelerated growth and improved profitability in 2026 despite current challenges [14][30] - The company is optimistic about the potential for recovery in gross profit margins and operating expense management [27][30] Other Important Information - Operating expenses decreased by 3% year-over-year, with significant reductions in travel and professional fees [12] - The company returned $22 million in cash dividends to shareholders during Q2 2025, with a total of $45 million year-to-date [12] Q&A Session Summary Question: What is the expected financial impact of the Workday partnership in 2026? - Management indicated it is too early to predict the exact revenue and profitability impact from the Workday partnership, but they are excited about the progress [38][39] Question: Has there been improvement in net client hiring? - Management noted that underlying hiring has improved, although it remains below historical levels, and they expect further improvement [44][46] Question: Is the $150 million investment in Workday still appropriate? - Management believes the investment will exceed $150 million over five years, but the impact on the income statement will reduce significantly as they move closer to launch [49][50] Question: How will pricing and plan design changes affect healthcare costs? - Management stated that pricing changes will be the primary method to manage rising healthcare costs, with plan design changes serving to limit overall cost trends [67][68] Question: When will broad marketing efforts for Workday begin? - Management indicated that broad marketing efforts will likely occur in 2026, following the beta testing phases [71][72]