Financial Data and Key Metrics Changes - The company reported a 7% revenue growth and a 7% adjusted EPS growth for the first quarter of fiscal 2026 [5][16] - Employer Services segment revenue increased by 7% on a reported basis and 5% on an organic constant currency basis [16] - Client funds interest revenue increased more than anticipated, leading to an increase in the full-year forecast by $10 million to a range of $1.30 to $1.32 billion [17][19] Business Line Data and Key Metrics Changes - Employer Services new business bookings showed solid growth, resulting in record sales volume for a first quarter [5] - PEO revenue growth of 7% exceeded expectations, driven by growth in zero margin pass-throughs and higher wages [7][18] - Employer Services pays per control growth rounded down to 0% for the first quarter, reflecting client caution around adding headcount [6][16] Market Data and Key Metrics Changes - Overall client satisfaction score reached a new all-time high for a first quarter, indicating improvements across business units [6] - The company experienced specific strength in ADP® Lyric HCM, with new business bookings exceeding expectations [9][10] Company Strategy and Development Direction - The company is focused on leading with best-in-class HCM technology, including scaling embedded payroll solutions for small businesses [7][8] - The acquisition of Pequity aims to enhance capabilities in compensation management, supporting complex planning needs for clients [11][62] - The company continues to advance AI initiatives to improve operational efficiency and client engagement [12][13] Management's Comments on Operating Environment and Future Outlook - Management described the HCM demand backdrop as relatively stable, with no significant changes observed in deal cycles [24][25] - The company maintains its full-year growth guidance for Employer Services at 4% to 7% and PEO revenue growth at 5% to 7% [16][18] - Management expressed confidence in achieving strategic goals and delivering strong financial results despite slight declines in retention rates [15][19] Other Important Information - The company announced the acquisition of Pequity, which is expected to enhance its compensation management offerings [11][62] - The company was recognized as a leader in multi-country payroll solutions by industry analysts [15] Q&A Session Summary Question: Update on deal cycles and time to close - Management indicated that the HCM demand backdrop remains stable, with no meaningful changes in deal cycles observed in Q1 [24][25] Question: Confidence in Employer Services guidance amid slight downticks - Management expressed confidence in the guidance, noting that movements are relatively small and offsetting each other [26][28] Question: Surprising areas of new bookings growth - Management highlighted growth in small business services, particularly in retirement services and HR outsourcing [32] Question: Performance of PEO during enrollment period - Management reported the highest participation rates in four years, indicating strong demand for health benefits among targeted industries [57][58] Question: Insights on international market performance - Management described the international market as "lumpy," with solid execution expected to drive growth in the future [68] Question: Impact of processing days on revenue growth - Management noted a modest impact of around $10 million due to one less processing day compared to the previous year [85][89]

Group 1 - The company Automatic Data Processing Inc. (ADP) maintained its adjusted earnings and revenue growth guidance for the full-year 2026 [1] - For fiscal 2025, ADP projects adjusted earnings per share growth in a range of 8 to 10 percent on revenue growth of 5 to 6 percent [1] Group 2 - Analysts expect the company to report earnings of $10.92 per share on revenue growth of 5.78 percent, totaling $21.75 billion for the year [2]

Core Viewpoint - Wall Street analysts anticipate Automatic Data Processing (ADP) to report quarterly earnings of $2.44 per share, reflecting a year-over-year increase of 4.7%, with revenues expected to reach $5.13 billion, up 6.1% from the previous year [1] Earnings Projections - The consensus EPS estimate for the quarter has been revised downward by 0.1% over the past 30 days, indicating a collective reassessment by analysts [1][2] - Revisions to earnings projections are crucial for predicting investor behavior and are linked to short-term stock price performance [2] Revenue Estimates - The consensus estimate for 'Segment revenues- Employer Services' is $3.45 billion, showing a year-over-year change of +5.7% [4] - 'Revenues- Interest on funds held for clients' is estimated at $281.99 million, indicating a year-over-year change of +11.3% [4] - 'Revenues- PEO revenues' are projected to reach $1.67 billion, reflecting a year-over-year change of +6.3% [4] - 'Segment revenues- PEO Services' are forecasted to be $1.68 billion, with a year-over-year change of +6.7% [5] - 'Revenues, other than interest on funds held for clients and PEO revenues' are expected to total $3.17 billion, indicating a year-over-year change of +5.3% [5] Key Metrics - The average paid PEO worksite employees during the period is estimated to be 757, compared to 737 in the previous year [6] - ADP shares have decreased by 2.5% in the past month, contrasting with the Zacks S&P 500 composite's increase of 1.3% [6] - ADP holds a Zacks Rank 4 (Sell), suggesting expected underperformance relative to the overall market in the near term [6]

Core Insights - Job growth among U.S. small businesses with fewer than 50 employees remains largely unchanged over the last year [1] - The Small Business Jobs Index, a key component of the Paychex report, has fluctuated just over a half percentage point over the last 12 months [1] - Hourly earnings are experiencing growth [1]

Core Insights - Private sector employment increased by 54,000 jobs in August 2025, with a year-over-year pay increase of 4.4% [1][9] - The ADP National Employment Report provides an independent measure of the labor market based on anonymized payroll data from over 26 million private-sector employees in the U.S. [2] Employment Changes - Job growth was primarily in the service-providing sector, which added 42,000 jobs, while the goods-producing sector added 13,000 jobs [5] - The leisure and hospitality industry saw significant growth, adding 50,000 jobs, while construction added 16,000 jobs [4][7] - The report highlighted a month-over-month slowdown in hiring, attributed to factors such as labor shortages and consumer uncertainty [3] Regional Employment Changes - Employment changes by region included: Northeast (+15,000), Midwest (+14,000), South (+4,000), and West (+8,000) [6][8] - Specific regional performance showed variations, with the East North Central region adding 17,000 jobs, while the West North Central region lost 3,000 jobs [7] Establishment Size Impact - Job additions by establishment size were: small establishments (+12,000), medium establishments (+25,000), and large establishments (+18,000) [8] - Large establishments (500+ employees) contributed 18,000 jobs to the overall increase [8] Pay Insights - Year-over-year pay growth for job-stayers was 4.4%, while job-changers experienced a higher growth rate of 7.1% [9][13] - Pay growth varied by industry, with financial activities showing a 5.1% increase and leisure/hospitality at 4.5% [13][20]

Core Insights - China exhibits a higher level of optimism regarding AI's impact on work compared to most developed Asia-Pacific markets, making it a significant growth market for AI applications and workplace innovation [1][4] Employee Sentiment - A global survey by ADP involving 38,000 employees reveals complex emotions towards AI, with 17% of global respondents "strongly agreeing" that AI will positively impact their work in the next year, while 33% "agree" [1] - In China, 22% of respondents "strongly agree" with the positive impact of AI, surpassing the global average and other Asia-Pacific markets such as Singapore (16%), Australia (11%), South Korea (8%), and Japan (4%) [1] Concerns About Job Security - Among employees who believe AI will positively affect their work, 27% express concerns about being replaced [2] - In China, 36% of knowledge workers "strongly agree" that AI will enhance their job performance, yet 19% also "strongly agree" that they fear being replaced by AI [2] Uncertainty and Anxiety - Globally, 44% of respondents "agree" or "strongly agree" that they are uncertain about how AI will affect their work, leading to anxiety [2] - In China, only 11% of employees "strongly agree" with this uncertainty, which is significantly lower than other Asia-Pacific markets like Singapore (19%) [2] Industry-Specific Attitudes - Employees in technology services, finance, insurance, and information sectors tend to have a more positive outlook on AI, but they also express greater concerns about job replacement [2] - In China, this trend is particularly evident among employees in technology, finance, and manufacturing sectors, where knowledge workers are increasingly using AI tools and are confident in AI's productivity enhancement, yet they also experience heightened anxiety about automation [2] Age and Regional Differences - Younger employees (ages 18-39) show a mix of optimism and concern regarding AI, while employees aged 55 and above tend to be more composed, believing AI will have limited impact on their careers [4] - In China, employees aged 40-54 are the most optimistic (25% "strongly agree" AI will positively impact their work) but also exhibit the highest concerns about being replaced (16%) [4] - The Middle East/Africa region has the highest percentage of respondents believing AI will positively impact their work (27%), while Japan and Sweden have the lowest (4% and 6%, respectively) [4] Job Pressure and Turnover Intentions - Employees worried about being replaced by technology are twice as likely to experience job-related stress compared to their counterparts [4] - Over 30% of those who "strongly agree" that AI may replace them are actively seeking new jobs, compared to only 16% among those less concerned about AI's impact [4]

Financial Data and Key Metrics Changes - The company reported an 8% revenue growth in Q4 2025 and a 7% revenue growth for the full fiscal year [5][18] - Adjusted EBIT margin expanded by 40 basis points in Q4 and 50 basis points for the full year [5][18] - Adjusted EPS grew by 8% in Q4 and 9% for the full year [5] Business Line Data and Key Metrics Changes - Employer Services (ES) revenue increased by 8% in Q4 and 7% for the full year, with margins expanding by 50 basis points in Q4 and 100 basis points for the year [18][19] - Professional Employer Organization (PEO) revenue grew by 7% in Q4 and for the full year, with average worksite employee growth of 3% [19][20] - PEO margins contracted by 20 basis points in Q4 and 60 basis points for the full year due to higher zero-margin pass-through benefits revenues [19][20] Market Data and Key Metrics Changes - The company achieved approximately $2.1 billion in new business bookings for employer services, representing a 3% growth [6] - Small business suite and domestic enterprise offerings saw solid bookings growth, while HR outsourcing experienced a softer finish [6][7] - International bookings improved in Q4 but did not offset earlier softness in the fiscal year [6] Company Strategy and Development Direction - The company is focused on accelerating employer services new business bookings growth in fiscal 2026, with a healthy pipeline and strong client retention [7][11] - Investments in HCM technology, AI capabilities, and global payroll capabilities are key strategic priorities [10][11] - The company aims to leverage its extensive dataset to enhance product offerings and client experiences [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a dynamic and growing market with opportunities for innovation and client support [13][14] - The macroeconomic environment remains uncertain, but the company is positioned to deliver solid financial results while investing for future growth [20][25] - Management expects a slight moderation in the macroeconomic environment but remains confident in achieving revenue growth of 5% to 6% in fiscal 2026 [20][25] Other Important Information - The company has made significant strides in client satisfaction, achieving record highs [7] - The acquisition of workforce software is expected to enhance capabilities and contribute to growth in multinational markets [10][50] Q&A Session Summary Question: Demand and HRO softness - Management noted that the softness in HR outsourcing was due to complex opportunities with long sales cycles, but the pipeline remains strong with active deals [28][31] Question: Confidence in bookings reacceleration - Management highlighted product maturity, investments in sales headcount, and technology as key factors for confidence in bookings growth [33][36] Question: Pricing contribution in fiscal 2026 - Pricing assumptions for fiscal 2026 are expected to be in the 100 basis points range, reflecting recent trends rather than pre-pandemic norms [45] Question: Retention performance - Retention results were broad-based, with no specific callouts, and management was pleased with the performance across all segments [46] Question: Workforce software integration - Early results from the integration of workforce software have exceeded expectations, contributing positively to bookings and sales [49][50] Question: PEO guidance and pass-through revenue - Higher expected contributions from zero-margin pass-through revenues are driven by medical health insurance inflation and state unemployment insurance costs [99] Question: Embedded payroll and Clover partnership - The partnership with Clover is progressing well, with expectations for broader deployment and contributions to bookings in fiscal 2026 [102][104] Question: Sales channel management and partnerships - Partnerships are enhancing visibility into results and pipelines, allowing for better forecasting and opportunity identification [110][111]

Financial Performance Highlights - Total revenues for fiscal year 2025 reached $20561 million, a 7% increase year-over-year[14] - Adjusted EBIT for fiscal year 2025 was $5347 million, a 9% increase year-over-year, with a margin expansion of 50 basis points[14] - Adjusted diluted EPS for fiscal year 2025 was $1001, a 9% increase year-over-year[14] - In Q4 2025, total revenues were $5127 million, an 8% increase year-over-year[10] - Q4 2025 adjusted diluted EPS was $226, an 8% increase year-over-year[10] Segment Results - Employer Services (ES) revenue grew by 7% for fiscal year 2025 and 8% for Q4 2025[8, 17] - ES retention rate was 921%[8] - Professional Employer Organization (PEO) revenue grew by 7% for both fiscal year 2025 and Q4 2025[8, 27] - Average worksite employees (WSEs) in PEO reached 761000, a 3% increase[34] Fiscal Year 2026 Outlook - The company anticipates total ADP revenue growth of 5% to 6%[36] - Adjusted EBIT margin is expected to increase by 50 to 70 basis points[36] - Adjusted diluted EPS is projected to grow by 8% to 10%[36] - Client Funds Interest Revenue is expected to be between $1290 million and $1310 million[36]

Group 1 - ADP announced its fourth quarter and fiscal 2025 financial results along with its fiscal 2026 outlook [1] - A conference call for financial analysts was scheduled for July 30, 2025, at 8:30 a.m. ET, which will be webcast live [2] - ADP has over 1.1 million clients across more than 140 countries, showcasing its global reach and expertise in HR and payroll solutions [3] Group 2 - The company has been a leader in HR and payroll solutions for over 75 years, focusing on innovation and solving complex business challenges [3] - ADP emphasizes its commitment to enhancing human potential through data insights and innovative technology [3]

Financial Data and Key Metrics Changes - Total revenue for Q4 increased by 10% to $1.4 billion, while excluding Paycor, total revenue increased by 3% [20] - For the full fiscal year 2025, total revenue grew by 6% to $5.6 billion [23] - Adjusted diluted earnings per share increased by 6% to $1.19 in Q4, while diluted earnings per share decreased by 22% to $0.82 [22] - Adjusted operating income margins for Q4 were 40.4%, an increase of approximately 20 basis points [22] Business Line Data and Key Metrics Changes - Management Solutions revenue increased by 12% to $1 billion for Q4, driven by the addition of Paycor and higher revenue per client [21] - PEO and Insurance Solutions revenue increased by 4% to $340 million for Q4, supported by growth in average PEO worksite employees [21] - Interest on funds held for clients increased by 18% to $45 million for Q4, primarily due to the inclusion of Paycor balances [21] Market Data and Key Metrics Changes - The number of clients served increased to approximately 800,000, with HR outsourcing worksite employees rising to 2.5 million [6] - Client retention rates improved year over year, indicating strong value provided to clients [6] Company Strategy and Development Direction - The company aims to strategically accelerate investments for future growth while focusing on cost synergies of approximately $90 million in fiscal year 2026 [7][26] - The HCM platforms will be segmented, with Paychex Flex targeting companies with up to 99 employees and Paycor focusing on enterprises with over 100 employees [9] - The company is committed to enhancing operational efficiency and maintaining industry-leading operating margins [6][24] Management's Comments on Operating Environment and Future Outlook - The management noted a mix of optimism and uncertainty in the market, with small businesses remaining fundamentally healthy despite external pressures [16][17] - The company expects total revenue growth for fiscal year 2026 to be in the range of 16.5% to 18.5%, with Management Solutions projected to grow by 20% to 22% [26] - Management expressed confidence in achieving revenue synergies and highlighted the importance of cross-selling opportunities [11][90] Other Important Information - The company returned over $1.5 billion to shareholders through cash dividends and share repurchases during the fiscal year [25] - The financial position remains strong, with cash and investments totaling $1.7 billion and total borrowings of approximately $5 billion [24] Q&A Session Summary Question: Can you discuss the distractions related to the sales force integration and its impact on Q4? - Management acknowledged that they made strategic decisions to complete changes quickly to minimize disruption, and they do not expect significant spillover effects into Q1 [33][37] Question: What factors contributed to the deceleration in organic Management Solutions growth from Q3 to Q4? - Management noted softer checks and a mix issue with smaller client sizes, along with MPP enrollment headwinds impacting growth [42][44] Question: How does the company plan to reaccelerate organic client growth? - The company will focus on organic client growth of 1% to 3% while driving product penetration and maintaining pricing strength [49][50] Question: What is the outlook for Paycor's growth in fiscal 2026? - Management expects Paycor to be a strong double-digit grower, with some conservatism in guidance to ensure deliverability [59] Question: Can you clarify the impact of recent bankruptcies and financial distress on the company? - Management indicated that while there were increases in bankruptcies, the impact on revenue was minimal, particularly at the lower end of the client base [72][84]