ADP Earnings Call & Webcast Q1 Fiscal 2026 October 29, 2025 Copyright © 2025 ADP, Inc. DISCLAIMERS FORWARD-LOOKING STATEMENTS This document and other written or oral statements made from time to time by ADP may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like "outlook," "expects," "assumes," "projects," "anticipates," "estimates," "we believe," "co ...

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices involving Insperity, Inc. and its officers or directors following disappointing financial results and a significant stock price drop [1][3]. Financial Performance - On August 1, 2025, Insperity reported adjusted earnings per share of $0.26 for Q2 2025, which was a 70% decline year-over-year and below analyst expectations [3]. - The company attributed the poor performance to higher-than-expected benefits costs, particularly due to rising pharmacy expenses and an increase in large insurance claims [3]. - Following the announcement, Insperity's stock price fell by $14.51, or 24.35%, closing at $45.07 per share on the same day [4]. Legal Investigation - Pomerantz LLP is actively seeking claims from investors of Insperity regarding potential securities fraud or other unlawful practices [1]. - The firm has a long history in corporate and securities class litigation, having recovered significant damages for victims of securities fraud and corporate misconduct [5].

Core Viewpoint - TriNet Group, Inc. reported its second quarter financial results for 2025, indicating stable performance in line with forecasts and reaffirming full-year guidance despite a challenging business environment [2][3]. Financial Performance - Total revenues for the second quarter were $1.2 billion, remaining flat compared to the same period last year [7]. - Professional service revenues decreased by 8% to $172 million year-over-year [7]. - Net income was $37 million, or $0.77 per diluted share, down from $60 million, or $1.20 per diluted share, in the same period last year [7]. - Adjusted Net Income was $55 million, or $1.15 per diluted share, compared to $78 million, or $1.53 per diluted share, in the same period last year [7]. - Adjusted EBITDA was $105 million, representing an Adjusted EBITDA Margin of 8.5%, down from $136 million and 10.9% in the same period last year [7]. Full-Year 2025 Guidance - The company reiterated its full-year 2025 guidance, projecting total revenues between $4.95 billion and $5.14 billion [4]. - Professional service revenues are expected to be between $700 million and $730 million [4]. - The Insurance Cost Ratio is projected to be between 90% and 92% [4]. - Adjusted EBITDA Margin is expected to range from 7% to 9% [4]. - Diluted net income per share is forecasted to be between $1.90 and $3.40, while Adjusted Net Income per share is expected to be between $3.25 and $4.75 [4]. Shareholder Returns - The company returned $117 million to shareholders through share repurchases and dividends during the first half of 2025 [7]. Key Financial Metrics - Average Worksite Employees (WSEs) decreased by 4% year-over-year to approximately 336,000 [7]. - Cash and cash equivalents increased by 13% to $407 million compared to the previous year [13]. - Total assets decreased by 10% to $3.688 billion [13]. Conference Call - TriNet will host a conference call to discuss its second quarter results and reaffirm its full-year financial guidance [6].

Financial Data and Key Metrics Changes - The company reported Q1 2025 adjusted EPS of $1.57 and adjusted EBITDA of $102 million, which fell below guidance due to higher than expected benefits costs [5][6] - The average number of paid worksite employees increased by 0.7% year-over-year to 306,023, but growth was slightly below guidance due to delays and cancellations in new client starts [5][6] - Gross profit per worksite employee decreased to $338 per month from $378 in Q1 2024, attributed to an 8.4% increase in benefits costs per covered employee [6][9] Business Line Data and Key Metrics Changes - Client retention improved to 91% in Q1 2025 from 88% in Q1 2024, indicating strong client loyalty despite market challenges [20] - Client net hiring was slightly positive but significantly weaker compared to historical norms [6][20] - The company experienced a 3% increase in worksite employees paid from new client sales compared to Q1 2024, despite overall hiring challenges [5][6] Market Data and Key Metrics Changes - A client survey indicated that 66% of respondents expect the economic climate to negatively affect their business, up from 29% in January [16] - The percentage of clients expecting to add employees in the coming quarter decreased to 34% from 43% [16] - The Northeast region showed better results compared to other areas, but overall trends were consistent across the nation [70] Company Strategy and Development Direction - The company is focusing on mitigating benefits cost challenges through pricing adjustments and plan design changes, with a forecasted benefits cost per covered employee range of 6.5% to 7.5% for the full year [10][35] - The strategic partnership with Workday is a key focus, with a go-to-market plan established to target mid-market businesses, which is expected to significantly drive growth starting in 2026 [30][31] - The company aims to leverage the Workday partnership to enhance service offerings and client engagement, particularly for businesses with 150 to 5,000 employees [88] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the unexpected rise in benefits costs but remains optimistic about future profitability improvements in 2026 [10][64] - The company anticipates a modest improvement in worksite employee growth throughout the year, barring significant changes in the macroeconomic environment [36] - Management noted that the current period of uncertainty is less likely to be a temporary spike, suggesting a more cautious approach to forecasting [86] Other Important Information - Operating expenses were managed slightly below budget, with a 2% increase year-over-year, primarily due to investments in the Workday partnership [11][12] - The company returned $23 million in cash dividends and repurchased 224,000 shares at a cost of $19 million in Q1 [12] - The effective tax rate for the quarter was 29%, consistent with the previous year [12] Q&A Session Summary Question: Can you elaborate on the onboarding pauses mentioned in Q1? - Management noted a dramatic reversal in small business optimism due to government actions, leading to delays and cancellations in onboarding new clients [40][41] Question: What is the expected cadence of spending for the Workday partnership? - The company anticipates stable spending throughout the year, with costs expected to decrease in subsequent years as the project matures [45][48] Question: What actions from Washington could improve customer sentiment? - Management believes that stabilizing the tax system and regulatory environment could significantly boost confidence among clients [53][54] Question: How quickly can pricing adjustments be made in response to healthcare costs? - Pricing changes are already being implemented, with expectations for improved margins as the year progresses [63][64] Question: Are there regional or industry differences in healthcare costs and hiring hesitancy? - The company has observed better results in the Northeast, but overall trends are consistent across the nation [70] Question: What is the expected profitability from the Workday partnership? - Management anticipates higher upfront pricing and ongoing revenue contributions from the new joint solution, though specific figures are still being analyzed [78][79]

Financial Data and Key Metrics Changes - The company reported first quarter adjusted EPS of $1.57 and adjusted EBITDA of $102 million, which fell below guidance due to higher than expected benefits costs [5][6] - The average number of paid worksite employees increased by 0.7% year-over-year to 306,023, but growth was slightly below guidance due to delays and cancellations in new client starts [5][6] - Gross profit per worksite employee decreased to $338 per month from $378 in the prior year, attributed to an 8.4% increase in benefits costs per covered employee [6][10] Business Line Data and Key Metrics Changes - Client retention improved to 91% in Q1, a significant increase from 88% in the previous year, indicating strong client loyalty [18] - Client net hiring was slightly positive but remained weak compared to historical norms [6][33] Market Data and Key Metrics Changes - A client survey indicated that 66% of respondents expect the economic climate to negatively affect their business, up from 29% in January [15] - The percentage of clients expecting to add employees decreased to 34% from 43% [15] Company Strategy and Development Direction - The company is focusing on mitigating the impact of rising benefits costs through pricing adjustments and plan design changes, with a forecasted benefits cost per covered employee of 6.5% to 7.5% for the full year [9][34] - The strategic partnership with Workday is seen as a significant growth driver, with plans to launch a joint solution targeting mid-market businesses [25][29] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the unexpected rise in benefits costs but remains optimistic about future profitability improvements as pricing adjustments are implemented [10][36] - The company has reduced its worksite employee growth forecast for the year to 0.5% to 3% due to macroeconomic uncertainties [33][34] Other Important Information - Operating expenses increased slightly by 2% year-over-year, primarily due to investments in the Workday partnership [10][11] - The company returned $23 million in cash dividends and repurchased 224,000 shares at a cost of $19 million during the quarter [11] Q&A Session Summary Question: Can you elaborate on the onboarding pauses mentioned? - Management noted that optimism in the small business community reversed dramatically due to government actions, leading to delays and cancellations in onboarding new clients [40][41] Question: What is the expected cadence of spending for the Workday partnership? - The company anticipates stable spending throughout the year, with a gradual decrease in costs expected in years three to five of the partnership [45][48] Question: What actions from Washington could improve customer confidence? - Management believes that minor changes in tax policy or regulatory environments could significantly boost confidence among clients [54] Question: How quickly can pricing adjustments be made in response to healthcare costs? - Pricing changes are already being implemented, with expectations for improvements in gross margins as the year progresses [63][64] Question: Are there regional differences in healthcare costs or hiring hesitancy? - The company has seen better results in the Northeast, but overall trends appear to be consistent across the nation [70]