Core Insights - Automatic Data Processing Inc (ADP) is recognized as a Dividend King, having maintained a 51-year streak of dividend increases, with a recent quarterly cash dividend increase of $0.16, bringing the annual rate to $6.80 per share [2][5] - In the first quarter of fiscal year 2026, ADP exceeded earnings expectations, showing year-over-year growth in both revenue and earnings per share (EPS), while reaffirming its full-year guidance despite market concerns regarding artificial intelligence disruptions [3][5] - ADP's current stock price is $253.09, reflecting a decrease of approximately 0.60% or $1.52, with a market capitalization of approximately $102.36 billion [4][5] Financial Performance - ADP's recent financial performance includes exceeding earnings expectations in Q1 FY2026, with both revenue and EPS demonstrating year-over-year growth [3][5] - The company has reaffirmed its full-year guidance, indicating confidence in its financial stability and growth prospects [3] Stock Information - The current stock price of ADP is $253.09, with a trading range today between $251.22 and $255.72 [4] - Over the past year, ADP's stock has reached a high of $329.93 and a low of $249.68, with a market capitalization of approximately $102.36 billion [4]

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 for client funds interest revenue by $10 million to a range of $1.30 billion 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] - International market performance was described as "lumpy," with a solid pipeline but some softness in the first quarter [68] Company Strategy and Development Direction - The company is focused on leading with best-in-class HCM technology, including the scaling of Embedded Payroll Solutions for small businesses [8][11] - Continued investment in AI initiatives aims to enhance operational efficiency and client engagement [12][14] - The acquisition of Pequity is expected to broaden the company's capabilities in compensation management, aligning with its strategic priorities [10][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the relatively stable HCM demand backdrop and maintained full-year growth guidance of 4%-7% for Employer Services [16][24] - The company anticipates a slight decline in Employer Services retention but remains optimistic about achieving its growth targets [16][18] - Management highlighted the importance of ongoing investments in technology and client services to drive future growth [14][19] Other Important Information - The company announced the acquisition of Pequity, which is expected to enhance its compensation management offerings [10][62] - The company was recognized as a leader in multi-country payroll solutions, underscoring its global capabilities [15] Q&A Session Summary Question: Update on deal cycles and time to close - Management indicated that the demand backdrop remains stable, with no significant changes observed in deal cycles during Q1 [24] Question: Confidence in Employer Services guidance amid slight downticks - Management expressed confidence in the guidance, noting that movements in pays per control and retention are relatively small and offsetting [26][28] Question: Surprising areas of new bookings growth - Management highlighted strong growth in small business services, particularly in retirement services and HR outsourcing [32] Question: Performance of PEO enrollment period - Management reported the highest participation rates in four years, indicating strong demand for health benefits among targeted industries [57] Question: Insights on the recent acquisition - Management emphasized the strategic importance of the acquisition for enhancing compensation management capabilities, although its financial impact is currently minimal [62][64] Question: Differences between U.S. and international markets - Management described international performance as "lumpy," with solid execution expected to drive growth in the future [68] Question: Impact of recent layoffs in the market - Management stated that recent layoffs are not expected to significantly impact guidance, as hiring levels remain static [99]

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]

Financial Data and Key Metrics Changes - The company reported a 7% revenue growth and a 7% adjusted EPS growth for Q1 2026 [4][14] - Employer Services segment revenue increased by 7% on a reported basis and 5% on an organic constant currency basis [14][15] - 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 [16][18] Business Line Data and Key Metrics Changes - Employer Services new business bookings showed solid growth, resulting in record sales volume for a first quarter [4][5] - PEO revenue growth of 7% exceeded expectations, driven by growth in zero margin pass-throughs and higher wages [5][17] - Employer Services pays per control growth rounded down to 0% for the first quarter, reflecting client caution in adding headcount [5][15] 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 [5] - The company experienced specific strength in ADP® Lyric HCM, with new business bookings exceeding expectations [8][9] - International markets showed a bit of softness in Q1, attributed to the lumpy nature of large, complex deals [87] Company Strategy and Development Direction - The company is focused on leading with best-in-class HCM technology, including the deployment of ADP Workforce Now® NextGen [7][10] - The acquisition of Pequody aims to enhance capabilities in compensation management, supporting complex planning needs [10][78] - AI initiatives are being advanced to improve client engagement and operational efficiency, with a focus on generative AI [11][12] 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 [23][24] - The company maintains its full-year growth guidance for Employer Services at 4% to 7% and PEO revenue growth at 5% to 7% [15][17] - Management expressed confidence in achieving the fiscal 2026 consolidated revenue outlook of 5% to 6% growth [18] Other Important Information - The company announced the acquisition of Pequody, which will broaden its capabilities in compensation management [10][78] - The company is committed to expanding its global capabilities, having recently gone live with its first GlobalView client in Costa Rica [13] 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 [23][24] 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 [25][27] Question: Surprising areas of new bookings growth - Management highlighted growth in small business services, particularly in retirement services and insurance, as well as continued interest in ADP® Lyric HCM [34] Question: Performance of the PEO and participation rates - Management reported the highest participation rates in four years during the recent enrollment period, indicating strong demand for health benefits [71] Question: Impact of recent layoffs in the market - Management stated that the hiring situation is static, with reduced layoff levels, and these factors are contemplated in their guidance [120]

Core Insights - ADP has introduced new AI-powered features aimed at addressing operational challenges in HR, particularly focusing on payroll errors, analytics, and administrative burdens [1][2][3] Group 1: AI Features and Benefits - The new features utilize ADP Assist to enhance efficiency in HR by tackling time-consuming tasks and improving accuracy in payroll processing [2][4] - Key functionalities include anomaly detection in payroll data, instant responses to HR inquiries, real-time visibility into workforce trends, compliance monitoring, and personalized employee development recommendations [6][7] Group 2: Client-Centered Approach - ADP's AI development is client-focused, with features tested rigorously based on client feedback, ensuring solutions are grounded in real-world complexities [5][6] - The company emphasizes a commitment to solving actual HR challenges rather than merely following industry trends, showcasing the practical application of AI to deliver measurable value [7] Group 3: Data and Market Reach - ADP's AI capabilities draw from extensive payroll and HR data insights, covering over 1.1 million companies across more than 140 countries, enabling informed decision-making for HR leaders [6][8] - The integration of AI across various HR functions provides a unified experience that evolves with user interactions while maintaining user control over critical decisions [7]

Corporate Leadership and Performance - The shift towards gender-diverse leadership is transforming corporate cultures and enhancing business performance across various sectors, including technology and healthcare [2][4] - Women-led firms are setting new benchmarks for strategic growth and operational excellence, often outperforming their industry peers [2][4] Case Studies of Women-Led Companies - American Water Works' Cheryl Norton has advanced infrastructure resilience and innovation, earning multiple leadership awards [3] - Apple's Deirdre O'Brien has significantly shaped the company's global retail presence and internal culture, overseeing flagship store expansions and community engagement programs [3] Financial Market Recognition - ESG-focused funds are increasingly prioritizing companies with women in executive roles, recognizing the value of gender-diverse leadership [4] - Women entrepreneurs own 42% of U.S. businesses, employing 9.4 million workers and generating $1.9 trillion in annual revenues [4] Funding Challenges for Women Entrepreneurs - Women-led startups receive only about 2% of venture capital funding in the U.S. and Europe, partly due to biases in the investment community [5] - Women entrepreneurs are less likely to seek financing, with only 25% pursuing loans compared to 33% of male business owners [5] Investment Opportunities in Women-Led Companies - Companies like Newmont Corporation, Ralph Lauren Corporation, Automatic Data Processing, Inc., and Casey's General Stores exemplify strong leadership and strategic vision, making them attractive investment opportunities [6] - Newmont's recent performance includes adjusted earnings per share of $1.43 and revenue of approximately $5.32 billion, with a record $1.7 billion in quarterly free cash flow [9][10] - Ralph Lauren reported a 14% year-over-year revenue increase, with an 8% uptick in North America, indicating growth potential under new leadership [13][14] - Automatic Data Processing achieved 7% revenue growth and 9% adjusted EPS growth in fiscal 2025, supported by a people-centric strategy [15][17] - Casey's reported $15.9 billion in revenues and $546.5 million in net income for fiscal 2025, reflecting strong operational execution [19][20]

Financial Data and Key Metrics Changes - The company reported an 8% revenue growth in Q4 2025 and a 7% revenue growth for the full 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][8] - The retention rate for employer services increased by 10 basis points to 92.1% for the year [8] - International bookings improved in Q4 but did not offset earlier softness in the fiscal year [7][8] 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 satisfaction scores [8][12] - Investments in AI and proprietary tools are aimed at enhancing client experience and operational efficiency [12][13] - The company plans to expand its global payroll capabilities and enhance its offerings in markets like Japan and Saudi Arabia [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 [14][15] - The macroeconomic environment remains uncertain, but the company believes it is well-positioned for solid financial results while continuing to invest in 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 will no longer provide point margin forecasts for its ES and PEO segments but will continue to share actual margin results each quarter [20] - Client funds interest revenue is expected to increase from $1.19 billion in fiscal 2025 to a range of $1.29 billion to $1.31 billion in fiscal 2026 [23] Q&A Session Summary Question: Can you share more thoughts on the HRO softness? - Management noted that the softness in the domestic HRO business was due to complex opportunities with long sales cycles, which saw delayed decisions in Q4 [29][31] Question: What are the expectations for bookings growth? - Management expressed confidence in reaccelerating bookings growth due to product maturity and investments in sales headcount and technology [34][35] Question: How is pricing expected to contribute 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 [44] Question: What are the early results from the workforce software integration? - Management reported strong receptivity and contributions from workforce software, with expectations for significant growth in multinational opportunities [48][49] Question: How does the company view the impact of partnerships on sales channel management? - Management believes partnerships enhance visibility and do not impede forecasting, providing more opportunities for client engagement [109][110]

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]

Summary of ADP's Investor Day Conference Company Overview - **Company**: ADP (Automatic Data Processing) - **Industry**: Human Capital Management (HCM) - **Fiscal Year 2024 Revenue**: Over $19 billion [7] - **Client Base**: 1.1 million clients, including 80% of Fortune 500 companies [7] - **Employee Payroll**: Over 42 million wage earners in more than 140 countries [7] - **Client Funds Movement**: Over $3.1 trillion annually in the U.S. [7] Core Points and Arguments Market Position and Growth - ADP is the world's largest HCM provider, emphasizing scale, dependability, and innovation as key differentiators [6][11] - The total addressable market for HCM exceeds $180 billion globally, with expected mid-single-digit growth [12] - ADP's market share has remained stable despite revenue growth, indicating significant room for expansion [13] Innovation and Technology - ADP is infusing AI into its operations to enhance product offerings and client experiences [3][20] - The company invested nearly $1.3 billion in R&D in fiscal 2024, focusing on AI as the next frontier [20] - ADP Assist, an AI-driven tool, has been recognized for its innovation and is being deployed across various functions [27] Strategic Priorities - **Best-in-Class HCM Technology**: Focus on developing innovative solutions and considering acquisitions to accelerate growth [21] - **Expertise in Outsourcing**: Providing unmatched client service across all client types [22] - **Global Scale**: Leveraging extensive data and partnerships to navigate the changing work environment [23] Client-Centric Approach - ADP emphasizes a client-first philosophy, with a commitment to understanding and addressing client needs [16] - Client satisfaction scores have increased by 40% over the past three years, reflecting strong revenue retention [29] Additional Important Insights Challenges in the HCM Industry - The industry faces challenges such as shifting demographics, rising healthcare costs, and a shrinking talent pool [15] - The regulatory landscape is continuously evolving, necessitating adaptive solutions [14] Product Portfolio and Differentiation - ADP's product offerings span from payroll to HR outsourcing, catering to businesses of all sizes [8][60] - The company is focused on creating a seamless user experience across its platforms, integrating various functionalities [61] Sales and Distribution Strategy - ADP has a large sales force of 8,500, with a significant portion of new business coming from partnerships [79][81] - The company aims to enhance sales productivity through AI tools and targeted marketing strategies [82][86] Future Outlook - ADP is optimistic about the HCM industry's growth potential and its ability to innovate and adapt to market changes [30] - The company plans to continue leveraging its scale and data to enhance product offerings and client experiences [31] Conclusion ADP's Investor Day highlighted the company's strong market position, commitment to innovation, and client-centric approach. With a focus on leveraging AI and expanding its global reach, ADP is well-positioned for future growth in the evolving HCM landscape.