ADP(US:ADP)2025-10-29 13:30Financial 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]