Good morning. My name is Michelle, and I'll be your conference operator. At this time, I would like to welcome everyone to ADP's fourth quarter fiscal 2022 earnings call. I would like to inform you that this conference is being recorded. After the speaker's presentation, we will conduct a question- and- answer session. I will now turn the conference over to Mr. Danyal Hussain, Vice President, Investor Relations. Please go ahead. Thank you, Michelle, and apologies to everyone for the brief delay. Welcome everyone to ADP's fourth quarter fiscal 2022 earnings call and webcast. Participating today are Carlos Rodriguez, our CEO, Maria Black, our President, and Don McGuire, our CFO. Earlier this morning, we released our results for the quarter. Our earnings materials are available on the SEC's website and our Investor Relations website at investors.adp.com, where you will also find the investor presentation that accompanies today's call. During our call, we will reference non-GAAP financial measures, which we believe to be useful to investors and that exclude the impact of certain items. A description of these items, along with the reconciliation of non-GAAP measures to the most comparable GAAP measures, can be found in our earnings release. Today's call will also contain forward-looking statements that refer to future events and involve some risks. We encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ materially from our current expectations. With that, let me turn it over to Carlos. Thank you, Danny, and thank you everyone for joining our call. We finished our fiscal 2022 with a strong fourth quarter that featured 10% revenue growth and 12% organic constant currency revenue growth. We also delivered 170 basis points of Adjusted EBIT margin expansion, which helped drive 25% Adjusted EPS growth. For the full fiscal year of 2022, we ended up with 10% revenue growth, 90 basis points of margin expansion, 16% Adjusted EPS growth, and importantly, we achieved record bookings and near record level retention, reflecting our strong position in the HCM market. Let me cover some highlights from the quarter and year before turning it over to Maria and Don for their perspectives. Starting with Employer Services new business bookings, we had a fantastic Q4, with growth accelerating from the prior quarter, resulting in our largest new business bookings quarter ever. With this strong finish, we were very pleased to have delivered 15% ES bookings growth for the year. Despite several sources of global uncertainty, including the ongoing effects of the pandemic, the conflict in Ukraine, inflation and concerns about global recession, our compelling suite of HCM offerings have continued to resonate throughout the market. In total, we sold over $1.7 billion in ES new business bookings in fiscal 2022, and well over $2 billion when including the PEO, marking the first time we've exceeded $2 billion in bookings. Maria will talk more about the growth opportunities ahead, but clearly, we are incredibly pleased with what is the best performance by our sales force that I've seen in my 20 years with ADP. Moving on, our full year ES retention of 92.1% was nearly flat versus last year's record level of 92.2%, as we once again exceeded our expectations in the fourth quarter. Client retention is driven by several factors, including product and service quality, business mix, and macroeconomic factors. Our expectation at the start of fiscal 2022 called for macroeconomic factors like SMB out- of- business rates to drive some normalization retention towards pre-pandemic levels. We did see some of that play out, but clearly less than anticipated. More importantly, our product and service teams have continued to deliver a best-in-class experience for our clients, and particularly so on our modern and scaled platforms. We achieved record client satisfaction levels for the year, and we once again set new record levels for retention in several of our businesses, including our mid-market. Although you will hear from Don that we're once again making an assumption for a modest amount of macroeconomic-related normalization and retention in fiscal 2023, we are excited to have delivered such a strong performance in fiscal 2022 and look forward to maintaining our retention rates at these historically high levels. Moving on to the employment picture. Our pays per control growth metric was 7% for the quarter and 7% for the year, reflecting a persistently strong demand environment for labor among our clients that has continued to exceed our expectations. This growth has served as a testament to the resilience of our clients. Although we expect pays per control growth will naturally slow in coming quarters, employment conditions today remain strong, with our client data suggesting that near-term demand for labor remains healthy. Finally, our PEO business delivered another great quarter as it wrapped up a strong year. We had average worksite employee growth of 14% in Q4 and 15% for the year, and we were thrilled to have crossed the 700,000 worksite employee mark this quarter. As you know, I joined ADP two decades ago when ADP entered the PEO market through an acquisition. As bullish as I was about the PEO industry back then, I'm not sure I could have anticipated we would be here 20 years later still growing at this combination of pace and scale. The ADP TotalSource team continues to deliver a great platform, great service, and a great benefits experience for our PEO clients, and there is plenty of opportunity for us in the years ahead to serve even more businesses. Taking a step back, fiscal 2022 was unique in a number of ways. We experienced strong demand with over $2 billion in worldwide new business bookings and near record level retention, which together drove us to surpass 990,000 clients at year-end, putting us on track to exceed 1 million clients any day now. At the same time, we've had to manage this growth in volume with prudent headcount growth given tight labor conditions. The way we've been able to do that is through efficiencies of course, but also through plain hard work by our associates. For that, I thank them for their efforts and for coming through for our clients once again. I'll now turn it over to Maria. Thank you, Carlos. With fiscal 2022 behind us, I want to take this opportunity to review where we stand on some key initiatives and provide an update on where we are heading in fiscal 2023. At the core of our client experience is their interaction with our platforms, and one product initiative we have talked about throughout fiscal 2022 is our new unified user experience, which was designed to be more action-oriented and contextual, and to move us from transaction-oriented applications to experience-oriented applications. In other words, more intuitive, better looking, faster, and more consistent across our solutions. To achieve this, we have applied a research-driven approach informed by the data and insights we have gained in working with our nearly 1 million clients. Our focus has been to listen to our clients, learn from them, and utilize their input to design the best experience. In fiscal 2022, we moved hundreds of thousands of clients over to this new user experience, including our clients on RUN, iHCM, and Next Gen HCM, as well as over 20,000 Workforce Now clients. We also moved the ADP mobile app over to the new UX. Feedback so far has been extremely positive, and in fiscal 2023, we plan to expand this rollout further to remaining Workforce Now clients, as well as to additional modules and experiences within our key platforms. Workforce Now in particular has been exciting for us for a few reasons beyond user experience. First is its growing traction in the U.S. enterprise market. Just this quarter, ADP was rated for the first time an overall customer's choice provider in Gartner's annual Voice of the Customer study. This was the highest tier possible and was based on perspectives from end users with 1,000 or more employees, and is a reflection of our continued momentum in selling Workforce Now to the lower end of the U.S. upmarket these past few years. This momentum builds on the already strong presence and traction Workforce Now has had in the U.S. mid-market, in the HRO space, and in Canada, all places where it is highly differentiated. Second is the continued rollout of our next-g en payroll engine to a growing portion of our new Workforce Now clients. Our next-g en payroll engine not only benefits from having a global native and public cloud architecture, but also empowers our platforms like Workforce Now to offer a better product experience and enables us to offer better service. We are incredibly excited for our payroll engine to continue to scale up to larger and more complex Workforce Now clients over the coming quarters. Finally, with talent and engagement an increasingly important aspect of the HCM suite, we continue to focus on our ability to help employers better connect with their employees. This quarter, we will launch a new offering that we're calling Voice of the Employee, a robust employee survey and listening tool which leverages survey instruments from the ADP Research Institute to offer clients a way to seamlessly capture employee sentiment across the employee life cycle. One of the things I love about this solution is that it was born out of the elevated client-employee engagement our return to work workplace solutions have been able to drive, and it reflects the ability of our global product team to quickly identify an opportunity and develop a solution to meet a need in the market. Moving on, we made some exciting enhancements to the Wisely program this quarter. Most notably, we now offer Wisely self-enrollment with full digital wallet capabilities for Apple and Google Pay, thereby allowing employees to instantly receive and start using their Wisely account without support from their employer and without having to wait for a physical card. We also expanded our earned wage access solution by offering a seamless one-app solution for Wisely members through a deeper integration with one of our key partners. The offering enables employees to receive portions of their earned wages prior to pay date, and most importantly, is free for employees who use Wisely. With these enhancements and more on the horizon, we're incredibly excited about the growth prospect for Wisely and look forward to taking it from over 1.5 million active members today to an even larger portion of our U.S. payroll base over the coming years. During fiscal 2022, we also highlighted the strength of our Retirement Services business, a key component of our HCM suite. We offer record-keeping services, provide unbiased independent advisory services, and give our clients, their employees, and financial advisors access to over 10,000 investment options from over 300 investment managers seamlessly integrated with our key platform and with the ADP mobile app. With over 125,000 retirement plan clients leveraging solutions including 401(k), SIMPLE, and SEP plans, we are proud of our scale today, but even more excited about the significant opportunity in the market as we look to expand our market share within and beyond our payroll base of clients. Fiscal 2022 was an incredibly strong year for our Retirement Services business, and we are looking forward to another strong year. Finally, our Next Gen HCM solution is getting closer to a broader rollout as we continue building on the implementation capacity for our pipeline of sold clients, as we shared at last year's Investor Day. While we are excited about all of these product enhancements and others too, product only drives growth when our sales and marketing organization can match it to a buyer and translate it into new business bookings. To that end, we are excited about our sales and marketing momentum and the continued investments we have planned to drive growth this year. First, the product improvements I just mentioned, as well as many others, are all intended to drive higher win rates and expanded breadth of offerings or higher price realization, and we fully expect our sales force to continue capitalizing on these opportunities. Second, we are making continued investments in both digital and traditional marketing into our brand and into our broad and growing partnership network. Third, we are excited to have invested at year-end in sales headcount and are stepping into the new year with hundreds of additional quota carriers. We expect to be able to grow our average sales headcount in the mid-single- digit range over fiscal 2023. Continued execution on our product and our sales and marketing strategy is ultimately designed to drive sustainable growth. For fiscal 2023, we expect to drive ES bookings growth of 6%-9%, bracketing around our medium-term target of 7%-8% from Investor Day. Growth is a priority for us, and we look forward to continuing to update you on our progress. Now over to Don. Thank you, Maria, and good morning, everyone. Our Q4 represented a strong close to the year with 10% revenue growth on a reported basis and 12% growth on an organic constant currency basis, ahead of our expectations despite higher- than- expected FX headwind from a strengthening dollar. Our Adjusted EBIT margin was up 170 basis points, about in line with our expectations as leverage from strong revenue growth overcame higher selling expenses, PEO pass-throughs, and growth investments like the sales headcount growth Maria just mentioned. Our robust revenue and margin performance drove 25% Adjusted EPS growth for the quarter, supported by our ongoing return of cash to our investors via share repurchases. For the full year, revenue landed at 10% growth. We delivered 90 basis points of margin expansion, offsetting a few different sources of incremental expense over the course of the year, and Adjusted EPS grew to $7.01, up about 16%. For our Employer Services segment, revenues in the quarter increased 8% on a reported basis and 9% on an organic constant currency basis. The stronger- than- expected revenue growth was a function of continued outperformance on key metrics like retention and pays per control. Our ES margin increase of 140 basis points was a bit lower than previously planned as a result of growing headcount faster than previously anticipated. For the full year, our ES revenues grew 8% on a reported basis, and our ES margin increased 110 basis points. For our PEO, revenue in the quarter grew 16%, accelerating slightly from Q3. Average worksite employees increased 14% on a year-over-year basis to 704,000 as bookings, retention, and same-store pays all continued to perform well. PEO margin was up 260 basis points in the quarter due in large part to favorable workers' compensation reserve adjustments. For the full year, our PEO revenues and average worksite employees both grew 15% at the high end of our guidance ranges, and our margin expanded 80 basis points. I'll now turn to our outlook for fiscal 2023, beginning with some overall remarks. We have, on the one hand, an inflationary environment that is creating upward pressure on our expense base. At the same time, we recognize there is clearly concern about a potential upcoming global recession or that we perhaps are already in one. On the other hand, our momentum entering fiscal 2023 is strong, and there are no obvious signs of near-term strength. If the market's forecast of higher interest rates holds, we are positioned to benefit from a continued rebound in interest income. Our focus for now will be to continue executing on our strategy. To that end, we have been and will continue to be making investments in headcount where we perhaps didn't get a chance to last year in a tight labor market. We also expect to deliver growth that's at or above our medium-term annual objectives shared at our November 2021 Investor Day. On to the numbers. Beginning with ES segment revenues, we expect growth of 6%-8% driven by the following key assumptions. First, we expect our ES new business bookings growth to be 6%-9%, which Maria covered. For ES retention, we finished the year at 92.1%, a touch below last year's record level, and we believe it's prudent to anticipate some further normalization of SMB out of business levels in fiscal 2023, even while we maintain record retention levels in some of our other business units. Our initial assumption is for a decline of 25 basis points-50 basis points in ES retention for the year. For pays per control, with employment back near pre-pandemic levels, we anticipate a return to a more typical 2%-3% growth range. We normally talk about price as contributing 50 basis points to our ES growth rate. We expect that benefit to be around 100 basis points-150 basis points this year. For client funds interest revenue, we expect higher overnight interest rates and higher repurchase rates on maturing securities should combine with our continued balance growth to drive interest income up nicely. Our short funds portfolio, which is invested in overnight securities, will benefit assuming the Federal Open Market Committee increases the Fed funds rate over the course of this fiscal year. Our client extended and long portfolios will benefit as we reinvest maturing securities at an expected rate of about 3.3%. Between those two drivers, we expect average yields to increase from 1.4% in fiscal 2022 to 2.2% in fiscal 2023. We expect our client funds balances to grow 4%-6%, supported by growth in clients, pays per control, and wages. This is on top of the very robust 19% growth we experienced last year. Putting those together, we expect our client funds interest revenue to increase from $452 million in fiscal 2022 to a range of $720 million-$740 million in fiscal 2023. Meanwhile, the net impact from our client fund strategy will increase by a bit less from $475 million in fiscal 2022 to a range of $675 million-$695 million in fiscal 2023. As a reminder, this is the number that impacts our Adjusted EBIT. The slightly lower growth here is due to the expected increase in short-term borrowing costs, which track the Fed funds rate. This borrowing enables us to ladder our portfolio and invest further out on the yield curve than we otherwise would. As we gradually reinvest our maturing securities, this gap between client funds revenue and the net impact from our client fund strategy should reverse and again become positive. Back to the ES revenue outlook. One more factor to consider is FX headwind. Clearly, with the euro near parity to the dollar, with a weaker pound, and with about 20% of our ES segment revenue being generated outside the U.S., we're factoring in a fair amount of FX headwind for fiscal 2023 of well over 1%. For our ES margin, we expect an increase of 175 basis points-200 basis points. This coming year, our expense base will be increasing more than it does in a typical year, in part due to inflationary pressure on our overall wages and in part due to headcount growth, some of which we did late in fiscal 2022 and some of which we're planning for fiscal 2023. Because our margins are benefiting from strong revenue growth outlook, including growth in client funds interest revenue, we're pleased to be able to guide to this strong ES margin outlook. Moving on to the PEO segment. We expect PEO revenues and PEO revenues excluding zero margin passthrough to grow 10%-12%. The primary driver for our PEO revenue growth is our outlook for average worksite employee growth of 8%-10%. That would represent a bit of a deceleration from last year, but of course, we are contemplating much less contribution from same store pays per control in fiscal 2023 compared to fiscal 2022. This 8%-10% growth compares to a high single-digit target that we outlined at the Investor Day in November. We expect our PEO margin to be down 25 basis points to up 25 basis points in fiscal 2023 compared to a strong margin result in fiscal 2022. Adding it all up, our consolidated revenue outlook is for 7%-9% growth in fiscal 2023, and our Adjusted EBIT margin outlook is for expansion of 100 basis points-125 basis points. We expect our effective tax rate for fiscal 2023 to increase slightly to about 23%, and we expect Adjusted EPS growth of 13%-16% supported by buybacks. I'll make one comment on cadence. Because we expect year-over-year headcount growth to be more significant early in the year, and because the benefit from client funds interest will build as the year progresses, we expect Adjusted EBIT margin to be down about 50 basis points in Q1, but then build steadily over the rest of the year. I'll now turn it back to Michelle for Q&A. As a reminder, to ask a question, please press star one one. In order to keep within our allotted time, please ask one question with a brief follow-up. We'll take our first question. Our first question comes from Bryan Bergin with Cowen. Your line is open. Hi. Good morning. Thank you. Wanted to start with a demand question. Can you just talk about what you've seen across client sizes related to demand environment? I heard the continued optimism in the mid-market. Can you talk a bit more about upmarket, downmarket, international, and then just give us a sense of booking cadence? It sounds like it accelerated through 4Q. Have you seen any change in pace as you've gone through the first couple weeks here in July? Yeah, absolutely, Bryan. I'm happy to comment on both pieces. With respect to the overall strength that we saw in new business bookings, both for the full year fiscal, very proud of the remarkable results both for full year as well as the fourth quarter. The strength was really broad-based. There was solid performance across each one of our markets. I think a few call-outs that I would give. You highlighted the mid-market. The mid-market does continue to perform. We saw strength in our HRO offerings even beyond the PEO. The HRO was a strength for us. I know I mentioned it in the prepared remarks, but I'd be remiss if I didn't mention Retirement Services again. We also saw strong results in Canada, which was fantastic to see, as Canada definitely was impacted a bit more with the longer lockdowns from a pandemic perspective. You know, I continue to highlight quarter after quarter the strength that we're seeing in our downmarket and our RUN offer. Felt very pleased with the RUN. Last but not least, on the international front, our international business had a tremendous year. Very confident in the results, very proud of the work of the sales organization. As we think about the demand environment right now, you asked about how did it progress throughout the quarter, and how do we feel sitting here a few weeks into July. I suppose I can't necessarily comment on in quarter, but what I can comment on is we did see the results accelerate throughout the quarter. While there was some macroeconomic things happening in the world, our demand actually accelerated as we closed out the quarter. We saw significant strength, specifically in the month of June. In fact, June was a record month for us ever, as was the quarter and as was the year, as mentioned. Feel good about the demand environment and the acceleration we saw throughout the quarter. Thank you for the question. Okay. Then just a follow-up on margin. If things do slow down, can you just talk about the levers you have to insulate EBIT margins? It sounds like you have baked in a healthy amount of resource additions. Can you talk about where you're making those across the organization and then where you might have some discretion to throttle investments should things slow down? Yeah, no, it's a very good question. Thank you for the question. I think, as I mentioned in the remarks and the materials that we distributed, you know, we were able to get our sales organization a little bit more than fully staffed going into the fourth quarter, and that makes us feel really good about the opportunity to step off into 2023 with a fully staffed team, which is something that, as we mentioned in prior quarters, was a little bit more difficult to do, during 2022. I think we feel really good about, where we are with staffing, particularly in the sales side. I would also say that just following the business model that we have, if we look at the record sales we had, particularly late in the fourth quarter, we need to make sure that we have fully staffed implementation resources to get those bookings generating revenue as quickly as we can. We'll be focused on that. Of course, just following through to the year-end process, need to make sure we can service all those additional clients as that time comes upon us in late December, January, February. We can do all those things. On the other hand, as I referenced and as we're seeing in the media and elsewhere, everywhere, is talk about recession potentially coming, are we in one, et cetera. We still do have flexibility, of course, and we can certainly temper the addition of headcounts and temper our costs more generally, should we think that that's necessary if it's something that's as a result of changes in the macro environment. I think we still have lots of levers, and I think we've shown historically that we are able to navigate those waters pretty adeptly, should that kind of a situation arise. Okay. Thank you. Our next question comes from Kevin McVeigh with Credit Suisse. Your line is open. Great. Thanks so much and congratulations on the results. I don't know if this would be for Carlos or whomever, you know, it feels like the retention step up is clearly a little bit more structural, just given the recent trends in 2022 into 2023. Is that a function of kind of the next-gen payroll engine, or just where are you seeing that success? 'Cause it's clearly been a super outcome post-COVID. You know, I think part of our focus was whether or not that starts to normalize or not, but it feels like it's at a structurally higher level. Yeah, there probably are some structural factors just because we can see obviously where the retention is stronger. As I think as we mentioned, some of the macroeconomic kind of readjustment that we expected in the downmarket, we saw some of it, just not as much as we expected. You know, if talk of recession is correct and kind of business and bankruptcies and so forth, probably will kind of, you know, come back to some kind of normal level, which is why, as Don mentioned in his remarks, we once again plan for a slight decrease in retention in 2023. That's really mainly in the down market in terms of the mix that it represents, the total it represents of the mix, because everywhere else, we really see some, you know, reasonable, what appear to be structural improvements. I wouldn't say that it's really next-gen p ayroll, because that's. You're really gonna see that, the impact of that on sales and market share and so forth in the next, you know, couple of years because, you know, the majority of our clients are still, you know, not enjoying, I think the benefits, even though over time they will, of next-gen p ayroll. That's really not. Just wanna make sure I was clear on that that is not what's causing the retention improvements. One thing I would point out is, and I mean, I know this is a broken record, but we made this big transition from multiple platforms onto one in the down market 10 years ago, or a little bit more than that. Then more recently, we went through a multiyear effort, which was painful to do that in the mid-market. We have other things going on like new UX and next- gen payroll, but those migrations and those consolidations in and of themselves have created some real structural tailwinds, I think, in terms of service, NPS, and ultimately on the retention standpoint. It's just a much more, an easier environment for our own folks to operate in. It's easier for us to invest in, you know, less platforms versus more platforms. It's just a much better, environment. As you know, we still have work to do in the upmarket, so there's still opportunity there. There's still some opportunity in Employer Services International as well. You know, we think these structural tailwinds that first helped us in the down market despite the macro, right? Because the macro is really a cyclical issue. Overall, excluding cycles, our retention in the down market is up, I said this before, hundreds of basis points higher than it was 10 years-15 years ago. Now the mid-market is at record levels, and the NPS scores continue to be at record levels. I don't think we anticipate that going back down. If anything, we see more opportunity there in the mid-market. Our plan would be to continue to do that throughout other parts of ADP, to add more structural tailwinds to our retention. Super helpful. Maybe this is for Don. You know, it looks like the margin guidance, like 125 basis points up from 90 basis points. You know, given the leverage and float and pricing, seems like really nice outcome on the pricing side. Is the offset kind of the cost inflation? You know, where's the cost inflation in the model in 2023 relative to where it's been historically? Yes, I think it's a good observation. I think there's a few things driving. Of course, you know, we talked about more price than we historically have been able to to take. Of course we do have the tailwinds, if you will, from the client fund interest. There's certainly, you know, we need to remember that the reason we're getting the higher interest rates is that we're in a higher inflationary environment, so, you know, that's driving the overall cost base and wages. The other aspect is that we have called out, and we typically haven't called out FX in the past, but, you know, we've certainly seen, I think, what we would refer to as pretty dramatic changes in FX headwinds in the fourth quarter compared to what we've seen in typical years. We thought that was important to call out. With 20% of our ES revenue being outside of the U.S. and denominated in Canadian dollars, euros, sterling, and Australian dollars for that matter, I think all the currencies are essentially down. You know, when you put all that stuff together, it certainly results in a little bit less of the top line dropping through to margin. That's in our focus. The other thing I'd say is that, you know, we do have a little bit of conservatism as we look to the back half. We have to take into account all the things we're reading about and seeing, and making sure that we're thinking hard about how to prepare should something happen in the back half of the year. I think those are the primary drivers to answer your question. If I can add one thing because, you know, you mentioned also price, and it's a big topic I know for a lot of companies and a lot of questions about it. I think it's important for you to understand strategically, right, at a very high level, regardless of how it flows into the numbers and so forth. Our view on price, we said it for a couple of quarters now, is to kinda keep up with inflation. I wanna make sure it's very clear that we're not achieving our margin improvements or doing anything that would be, you know, unusual. 'Cause I think, you know, there might be some companies that are trying to make up revenue gaps or margin gaps with price because there's, quote unquote, "cover" out there to do that. I think when you do that, and I think Don has mentioned this before, that we operate in a competitive environment, and we look at what competitors are doing, we look at what's happening in the world, and we're long-term thinkers here. You should assume that our price increases were in line with what's happening with inflationary costs and not anything more than that and not, you know, materially less than that. Been very consistent on that. Thank you. Our next question comes from Bryan Keane with Deutsche Bank. Your line is open. Hi, guys. Good morning and congrats on the numbers. I guess my question is looking at the mid-term outlook for Employer Services back in November. I think we talked about a 6% growth rate, and you guys are gonna be trending above that, 6%-8%. With the strength in bookings, you know, growing over 15%, I just wonder if maybe the mid-term outlook was a little low compared to what structurally is going on in the business model that potentially the growth rate's faster than the 6% outlook that you gave over on mid-term. Well, I hope so. I'll let Don comment in a moment, but again, just because I've been doing this for a long time, it's just I can't get it out of my mind. The way the recurring revenue model kind of works is we love the 15%, and what you just described really comes through in the numbers, that the difference between our bookings and our losses, our strong retention and our strong bookings, that the net of that contributed more to Employer Services revenue than I've ever seen in my tenure as CEO. That is what led to the acceleration that you just described in ES revenue. That net new business growth is really the way to grow the top line here. There's other factors in there like pays per control, client funds interest, but that's the core of the business, and we're really happy with that. The challenge, of course, is that we're not forecasting 15% bookings growth again next year. I would just caution you. Now, the good news is that increase in net new business is in our run rate now, and so we don't have to grow by as much the next year in terms of that net new business to further accelerate our revenue growth. I would just caution you in terms of if you do that kind of math, it's hard. It's hard to accelerate the revenue growth rate of this company. We just did it, and it takes a combination of better retention and higher starts, higher sales, and new business starting in the upcoming year. That 15% really makes a huge difference. You can see from our guidance that that is not our expectation next year in terms of bookings. You'll experience, hopefully, additional acceleration of revenue growth in ES, but not by as much as you had from 2022 to 2023. Notwithstanding the fact that remember, there's other things in there, moving parts like pays per control, client funds interest, and so forth, some of which will give us tailwinds, some of which may be headwinds. Yeah. Carlos covered off all the main drivers there, of course. I think just once again, though, to go back and mention the FX headwinds we're experiencing. I think when you add that into the mix, I think probably get to the place where we're landing and what we're anticipating, what we're guiding to for 2023. Got it. Then let me ask you another popular question, that everybody's getting is just how the model might be different, now, in versus previous recessions, just thinking about the resilience potential in the ADP model. I mean, Don, again, has, I think, a couple of points he could probably make, but I would say, as usual, there's probably, you know, some puts and takes. I mean, obviously I wouldn't be a CEO if I didn't say I think our model is better now than it was before, even though, you know, I've been through a couple of cycles here myself, so it's not that I'm criticizing anything other than myself if I'm saying that it's better than it was before. We just talked about the structural retention level. Even if we have a little bit of a drag in the downm arket, and by the way, the down market is a larger percent of our overall business than it was, you know, 10 years, 20 years ago. Still, it's structurally higher by several hundred basis points in and of itself. Even if it goes down a little bit and it's a little bit bigger part of our mix, I think our retention is just gonna hold up better, I would predict, in terms of, you know, depending obviously on the severity of the recession. That's a huge help because, you know, the bigger, obviously, the portion of the revenue that you retain each year, the less dependency you have on bookings in a recession, which tends to be the most sensitive. Like historically, when you look at GDP growth and all of our metrics besides pays per control, bookings, you know, is something that can be challenging in a severe recession, which to reiterate, we don't see. We read the same things everyone else reads, and we know that Fed tightening will lead to slower economic growth, but we really can't see it in our numbers. Like, our pays per control number in the fourth quarter was as strong as it was the whole year. You look at the monthly initial unemployment claims, you look at the room that still is there in labor force participation, you look at the number of job openings in comparison, you know, to where it was historically, and I just don't see it. There clearly are pockets that are happening, I think as part of, you know, readjustments because of COVID that are kind of confusing the landscape. There's clearly some kind of slowdown underway because it just happens when you have Fed tightening. It's not happening in the labor markets, at least not yet. Great. Thanks for the color. Our next question comes from Tien-Tsin Huang with JP Morgan. Your line is open. Thank you so much. Really strong sales. I was just trying to think about attribution of the strength and how you would rank the factors there between better product set that's more relevant or better sales productivity, expanded sales force, the cycle or secular things around outsourcing taking over versus software. Any interesting observations on your side, Carlos or Maria? Yeah. Thank you. Definitely tremendous strength that we saw. I think I called out a few areas. Definitely the strength that we're seeing in our upmarket continues to excite us. For the future, I think you asked about the attribution of strength, and I think it really was broad-based across the business. I think from an execution standpoint, it really comes down to the execution of our sales organization and how they've been able to go to market candidly, really over the last two years, as it relates to navigating this evolving environment, but more specifically, providing value to our clients in a more meaningful way. We really have seen that evolve over this past year as we've been really across each one of the segments helping our clients navigate, as I mentioned, the evolving environment, inclusive of all the legislative changes. I think there's the value we're bringing, I think the strong execution in general across the sales organization and leveraging the entire ecosystem to bring that strength, right? Which is everything from our marketing investments, our brand investments. I spoke earlier to the headcount investments. All of this together, I think has lent itself to a tremendous execution and strength, as it relates to the overall performance. The only thing I would add to that is, you know, Maria and I have been talking for the last 18 months about how, you know, one of the most important things for our sales organization was really to get productivity at the quota carrier level back to, and then exceed from a trend line standpoint, where it was, right? So when you think about whether GDP trend or price trends or anything like that, you gotta get back to where you were, and then you gotta get back on that same trend line. Otherwise, you leave a lot of money on the table, right? Whether it's the economy or ADP's revenue and bookings growth. You know, if from an attribution standpoint, again, this. I think it's important for you to understand this color. Like, we had unbelievable productivity headcount growth, and that's why I said that this is the best performance I've ever seen by our sales force. Clearly, some of it is because we were in recovery mode, but sales forces naturally, generally have. Not that I know because I was never a salesperson, but I guess I've been around long enough to be hopefully an honorary member. But when you tell a sales force, "Okay, you gotta grow. We're gonna grow our headcount by a few percentage points, and then we gotta grow our productivity 2 percentage points-3 percentage points," that's the typical year, right? That's hard in a typical year. When you tell a sales force, "You have to grow your productivity close to 20%," even though it's because it went down 20%, that's freaking hard to do. Very hard to do psychologically. Anybody who's in sales, I think, understands that. These percentage growth numbers that we have and the productivity growth numbers that we have honestly are incredibly, just gratifying because I really thought this was gonna be hard. I was, of course, keeping my poker face on and just telling everybody, "'Cause we have to do it, we have to do it," and we did it. Most of this growth came from productivity and not from headcount because as we've talked about, we actually had some challenges up until the fourth quarter in terms of achieving our headcount objectives. Not by lack of trying, by the way, not because we were trying to save money, because we were doing everything we could, and it was just a difficult labor market. The good news is, in the fourth quarter, as Maria has mentioned, we really did quite well, and we're in a great position headcount-wise now. The 2022 story is all about productivity, and that is an unbelievable accomplishment for our sales force, and it's across the Board. It is. Just to provide some actual numbers to that. We reported $1.7 billion in Employer Services bookings. That is a record as mentioned. It does exceed the other record, which was pre-pandemic in fiscal 2019 at $1.6 billion. That really, in the end, speaks to some of this additional productivity that's now normalized, if you will. Carlos is spot on. We did initially tell the sales force, "We will add headcount, and you have to grow faster." In the end, we didn't add the headcount, and they grew that much faster. Which is why I am very bullish and excited as we step into the fiscal year with more sellers, more active quota carriers to really couple this strength that we've had in productivity with now finally more sellers to go get after it. Well, that's great. Must be gratifying for sure. I'll stop there with the questions. Thank you. Our next question comes from Dan Dolev with Mizuho. Your line is open. Hey, guys. Really nice results. I'm very happy to see the strength in the enterprise that you called out, I think, at least twice. Can you maybe tell us like, I know you don't parse out the growth between, you know, in the year, but, you know, if you did, I would love to hear it in terms of the different subverticals. But on a bigger picture, can you tell us, like, what types of firms are you now regaining share in some of those like, lower end of the large enterprise? Sort of what types of firms it's coming from and how these conversations are different now versus, say, a few years ago? Thank you. Yeah. I think you mentioned. We were having a little trouble catching the entire question, so maybe I'll maybe try to give a little bit of color. Maybe you can repeat again or ask the question again. But I think you said something about the lower end of the enterprise space and kind of where the strength in sales was coming from, et cetera. I think just to repeat what Maria said, I think it is across the Board. But that is one, t he reason I'm picking up on it, like, this is it. It's a really good news story for us. Our Workforce Now platform, you know, we made this strategic decision two, three years ago. It made sense because it fits well on the lower end of the enterprise space, and it's really been a home run for us there. Against certain competitors, it's really very, very effective, and we're selling a lot of units in that kinda lower end of the upmarket space for us. As we continue with the rollout of Next Gen HCM, which is really intended to further upmarket and eventually for global. In the meantime, we're really having a lot of success in the lower end of the upmarket with our Workforce Now platform. If you wanna maybe repeat your question one more time, we'll give it another try. Yeah, no, I think that sort of answered the question. I wanted to know, and I apologize, you couldn't hear me before. I wanted to know, like, how the conversations are, you know, like, how the conversations are different today when you're with those clients versus, say, three years ago, 'cause I'm sure there's been a tremendous change given the results. It's a good observation. There has been tremendous change. I think Carlos hit the nail on the head. In the lower end of the upmarket, it's one of the reasons we cited the award and recognition we recently received from Gartner because the conversation around our offering of Workforce Now in that lower end is definitely resonating for several reasons. One is it's a best-in-class product, as Gartner even acknowledges, and the users that were surveyed for that award. But moreover, it's also the speed by which we can execute and really take these enterprise customers and turn them into active clients. It's meeting a lot of different needs from a product perspective, from a timeline perspective. I think in the upper end of the market, you know, certainly the conversation over the last three years has evolved. A big piece of that conversation is the global discussion and our ability to talk to much larger U.S. enterprise customers and other enterprise customers across the globe around our multi-country offerings and how they are thinking about their strategic direction on HCM on the global front. I think, you know, the conversation continues to evolve on both ends of the spectrum of the upmarket, and we're certainly in a position to have very formidable conversations and transformation discussions. I think, you know, the conversation continues to evolve on both ends of the spectrum of the upmarket, and we're certainly in a position to have very formidable conversations and transformation discussions with our clients in that space. Great. Thank you, and excellent results as always. Thank you. Our next question comes from Mark Marcon with Baird. Your line is open. Hey, good morning, Carlos, Maria, and Don. Great to see all of the years of hard work really pay off here this year. Congratulations on the results. Wondering, with regards to the new bookings, I mean, $2 billion in total, $1.7 billion in ES, how much of that is split between new logos relative to upsells? How would you characterize your expectations on that front, you know, for the coming year? Thanks, Mark, and thank you for acknowledging the strong performance in bookings. There's really no news to report here. I think we've cited it for years really to split between new logos and client business. It really remains at that 50%, kind of 50/50 going forward, and that's really what we expect heading into fiscal 2023. Great. With regards to the forecast, Don, you gave us a bit of a cadence, you know, a sense for margins. How would you characterize it for revenue? Specifically, what I'm interested in is you did mention, you know, the interest on client funds is gonna be back-end loaded. But at the same time, we've got pays per control being modeled up 2%-3%, you know, even though people are starting to call for, you know, a potential recession and potentially a decline in employment. I'm wondering, how are you thinking about that part of the model, and are there any things that you would call out with regards to just revenue trends as we build out the models for the coming year? Yeah. Mark, I just going back to the first part of your question, you mentioned the deceleration in margin that I mentioned. Of course, we talked about the increase in sales headcount specifically because it is meaningful quarter one of this year to quarter one of 2022. We do think that's gonna have a bit of a drag. There are, of course, some other factors, general inflation, general et cetera, but. We've taken price. Carlos described it and took you through our price thinking, which is pretty consistent to what we've discussed over the last number of quarters. We do expect to see a little bit of deterioration in margin percentage through the first quarter. I think that's understood. As interest rates go higher and as we have the opportunity, we're gonna see higher client fund interest toward the last three quarters of the year. Overall, you know, we're kinda looking at pretty even top line revenue quarter- by- quarter through the balance of the year. No big changes at all in terms of growth rates quarter- by- quarter through 2023 compared to 2022. You know, if you're modeling growth, you can be pretty comfortable to model consistent growth across the top lines quarter- by- quarter. That doesn't mean that you should model or that we modeled everything consistently throughout the quarters. 'Cause I do have to make a comment on your point that it sounded like you thought we were being aggressive, which would not be typical of us to model 2%-3% pays per control when everyone's thinking there's gonna be a recession. I would tell you that the fourth quarter, you saw what our pays per control growth was, and I can tell you that we have visibility into July, and it's hard to believe that for the whole year it would be less than 2%-3%. You can assume that if, for example, the first couple of months, at least, since we have some visibility of that already, are in the 6%-7% range, 'cause that's where we're kinda exiting, then you can do the math, right? You're probably. This is just to give you a color in terms of what some of our assumptions are in our operating plan, 'cause I think Don mentioned maybe a bit of conservatism on the back half. We probably have reasonable continuation of trends because that's the way trends go on pays per control in the first half, and then you would probably expect the second half of the year to have, you know, little to no pays per control growth or somewhere in that, in that neighborhood. It's also hard for us to model a big negative growth in pays per control just because of all the factors we mentioned in the labor market. That doesn't mean that won't happen in 2024 or late in 2023 or at some point in history, but it doesn't seem likely over the course of our fiscal year. We're clearly expecting some slowdown in the second half. Carlos, you read my mind in terms of just the way I was thinking about the characterization and then thinking like, "Okay, this is probably what you're thinking in terms of the way it's gonna unfold." That's directly in line. Hey, can I just ask one more question? Just on Workforce Now, would you expect next-gen p ayroll? What's the expectation in terms of the number of clients that would have next-gen p ayroll within the Workforce Now contingent by the end of the year? In terms of new business bookings? 'Cause obviously, we just wanna make sure we answer the question correctly. It would only affect. Obviously, we're not even talking about migrations yet, even though at some point that will happen. That's what exactly. Are we gonna do any migrations over the course of this year? No. Okay, great. Thank you, and congrats again. Thank you. Our next question comes from Ramsey El-Assal with Barclays. Your line is open. Hi there. Thanks for taking my question today. I wanted to ask if you are seeing or expect to see any divergence in the kind of hiring or macro hiring environment macro impact between the U.S. and Europe. I guess the broader question is, does your guidance assume a tougher environment in Europe relative to the U.S. or something similar? Don probably has the details, but I can give you some high level color that pays per control growth. I know you're not asking about historical, but as we gather the data, I just wanna tell you that pays per control growth is very strong in Employer Services International as well. Part of that, of course, is because of what we're coming off of, right? Which were these lockdowns and these high unemployment rates kind of across the globe. I would say international has performed similarly, but it is safe to assume that we see probably, you know, challenges given what's happening in the macro environment with energy costs and the war and so forth in our international business. I don't know, Don, if you have No, Carlos, I think those points are valid. Certainly the. You know, what happens with energy on the continent in particular is gonna have some impact on the results. Beyond that, this is a little bit of the conundrum that we talked about earlier about where we are versus what people are talking about. As much as everyone's predicting a recession, et cetera, unemployment rates in the Eurozone are at 6.1%, which is an all-time low. Unemployment rates in Canada are as low as they were, even before I started working in 1974. Unemployment rates, Australia, 50-year low. We've got this situation where there seems to be a lot of employment, yet all this risk and worry about recession. Although, you know, come back to your question, are we a little bit more concerned about what could happen in EMEA in particular as a result of what's going on with the Ukraine crisis, et cetera? A little bit more concerned, yes. Did we think about that when we put our plans together? To some extent, yes. Don, you should point out that you started working in 1974 when you were 12 years old. Well, I'd say I said before I started working there. That's very helpful. A follow-up question, just update us on M&A capital allocation. Are you shifting your approach at all? Are you seeing incremental opportunity out there given the turmoil, valuations in the marketplace, potential acquisition targets, or is it just sort of steady as she goes in terms of no change? Yeah. I think for now it's pretty much steady as she goes. I mean, certainly you can see the valuations have dropped across the Board, and things that were really expensive in January are still just expensive. Things are still expensive. They've come down off of historic highs, so there's not exactly what I would call a bunch of bargains out there. There's also not a lot of people who are coming forward looking to sell their properties because prices are down. So I would say it's steady as she goes, and we'll continue to do what we've done and look for things that work for us strategically, look for adjacencies that make sense should they arise. But really, steady as she goes, really no change to our overall policy. Great. Thanks so much. Our next question comes from David Togut with Evercore ISI. Your line is open. Thank you. Good morning. Don, you called out a 260 basis point margin increase in PEO year-over-year, in part driven by a favorable workers' compensation reserve adjustment. How much was that adjustment, and how should we think about this item for fiscal 2023? Yeah. I guess the short answer is we get adjustments on a regular basis, and they've been favorable for us. We look at the workers' compensation experience over a number of years, and we get external third parties to do an assessment as to whether or not it's appropriate to book any of those adjustments. This year we've been fortunate. We don't typically forecast those numbers in any great detail simply because we do have to rely on the experience rating that the insurance companies bring to us. Without trying to disclose exactly what the numbers were, I would say they were favorable. You know, we'll have to wait as the months go by to see what's gonna happen in 2023. I mean, we're disclosing it in our 10-K, so we can. It was $40 million for the quarter, David, in the 10-K, and that compares to last year's about $5 million. Most of that was as we headed into the quarter in the forecast and guidance. It wasn't a big departure from what we had expected. I think what Don was trying to say, though, about 2023 is that it's clearly a headwind, right? As you kind of do your modeling and you think about margins, it's a headwind, not because there's an operating performance issue or whatnot, it's just because we had a big, you know, benefit in 2022, and we're not planning for a big benefit in 2023. Although we're always hopeful that we will get some benefit. That's historically been our experience, is that we do get some quote-unquote reserve releases. Probably not as big in 2023 as in 2022. It might not be as big a headwind as it appears now just because of the numbers. Appreciate that. Just as a quick follow-up, Don, in the guidance you've given for extended investment strategy, client fund interest to be up about $200 million-$220 million year-over-year in fiscal 2023, how should we think about the incremental margin on that additional revenue? Are you applying additional expenses against it, or should we think about it flowing through, you know, at some set margin? Yeah. I think there's other things going on, of course. You know, we mentioned the inflationary environment, which is why we have the higher interest rates. We mentioned the FX headwinds we have. All things in, we're still expecting and we're still very, you know, very happy and very proud of the operating margin improvements we're getting. We think we still have good opportunity for margin improvements, ex client fund interest, going forward. I'd say that right now our expectations are for a pretty balanced incremental margin from both of those factors. We are, of course, as we mentioned, you know, we are spending some more money. We're investing in sales headcount. We have higher costs as a result of inflation, some of which is offset by price. You know, we are letting a substantial amount fall to the bottom line. We are obviously in this for the long term, so we'll take the opportunity to invest in the business and make sure that we have the right balance between margin growth and preparing ourselves for continued success in the future years. I think that stream of revenue, we would generally see it as 100% margin, just to be completely clear. If that somehow leads to the question of do we apply expenses against those revenues? The answer is, I think it felt like a trick question because you've known us for a long time, and we've been clear for a long time. Like, on the way down, we always say it's 100%. Hurts us, right, because there's really no expenses that go away when that interest income goes away. Likewise, we would wanna be transparent and acknowledge that on the way up, it's 100% margin. I wasn't sure if it was a trick question or it sounds like it was. No, I was just trying to understand how much of that incremental revenue would flow through to the bottom line since Don had talked a lot about investment initiatives and you had underscored, growth in sales force headcount. Thank you so much. Very responsive. I appreciate it. Hey, David, I'll just add one clarification. You said incremental revenue. We did make the point in the prepared remarks that it's the net impact of the portfolio that would be 100% incremental margin. So there is a cost offset, and it's the short-term borrowing costs associated with the portfolio strategy. Much appreciated. Thank you. We have time for one more question, and that question comes from Samad Samana with Jefferies. Your line is open. Hi. Great. Thanks for squeezing me in. I just wanted to maybe circle back on the price increases. I know that inflation is a big driver of the maybe more than normal amount. Can you just maybe help us understand, would that put the company back on track if I think about the pause in increases in maybe fiscal 2021 during COVID? Would it be kind of linear from pre-COVID levels if we just thought about the price increases compounding, or would it put you ahead of that because of inflation? Carlos, can you just remind us, do those price increases tend to stick if inflation starts to roll over? Yeah, I think again, strategically, and I'll maybe Danny and Don can give more specifics on the numbers, but I wouldn't characterize what we did as being out of step with the market or there was a pause for a few months. Our price increases, our intention was that our price increases during COVID were reflective of the inflation environment at that time as well. We did pause for a few months because timing wise, we just thought, and particularly in 2020, that it was inappropriate to be giving clients price increases, you know, one or two months into a global pandemic. We eventually did some price increases, but we did very modest price increases because inflation was near zero for some period of time. I don't know if that answers. I'm trying to be responsive, but I think in general, we are always trying to remain kind of in step with the market and still be competitive because our number one goal is to gain market share. What the trap that is easy to fall into when you're a large company like ours is you can take price and take it higher than maybe you should be. You can usually do that multiple times, and you can do that for a while, it just doesn't work forever because of just the law of economics and large numbers, and it's because of competition. Our intention, it's important for you to understand that strategically, is we want to grow and we want to gain market share. To do that, we have to be competitive in terms of our products, our service, and also our price. That's so it's important when we do price, pricing actions, either on new business or on our existing book of business, that we remain in line with what's happening in the general market and with our competitors. Great. I appreciate that and good to see the strong results. Thank you. This concludes our question- and- answer portion for today. I am pleased to hand the program over to Carlos Rodriguez for closing remarks. Thank you. I think we're very happy with the quarter, as we said. I'm not sure what else I could say other than what I said about our sales performance, which I think is definitely the best I've seen in a long time. We've talked a lot about our retention and some of the structural issues that are happening there. It's hard to be more pleased about that. But I do want to reiterate again how happy we are with our organization and our team. You know, first we start with COVID and all the uncertainty that that created, everybody having to work from home. We have all these regulatory changes, some of them very positive, like the PPP loans, the ERTC, that happened across the world. While we're then in the middle of that pandemic, we're telling our associates that they got to work weekends and nights because we got to keep up with all these regulatory changes, and we got to help our clients. Then as soon as that starts to abate a little bit, we get this great reshuffle, and we start having challenges, which we overcame in terms of being able to add the staffing and so forth. We ask our associates to once again, you know, work harder, you know, put in the extra effort. Every time we've asked, they've come through for us. They've come through, more importantly, for our clients. We really do provide critical services across the world to our clients. It was very, very important for our organization to come through for our clients. I just wanna, again, thank our associates for making it through so many ups and downs where we just keep asking for a little bit more and they keep delivering. I wanna thank them once again. Once again, your attention and your interest and the great questions. We look forward to talking again in the next quarter. Thank you. This concludes the program. You may now disconnect. Everyone, have a great day.