All right. Good afternoon, everybody. Thanks for joining us here for ADP. As a reminder, I'm James Faucette, senior research analyst here at Morgan Stanley. Very pleased to have Maria Black, CEO of ADP, and thanks for joining us. Thank you. And Don McGuire, also of the CFO. You know, I guess no conversation around ADP would be complete, or I don't even know how you start a conversation with ADP without starting to talk about, like, the what you're seeing from a macro environment perspective, labor market, et cetera. Kind of these key topics are the first thing that we always get asked about, and I'm sure you do as well. Yeah, absolutely. So first and foremost, good afternoon, and thank you so much for having us today. We're thrilled to be here. So I'm happy to comment a bit on what we're seeing with respect to the macro and demand environment, as we believe it's still incredibly optimistic. And you're right, ADP, and in addition to being known for our incredible stock performance, we are also known for the National Employment Report and a lot of the work that we do through our ADP Research Institute. And so between the lens that we have there, as well as the lens that we have across our business, I'm happy to make some comments around the macro. So we are still seeing a very strong employment market. There are some pockets, and we can get to those in a minute, where we see a little bit of softening. But generally speaking, we are seeing labor demand at all-time highs. There are still more jobs than there are workers. So while the number of jobs has fallen a bit, there's still more jobs than there were pre-pandemic. The other is, from an unemployment perspective, the unemployment rate in the United States right now is tracking to record low levels that we haven't seen since the late 1960s. And so that leads and lends itself to a tremendous amount of strength in the labor environment. That said, we are seeing some pockets of deceleration. Wages have decelerated a bit, albeit still growing, but not growing at the, the rate that we, we saw coming out of the pandemic and coming out of the Great Resignation. I think we were talking a little bit backstage about what now everyone is referring to, or at least we are referring to, as the, the Great Stay. So it was the Great Resignation that happened and the great movement of labor across, and now it appears that some clients and, and some, companies are specifically hanging on to their associates, and attrition rates certainly have fallen. And as such, we are seeing specific industries have some pressure. We've seen that in our business results as well, a little bit of pressure in places like professional services, technology. But overall, I would suggest that the overall demand for the labor and the market that we serve, the human capital management space, remains incredibly strong. And as such, the demand environment that we find ourselves in and continue to be the recipients of is incredibly favorable for us. I don't know what else you would say from an index perspective. No, I think you covered it, Maria. So thank you once again also for the invitation. Thank you, James, for the invite here today. I think Maria covered it well. I think we're. You know, we've been fortunate across most major economies to see incredibly solid employment levels. And I don't really think there's really much to add there, too. I think you covered it very well. So I want to ask just a quick follow-up question. Like, one of the things that, you know, has been surprising is the labor retention. I know internally at Morgan Stanley, we've kind of had this narrative that there's been labor hoarding. At least some companies had been willing to even sacrifice, maybe surprisingly, some of their own profitability in order to retain employees so that they'd be pre-prepared to match demand, that they were unable to do so. But at the same time, we saw at least some evidence it looked like of sacrificing benefits in order to retain employees and keep people on payroll, et cetera. You know, is that an accurate assessment of at least what was happening in part, and what have we seen as an evolution of your customers' intentions and engagement with their employees? Sure. So there were articles written about this. Mm. Concept of labor hoarding, really, in the post the Great Resignation. And I think as all of that labor movement happened, and you had so much of the workforce moving, employers, I think many of us, ourselves included, it took an inordinate amount of effort, energy, and perhaps profitability. Right. To get the labor into, each of our companies. And as such, taking the risk of letting go of some of that labor is, is one that I think many companies are feeling, less desirable. That said, though, there was a lot of over-indexing that happened. So I think some of the pressure felt in tech and professional services is because demand was so. Mm. High coming out of the pandemic, there was a bit of over-hiring. So I think you're just seeing the normalization there. Got it. In those industries. I think perhaps the rest of the industries are reluctant to let any of this labor released back into the environment because it took so much to bring it on board. To me, that's somewhat mutually exclusive to this other comment and question that you made around: What does it take to be an employer in today's environment? Is there this adage of whether or not companies want to still offer best-in-class services and offerings to their employees to attract talent? My answer to you would be, you know, while you may see some degradation perhaps here or there in participation rate, I think the nuanced difference is that in order to compete for talent. So there's still, even though there's a lack of attrition and this Great Stay that's happening, there is still ultimately a war for talent, for lack of a better word. And the competitiveness to be an employer in today's environment, you have to have a lot of these offerings, inclusive of medical plans and health benefits, and the things that many of our offerings satisfy. As you know, our professional employer organization, the more comprehensive of our offerings, really enables a small to medium-sized company to act and operate as a large company by virtue of being able to offer Fortune 500 caliber benefits for this exact reason, which is, in order to compete with unemployment at 3.5%-3.6% in a given month, you still need to have these offerings inside your overall value proposition to. Want people to, or to have people want to come work for you. Got it. So maybe this is, like, I think, sets the stage. We spent, you know, a few minutes here talking about the macro backdrop, and hopefully that gives context. So let's turn to ADP specifically. Like, ADP, as a business and as a stock, has been an incredible compounder for a very long period of time. I remember, you know, not to tell too many stories, but there was a few years ago, another analyst approached me and said: "Hey, you know, can we write an article about disruption? Like, you know, 20 years ago, ADP was one of the top 10 market cap companies in the world." And I was like: I don't know if we want to include ADP. It's still up massively, right? Having outperformed the market. Maybe not be Number 5 or whatever it was in the reference period they were looking at, but it was just like, it's still a really good company. So for you, what are the kind of key points and things that you're driving from a strategic perspective? What matters to you most to continue to drive the performance of ADP? Sure. So thank you, by the way. I'll take all of what you just said as a giant compliment. I know Don is smiling ear to ear as well. So perhaps maybe I can speak to some of the things on the strategic direction, the strategic priorities, and then maybe, Don, you can chime in on the goals that we have from a financial perspective. From our lens, you know, continuing this great journey that you just outlined is absolutely an imperative. It's the expectation of ADP. We may not be, at times, in the most exciting industry and the most exciting stock, but everything you just mentioned is exactly why we are as exciting as we are, and it's really anchored in how this company was founded and grounded. So we are coming up actually on our 75th anniversary this next year, and the company was founded in 1949 with a very simple concept, which was to solve a very simple challenge that was presented to an accountant named Henry Taub. It was really about a bookkeeper that was out on leave that needed help processing payroll, and so the payroll industry was born. Hmm. From there, this focus of client centricity, this focus of solving really big, big problems and challenges in the world, really has been the base and grounding for 75 years of incredible growth, incredible compounded growth, but also incredible culture. That culture is deep in ADP, and it's really the genesis of the strategic direction and strategic priorities that I outlined back in July at the earnings call when we laid the foundation for the fiscal guidance for this year. They're very simple, actually. The first of which is to lead with best-in-class HCM technology and innovation. The second priority is to have the most comprehensive and unmatched service model, whether you're one employee or the most complicated, with a million employees or perhaps the most complex in our HR outsourcing offering. And the last strategic priority is to assist our clients by allowing them to take advantage of our global scale, which is bigger than all the others, in that we serve a million clients today, and we pay 41 million wage earners across the globe in 140 countries. We span all the segments, we span all the countries, and so all of these priorities are really anchored in a very simple concept, which is to do really good work that means something in the world of work for our clients. So it's very simple. It's about having the best tech, the best service, and the biggest global scale, and that's really the strategic direction we've been on for many years. But the focus of execution in these three strategic priorities is undoubtedly what will continue our competitive advantage and continue this tremendous financial result that we've had. So I don't know, Don, if you want to. Yeah, just adding on that, building on that, we have had great financial performance over many, many years, and I think Maria is very focused on the customer, as ADP has been for a long time. So focusing on that client, having that great client service, having great solutions for our clients, is what enables us to achieve the results we do. We've been a very consistent grower. People ask sometimes. I get asked questions about price and, you know, in the view, I guess, that if we tweak our prices higher, we can see these immediate upsides, but really, we're about the long term. We're very fortunate to be in an industry with about a $150 billion TAM. We are about 10% of that, give or take, so we see lots of runway in front of us, and I think as we continue to build upon the strategies that Maria just outlined, I think we've got lots of opportunity to continue that growth and that compounding of our stock. So, Don, let me ask you. I want to dig in a little bit in terms of the footprint that ADP has, and your customer sets, and how do you think about exposure to small, medium, and large corporations, and what are the growth prospects for those different segments over the medium term? It seems like the mid-market is probably the most mature for the business of the respective portfolios, and the smaller side, or what oftentimes we call downmarket, is still growing nicely. But give us some context of where you're at and where you see growth potential. Yeah. So I think we've been fortunate. We do have a very, very large footprint. We built up their segments. Certainly, in the U.S., we built up a number of segments, and then, of course, in addition to the three segments you just mentioned, we very much have an international business that we can perhaps talk about a bit later. But we see opportunity in all the segments, so there continues to be lots of opportunity in the downmarket, the small market. We've seen great success there over the last few years. While I would agree with you that perhaps the mid-market is more mature, you certainly see more publicly traded companies there. We have more well-known or better-known competitors there. Still lots of opportunity within that space. We're still seeing good growth there. We've also had a good turnaround, if you will, at the lower end of the enterprise space. Our Workforce Now product, which. Mm. is in the mid-market, but also up into the lower end of enterprise, is doing very well. Lots and lots of new units. So that broad distribution, if you will, across all the segments, is very good for us, and we're benefiting from all of them, and I wouldn't necessarily say that any one is more likely or prone to grow faster than another. Hmm. I think there's still lots of runway back to the $150 billion TAM. Still lots of opportunity in many, many places. So let's contextualize the landscape then a little bit more if you feel like there's good growth opportunity across the different rough size cohorts. Maria, like, how do you think about the competitive landscape, both in terms of other direct competitors versus internal solutions? I know that there's been. We've talked for years with investors about software-based solutions. Sure. Coming into the market. How do you look at the competitive landscape today, and where ADP sits, and the advantages that you have versus others? I think the first thing that I would offer is that we are the leading provider in, Number 1, categorically, or Number 2, from a market share perspective, and the leader in every one of these segments. That said, we are never satisfied with that, and we're never satisfied from an innovation cycle, resting on our laurels, if you will, from an execution perspective. How do I think about all of the competitors? Perhaps it's the fact that I started with the company 27, 28 years ago, selling payroll door to door, so I think about the competition every day. I think about every single one of them, and there are a lot of them. If you imagine that we provide services across every one of these countries, across each of the segments. You know, there are days I look at Don, and I look at this huge competitive slide of ours with all these logos, and I wonder to myself, "Is there anyone we're not competing with?" But the truth of the matter is that we have very formidable competitors in each one of our categories. We think about them deeply. We study them deeply. We study our own experience in the context of their experience. Right. And every day, we're anchored on these strategic priorities to go win more share, and that's really what it's about. It's about, market share. It's about taking, business from the competitors. It's about making sure that we're showing up with the best product, with the best service, with the biggest footprint to, continue that journey. So they're all, they're all formidable. The. The tech ones, the non-tech ones. So, what. Maybe you can answer for me, like, how do you think about, like, how a customer, if a customer is looking at, like, say, just a strict software-based payroll solution- Sure. And versus what ADP can deliver, like, how does that decision process typically work, and what are the points that you're trying to make to a potential customer to sway them one way or another? Sure. I think feature by feature, functionality by functionality, we have best-in-class software. Okay. So do many of the others. And so sometimes there might be, you know, said feature here or said feature there that's delineated, but generally speaking, I would say all of our products are fantastic. I'd like to think, and many of the external surveys support the thesis that we have best-in-class products. Okay. Across our space. So what does the decision come down to? I think part of that decision comes down to the strength in our distribution. So oftentimes, we have a very comprehensive ecosystem that involves our distribution. Part of that is our own sales force that's out there every day. Part of that is the digital marketing that we do. Part of that is the distribution we do through the ecosystem. I think the biggest competitive advantage we have is that we are more than technology. So we have best-in-class technology that competes very well with other good technology, but we also have an and equation, and that and equation goes back to the founding 75 years ago, and this focus that we have on our clients and providing the and. And the and, to me, is the service wrapper around this amazing technology. I think we proved a lot of that, James, during the pandemic. I think we confirmed that position that we have at the tip of the spear of HCM, and that I think many of our clients found themselves eternally grateful to ADP as we were able to execute and help them navigate the tremendous disruption of the pandemic, and it did require more than software. It required somebody being willing to help a client navigate, whether in the U.S., it was the, the payroll protection loans, and things of that nature. On the global scale, it was the thousands and thousands, tens of thousands of tax code changes that our clients needed help with in terms of navigating overnight. And so for us, that is a big piece. I think what really separates us is our distribution model and the service model that is surrounded by incredible technology. Got it. Don, let's talk about international. You know, I think among your competitors, what makes ADP somewhat unique is the international reach. Most of the competitors tend to be more national in nature. So, and you, I know, spent time working internationally, so I'm sure it's a subject that's near and dear to your own experience and the like. But give us a short priority of your, or a short list of your priorities internationally, and how do you think about the competitive distinctions versus the U.S. market? And what kinds of companies do you win internationally? Is it U.S. companies that have international operations, is that the easy win, or is it more broad than that? Yeah. Well, I'll start with saying that I had the opportunity to move here to the U.K. in 2007 to run the U.K., Ireland business. And then a few years later, Maria came and took my chair and sent me off to Singapore, where we put together an Asia-Pacific offering, or we put together the countries and added some more countries to our distribution. But we've been very fortunate to build that business over a number of years. And so if you look at our business in two broad ways, we have the large companies, be they U.S., European-based headquarters. Mm-hmm. That have operations in multiple countries with large populations, and then they have countries in what we would call a long tail of countries. So we have the GlobalView offer for the big countries, and we have something called Celergo offer for the 15 employees you may have in a small Scandinavian country doing programming for you. Right. Right. We weave all those together with a single experience through dashboards, et cetera. So that's about 50% of our revenue in the space. In addition to that, we have what we will call the domestic or the best-of-breed offers in each of the countries. The first group of clients that I talked about, or opportunities, is really sitting on top of our deep expertise in 30-40 countries, where we have people on the ground running payroll. So be that in France or Australia or Germany or here in the UK or India, Australia, Brazil, that is really the foundation for our ability and our license, if you will, to be experts in these other countries on that global offering. Beyond that, in some of the smaller places, I have to say Kiribati, we have a partner in Kiribati. Unless you scuba dive, you don't know where Kiribati is, but we have the offer there. We're very fortunate, and I think it's an opportunity for us to continue our growth. If you look at ADP's size and where we pay people, we pay about 40% of people outside of the U.S. market. It's about 15%-16% of our overall revenue. As beyond payroll opportunities continue to be made present, we think there's a really large opportunity for us to improve on that international growth. It's already a bit above the fleet average, but we do think that we see prolonged growth opportunities in the international space. Is international. Does that, can that grow faster, the same, or a little less than the business as a whole? And how do we think about the profitability of international compared to the company as a whole? Yeah. So generally, I would say that it's a bit better than the fleet average right now. Mm-hmm. So doing well. And I think the profitability has changed a lot. Not to say thank you to me or Maria too much, but I think one of the things we did historically was we did a large number of acquisitions, and we're certainly running too many platforms in too many countries, and our profitability suffered from that. We've spent a lot of time making sure that we consolidate to best-in-class offers in many of the countries we operate in, and I think that's gonna help us improve, continue to improve our margins as we go forward. Got it. Got it. So, Maria, I want to turn to, to PEO. PEO is a uniquely U.S. offering, given the. Yes. The structure there, and it can be frustrating for all investors, but especially for those that we talk to internationally, to understand, like, why it's having such a big impact, at least on the stock, right? And, like, it moving around, et cetera. So maybe you can quickly explain for us, the business, what PEO is. And once we do that, let's take a step back and, you know, you had talked about your previous guide and, you know, what was driving that growth and how we should think about PEO going forward. So the PEO business is unique to the United States. It's a concept that is recognized, if you will, by the federal government, by the state governments. What it does is effectively create an environment where a client's employee is co-employed with ADP. And what that means is that the end employee has ADP as an employer of record, while they still have their employer as that worksite employer. So said differently, the worksite employer has ability to hire, fire, retain, they set the wages. ADP serves as the employer of record or the administrative employer to process payroll, provide benefits, workers' compensation, state unemployment, retirement offerings, HR offerings. So primarily, the PEO offer is in the SMB space. So small to medium-sized businesses are able to take advantage of acting and operating as a much larger company in that they are, have their employees pooled together with all of the client companies that are in this model. So the brand name in the, in the U.S. is ADP TotalSource. It is roughly from an addressable worksite employee perspective, the sizing sits somewhere around 20-25 million employees in the United States could be in this model. There are just north of 4 million in the model. We have 717,000 of them, as of the, the last report that we gave in ADP TotalSource. So if you imagine being a small to medium-sized business, if you were to be out there on your own, trying to navigate how you want to effectively compete for talent and how you're able to offer things like talent management solutions, like HR support, like health benefits, like workers' compensation, like retirement services, it's very different as a 35-employee company on your own than it is being able to take advantage of the infrastructure of ADP TotalSource that has the ability to procure and deliver back to these clients the Fortune 500 caliber type of solutions that are involved when you have 717,000 worksite employees altogether. So that's the model. It's hugely advantageous for small business, not only because of the scale that you get access to, but just that support infrastructure. Mm. Your average small business didn't get into this small business. Right. To navigate being an employer, and it's certainly not getting any easier. So you are right. It has been a tremendous growth business for us for many years. We actually entered into the business in 1997. We did a big acquisition in 1999. I spent a lot of my time in that business. I have tremendous passion around it. The value proposition is fantastic. It hasn't changed. I would suggest to you that it's stronger than it's ever been because it's harder to be an employer than it's ever been. It's harder to to get talent to stay, to get talent to, to come on board. So all of that has the strength. That said, we have seen some deceleration in that business over the last year. That deceleration is anchored in a couple things, but one most specifically, and most recently. The first I would say is that all of those, pieces that I just outlined, things like unemployment, things like workers' compensation, things like health benefits, they're all at the mercy of economic cycles and insurance cycles. And so as things are strange in the market. We saw this during the financial crisis, we saw this during healthcare reform in the U.S., we saw this during the pandemic in a very meaningful way. It was a very strange time for the PEO, and as that evolved in the post-pandemic, we're still feeling, some of the impact filter through the business. So that's part of what's happened over the past year. That had pressure on business bookings. So if you imagine the strangeness, if you can call it that, was really what happened during the pandemic and the post-pandemic, and then now as the business normalizes, there was pressure on bookings, there was pressure on retention. And really, as a result of that, we saw some of the results that we did in the deceleration. But the biggest deceleration that we saw, a bit abruptly, a bit more abruptly than we expected in this last quarter, was the pressure that we saw on pays per control. So if you imagine, the PEO was hit a bit harder during the pandemic just because of the industries that it skews and had lower growth during times, in the post-pandemic, it had really heightened growth. As some of the cohorts that we talked about earlier today, at the very beginning, professional services, tech, the very best fits for the PEO, have pressure on not adding as many employees as perhaps they were adding after the pandemic or after the Great Resignation. We have pressure in the business from that. That's not a controllable for us. We just have to have a little bit of patience around it. What is controllable is the re-acceleration that we're looking toward, and that re-acceleration is really first and foremost anchored in new business bookings. And so I'm pleased to see what we've seen in the last three quarters in the PEO, which is solid demand, a solid value proposition, solid demand, solid pipelines and things of that nature, but also solid results over the last three quarters and the growth that we've seen in bookings. Assuming that happens and continues to happen in the back half, which is our expectations based from our vantage point, and retention largely remains stable and and. Right. Starts to, like, re-accelerate, and then the patience around pays per control, we believe that this business will continue to be a huge growth engine for ADP. In the last couple of minutes, I want to come back to bookings. Yeah. But just before we do, you threw out a couple times jargon there. I want to make sure everybody. Yes. Understands pays per control. Yes. Like, exactly what that is, just so we know. I don't know if we have an international translation for it. Pays per control is really a measurement that is relevant really across the labor economy and across all of ADP, but most specifically to the PEO in this case, in that it's directly correlated to the performance of that business, as we bill on a percentage of wages in that business. But pays per control is really just the number of client employees per company that we have, and so it's a measurement of at some level that we leverage for the labor reports that we do, and it also is a leading indicator to the growth that our business will have. Great. And 40 seconds here. Yeah. Bookings, how are you feeling about bookings and, and what matters? Bookings matter. Bookings are a direct by-product of demand. We mentioned at the end of the last quarter and continue to mention and cite tremendous demand. That's what we see. I think we continue to call out the down-market opportunity, our HR outsourcing opportunities. Those are places that we've seen great demand. In international, we did see a great quarter last quarter. It was on a little bit of an easier compare, but I would say in general, demand is strong across each one of our segments. It's a little bit lumpier in perhaps the enterprise space than it is in the down market. But based on our indicators that we are looking at, which is everything from pipelines to. In the down market, it's more about how many appointments are we seeing, how many clients and prospects are we engaged, how many demos are we doing? Demand remains strong. That's great. Well, that's all the time we have. Maria, Don, thank you for joining us here. Thank you. Appreciate it. Appreciate it. Thank you.