All right. I'm Jared Levine. I cover software and business services here at TD Cowen. With us today for our fireside chat, we have the CFO of ADP, Peter Hadley. ADP really needs no introduction, so let's get right into the discussion here. We can open it up for any audience discussions towards the end here. With that, Peter, thank you for joining us today. Thank you for having me, Jared. Let's start with the obligatory question on the demand environment. I guess, how would you characterize the current state of the demand environment? Where are you seeing the strengths and weaknesses? Good question. I think the demand environment is very constructive, is a word we use. Consistent. Not a lot of obvious sort of tailwinds or headwinds, I would say. It's a pretty stable environment. By the way, we see that across the board, not just in one or two segments. It's really, as I'm sure many of you know, ADP covers all segments from the smallest of small businesses up to the largest of multinationals, domestically, internationally. We have outsourcing offerings. Really, I think demand has been really consistent and stable, I guess, throughout our fiscal year. We're in our Q4 at the moment. As you know, that's a large quarter for us in terms of bookings. I'll touch wood and say hopefully the demand environment certainly holds out for a strong finish, which we are looking forward to. I think the demand certainly for the type of services we provide and the assistance that we're able to provide to employers and their employees continues unabated, which is great. Great. Let's touch on that Employer Services bookings there. It was a key focal point of investors following the recent 3Q print. ADP has guided for the year 4%-7% growth. I guess, how's the company feeling about that 4%-7% guide based on year-to-date performance? Yeah. As we mentioned in our Q3 earnings call back in late April, we reiterated the guide. We've held the guide consistent all year. As I was saying a moment ago, the Q4 really is the largest quarter in terms of bookings for us. It's the nature of our cycle, probably to some degree, the nature of the incentive systems we have in place for our more than 8,500 sellers. Three points to some might seem like a wide range going into a quarter. I would say with respect to bookings, there's still a lot to do. There always is in the Q4. We feel good. Our team is fully staffed, fully motivated. We have all the incentives and so on in place in the system. Our pipelines, we mentioned, going into the quarter continued to be healthy. I think the macro environment, like I was saying a moment ago, and demand environment continues to be stable. Not necessarily a tailwind or an obvious headwind, notwithstanding all the things going on in the world. We feel good about our ability to deliver a strong bookings year. Certainly, where that lands in the range, we'll all be the wiser, I guess, once the year closes. A lot still to do, but we have plenty of really talented salespeople with great products in their hands out there doing their very level best to finish the year strongly and give us a great result. Great. Let's double-click on 4Q specifically. A key question we've gotten is how to think about that dependency on 4Q. Anything you can help us with in terms of thinking about that dependency, whether that's the typical mix of bookings for a year as we think about 4Q and that dependency? We don't disclose sort of the quarterly dependencies. All I would say is it's the largest quarter of the year. It's certainly more than 25%, obviously, by definition. It's a big quarter. Obviously, we had a little bit of a shortfall last year in terms of our fourth quarter finishing up. Not by a huge dollar amount. Again, it's sort of missing a range is sort of unexpected with respect to ADP. There was not a meaningful drop in terms of dollars. It hasn't had any real obvious effect on our revenue growth, I don't think. There's still a lot to do, and it is the most important quarter for us. The Q3 is also an important quarter, the quarter we just finished. We mentioned on our earnings call that we were pleased with the results. It was a solid quarter and probably the most pleasing thing I think that we've seen throughout the year is it's really been broad-based contribution across our portfolio. We're not concentrated to the results of one or two particular segments. Again, we feel good, but more will be revealed at our next earnings call once we do close out the year and hopefully get as many fish in the boat as we can. Great. One last one on Employer Services bookings, then I promise I'll move on here. Last year you did grow bookings 3%. This year, the company's trending to right around 5% organic constant currency growth, I guess, which is comparable to the prior year performance. I guess based on this, is bookings implied to be accelerating off of that 3%? I think the only difference this year to probably point out was maybe slightly better pricing contribution. I guess, can you help us kind of rectify those differences? There's a lot of drivers, obviously, in our revenue. The model and the indicators we talk about publicly are certainly the most key ones, but really there's a lot that goes on. We have a lot of different businesses that include different revenue models. Some of them not all necessarily tied to bookings when I go to, for example, some of our data businesses and B2C offerings and so on, asset-type revenues in our retirement services offering. I would say, again, like I was saying before, a point or so of bookings, again, we certainly would prefer to have it than not have it, but it doesn't necessarily have a meaningful impact on a full year revenue for Employer Services or certainly for ADP. I wouldn't necessarily draw any inference on the trends. I think the fact we're still guiding to a range of 4%- 7%, and last year we finished at 3%, probably implies what you're saying, that we're expecting a stronger full-year result than what we did last year. Again, we'll know more about that in a couple of months. Great. Let's pivot here to the PEO. The health insurance enrollment period typically is the primary period for your PEO clients to churn, which for you occurs on July 1st. Some of your competitors have cited a drag to retention rates from the outsized health insurance price increases that they have to pass through onto clients. I guess, how are you feeling about the level of price increases you're passing through for this upcoming enrollment period? Yeah. Just as a reminder for everyone, we operate a fully insured model when it comes to the PEO health insurance program. Not all of our competitors do that. In fact, I don't know that many of them offer a fully insured model. Again, all PEOs are a little bit different. The segment of the markets we look for, we're much more in the white-collar, gray-collar space, from underwriting purposes, both for medical and also for workers' comp. Others perhaps play a little more in the blue-collar space. Some take risk on medical. That can give you a little bit of a boost in terms of bookings and what have you at points in the cycle. It also can come back and bite you at some points in the cycle. I think some of the repricing maybe that's going on in other companies perhaps may be an indication of that. I don't know. I'm not inside their four walls. For us, I think that's strictly a pass-through expense, and again, a pass-through of risk to the carriers. It has some effect, of course, because there's an overall size of wallet that's available to companies. I would say we think about it in terms of the pricing of the rest of the PEO, if you like, the services, the administrative services, the HR support that we provide in the PEO, tax support, and all these other things that we do. It's one factor in our contemplation. I would say it's not the most important factor in pricing of the rest of the services because of the pass-through nature of the medical costs. Where it is perhaps a little more relevant is on retention. Again, in a high medical renewal environment, that can have some downward impact on retention. Good news is we had a high renewal environment last year as well, and we also had a slight improvement in our retention. We saw no degradation in retention last year. We don't give a guide on retention for the PEO. I don't have a specific comment on it other than to say that on a basis year to date, and it's implicit in our revenue numbers for the PEO that we're satisfied with retention. It's a watch item whenever medical inflation is high. Medical inflation is high no matter how you procure it. I think our ability to provide Fortune 500 benefits to small and midsize companies on a fully insured model is a winning proposition and one that we have no intent in changing. Got it. As pays per control has moderated this year within the PEO, the company has been increasingly reliant on bookings to grow WSEs. The company has been investing in sales and marketing. I think year to date, you were right around growth of 15%, falling 10% last year. Does this level of investment support an acceleration here in the WSC growth here? What are those key investments being made in that PEO business? I think, on the WSEs, we're guiding to a full year result of 2%. I think we've had 2% in each of our three quarters to date. I would say that's a fairly constant environment. I think on the pays per control, it's an interesting one, actually, if we just take a little sidebar on that for a moment. It has moderated a bit in the PEO. It's still positive and growing. It's sort of come off a little bit in terms of the amount of contribution through the year, which is a little bit the reverse of Employer Services that's got very slightly stronger, I guess. Very slightly, a little bit stronger as we've moved through the quarters. It's an interesting dynamic, and I just want to take a second on it because I was talking a minute ago about our white-collar, sort of gray-collar emphasis in the PEO. I wouldn't extrapolate a trend on white-collar employment to the softening. Where we've actually seen some of the softening has been more in some of the gray-collar industries like construction, like leisure and hospitality, like trade and transportation. We've seen, again, relative continued strength in areas like IT, professional services, financial services, health, and so on within the PEO base. There is still growth there from a same-store basis. It's definitely a lot less than what it was a handful of years ago, which back to your question means that, and again, if you take my comments a minute ago, Jared, on retention in the medical renewal environment, it puts a lot of emphasis back on bookings, and hence why we are happy to continue to invest heavily in driving bookings growth in the PEO to keep the engine moving. Whilst we go through what we believe is a cyclical period for the PEO with respect to the employment levels and also the medical inflation costs, again, we don't know how long the cycle will last. We don't believe it's a structural headwind to the PEO long term. We're happy to continue to invest in trying to drive the growth engine. It does have some adverse impact on the margins, but when I look at the contribution that new business brings from a margin perspective in the PEO, it's an investment worth making. Got it. We can't skip the topic of AI either here. ADP has rolled out ADP Assist, your AI chatbot, and there's AI agents available on the ADP Marketplace. How is the company approaching the monetization of AI functionality? Yeah. We have ADP Assist. We've been talking about that now for a couple of years, I think. The Marketplace thing is allowing some third-party agents, in a very governed fashion, to operate within the ADP ecosystem. Again, we protect that at great effort and interest to ourselves on behalf of our clients and their employees because of the amount of personal sensitive data we have in our systems that belong to our clients. Again, allowing third-party agents in through a governed process via our Marketplace is how we're dealing with that so far. We also have spoken about, in our last earnings call, about the imminent deployment. There's been some deployment, but I would say it's very much at the beginning stages of our own persona-based agents. What I mean by persona-based agents is, within HR, it's not just a homogenous space. Pure HR, there's HR business partner, there's compensation, there's payroll and a raft of performance management, recruiting, and all of these sort of functions within HR. Our technology organization is looking at, or has been building, I should say, not looking at, is building and deploying some of these persona-based agents into our platforms to assist our clients, the practitioners, to be more effective, more efficient in their work, and ultimately deliver benefits. It's a multi-pronged approach. There's some of the functionality that's built into the product to help practitioners today to help client employees proactively or reactively address questions around their time, their payroll, why has things moved. There's some of these persona-based agents, is sort of the next level down and sort of the next phase we're entering into now, that we believe will benefit our clients dramatically. As you mentioned, through the ADP Marketplace, clients who want to use other systems that we have a partnership arrangement with, the ability for those agents to be deployed into our ecosystem in a governed way is a third method, if you like, of monetizing the opportunity. The company has pointed to still being in a net investment position when it comes to AI deployment internally. I guess, how far along is the company in terms of deploying AI internally, and where have you seen the most promising results to date there? Yeah. It's a good question. I think we continue to invest, and we also continue to generate results and efficiencies and reward, if you like, from that. We spoke about that in our third-quarter earnings call. We lifted our margin delivery. I think you may have asked me a question, so I'll try to hold fire on interpreting my own words on the margin comment I nodded to in our last earnings call. Certainly, we're seeing more and more rewards. That potentially makes us want to continue to invest more and more to try to generate more. I think, we're still in the early innings, if you like, for AI deployment. I don't really see it as a heavy drag on margins. I think we will continue to invest because we're seeing the results and we're seeing it in a number of ways. When it comes to margins, I would say the primary driver is making our service and our implementation teams more effective and more efficient. The beauty of that is it costs us less money to serve. We reduce the cost to serve. In most cases, we're delivering a better client experience, a more automated onboarding, for example, for clients in the down market. We're able to deliver better insights to our clients in solving problems, whether it's IRS notifications or other things that come their way in the daily life, if you like, of payroll and HR and time and things like that. We're able to do that. We're able to realize economic benefit for ADP through being able to price for that, while at the same time generating more efficiency in the cost base and certainly influencing the headcount curve in the direction we feel is appropriate for our operations teams. Do you have a sense on terms of the timeline and when AI might ultimately flip from a net investment to a net benefit here? Yeah. A good question, a very difficult one to answer because, again, I think there's plenty of untapped opportunities out there that we potentially could invest in. I would put it this way. In our medium-term guidance that we shared almost 12 months ago now at Investor Day, we showed that the contribution to our margins from float is likely to diminish, if you like, or the contribution will become smaller just as our embedded rates in our portfolio catch up, if you like, to the rates that are available in the market. No decline expected for sure, but the contribution, if you like, to improvement will become smaller. As a result of that, to be able to maintain and potentially even look to lift our margin trajectory, we need the outcome you're talking about there. That's something that we're already starting to see, and something that we nodded to on our last earnings call. Got it. In terms of AI, in terms of more of the risk side of things, one thing we have heard from investors is that AI could potentially cannibalize your outsourced service offerings. I guess, how would you respond to this view? Yeah. I definitely don't see a high probability of it cannibalizing. I think it certainly can augment and support those offerings. The economics, if you do believe, and it's not our thesis, but if you do believe that potentially there is some revenue pressure there, I think that could be well and truly offset by the utilization of AI in the delivery of those services. I know AI is a different and a new and faster accelerating technology, but we've been in these businesses for a long time, and we've been through a number of technology cycles and automation cycles. If anything, it's just added to the value proposition of HR outsourcing to PEO, some of our managed offerings. It's not purely a cost play. There's a lot more to it than cost play. There's a quality play, there's a risk transfer play involved in these offerings, and I personally believe that AI will actually help augment that and enhance it as opposed to replace it. Got it. Let's talk on margins here. This has been a key area of investor focus here. With the 3Q print you did detail for FY 2027, while still early in the planning process, a focus on continuing that acceleration and margin expansion as you realize productivity benefits from your AI transformation. To clarify, was that comment in relation to implied expansion guided to for 4Q relative to the FY 2026 guide or something else there? Just to clarify that. No, the intent of those comments was, again, we lifted our margin guide quite meaningfully, I think, through this fiscal year. We started at 50- 70. We had some pressure in the first part of the year with respect to a large, by ADP's historical standards, acquisition we did called WorkForce Software. There was some pressure at the beginning part of the year on that. We got past that. We had a Q1 of flat margins as a result really of that acquisitions-related contribution, if you like, to the Q1. We had two quarters where we delivered 80 basis points of margin. We lifted our full-year guide to 70 to 80 basis points, which I think if you extrapolate from a Q1 of flat and then two quarters of 80 implies some acceleration. The intent of my comments was to show or to inform investors that we see this as not coming from some sort of temporary factor or a one-time benefit that has helped us lift the margins this year and then sort of deviate back, call it to more of the medium-term guidance range, which was 50- 70. I would say we're at or around, maybe potentially a little above, depending on where we finish the medium-term guidance range. The intent of the comments was to say that we see that more as the go-forward level as opposed to sort of coming back. Hopefully that makes sense. No, it does. Where are we getting that from? We're not just squeezing costs and potentially disrupting ourselves with a worsening client experience. We're getting that from some of the efficiencies I was just talking about. Some of it also is price contribution that we're getting good value, we believe, for what we're delivering to our products through AI, to our clients. That's helping us maintain our price. Again, we're not really counting on much different in the way of pays per control growth or same-store employment growth. It's really top-line opportunity and productivity in primarily in our service and implementation operations. Got it. One more on margins here. As we look at the income statement, what expense line do you see the greatest opportunity for expansion over the medium term here? Yeah, again, I think it's what I was talking about. Most of that translates into the OpEx line. Service and implementation is in OpEx. SG&A for us is a little bit of a funny line because S is very different to G&A, being sales and marketing. It's an area we continue to invest in and we have invested in for many years. It's part of the fabric at ADP, and we still see plenty of opportunity, notwithstanding our size, plenty of opportunity in this large and growing market. I would expect we would continue to invest in things like sales and marketing, in R&D and product and technology. G&A, I think there's efficiency opportunity, likely that'll be a little bit dwarfed by the S part of the SG&A line. Net of it all, the OpEx line is the most likely where you would see that, and I think where we have been seeing that through recent times. Makes sense. ADP is cited for paying one in six employees in the U.S. for some time now, which suggests you've maintained your market share and payroll. I guess, what has prevented the company from expanding its share to, let's say, one in five? Would taking share and payroll be your expectation as we look forward here the next 5- 10 years? We pay around 26 million workers. We've disclosed that for some time. Our 26 million workers in the U.S., I think it's 41 or 42, around 42 million globally, about 15, 16 million or so internationally. It's a big jump to go. If you think about 26 million is one in six, to go one in five, that I think is 32 million. That's six million workers. That's, call it a 20% grab in market share. When you consider the fact we don't really play in the public sector, which is about 25 million, I think, of the roughly 160 million workers out there. Some of it perhaps is just our absolute size and moving a metric like that. That metric is sort of meant more to just to be a helpful rule of thumb for people. It's not necessarily an objective of ours to go from whatever we were, one in seven to one in six to one in five. It's not really something we think about too much as a management team. Gaining market share is certainly something that we spend a lot of time focusing on, and I think we feel like we have done pretty well there in certain segments of our market, particularly like in the down market, in the PEO business. Over time, I think we have some opportunity to drive more market share, and we feel like we're now well-placed in an area, being the enterprise space, where we have probably ceded some market share over the last decade or so, just due to where we were placed. I think with our product Lyric and the way it's performing, it'll take some time to bed in terms of sales cycles and implementation cycles for enterprise companies for it to bed into the numbers and the results. We feel good about our opportunity to continue to grow share domestically and internationally, and it's certainly something we're focused on. Great. It feels like messaging across public company here has been no change in the competitive environment in recent years. It remains highly competitive. Investors tend to struggle with this just due to the certain private vendors like Rippling or Gusto getting to notable private scale and still growing at rapid rates here, while you've seen some deceleration organic constant currency growth rates across the public comps. What do you attribute this to? Is this more so just you're competing against better public competitors or certain private competitors? I guess, what drives that consistency there while you've seen such notable growth and emergence of certain private vendors? I think the competitive environment, what's the best way to put it? I would say it's not that it doesn't change. Of course, there is changes. Some companies come in, some companies go out. Companies are either maybe moving their focus from their core segment to try to identify growth opportunities in new segments. It definitely moves. I think what we would say is that, is it meaningfully more competitive now than what it was one, two, five, 10 years ago? I would say not necessarily. What I would definitely say is we don't see any unnatural behavior or people doing unnatural things just to try to drive share. I think the net of it all is, we believe at least that it's a growing market, so there is room for opportunity for all. I think some of the companies, again, some people may be more familiar with the details of some of the private companies than others, but certainly there's not as much public disclosure, so hard for me to comment on those companies. There is still, and you mentioned Rippling, for example, more of a mid-market or the lower end of the mid-market competitor for us. We see them a little bit, not a huge amount, but we do see them around. A formidable company by the looks of things. There is still opportunity, I think, for all of the name companies, whether they're public or private, like the likes of Rippling, to grow. There is still, and I know it raises a few eyebrows from time to time as to how can this still be the case, but the reality is there is still a meaningful size opportunity, putting the growth in the market opportunity aside, in these regional local players, whether they're CPAs or ma and pa shops, those sort of things. They may not have as much share as they did five years ago, but they still have enough meaningful share. I think there is opportunity to grow. Our focus is really not so much on what all these other companies are doing. We certainly pay attention to the competitive landscape, but our real focus is on improving our client experience, improving our retention. I think we've done that really successfully. Being out there with the best products in the market and winning business, that will hopefully take care of itself in terms of winning share. Makes sense. We've also gotten the question before on the risk to float revenue from the adoption of faster and lower cost instant payment methods such as stablecoins. Is this a legitimate risk over time as we think about your float revenue? I would say we don't see any of that now. We do offer the ability for client employees to receive some or all of their net pay as they choose in a digital currency, a stablecoin, for example. That's a conversion done sort of what we would call post-payroll, if you're getting into the payroll, sort of a geeky payroll process, sort of towards the tail end. They're somewhat seamless to the client employee that would receive stablecoin in their Coinbase account or whatever exchange they work with. Not really. Faster payments, real-time payments have been around for close to a decade. There are some advantages of those. We use some of those in our money movement operation. There are also some disadvantages, particularly to small midsize businesses around the finality of payments, the cost of the transactions. No tax authority, to my knowledge, in this country or any country that we operate in and move money in will accept anything other than fiat currency at the moment. Nothing on the horizon that's obvious. Our float balances, not just the revenue from the rate side of it, but the balances coming from both wage growth and volume growth in the employee base, to me shows that the value proposition is as strong or stronger than it's ever been as opposed to sort of being at risk. Understood. The company is guiding Employer Services retention to decline right around 10 basis points at the midpoint of the range this year. Is it just an increase in out-of-business losses and the down market driving this expected decline? No, I would say it's not that. It's nothing specifically. We've said sort of through our first three quarters, then we raised our guide to flat to 20, hence your midpoint comment in our last earnings call. It's just 10 basis points for us is a relatively small number in the context of the size of our Employer Services base and churn. It's hard to get very precise down to these levels in terms of what may happen, but it's less about macro environment or structural things. We just see from time to time and we're perhaps a little bit prudent on our retention guidance as we have shown over the last few years. Things can happen. Clients can downgrade from a service level to a lower service level that impacts retention. Of course, we have a revenue retention rate. A company can be acquired by another company and therefore need to move their provider to the parent company. There's just things that can happen that might move the needle around 10 or 20 basis points. There's nothing structural, and I certainly would not attribute our guide, at whatever point it is, flat, 20 basis points or anywhere in between, down to things like out-of-business rates or macro or the war or oil prices or anything like that. To me, it's more just we're trying to be prudent and cautious and not get ahead of ourselves on where retention will land. It's been a very strong and stable metric for us for a number of years, and I think this year will be no different. Great. Let's wrap it here. Thank you for joining us today. Excellent. Thank you, Jared. Thank you, everyone.