Q3 2024 Automatic Data Processing Inc Earnings Call Transcript
Key Points
- Automatic Data Processing Inc reported strong 7% revenue growth and 14% adjusted diluted EPS growth for the third quarter.
- Record Employer Services new business bookings for a Q3 period were achieved, keeping the company on track for its full-year outlook.
- Employer Services retention exceeded expectations, reaching a new record level for a Q3 period, particularly led by the mid-market business.
- Introduction of ADP Assist, utilizing Gen AI to enhance client and employee interactions, showing promising early results in streamlining workflows.
- International expansion continues with significant growth, particularly in the APAC region, enhancing global payroll and workforce management presence.
- PEO revenue growth of 5% met expectations but faced short-term pressures from below-normal hiring activity among clients.
- Employer Services pays per control growth was steady at 2%, indicating only moderate workforce additions by clients.
- PEO margin decreased by 220 basis points in Q3 due to lower workers' compensation reserve release benefits compared to previous years.
- Challenges in the technology and professional services sectors contributed to deceleration in PEO pays per control growth earlier in the year.
- Gen AI-related expenses are expected to create margin pressure in the upcoming fiscal year as benefits from these investments are anticipated to phase in gradually.
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 Third Quarter Fiscal 2024 Earnings Call. I would like to inform you that this conference is being recorded. (Operator Instructions) I will now turn the call over to Mr. Danyal Hussain, Vice President, Investor Relations. Please go ahead.
Thank you, Michelle, and welcome everyone to ADP's Third Quarter Fiscal 2024 Earnings Call. Participating today are Maria Black, our President and CEO; 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
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