Automatic Data Processing, Inc.

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 first quarter fiscal 2022 earnings call. I would like to inform you that this conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press the pound key. Thank you. I will now turn the conference over to Mr. Daniel Hussain, Vice President, Investor Relations. Please go ahead.

Daniel Hussain Thank you, Michelle. And good morning, everyone, and welcome to ADP's first quarter fiscal 2022 earnings call. Participating today are Carlos Rodriguez, 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 a reconciliation of non-GAAP measures to their 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 risk. 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. And with that, let me turn it over to Carlos.

Thank you, Danny, and thank you, everyone, for joining our call. I'd like to start by welcoming Don McGuire, our new CFO. Don has been with ADP since 1998 when he joined the ADP Canada team as a VP of Finance. He's held a series of roles with increasing responsibility, most recently serving as president of our international business, where he's done a phenomenal job of driving growth and profitability in a very complex environment. I know he's looking forward to meeting all of you. Now, moving on to the quarter. We are pleased to have delivered a very strong start to the year, with 10% revenue growth and 140 basis points of margin expansion, resulting in a 17% increase in adjusted diluted EPSs. While we did expect our Q1 revenue growth to be above our prior full-year guidance range, this result was still above our initial forecast and underscores the strong position we're in as we emerge from the pandemic. I'll let Don go through the details after I cover some highlights. Our ES new business bookings results were very strong, representing another record Q1 bookings amount, and we're ahead of our expectations with our performance driven by continued strength in our HR portfolio, and our international business. With this impressive bookings performance across the enterprise, we're pleased to raise our ES bookings guidance for the year after just one quarter, as we're now feeling even more confident about our sales momentum. Even stronger was our PEO bookings performance, which was also well ahead of our expectations and a key reason that we're raising our guidance for average worksite employee growth for the year, as Don will outline for you. As you'll recall, we've been sharing our sales productivity trends over the course of the pandemic, and I'm pleased to report that in Q1, we were well above pre-pandemic levels. We reached this result several months sooner than we expected, and we expect this to continue as we look ahead. Our ES retention remained incredibly strong as well. As we shared last quarter, we believed it was reasonable to assume a slight step back in retention from the record 92.2% level we experienced last year. But in Q1, we did not see meaningful deterioration. Instead, we actually saw further improvement in our overall ES retention to a new record Q1 level, despite a modest decline in our small business division, where out-of-business losses started to trend back to more normal levels compared to the below normal levels last year. We're continuing to assume a slight decline in our retention outlook for the year, But clearly, we are pleased with our performance so far, and the upward revision in our retention outlook reflects the strong Q1 performance. Our ES pace for control was solid, with 7% growth in the quarter, about in line with our expectations. We have fielded a number of questions these past several months about what we think might drive workers back into the labor force. While we don't have an answer to that question, what we can tell you is that we continue to see positive trends, Our clients are eager to hire, and we are seeing workers return to the labor force, even if it's gradual. As a result, we expect to benefit from an above-normal level of pay-per-control growth over the course of the year. In addition to the very strong ES performance, our PEO delivered another stellar quarter with 15% revenue growth and 15% average worksite employee growth. even better than the high expectations we had coming into the quarter. There were multiple drivers to the outperformance in the PEO, including the strong level of hiring within the client base, resilient retention, and the improved bookings performance I mentioned earlier. We're very pleased with the momentum we see building in the PEO, and we're raising our full-year guidance accordingly. In addition to the financial highlights, there are a few product highlights I wanted to share with you. First, I'm excited to share that we completed the initial rollout of our new user experience for RUN. As we shared with you last quarter, this represents the most comprehensive refresh we've done since the launch of RUN. And we're very proud that in a matter of a quarter, we were able to seamlessly move hundreds of thousands of clients to a new and better user experience. Early signs indicate that client satisfaction scores should trend even higher than the record levels we already have in our small business division. So it's a really great outcome and represents a very strong execution by the team. I'd like to also share that at the annual HR Tech Conference a few weeks ago, our innovative diversity, equity, and inclusion tool on the Data Cloud platform was named a top HR product. This recognition adds to ADP's longstanding history of award wins at the conference, marking an unprecedented seventh consecutive year ADP has been honored for its innovative HCM technology. You can probably tell from the number of times we've highlighted Data Cloud that our velocity of innovation has increased significantly there. With this DE&I solution as an example, we've seen over 50% of active users of this solution take action and realize positive impact on their DE&I measures. I'm proud that we provide solutions that drive real positive change for our clients. This seven-year track record demonstrates that innovation is part of ADP's DNA and that we have a strong, growing, agile R&D team committed to delivering solutions in the market that continue to push the boundary of what HCM solutions can do for employers and their employees. As I said before, we're very pleased with the fantastic start to the year. We look forward to sharing even more of the ADP story with you at the upcoming Investor Day in November. And now I'll turn the call over to Don for more detail on the quarter and the outlook.