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 third 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 remark, there will be a question and answer session. If you'd like to ask a question during this time, simply press the number one, 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. Jani Hussein, Vice President of Investor Relations. Please go ahead.

Thank you, Michelle, and welcome everyone to ADP's third quarter fiscal 2022 earnings call. 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 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 ESCC 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. We delivered exceptionally strong third quarter results, including revenue that accelerated to 10% growth on a reported basis and 11% growth on an organic constant currency basis, coupled with solid adjusted EBIT margin expansions. This strong outcome on both revenue and margin drove 17% growth in adjusted diluted EPS, well ahead of our expectations. Our clients have had no shortage of challenges in navigating the last 12 months, but through it all, not only have they persevered, but they have invested in their workforce to better support their employees and continue to grow their businesses. We're proud to support them in these efforts through our leading HCM technology and unrivaled expertise. This quarter, I'll provide high-level commentary on key business drivers, and then Maria will take us through some product and other updates. And as usual, Don will discuss the financials and our updated outlook. Let me start with employer services and new business bookings. We are very pleased to have delivered another strong quarter of double-digit growth. This was a record level for the third quarter, and as we had hoped when we updated you last quarter, The Omicron variant was not a meaningful factor in our bookings performance, as third quarter growth accelerated from our first half levels towards the high end of our guidance range this quarter. Our clients continue to find tremendous value across our suite of offerings, with our PEO and HR outsourcing, international, and downmarket businesses again leading the way. We're pleased to narrow our ES bookings guidance higher, and we look forward to delivering this double-digit growth for the full year, which should position us well for fiscal 2023. Our employer services retention was also very strong this quarter. As you know, our third quarter is especially important for retention since we typically experience elevated switching with the start of the new calendar year. Accordingly, we were very pleased that rather than decreasing the quarter towards pre-pandemic levels like we anticipated, our retention actually increased further into record territory, driven by incredible performance from our mid-market and international businesses, among others. As we've discussed for several quarters, the strong employee and client growth we've experienced have increased the demands on our implementation and service organization. We added to our headcount to keep up with this demand ahead of our busy year-end period, and as a result, we were able to maintain strong overall client satisfaction scores, despite ongoing pressure from this elevated demand. With retention having outperformed our expectations so far this year, we believe we are now on pace to hold on to most of last year's retention gains and expect to remain at 92% retention for the year, down very slightly versus last year's record retention level. Moving on to employer services pace for control, our clients continue to steadily hire as workers enter or reenter the labor force, and our pace for control growth of 7% for the quarter came in better than expected. Clearly, there are a number of factors at play when considering employment growth trends, but strong overall economic activity continues to keep demand for labor high, and we've been pleased to see labor force participation gradually recover over the course of the year. And one last highlight before I turn it over to Maria. our PEO had another strong quarter with 16% average worksite employee growth and 14% revenue growth. As we've seen all year, growth in our PEO bookings was exceptionally strong as small and mid-sized businesses increasingly find value in turning over a meaningful portion of their HR function to ADP. And that strong bookings performance coupled with robust employment growth within the PEO base has driven this very healthy double-digit revenue growth. And now, let me turn it over to Maria.