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 second quarter fiscal 2026 earnings call. I would like to inform you that this conference is being recorded. After the prepared remarks, we will conduct a question and answer session. Instructions will be given at that time. I'll now turn the conference over to Matt Keating, Vice President, Investor Relations. Please go ahead.

Thank you, Michelle, and welcome everyone to ADP's second quarter fiscal 2026 earnings call. Participating today are Maria Black, our president and CEO, and Peter Hadley, our CFO. Earlier this morning, we released our results for the quarter. Our earnings materials are available on the FCC'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. I'll now turn it over to Maria.

Thank you, Matt, and thank you, everyone, for joining us. This morning, we reported strong second quarter results that included 6% revenue growth, 80 basis points of adjusted EBIT margin expansion, and 11% adjusted EPS growth. We achieved these financial results while also making meaningful progress across our strategic priorities. Before discussing this strategic progress, I will briefly review some additional highlights from our results. We delivered solid employer services new business bookings growth in the second quarter. We enjoyed broad-based strengths with the fastest growth in our international U.S. enterprise and compliance businesses. Our small business portfolio and mid-market business also contributed to the growth in the quarter. With good momentum and healthy pipelines, we are focused on driving continued new business bookings growth in the second half of our fiscal year. Our employer services retention rate matched our expectations with a modest decline in the second quarter. We continue to benefit from a stable overall business environment and very high levels of client satisfaction. In fact, our overall client satisfaction results represented the single best quarter in ADP history. Employer services pays for control growth rounded up to 1% for the second quarter, representing modestly higher year-on-year growth compared to the first quarter. And last, our PEO revenue increased 6% in the quarter, helped by growth in zero-margin pass-throughs and solid new business bookings growth. Our 2% growth in average works on employees included a moderation in PEO pays-per-control growth. Peter will share our updated outlook in a few minutes, but we believe the demand environment for our PEO and other outsourcing services also remains healthy. We are proud of our strong second quarter financial results and excited by the progress we continue to make across our three strategic business priorities. I will start with what we are doing to lead with best-in-class HCM technology. We are very pleased with the strong traction our Workforce Now NextGen and ADP Lyric HCM platforms continue to experience. Workforce Now NextGen is being embraced by our mid-market clients for its always-on payroll processing capabilities, generative AI functionality, and expedited implementation timelines. We reached a milestone in the second quarter with our first sale to a client with more than 1,000 employees. The client, a logistics company in the Midwest, selected WorkforceNow NextGen based on the strength of its underlying technology and the breadth of its integrated solutions, which included payroll, HR, benefits administration, time and attendance, and learning. WorkForce Now NextGen is a great example of how we build products to solve real-world challenges HR teams face each day, and we do so by combining our NextGen platforms, investments in AI and automation, and robust compliance expertise to support our clients' wide-ranging needs. In the enterprise space, Lyric's new business bookings once again exceeded our expectations in the second quarter, and its new business pipeline continued to expand at a rapid pace. Underscoring Lyric's strong reception in the market, more than 70% of its new business bookings and overall pipeline related to new logos as it continues to fare favorably against our competitors. Organizations are turning to Lyric for its flexibility, intelligence, and human-centric design that enhances the employee, manager, and practitioner experience. Among our many Lyric new business wins in the second quarter were two companies with more than 20,000 employees, which represents two of our largest clients sold on the platform to date. Earlier this month, Lyric was named a winner in the 2026 Big Innovation Awards presented by Business Intelligence Group, earning recognition for driving transformative impact in the HCM industry. In addition to building our own best-in-class solutions, we strive to enhance our HCM offerings through acquisitions that complement our business. Our October 2024 acquisition of Workforce Software is a great example. During the second quarter, we launched the ADP Workforce Suite, our integrated workforce management solution across our leading payroll and HCM platforms. Clients now have the opportunity to offer their employees around the world a unified time, pay, and HR experience with best-in-class workforce management tools at their fingertips. We are already seeing benefits from our integrated approach, winning several deals in the second quarter that included the ADP Workforce Suite. We also partner with others to accelerate innovation. In December, we successfully embedded Fiserv's Cashflow Central an integrated accounts payables and receivables management solution into RUN in order to help our small business clients better manage their cash flow. The RUN powered by ADP platform brings payroll, contractor payments, bill pay, and invoicing together in one clear, connected experience. With payroll and payments in sync, our clients can do more in less time and steer their business forward confidently. AI remains central to our technology strategy, and we are moving full speed ahead to leverage it in attracting, serving, and retaining our clients. We continue to scale the usage and capabilities of our client-facing AI, including the launch of new ADP Assist payroll, HR, analytics, and tax agents that apply advanced intelligence to real workforce challenges. Built on ADP's comprehensive global data platform, These new persona-based agents help organizations manage people, streamline processes, and make informed decisions that support people at work. For example, ADP Assist tax registration agents can proactively identify when clients have missing or incomplete tax IDs and guide them through every step of the registration process. Additionally, our ADP Assist HR agents can create key talent actions instantly such as initiating a promotion simply by the user typing what they want to do. The system delivers real-time answers and guided next steps, reducing time spent navigating HR workflows. And our AI solutions are designed with a human-centric approach that enhances the value and meaningful connection we all derive from our work. Unlike generic AI solutions, ADP's approach combines proprietary workforce insights, with advanced automation to solve real workforce challenges while maintaining the security, governance, and compliance standards companies trust. Our second strategic priority is to provide clients with unmatched expertise and outsourcing solutions. Success here requires us to carefully consider the breadth of our solutions and to continually evolve to best meet client needs. To this end, we were excited to introduce our first Pooled Employer Plan, or PEP, within our retirement services business during the second quarter. A PEP is a single 401k plan that lets unrelated employers participate together with a pooled plan provider acting as plan sponsor, named fiduciary, and plan administrator. This arrangement shifts most of the compliance, filing, and oversight burdens from employers to the pooled plan provider. Our Save for Retirement Pooled Employer Plan brings together scale, integration, and fiduciary support, allowing employers to offer robust retirement plan benefits without adding administrative burden. Clients gain scale-driven cost savings, reduced administrative work, and lower fiduciary risk. Finally, we are focused on executing on our third strategic priority, benefiting our clients with our global scale. We serve more than 70,000 clients outside of the United States, where we pay more than 16 million wage earners across more than 140 countries. Our mix of global solutions includes both in-country and multinational offerings. During the second quarter, we won the business of a large European bank with more than 75,000 employees. This win demonstrates the power of our brand built by having associates on the ground for decades in most of our international markets. We also recently enhanced our global payroll platform through more intuitive dashboards with clearer messaging and easier navigation, all of which reduce manual tasks and enhance the overall user experience. The investments we are making in our international business are being noticed, as we were recognized recently in the HRM, Asia Reader's Choice Awards, winning two golds in 2025 for best HR tech, outsourcing, and payroll solution. Overall, our second quarter represented strong outcomes on the financial front and with respect to our key strategic priorities. I'd like to take a minute to thank our associates who continue to deliver exceptional products and outstanding service to our clients, particularly now as many of them are in the middle of our most hectic time of year, completing year-end work. Their consistent effort over decades has established our company's trusted corporate reputation, and I am proud to announce that ADP was recognized earlier this month by Fortune magazine as one of the world's most admired companies in 2026. This marks ADP's 20th year on this annual ranking, and I would like to congratulate all ADPers on this well-earned accomplishment and thank them again for all that they do for ADP and for our clients. And now I will turn the call over to Peter.