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 fourth 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 will now turn the conference over to Matt Keating, Vice President, Investor Relations. Please go ahead.

Thank you, Michelle, and welcome everyone to ADP's fourth 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 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 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. This morning, we reported strong fourth quarter results, including 7% revenue growth, 140 basis points of adjusted EBIT margin expansion, and 17% adjusted EPS growth, capping a fiscal year that exceeded our initial expectations and reflects the tangible progress we are making across our three strategic priorities. Our results this quarter and the full fiscal year are grounded in the value we continue to deliver to our clients. They trust us to help them find smarter ways to manage work through our hands-on experience and intelligent tools. Every business we serve is wrestling with the same question right now. How do we address this defining moment for work, navigating compliance, reimagining roles, and deploying AI without losing the accuracy and trust that payroll and HR require? ADP is the answer. While some job displacement can occur during times of transition, Our data shows that AI is not eliminating jobs at scale. Instead, it's reshaping how work gets done, what roles look like, and how teams are organized. At the same time, employers are navigating an accelerating wave of new regulations and compliance requirements as they increase their use of AI to enable and support human talent. This is a historic shift that is driving a redesign of the global workforce. ADP sits at the center of this shift. 77 years of data, deep domain expertise and a global infrastructure built at a scale no one else can match. This has earned us the trust of our clients, the kind of trust that this era requires. What energizes me most about this moment is that it makes the work ADP does more important than ever. The workforce is changing, but the need to manage people, pay them accurately and remain compliant is not. Before I get into our strategic progress, Let me share a few business highlights for the fourth quarter and full year. Starting with Employer Services, we delivered more than $2.2 billion of new business bookings in fiscal 26, representing 6% growth over the prior year. This reflects the strength of our solutions and the power of our unmatched distribution capabilities, which remain a competitive advantage for us. We experienced broad-based new business bookings growth with notable contributions from our small business portfolio Employer Services, HR Outsourcing, Enterprise, and International Businesses. Our Retirement Services business achieved a major milestone of $1 billion in annual revenue for the first time. This business continues to grow quickly and now serves over 210,000 clients, supporting the retirement savings needs of millions of Americans. Retention and Client Satisfaction were two other standouts from our full-year results. Employer Services Retention again exceeded our expectations and remained strong at 92.1% for the fiscal year. This is the third consecutive year that our overall client satisfaction scores reached a new record high. Clients recognize the exceptional levels of client service we are delivering through the efforts of our associates and investments in our solutions. Finally, demand for both our PEO and employer services outsourcing solutions remained strong throughout the year as employers continued to turn to us for support in an increasingly complex operating environment. These strong results reflect deliberate decisions we made in where we invested, what we built, and how we served our clients. With continued healthy new business pipelines and increasing adoption of AI tools across our product set, Service Operations and Sales, we enter fiscal 27 confident in our ability to continue winning new deals and create operating efficiencies that will help drive adjusted EPS growth. Now, let me take you through the three strategic priorities driving our performance. I'll start with what we are doing to lead with best-in-class HCM technology. What we have accomplished this year is about more than any single product or feature. It is how we are embedding AI into the very core of HCM. AI is being built into how our clients run payroll, how they are onboarded, and how we service and support them every day. That integration is what makes it real and makes it ours. Starting with ADP Assist. Since launching ADP Assist agents in January, our rollout has steadily expanded across payroll, benefits, HR, and compliance. We now have HCM agents available to nearly all of our more than 1.1 million clients. In fiscal year 26, 3.1 million unique active users had 12 million conversations with ADP Assist. It is becoming embedded in our clients' workflows, providing real-time savings and improving accuracy. We've also seen how ADP Assist can help our clients identify and mitigate risks early on. Providing compliance insights is one example of this. Since January, ADP Assist has surfaced 45,000 compliance insights to thousands of clients so they could review and take action on tax and regulatory issues before they become a problem. That means less compliance risk and more client confidence built into our solutions. We also recently announced the availability of ADP Assist on the ADP Marketplace. This makes it possible to seamlessly connect our solutions with client technology ecosystems through guided, natural language conversations and ADP APIs. Access to ADP Assist within the ADP Marketplace helps our clients and their IT teams accelerate development and build integrations that deliver real business impact. Moving to ADP Lyric HCM. Lyric continues to gain traction in the enterprise market with our number of live clients increasing by 94% from a year ago. Our Lyric pipeline also increased 50% year over year with new logos representing 70% of these opportunities and we have made progress in international sales. This quarter, we closed deals with a digital transformation and IT consulting firm in France and two clients in the UK, a specialty chemicals company and a global manufacturer of accessibility solutions. At our investor day in June of 2025, we talked about our unified offer of global payroll, global HR, global time and global service. We saw more evidence of this initiative working in the fourth quarter where we signed three deals that included Lyric, the ADP Workforce Suite and ADP Global Payroll. In addition, our global time bookings increased significantly for the year Thanks to the continued positive reception of our workforce software time solution. Our technology investments are also accelerating what we can deliver for clients. All of our developers are now equipped with AI tools across the entire development and testing cycle, bringing new capabilities to the market faster than ever. The Zone, our proprietary AI-infused service platform, is transforming how our service teams work. By giving associates a 360-degree view of the client, connecting data, insights, and interactions across the full client journey, the zone equips our teams with AI-powered recommendations, case summaries, and contextual insights that improve the quality and consistency of every interaction. At the start of fiscal 26, 10% of our service population had access to the zone. Today, that number has grown to 48%, exceeding our end-of-year target. For those associates using the zone, 96% of their service work is taking place on the platform. Additionally, as we scaled the zone, we saw a 4% decrease in contacts per client in fiscal 26. When you view this against the backdrop of the millions of client contacts we have each year, this is a strong indication that our service teams are beginning to spend less time on administrative tasks and more time on tasks that add value to clients. The zone is now embedded in how ADP serves our clients every day and provides a scalable foundation to support stronger client engagement and retention. There's no question that products and platforms matter, but our clients also want something even more fundamental, a trusted partner who can help them execute high-stakes HR tasks amid the complexity of this workforce shift. They are looking to ADP to unlock value by helping them streamline core HR processes. That is what our second strategic priority is about, providing clients with unmatched expertise and outsourcing solutions. AI is accelerating how businesses build, manage, and deploy their workforce. As organizations pair AI capability with expert human judgment, they need HCM partners with operational capabilities, process expertise, and technology to execute it. Payroll updates, compliance navigation, regulatory filings, people infrastructure across every jurisdiction, every workforce model, and every business size. All of that requires ADP. A large global auto manufacturer has recently expanded their relationship with us as they undergo a large-scale AI-driven workforce transformation aimed at optimizing labor allocation and creating a more efficient global operating model. As part of this initiative, the organization is introducing new workforce structures, evolving compensation frameworks, and navigating complex regulatory requirements, including country-specific labor laws, payroll regulations, statutory filings, and reporting requirements across 13 countries. On the small business end of the spectrum, we recently supported a dentist's office in Las Vegas who was experiencing high turnover after they hired quickly to keep up with rapid growth. Our experts helped them revamp their recruitment process with intentional hiring strategies, structured behavioral interviews, and improved onboarding programs. The strategic shift ended up reducing turnover by 40% in just a year. I spoke last quarter about ADP structural advantages in the AI era, and this is what our structural advantages look like in practice. We are not a passive observer of change. We are the partner helping our clients execute it. Our massive data foundation is another significant advantage in creating deeper value for our clients. Through our research partnership with the Stanford Digital Economy Lab and using ADP's payroll data from millions of workers across roles, industries, and geographies, and millions of job postings, we are mapping how AI is actually reshaping work in the near real time. We can break down work into granular tasks that describe what people do, not just job titles, and measure how the amount a worker is paid to do a specific task changes over time. This is a level of visibility no other HCM company can match. By understanding the changes in the wage premium of specific tasks, we can see how the economic value of certain tasks evolve over time, likely influenced by AI and automation. Additionally, we can not only uncover what tasks are valuable, but what work is actually growing or shrinking in practice. Why is this important? This powerful workforce intelligence can help our clients navigate the workforce redesign and reskilling brought by this shift. The work is in its early stages, but here's an example. An initial look at IT workers shows that tasks like design, development, and analysis command higher wage premiums than tasks like testing, documentation, monitoring, and technical support. This suggests employers' value and will pay for the tasks that require deeper thinking and human judgment. As I said earlier, what this research continues to confirm and what our client data shows is that the workforce is evolving, not shrinking. It is being redefined at the task level, and for our clients, it means that the stakes of getting HCM right have never been higher. This is what ADP's service model is built for, The challenges and opportunities of workforce redesign create complex HR and compliance situations where human judgment is irreplaceable. Our associates are trusted advisors who navigate those situations with expertise that goes beyond what an AI agent can deliver. AI handles what can be automated. Our people handle what cannot. That combination is what makes the execution reliable, accurate, and compliant in every jurisdiction for every client. Trust is a core tenant of ADP's brand, and we are deepening it through our commitment to responsible AI. Our AI governance infrastructure is grounded in principles of human oversight, privacy, bias mitigation, explainability, and data quality. As regulators across the world, including the EU and several US states, move to create guidelines and policies to manage AI practices, our governance infrastructure is more than a compliance checkbox. It is a genuine advantage for ADP clients forged through the relationships and experience we have built with these institutions over decades, bringing me to our third priority, benefiting our clients with our global scale. ADP scale is an advantage that becomes more valuable as work becomes more complex. The regulatory landscape is fragmenting by country, by state, by city, by municipality, each with its own requirements and nuances. ADP makes workforce management executable across more than 140 countries and numerous local jurisdictions. That breadth is the foundation of the value we deliver to each client, from the small business running payroll for the first time to the global enterprise managing a 30 country workforce transformation. Earlier, I covered how we're approaching the zone for service. In addition, about half of our sellers are now equipped with it as well, helping them approach every sales conversation with better intelligence and greater precision. And that is showing up in the outcomes. We saw a record high seller productivity in fiscal 26, and we believe the zone was a key contributor. I want to close with something I feel strongly about and something I think gets lost in the noise of the AI conversation. There's a lot of commentary right now about what AI means for HR, for the workforce, and for the future of work. But is this the right discussion? I see it differently. I believe, and our data shows, that the world of work is evolving in ways that are beautifully and fundamentally human. AI is taking on the routine. What is left? The judgment calls, the complex decisions, the moments when a real expert needs to guide a business through something unprecedented. Those moments are becoming more frequent, and the value of human expertise is compounding. The conversation should be about how we address this defining moment for work. The fact is, HCM remains alive and well. The need to pay people accurately, treat workers fairly, stay compliant, and navigate change has never been greater. The organizations that get this right, that invest in the right partners, the right infrastructure, the right expertise, are the ones that will come out of this moment stronger. That is the world ADP is built for, and I have never been more optimistic about the role we get to play in it. With that, I'll turn the call over to Peter.