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. After the prepared remarks, we will conduct a question-and-answer session. Instructions will be given at that time. I will now turn the call over to Mr. Danny 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 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 risks. 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, Danny, and thank you everyone for joining us. This morning, we reported strong 7% revenue growth and 14% adjusted diluted EPS growth for the third quarter as we continued to make progress delivering against our strategic priorities and as the labor market and the overall HCM business environment remained stable. I'll begin with a review of the quarter's results and provide a brief update on our strategy before turning it to Don to update you on our outlook and share some early considerations for next year. In Q3, we delivered solid Employer Services new business bookings growth reaching record bookings for our Q3 period and keeping us on track for our full-year outlook. We maintained momentum in our small business portfolio with particularly strong growth in our retirement services offering, and in Q3, we also delivered strong bookings results in our midmarket, enterprise and international businesses. With a steady demand backdrop and a healthy new business pipeline, we are focused on continuing to execute for the remainder of the year. Employer Services retention was very strong in the third quarter and once again exceeded our expectations, also reaching a new record level for our Q3 period led by our midmarket business. Our overall retention continues to benefit from ongoing investments in our key platforms and from our commitment to delivering an exceptional client experience, which together helped our client satisfaction scores reach a new all-time high for our Q3. Our Employer Services pays per control growth was steady at 2% reflecting the resilient overall U.S. labor market and the fact that our clients continue to add to their workforces at a moderate pace, and our PEO revenue growth of 5% for the third quarter was in line with our expectations despite continued short-term pressure from below normal hiring activity we've been experiencing among those clients. Moving on to a broader update, we continue to push forward on our three strategic priorities, leading with the best HCM technology, unmatched service and expertise in a broader scale to ultimately deliver the best possible experience not just to the buyers of our products but everyone that engages with ADP. We are investing with purpose to deeply understand and deliver value to a vast set of personas from small business owners that count on us to HR professionals and executives of the largest global enterprises to millions of employees and gig workers around the world who engage with our solutions through CPAs, banks, brokers and other key partners to our thousands of dedicated service and implementation associates and to our sellers who represent ADP in the market every day. It's with these personas in mind that we continue pushing forward on our strategic priorities, and in Q3, we made steady progress. Our first priority is to lead with best-in-class HCM technology. We've been rolling out ADP Assist these past couple of quarters, which, as a reminder, will be embedded in our key platforms and utilizes GenAI to surface insights, aid decision-making, and streamline day-to-day tasks for our clients and their employees. In Q3, we were very excited to begin piloting a new feature that enables our small business clients to not only leverage GenAI to answer questions and better understand how to initiate an HR action, which we outlined in recent quarters, but to actually allow them to issue commands to complete that HR action. For example, users can now type, 'I need to rehire Alex' or 'I would like to give Alex a leave of absence' and are expedited through that workflow. Our second priority is to provide unmatched expertise in outsourcing. We continue to extend GenAI capabilities to a broader portion of our service associates, and in Q3, we started rolling out a new tool for some of our implementation teams. Now they can use GenAI to take in unstructured client employee data reducing manual data entry and minimizing errors during the implementation process. While it's still early, we are excited about its potential benefits. Our third priority is to benefit our clients with our global scale. The ADP marketplace remains a differentiator for us and is a perfect example of a benefit our clients receive from partnering with the leader in HCM. As a growing number of our hundreds of partners offer AI-enabled solutions, in Q3, we established ADP marketplace AI principles that require our partners to commit to the same type of responsible AI principles that govern our own products, including human oversight, monitoring, explainability, and mitigating bias. Our clients put a huge amount of trust in us, and this is another example of how ADP strives to ensure the responsible use of AI throughout the ADP ecosystem. We also continued to extend our market-leading global scale, and in Q3, we reached 1 million paid employees on our I-HCM platform, which continues to scale in several countries in Europe, and we made further progress in growing our presence in the APAC region, where we have recently been expanding our in-country payroll and workforce management presence in a number of markets. In 2024, we are celebrating our 75th anniversary, and we pride ourselves on having built ourselves into a brand that truly matters to employers, their employees and the broader world of work. Our focus on our strategic priorities positions us to deliver more value than ever for our over 1 million current clients and to the tens of thousands of new clients we welcome to the ADP family every quarter. I'd like to highlight just a few of these new client wins from Q3 to give you an appreciation for the variety of ways in which we deliver value for them. In U.S. small business, we had a new boutique donut shop referred to us from one of our CPA partners. The client chose ADP for the strength of our RUN platform, our reputation for great service, our strong relationship with our CPA, and our ability to provide retirement services. Since this was a first-time small business owner, our sales team even took the time to help the business owner set up their business the right way, from guiding the client on obtaining a state tax ID to making sure the client obtained the appropriate workers' compensation insurance. In U.S. midmarket, we won a multistate operator of rehabilitation centers; this client wasn't happy with our prior HCM provider, and Workforce Now proved to be a much better fit. What makes me the most proud in this example is how one of our ADP marketplace partners played a key role in the decision to switch to ADP by independently highlighting the advantages we offered in terms of ease of integrations, a capability we have invested in over the years. In U.S. enterprise, we welcomed a large luxury resort that operates multiple hotels, restaurants, and retail stores on-site and was dissatisfied with the prior provider's level of client service. The client was so happy following their seamless ADP implementation, which included onsite training for their HR team, that they accelerated their plans to add on features like benefits, recruiting, onboarding, wage garnishment, and tax credits. In our international business, one recent win was a leading airline that utilized ADP in certain countries and asked us to help better define their global payroll strategy. Ultimately, they expanded the scope of our services to include an additional 18 countries and started that rollout in the third quarter with plans to add other countries over the next year to enable true consolidated global reporting and analytics. And as a final example, our HRO team started a New York-based design firm after its leadership team recognized the company lacked the HR infrastructure required to adequately attract and retain the right talent. They turned to our PEO offering for truly comprehensive support, attracted by the breadth of our offering including features like the MyLife Advisors program, which supports employees as they make benefit and other important life decisions. We also advise this client on the development of a comprehensive benefits strategy to support their multigenerational workforce and help them attract the talent that they need to grow. As you can tell from these examples, it's often a combination of our technology, expertise, and overall breadth that resonated with these businesses, and the result is incredible diversity in our client base and a resilient overall business model. We look forward to leaning in and delivering even greater differentiation in the market going forward. Overall, we were pleased with the strong financial and strategic outcomes in the third quarter. I'd like to thank our associates who continued to deliver exceptional products and service to our clients, in whose efforts drive these client wins and retention. Thank you again for all you do for ADP and for our clients. And now, I'll turn it over to Don.

Thank you, Maria, and good morning, everyone. I'll provide more color on our results for the quarter and our updated fiscal 2024 outlook. Overall, we reported a strong third quarter with our consolidated revenue growth and our adjusted EBIT margin coming in a bit above our expectations. The interest rate backdrop has improved since we last provided our full-year outlook, so we are updating our outlook for that as well as making a few other changes, which I'll detail. I'll start with Employer Services. ES segment revenue grew 8% on a reported basis and 7% on an organic constant currency basis. As Maria shared, we had a good quarter in ES new business bookings with broad-based growth across our client segments. We have a tough compare in Q4 following last year's strong finish, but with a steady HCM demand environment and healthy pipelines, we feel on track to deliver our 4% to 7% new business bookings growth outlook for the year. Also, as Maria mentioned earlier, our ES retention exceeded our expectations and increased slightly from last year. Given our continued strong retention performance, we are increasing our full-year retention outlook slightly; we now anticipate a 20 to 30 basis point decline in full-year retention, which is better than our prior forecast. ES pays per control growth held steady at 2% in Q3 and we now expect growth to round to 2% for the year, the high end of our prior 1% to 2% growth outlook, and client funds interest revenue exceeded our expectations in Q3 due to higher average client funds balances and a slightly better average yield. We are revising our full-year client funds interest outlook to reflect our Q3 results and the increase in prevailing interest rates since our last update. We now expect fiscal '24 average client funds balance growth of about 3%, and we are raising our expectations for client funds interest revenue and net impact from our client funds extended investment strategy. In total, there is no change to our fiscal '24 ES revenue growth forecast of 7% to 8%, although we are now likely to come in towards the higher end of that range. Our ES margin increased 230 basis points in Q3, driven both by operating leverage and the contribution from client funds interest revenue growth. With our strong Q3 results and the slightly more favorable client funds interest rate backdrop, we are raising our fiscal '24 ES margin outlook and now anticipate growth of 180 to 190 basis points. Moving onto the PEO, we had 5% revenue growth driven by 3% growth in average work site employees in the third quarter, representing slight acceleration from the first half of the year. These results were largely in line with our expectations, and we were encouraged by the gradual stabilization in our PEO's pays per control growth, which decelerated but only slightly from the prior quarter. We continued to anticipate soft pays per control growth through the end of the year and expect work-site employee growth to hold steady at about 3%, keeping us on track for our full-year outlook for work-site employee growth of 2% to 3% and revenue growth of 3% to 4%. PEO margin decreased 220 basis points in Q3. As we shared last quarter, we expect this year's workers' compensation reserve release benefit to be significantly lower than what we experienced in these last few years, and in particular, last year's $73 million benefit. We are updating our fiscal '24 outlook to now assume a minimal release benefit, and as a result, we are further revising our overall PEO margin expectation to be down 120 to 140 basis points in fiscal '24 versus our prior expectation for a decline of 80 to 100 basis points. Putting it all together, there is no change to our fiscal '24 consolidated revenue growth of 6% to 7%. With the two changes to segment margins, largely offsetting one another, we continue to expect our adjusted EBIT margin to increase by 60 to 70 basis points. We still anticipate an effective tax rate of around 23%, and we continue to expect fiscal '24 adjusted EPS growth of 10% to 12% with the middle of that range still the most likely outcome. As we look ahead to fiscal '25, I wanted to share a couple of early thoughts at this point. First, given the fullness of the labor market, we are planning for pays per control growth to once again be below normal levels next year and to decelerate modestly from this year's growth level in both ES and our PEO segments, with the resulting revenue pressure more apparent in the PEO segment given its more direct revenue sensitivity to work-site employees. We will of course share those exact assumptions with you when we give our formal guidance in a few months. On the expense side, we are also planning to continue growing our GenAI-related spending next year. As you've heard from us all year long, there are many ways we can put GenAI in the hands of all of the different stakeholders that work with or on behalf of ADP, including our client practitioners, their employees, our service and implementation teams, our sellers, and our developers. These are critical investments and they are the right investments for ADP, but we expect the associated benefits and productivity growth to phase in gradually over time, likely representing overall margin pressure for the year. At the same time, we appear positioned for continued tailwind from interest rates, though the extent of this benefit will of course depend on how the yield curve continues to develop. As usual, we're focused primarily on maintaining good momentum in our new business bookings and maintaining our strong client satisfaction and retention, and we remain upbeat about our strategy for the years ahead. And now over to Q&A.

Hi, this is Owen on for Ramsey. Thanks for taking our question this morning. So, you're currently entering your open enrollment season for client benefit elections within the PEO. I was wondering if you could talk about trends you're seeing there thus far, you called out some stability in regard to insurance price inflation driving more attached rates, are you seeing any of this follow through? Any thoughts there might be helpful. Thanks.

Good morning. I was going to say good morning, Owen. How about I start and I'll let Don chime in. I think the comment would be, just to start, we are smack in the middle of our open enrollment season exactly as you suggested, and so, it's probably too early to make a call in terms of what that's going to look like from a full-year perspective on the retention side. But overall, we have seen a bit, a tiny bit of PEO retention improvement this year, and the compares are getting a bit easier, and we do expect some improvement for the full year. So with that, I'll let Don chime in.

Sorry, I jumped again there. So, Maria, thank you. Perfect answer. Thank you.

Great. Super helpful. And then, if I may, just on client retention continues to sort of surprise to the upside, I was wondering drivers there, I previously thought potentially fewer bankruptcies in the down market but any expectations more longer term might be helpful there?

Yes, absolutely. We're very pleased with the overall retention results. I think you see that in our revised outlook, you see that in the revision we made last quarter as well. And so, just to remind everybody just how well retention is going, fiscal '23 was a record, that record was really driven by the mid-market and international and the down market actually did decline a bit in fiscal '23, and we expect pretty much the same outlook, if you will, for full year '24, which is why we still have a down year-on-year retention result, but we're incredibly pleased with overall what we're seeing with client retention. That's really being led by a combination of things, one of which is the investments we made into product, the record results we have in terms of client satisfaction; that in and of itself was a record in the third quarter, along with retention. So, we're very, very pleased with that. As mentioned, there's still down market variability, and there's down market out of business. We haven't seen it thus far this year but we still expect it to normalize a bit further. And then there's always normal variability in retention. So, we believe the retention guide is the appropriate one, but certainly we're very pleased with the record quarter and where we sit with retention thus far this year.

Great. Super helpful. Thank you.

Hi, thanks. This is Zack Ajzenman on for Bryan. First question, just want to dig in on the ES revenue growth affirmation despite the higher retention at PPC views, heard that you might come in towards the higher end of the range, but perhaps you can elaborate on some of the underlying assumptions and any offset?

Yes, so a couple of things, Zack. Maria already mentioned that retention is in very good shape for us, so certainly that's been helping and contributing to the revenue growth. And of course what's changed since last time around which is making us even more comfortable with saying we're going to be towards the higher end of the range is that client funds interest impact is very good. So, I think those are the two primary drivers to why we're more confident that we're going to see revenue come in towards the higher end of the seven to eight than we perhaps were 90 days ago.

Got it. And a follow-up on demand ES new business bookings affirmed at 4% to 7% growth, what are the strongest segments of the market and any notable changes to call out versus the second quarter?

We are optimistic about the overall demand environment. Companies continue to hire and invest in their workforce and human capital management. This quarter, we were particularly impressed with the performance in retirement services, which remains a strong story. We've discussed the positive long-term trends influenced by new legislation, and our efforts in distribution execution have paid off well in this area. Additionally, our mid-market and international segments are also performing remarkably well, reflecting a similar success story where our investments and execution strategies are aligning effectively. Enterprise also showed strength this quarter. Overall, we haven't observed any significant changes in the demand environment. We feel confident, as evidenced by the strong hiring landscape and labor demand.

Thanks very much.

Hi, good morning, and thanks for the terrific updates. Client retention obviously really strong, obviously your scores continue to go up. Are there any areas that you would call out that are standing out in terms of driving the higher NPS scores and the higher client retention? Anything that you would particularly note?

Good morning, Mark. I would say to you mid-market on both of those. So, mid-market is driving the strong NPS scores to record highs. The mid-market is driving incredible retention. So that's the one call out. You can probably hear the optimism in my voice there because it's a fantastic story coming together, but I think overall retention is incredibly strong. The mid-market and international in fiscal '23 were very strong; they continue to be strong, but that's really the one call out I would make is the mid-market.

Great. Maria, there's an area that investors are increasingly curious about, and you and ADP have the most comprehensive perspective regarding the industry. I'm bringing this up on the call because some individuals are concerned about saturation. Your new bookings are still on the rise, but investors want to know more about the potential for new solutions and how many clients have already upgraded. While your results, along with those of some competitors, have addressed these concerns, could you provide some insights?

Yes, absolutely, Mark. I'll give it a shot and certainly happy to have Don chime in. Maybe he can talk a little bit about our growth opportunity in international, but I think, broadly speaking, when you think about the total addressable market of the HCM space and where we all play and we all compete, and it's highly competitive and there's been a lot of investments coming into the space over the past few years. What I would suggest is there's still tremendous amount of growth and growth upside for all of us, and as you mentioned, we continued to deliver that and the results that we see on the new business booking side. And so, I think overall there is still runway, there's still plenty of space. I think the part for us outside of our incredible distribution organization which has always been a competitive advantage in how we go to market, that distribution is also anchored to our ability to upsell to the base. So you mentioned this ability to upgrade and how much has upgraded and are we all the way there? What I would suggest to you is we're still at about 50% as it relates to new business bookings coming from, call it, new business, net new business versus upgrades, which suggests to me that we still have a tremendous amount of opportunity even within our base. And that's a lot of the focus that we have as an organization, whether it's in the PEO getting smarter about which clients within employer services that we target to offer to the PEO, or it's the work that we're doing on generative AI to try to get upsell and offering the right product to the right client at the right time. And in my mind, bending the curve and continuing to focus on attach rates, whether that's on the point of sale or omni-attach at a later time, is definitely an opportunity for us to continue to deliver bookings in a very broad market that still has a tremendous amount of opportunity for all of us, but moreover, where we continue to execute and deliver on that. So, I don't know, Don, if you want to comment a little bit on international in terms of the opportunity there?

Yes, perhaps to add a little bit more color, I think we're still very optimistic about growth opportunities beyond the U.S. or the North American market. So, Mark, I think we've talked before we're on the ground in 40 plus countries outside of the U.S. We're present in multiple segments in those markets as well. We've got some great things happening in Southeast Asia where we're rolling out a single platform across, beginning in India but many countries surrounding India and the Southeast Asian market. We're excited; we often talk about the fact that we pay over a million people in India, every payroll, every payday. Price points are still a bit low, but we expect those things to work for us and work in our favor in the future. So, I think still lots and lots of opportunity for ADP from a growth perspective, and certainly we don't worry about saturation being a limiter to our future.

Hi, good morning, and thanks for taking my questions. I just wanted to go back to some of the early thoughts Don that you provided on fiscal '25 and talking about the GenAI investments and I think you had mentioned that there could be some margin pressure associated with that, and just wanted to clarify were you talking about potentially leading margin to be down year-over-year, or are there other offsets with general operating leverage and interest income that can potentially offset the margin pressure from those investments? Thanks.

Yes, Scott, thanks for the question. I think it's still early. I think the intent here was to give some very early guidance on what '25 could look like. So, we still expect to see some improvements in margins. It's just, do we expect to see as much of an improvement given some of the GenAI pressures, expense pressures that we may see. Of course, CFI, at this point in time, depending on what the yield curve does, once again things have changed a fair bit in the last 90 days, and if I was to, not that I have a crystal ball, but I don't think many folks right now are expecting anything to change from the rates perspective in the U.S. before September, so I think we're going to get some tailwinds from that. So, we're not really trying to signal a decline in our margins; what we're signaling perhaps is maybe a slower growth in the margins as we look into '25.

Got it. That's super helpful. And then just wanted to go onto the PEO segment and going back to some of the verticals that we've talked about over the last year in technology and professional services, just wondering if you can update us on some of the trends you've seen there with pays per control growth. I mean, even looking at the employment report that you guys released this morning, it looks like professional services is stabilizing and increasing, but technology information seems a little bit choppy. So, just wondering if you can talk about trends in the PEO with respect to those verticals?

Sure, so if I, you know, Maria talked a little bit about bookings, I think, so we've been, we were happy with our bookings. They softened a little bit in Q3, but we had a very, very strong Q2 on PEO bookings. We can move on kind of to the PPC growth. Back in Q1, it decelerated a little bit more than we anticipated, and a significant amount of that deceleration was attributed to the technology and professional services sector. And in Q2, that stabilized. So that was good for us. While there's still some headwinds in PPC, including from technology and service sectors, there were no surprises in Q3. So it's important to note that worksite employee growth accelerated, about 1% over Q2, despite the modest incremental pressure we had from PPC pressure. And so, and that, of course, is a function of the year-to-date booking success that we've had. So nothing really to call out. More stability, if you will, in PPC pressure than we've talked about previously.

Thanks, good morning. Thanks for going through all this. Anything on the pricing side worth sharing, Maria? Just thinking about some of the peer commentary out there. Any call-outs or interesting observations?

In terms of, from a standpoint of our price, or pricing in the market from a demand?

Yes, your pricing, or as you're thinking about resetting prices as you go into the usual seasonal time changes, price changes, any thoughts there? So both for new renewals as well as new deal bids?

Yes, absolutely. So I think my general sentiments, and then Don can give the kind of a little more directional, but my general sentiments around price remain that we're very thoughtful and very measured as it relates to how we think about price, whether that's on the new business side, or it's on the renewal side, as you mentioned. And so for us, it's about understanding kind of by segment. So, you heard my commentary in the prepared remarks just how broad and deep and diverse ADP is, with respect to our client base. As you can imagine, we think about a down market, price increased differently than perhaps an enterprise. Some of those are also long-term contracts that have indexes attached. And so all of that lends itself to a very surgical approach to ensure that the price value equation remains the right one for the market and for our clients. And obviously at the same time, what we're doing is also monitoring what's happening in the HCM space with respect to the peer group and pricing overall. And I would say from a competitive lens, we haven't seen anything unusual as it relates to price from us or the others, even though it continues to be a highly competitive environment. And so as such, our approach this year to price, which I'll let Don comment on, has been very thoughtful, and I would expect us to take that same measured approach as we head into '25.

Yes, so the price increase this year was relatively well-received. We're in the 100, 150 basis point range. We're closer to the 150. So happy with where we're at. But back to Maria's comments, we're in the middle of our planning cycle right now, and we'll look very carefully at that whole value equation, making sure that we keep our retention up. Our NPS is supporting that, and we'll make sure that we're mindful and thoughtful about what we do with pricing going forward.

Oh. The answer is both. So I think it's really about solving for, again, all of the users that interact with ADP, right? So if you think about all the personas: our clients, our clients' employees, and our service agents, our sellers, it's really about putting GenAI in every part of our ecosystem. So in terms of what are we solving for, the answer is both. We're trying to drive greater service efficiency. I think we've proven out that through digital transformation and taking friction out of our products and making those investments, we have the ability to drive up our NPS results and record client satisfaction tends to lead to similar record retention. So definitely working on ensuring that we're driving up retention. Obviously, the more happy clients we have, the easier it is for our sellers. We're also investing into generative AI for our sellers to become more productive. So it is about service productivity. It's about seller productivity. It's about client experience. Client experience lends itself to retention. So I guess it's just one happy virtuous cycle, but I think - my answer is both, and all of it is what we hope to gain. Now, again, kind of back to the investments we're making and what Don alluded to in terms of any pressure we would have with respect to margin on those investments. Some of these investments, we know they're the right thing for ADP, but they will take time to ultimately garner all of the results, in all of these categories that I just mentioned. And so, as it stands today, we have some really exciting things that we're seeing. If you think about something like call summarization that I've spoken about in the past. And we're shaving off roughly a minute per call; that doesn't probably sound that exciting. But you think about a minute per call over time, and you think about how many calls we take broadly across ADP in a given year. The math lends itself to over time, tremendous efficiency, and again, hopefully a better experience, right? So I think the answer is all of it. We're solving for all of it.

Understood. Thank you.

Hi, everyone. It's for James. Thanks for taking our question. Just one for me today. You mentioned coming in at the higher end of the range on ES for the full year, which makes sense given some of your commentary on booking strength, better retention, and the improvement in the float benefit we're seeing. However, despite these factors, it seems ES in the quarter met our expectations. I'm curious, based on your remarks about pricing being at the higher end of your historical range, what does that indicate regarding what you're observing in terms of net new business, as well as cross-selling and upselling? Thanks.

Yes, Michael, thanks for the question. I think that, first of all, the price, there's no change in that. I think we've been calling that out for most of the year, certainly in the one to 150 range. So not much of an incremental impact, if you will, for Q4 and therefore for the year in total. So not a lot of change from that. Yes, I mean, bookings, we called out, we're still in the hunt for delivering on the range as we declared, so we're still in that. But not really a lot to drive incremental revenue, other than some of the float, but as the year shortens or we have fewer months, days left in the year, the impact from higher CFI is going to be somewhat muted as we look to finish the year.

Hi, Michael, it's Danny. If you're wondering whether there is some offset somewhere else, there's a little bit from FX moving adversely relative to our prior expectations.

Good morning. Thank you for the question. Maria, you gave a great explanation of the wallet share opportunity that's still left earlier, PEO, propensity modeling with GenAI, and then international. I want to dig into the international side a little bit, particularly some of the newer markets that you're getting into. I'm just hoping you can give us a bit of a progress report on a lot of the last-mile infrastructure that you've been putting in place, go-to-market, ramping that up. And I'm just curious, should we think of the deployment of PI, the next-gen payroll engine in the international as a real catalyst for the next leg of booking growth? Thank you. I appreciate it.

Yes, thanks, Pete. I think that was a solid three, four questions in one. So I will, I'll do my best to weave through it here. But as Don mentioned, we're on the ground in 40 countries. We do payroll across 140 countries, inclusive of our partner network. In terms of the final mile or the last mile, as you referenced, the first thing I would comment on is we've building that for 50 years. So when I think about international and everything we've done over the course of decades to build that infrastructure, it's a tremendous lead is what I would suggest. And you see that in our international bookings results, right? So we had a nice first quarter in international. We accelerated that in the second quarter. We had an even better Q3. A lot of that is being driven by our multinational growth. So think about our Celergo offering, our GlobalView offering. These were especially strong for us in the third quarter. And I do believe it's the overall demand environment coupled with an on-the-ground strategy, if you will. And by the way, the international pipelines remain healthy, and we believe it's going to position us for a solid Q4, but also next year. In terms of where we continue to expand. I mentioned it in my prepared remarks. Asia-Pac or APAC is something that our Asia business has been relatively modest, but we see significant growth over time. Obviously, that growth is a direct byproduct of our clients' demand growth, as it relates to the activities of our clients and where they're moving associates and where they're moving business. So, we believe that continuing to lean into Asia-Pac is important for us. And so as a result of that, we kind of are continuing to lean in there. I think we mentioned last quarter, the acquisition of a company in the Nordics, specifically in Sweden. So that's an area that also is a high-growth area from a client perspective. And so I think, our strategy over time has been as we get further into a country and we see the demand, at times we will fold in our partners. And you've seen that obviously in the Nordics, and you've seen that in many countries prior to that. But that ecosystem is vast across 140 countries. Its decades of building that final mile. It's a clear competitive differentiator in the market. You can feel see, and it's really palpable on the heels of the last earnings call. I was actually over at our rethink event, which is where we bring together a few hundred of our very largest global MNC clients. And the spirit of how we're executing in that market is really palpable when you hear it directly from our clients. And I believe it's a tremendous opportunity for us to continue to drive growth. So I think, I covered all of that, Pete.

Thank you, Maria. Just quick follow-up. Do you think that the deployment of next-gen payroll is a catalyst for going to market and some of those newer markets?

Yes, of course. So, next-gen payroll, for sure, our intent is to continue to drive next-gen payroll across various international markets. We have it deployed in a few of our markets today. And that coupled with these offers that again have the lead of Celergo going GlobalView over time will just further the growth narrative and the story over there. But that is absolutely the intention and the strategic direction of next-gen payroll.

Hi. This is David Paige on Ashish. It was great to hear about your results and growth in the mid-market particles. I was wondering if you could just give a little bit of an overview on the competitive landscape there. Are you guys taking share or the entire market, or just what's the outlook or the environment in terms of competition in the market? Thank you.

Yes, absolutely. So the mid-market is a great segment for us. It's certainly not getting any easier to be an employer in the mid-market. It's littered with complexity and all sorts of challenges to navigate. Just even if you look at the last 30 days, you can see legislation that mid-market employers are having to navigate. And so it's a strong market. It is a highly competitive space. That's not new. I think from a competitive landscape perspective, it's always been competitive. And I don't know that we've seen noticeable changes in the competitive landscape. What we have seen is incredible distribution, execution, and incredible satisfaction execution on our end. We've made great investments into the product set. It's winning in the market. You marry that strategy with great execution on the seller side and great execution on the retention side. That, to me, is what's changing in the mid-market is that we've gotten stronger.

Good morning. Maria, as you look at the mid-market and the success ADP is having, who are you winning market share from? Is it traditional payroll companies? Are there companies that are maybe using other software products that you wouldn't consider payroll companies? I'm just wondering where the success is coming from?

Everywhere. Candidly, listen, from a mid-market perspective, again, the demand is healthy. The competitive environment is competitive, and we continue to remain laser-focused on all of the competitors specifically. The ones that have been talking a lot about us over the last few years. And I think the way that we've been focused is really about the investments we've made, investments into a best-in-class product. Investments into focus on distribution; investments into a digital transformation that's driving great client satisfaction. And so, that really has allowed us to have a winning story, as it relates to really all of the players. Yes. So I'm happy to start and certainly happy to have Don chime in too on the PEO. I'm always very, very bullish on the PEO value proposition. I've been close to that business for a long time, and I will tell you it's stronger than it's ever been. So despite the strangeness that we've had in the PEO, from a kind of the componentry heading into the pandemic, during the pandemic, after the pandemic, and then now, call it, a little bit post-pandemic. What I would suggest to you is it has nothing to do with the fundamentals of that business and what we would expect over time from a growth perspective long-term. And so the value proposition is strong. Nothing from our end has changed there, as it relates to the overall demand from the business. And we see that just in the - we continue to have 50% of our clients into the PEO coming from the base. So it's resonating with our existing clients; it's resonating with the open market, and it continues to be a very strong offering for us. So I don't know, Don, if you want to add anything there?

Nothing to add but the value proposition is as strong as ever, and the fundamentals in the business continue to be quite strong.

Hi guys, thank you for taking my question. And apologies, I was on a different call. But I know it's kind of maybe early, but do you have any news about your next fiscal year, maybe something like early views as we head into the fourth quarter? Thank you.

Yes. Dan, just a couple of things, thinking about next year. We do think that it's early, so we didn't share too much, although we did say that the pace per control will continue to be under a little bit of pressure, given the fullness of the labor market. So that's kind of continuing story that we've been telling. We will continue some of our GenAI spending related spending, making the right investments for ADP. And of course, we're going to get some tailwind from interest rates. So I think those are the three primary things. And of course, we always remain very, very focused on bookings and our strong client retention and client experience. So, I think those would be the highlights for '25.

Yes. Thank you, and thank you once again to everyone who joined us today, whether the full time or late. We always appreciate the questions, the interest, and we certainly look forward to speaking with all of you again soon, and we look forward to the close of the year. Thanks.

Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone have a great day.