Conference Transcript - ADP 2026-09-09

Brian Keene, Analyst — Citi

I'm Brian Keene. I cover the payments, processors, and IT services here at Citi, and we're excited to have ADP here for Fireside Chat. We have Peter Hadley, who's the CFO and a longtime ADP-er. I think it's been over 20 years, I think, at ADP, so he can tell us all the secrets of what goes in and out of ADP. So I got a list of questions that I'll run through, and then if you got any questions, you can just raise your hand and we can get a mic to you or I can ask a question for you. So with that, Peter, thanks for being here.

Peter Hadley, CFO

Thank you, Brian. Good to be here. Thank you.

Brian Keene, Analyst — Citi

So I got to start with the obligatory question about the macro, and since you guys have an incredible holistic view, what could you call out or what appears to be kind of the strengths you're seeing in the macro versus the weaknesses? Anything in particular that maybe your data sees that kind of are interesting insights over the last several months?

Peter Hadley, CFO

Yeah, sure. I mean, it's a super interesting macro environment. Obviously, lots going on. Oil prices, I think, I haven't been watching during the day, but I think over $100 a barrel now and inflation rates north of 3%, at least in the most recent print. But for ADP, the main factors that drive our business are actually pretty stable. So employment situation being the predominant one, you know, very much still a low hire, low fire environment. I think, you know, layoffs and, you know, we get a lot of questions about layoffs that are here announced in the news, many of them technology companies and is AI driving this. I think the real information we see in the macro environment with respect to employment, at least is a stable environment. Continuing to hire, we reported our internal metric of pays per control growth, which represents the number of pays on a same store basis for client-employee hiring, grew at 1% last year, again, with very low sort of layoff levels and relatively low new hiring levels. But the net of all of that, around 1%, consistent with the year before. We're expecting flat to 1% again in our fiscal 27, of which we're now in just started month three. So, you know, overall, a very sort of consistent environment. Other things going on in some of our businesses, so medical inflation, or medical healthcare inflation in our PO business continues to be high. You know, we see that as each year as we go through the renewal process, So a lot going on in that area. Yields too, in our client funds portfolio, we've been benefiting from, you know, continued high yields on the fixed income side of things. So, you know, overall, I would say the environment, not a lot of natural tailwinds to our business model, not a lot of natural headwinds. It's really quite a stable environment. And most importantly for us, the demand environment for our services continues to be healthy. and as you can probably appreciate, the level of compliance, rigor, regulation and so on with respect to employment is not in any way diminishing and I think that helps in terms of continued demand for our services.

Brian Keene, Analyst — Citi

But even pays per control for you guys doesn't have a wild swing on the revenues. I don't know if you guys used to give the stat of like 1% pays control only determines this amount of revenue. Do you guys still have that, quote that number?

Peter Hadley, CFO

Yeah, it's around 25 to 30 basis points of our employer services segment revenue is impacted, if you like. That's the impact on employer services revenue from around 1% pays per control growth. So in our growth algorithm, bookings and retention are much more important drivers, if you like, than pays per control.

Brian Keene, Analyst — Citi

Yeah, it gets a lot of the headlines, but it doesn't drive the bottom, per se.

Peter Hadley, CFO

It does get headlines, yeah. It doesn't drive a huge amount of revenue, but it is high margin revenue, movement in employee volumes. It doesn't really tend to meaningfully impact the cost to serve. So whether they're going up or down tends to be maybe more of a driver on the margin, candidly, than on the revenues.

Brian Keene, Analyst — Citi

Got it, got it. I wanted to talk about the big AI debate and there was, you know, some misperceptions on maybe some of the AI risk in your guys' business and payroll in particular. So, you know, the big question was, can AI automate processes to disintermediate ADP and why not? Maybe you could just start there.

Peter Hadley, CFO

Yeah, look, I think AI can certainly automate processes. We're doing that ourselves. were investing at scale in AI, from a disintermediation perspective, there's a lot more that goes on to our business than purely the, call it the AI capable element. So there's a lot of, you know, we've been in business for nearly 80 years, building up sort of this critical infrastructure, you know, with respect to the banking rails, for example, we move three and a half trillion dollars per year in the US of client money, client payrolls running through ADP, being dispersed to, you know, thousands and thousands of tax authorities and, you know, a million or millions, I should say, of employees. You know, the, again, the infrastructure around taxes, you know, bankings, the security protocols, all of those things, you know, I think are not really areas that AI is addressing, designed to address and so on. Where it is, you know, very valuable. I don't see it as a disintermediation factor, but I see it as something if you can invest in scale, at scale, and you have sort of the capability through data, through use case and experiences that we have, you can really train AI to be very useful in terms of client interactions, solving problems for our clients, for their client employees, and also making our own workers more efficient, whether that's in our service and implementation area, increasing the effectiveness of our sales force and also our product developers and coders. So, you know, we see it much more as an opportunity than a threat. So, you know, I think, you know, net a positive, but having that data set, that use case, you know, history and the ability and balance sheet to invest at scale, I think is really an important enabler for AI, and it's sort of areas we believe, you know, ADP differentiates itself from the competition.

Brian Keene, Analyst — Citi

Yeah, and I was hoping you could describe the capabilities of ADP Zone in a little more detail, and how has this AI-infused platform gone from 10% to almost 50% of employees using it in fiscal year 26, and what are some of the benefits to the operating cars?

Peter Hadley, CFO

Yes, the zone is our proprietary platform. We have developed our own technology as well as using Salesforce technology, expanding sort of a long standing relationship we've had with Salesforce, salesforce.com that is. And it's a tool we use now across our Salesforce, our implementation organization and our client service organization. So it provides different things to different to different you know elements of our of our associate base depending on what their what their job is but you could think about it as a holistic you know client platform you know a crm type platform but but surfacing intelligence and and capability to our employees and as you said we've we've now deployed at around 50 percent of call it those of the organizations that i just mentioned, we expect to be largely fully deployed by the end of FY27. What it does, for example, for a salesperson is it will really help organize their opportunities. It will stack rank the opportunities. It will give intelligence with respect to what that buyer may be looking for, again, based on use cases and history and data mining analytics. It will suggest during a live call with a prospect, you know, how the salesperson may want to approach the opportunity. It will help surface, because we have multiple offerings, the best fit or potential best fit and offering for that customer. So really driving Salesforce productivity and effectiveness when it comes to implementation and client service, sort of similar, but in the vein of obviously more of an operational activity, helping solve, you know, client use cases. Again, it's really bringing together the history of that client plus the wider client base to identify common threads and trends to enable our service and implementation associates to remove friction from the process on behalf of the client and better serve them to give them a better outcome and at the same time reduce our cost to serve.

Brian Keene, Analyst — Citi

And could, yeah, so zone can help drive revenue and lower the cost to raise margins. Right.

Peter Hadley, CFO

Yep.

Brian Keene, Analyst — Citi

And then how about ADP Assist? Does that, is that more of a revenue driver for you guys?

Peter Hadley, CFO

Yeah, ADP Assist is sort of the overarching name we give to our AI program in terms of what we deploy into our products. So these are AI use cases and AI tools that product users, which could be our own associates in the case of some of our outsourcing businesses, but also client practitioners and also client employees. So again, as an example, using a client employee, if a client employee was, and one of the benefits, sorry, just before I go into that, of, you know, ADP Assist is it's also a proactive It will analyze an employee or a client situation and proactively reach out to and prompt the user. So, for example, if you're an employee and you've moved from New York City to Connecticut, let's say, your pay statement will change as a result of the different tax regulations. Maybe during the time of the year, your pay statement might change with respect to hitting certain limits on 401k contributions or Social Security or whatever. will reach out and, so to speak, and prompt the user for, are you aware your pay statement has varied, your net pay has either increased or decreased, probably increased in my example. Net pay has increased, taxes have come down. This is due to differential in state tax rates and, you know, hitting social security limits during the period. So it's really a tool to surface insights. Many of the things we've done, candidly, for many years, but through calls and other things and also maybe have done a little more reactively prior to the AI era. This is a tool that's helping solve these client issues that we've been solving for many years and also new use cases, but in a proactive fashion, in an automated fashion and using the collective intelligence that we've amassed through our massive data set as opposed to sort of just being able to serve a client on an individual basis.

Brian Keene, Analyst — Citi

So where do you think we are on the ADP journey with AI? in both revenue enhancing and cost, are we still in early innings? Is there going to be more product velocity coming? I mean, how do you think about the roadmap?

Peter Hadley, CFO

Yeah, I still think we're very much in the early innings. We are meaningfully getting benefit from the AI we've deployed, whether it's in productivity and revenue. We have certain situations where we discreetly will charge an incremental amount for additional functionality In others, it really helps with, like I was saying before, with reducing friction, improving client satisfaction, helping retention rates, helping us support sort of our price increase levels, you know, to the clients by delivering value and features in exchange for price and not just sort of whacking an inflation adjustment on the bill. So it has a revenue effect. Some of that is direct, some of that is more indirect. It also has a cost opportunity that we have been starting to monetize, but I think more of that to come. So yeah, a net net, a positive opportunity, I think, for the P&L. Okay, great.

Brian Keene, Analyst — Citi

I wanted to turn to some of the numbers and I was looking through the 10K and it popped out of me that the global business kind of grew 10% in fiscal year of 26. I think that was up from 5% in fiscal year of 25. And I traditionally think of it as a mid single digit grower. So it obviously has been growing faster, global has, and I assume that's a lot to do with Lyric. but maybe you can just describe the change in global and how does that look as we head into fiscal year 27? Does it go back to a normalized kind of mid-single-digit growth rate or can it stay at these elevated rates?

Peter Hadley, CFO

Yeah, thank you. Great question. I think the global business is one of the real opportunities we have at ADP. We're very happy with how it's been performing. Again, really a big opportunity. We have a sizable business. We have around 70,000 clients and a couple of billion dollars plus of revenue there. But I still think there's tremendous opportunity there with respect to, you know, broadening our offer. Our offer is much more a payroll specific offer outside of North America. In North America, obviously, we cover much more of the HCM pillars. And I think the opportunity to take more of that to global is something that's in front of us. With respect to FY26, Lyric actually is maybe surprisingly not a major contributor. the majority of the Lyric business we have live today is domestic, is more in the domestic space than in the global space. We've been talking about on some recent earnings calls, some European headquartered companies in UK and in France that have signed for Lyric. Again, with the implementation timelines for that product, most of those clients are still in backlogs and not meaningful revenue generators at this point in time. The growth rate global in 26 was driven more by our global payroll offering, which is continuing to perform really well. And as that's a 10K number, it's also as reported. So there was some lift from FX in FY26. In our reportable segment of employer services, we called out about a point of revenue growth from FX that all lands in the global pillar, as you can imagine. So whether or not we deliver the same number in 27, we don't tend to guide to these pillars. We guide more to the reportable segments, but I would expect maybe some moderation in the FX contribution, but continued strength in global payroll and hopefully more international business coming on board with our Lyric HCM offering.

Brian Keene, Analyst — Citi

Yeah. So Lyric, I think live clients went up 94%. The pipeline was up 50% for Lyric with 70% new opportunities for logos. What's gaining traction so much with Lyric and is that a key component to, you know, maybe a little bit higher revenue growth?

Peter Hadley, CFO

Yeah, it's very much gaining traction. I think, you know, what differentiates Lyric, if you like, from the competition, I think it's the newest enterprise HTM offer out there on the market. So very much designed in the AI era, very much designed with a flexible working environment in mind. And obviously we all know sort of how the work environment has changed from the pandemic period or post the pandemic period with respect to flexible teams, dynamic teams, not necessarily the traditional HR hierarchies, which obviously the product accommodates, but it also accommodates sort of more fluid working environments and obviously, you know, many of those things that have happened post-pandemic. So, you know, it stands very much, I think, on its own a little bit in the context of its modernness. And also, we believe the AI capabilities that, you know, we were talking about a few moments ago that are built into Lyric as well as a number of our other offerings. So, you know, I think we couldn't be more excited about how it's performing. At the moment, it's very much, you know, a booking story. The live clients, as you said correctly, grew 94% last year. It's still a relatively small number, though, in the context of ADP and our enterprise opportunity. The backlog is big and the demand and the pipeline is strong. And that's probably the thing that's most exciting for us at the moment. Implementation timelines, particularly as you go further and further up market, which is the other area where we're really pleased with, you know, Lyric sort of started. We started at the low end of the enterprise space, you know, 2,000, 3,000, 4,000 employee companies. We've been signing, you know, more and more companies north of 10,000, north of 20,000 employees over the last six to nine months. And, you know, I think penetrating sort of that true north of 10,000 enterprise space and also taking it, you know, into the international arena and selling to, you know, headquartered companies outside of North America, I think is a tremendous opportunity for the future. But it will take a little bit of time for all of that to bet into the revenue growth, just given the absolute size of ADP's installed base and our existing revenues.

Brian Keene, Analyst — Citi

Okay, great. I want to ask about HRO X pass-throughs. I think it grew 5% in fiscal year of 26. That was down, I think, from 7% growth in fiscal year of 25. And there was a little bit of a rebound, I think, that was called out in the ESHRO segment in fiscal year of 26. So just trying to think about the two segment growth rates of kind of HCM and HRO, should they grow similar in that kind of mid single digit kind of growth rate?

Peter Hadley, CFO

Yeah, I don't think they necessarily need to grow it. There's no necessary linkage, if you like, to the growth rates between the HRO portfolio and the HCM portfolio. And again, these are sort of pillars we share in our external reporting. So the HRO pillar comprises from a segment perspective, the PEO business, and also what we call the ESHRO business, which is called a managed service offering for payroll and HR and time and things like that. But so a couple of things, you know, the PEO business, which is, I think, well known to investors, given it's a segment reported, you know, we delivered 7% revenue growth, 5% X zero margin pass-throughs last year. You know, we have some headwinds, if you like, with respect to pace per control in that business, not particularly growing. I mentioned earlier, medical insurance inflation has somewhat of an impact in terms of being able to improve retention rates when medical insurance renewals are as high as they are. But bookings have continued to perform well in the PEO space and in the ESHRO space, which is the other part of this HRO pillar that we share in our K. We had a bit of a soft sales year in FY25, particularly in the fourth quarter. and for the, it feels like an age ago now, but there was a lot of noise last year in the, or in FY25, fourth quarter, it was Liberation Day tariffs and there was a government shutdown too, if I remember correctly. So there was a little bit of pause, if you like, on decision making in that space that we saw rebound quite strongly in FY26. So again, these are larger deals, more complex deals that take a bit of time to work through backlog to become live and revenue generating. So some of that will come in 27. Some of that might feed through into FY28. But the underlying health of the HRO portfolio is strong, as is the HCN portfolio.

Brian Keene, Analyst — Citi

And so just sticking on the PEO business, the X pass-through, I think that's growing somewhere in that 3% to 5% range. And then the WSE growth is only 2%, which is a little bit lower than maybe normal. What's it going to take to get back to the kind of midterm targets for PEO to be in that 6% to 8% growth?

Peter Hadley, CFO

Yeah, so the midterm targets were a total revenue target. So we were happy last year in 26, we finished at 7%, so squarely in the range. That contemplates the zero margin pass-through piece. X zero margin pass-throughs, we hit 5% last year, which we felt was pretty good, all things considered. And like I mentioned, sort of growing worksite employees is a little tougher in that space at the moment, just given hiring levels in the PO client base and also medical inflation having an impact on how much we can improve our retention. We did improve our retention in 26. We also improved it in 25, but relatively modest improvements. And I think that was understandable for us given the inflation environment in health insurance. But But the main driver, Brian, in terms of sort of the current PEO growth rate levels versus where they were three or four years ago is the hiring situation. So, again, we were seeing sort of 4%, 5%, even 6% pace per control growth within PEO a number of years ago. That's much more in the 0% to 1% range now. And that's having an impact on our revenue growth versus where we were in the low teens or high single digits. a few years ago but seven seven and five last year is we were very pleased with and our guide this year at least at the higher end is for similar levels we'll see where we land you know during the year yeah um that wse growth is that a little bit out of your hands you know it's kind of dependent on the market um it's partially in our hands and partially out of our hands so the booking side of it is very much you know our ability to execute and drive bookings we had good bookings healthy solid bookings in FY26 we're expecting you know the same again or better hopefully in in 27 that piece we can control I think the retention we partially control through quality of service and the relevance of the offering to our client base part of it becomes a little bit I don't know if not controllable is the right word but but some of it is down to companies wanting to switch hoping that they can find you know maybe some better better benefits pricing by going to a different provider some of it is our own declination rates on on clients that don't meet our underwriting levels with respect to you know to how they're performing in the book or potentially as as prospects so there's i would call retention partially under

Brian Keene, Analyst — Citi

our control partially driven by the market and the pace per control piece really is client decision making on on hiring levels so hard hard for us to uh to impact on that got it got it um es grew six percent organic in the fourth quarter i think you guys called up pricing was up north of 130 basis points i think it'll remain that level in fiscal year 27 you know maybe you talk a little bit about what's driving price you're getting a little higher price maybe than the normal 100 basis points cadence i know we're we're talking about 30 basis points but i'm just curious I think the market might think that there'd be pressure with competition in price, but actually you guys are getting a little pricing power instead. So I just want to understand that. And then maybe about, you know, what's new client growth look like for you guys?

Peter Hadley, CFO

Yeah. So I think on price, you know, again, the world sort of changed, I guess, with respect to the pandemic period. So before the pandemic, we were more averaging around 50 basis points of contribution from price. Since the pandemic, we've been in more than 100 to 150 basis point range. So 26 was sort of squarely in line with, call it the post-pandemic expectations. We expect similar in FY27. Some of it is the macro environment and where inflation sits. And obviously, as we all know, I think many things, whether it's suppliers or pricing or whatever has all somewhat risen. That rising tide has lifted all boats there. But the other piece of it, and we're very careful on price to take what's appropriate but not to push the envelope. Notwithstanding, we have a very sticky business. We definitely want to retain our clients, retain them as happy clients, have them buy more from us, around half of our bookings, as you know, come from our existing book of clients, have clients referring us, you know, in the market for new opportunities, that opportunity we see is larger than, you know, what we might be able to glean short term from excessive price increases, if that makes sense. So, you know, I think how we feel comfortable with the pricing equation is a little bit the macro environment, but also very much what we're delivering to clients through our products, our solutions and our service. And, you know, back to the AI point, as I was saying earlier, we monetize a portion of that just as opposed to specific items on the invoice through our general price increases. And adding that increased and improved functionality and capability in our solutions gives value to our clients that we feel they're happy to pay for through incremental price. And we're happy to take what we can, but not to get too greedy.

Brian Keene, Analyst — Citi

And then what about new client growth? How is that trended versus historical?

Peter Hadley, CFO

Yeah, new client growth continues to trend. I mean, we're a large company with getting close to 1.2 million clients. So if I look at what we reported in our K, we had mid-single-digit growth in our down-market solution run. We continue to see growth in our Workforce Now solution, which supports the mid-market, both the PEO, ESHRO, and the traditional HCM tech offering in the mid-market. We're making headway in the enterprise space now with Lyric and with Workforce Suite and our global payroll offering. So, you know, we feel pretty good in terms of where we're tracking on market share. I think we have more opportunity in front of us. We are beating a number of our competitors when it comes to our balance of trade. Some competitors, we are still in a position where we're in a negative position, but generally an improving position. So, you know, more opportunity there, but I think execution has been pretty good.

Brian Keene, Analyst — Citi

New bookings growth, I think with 6%, it felt like it came in pretty well, strong for you guys in the fourth quarter. How does the pipeline look to grow in fiscal year 27? I think you guys guided to a 4% to 7% kind of new bookings growth, but how does the pipeline look when you finish strongly? Do you have to go replenish the pipeline? Does it take a little more time to build?

Peter Hadley, CFO

Yeah. So in terms of pipeline, that's typically more an enterprise, maybe upper end of the mid-market enterprise concept for us. We did have strong bookings in those segments, as we mentioned, in the fourth quarter. So there is an element of replenishing, but we're always working on the pipeline. So we feel good about the pipelines entering FY27. We're now still in our first quarter, but we'll see how the results pan out. But there is an element of that that might have a bit of a seasonal impact. if you like, or a cyclical impact in, you know, the early part of the year, but not unexpected, not something we haven't dealt with before. I think, you know, more in the mid-market, down-market space, it's more of an activity-based business. And again, our sellers continue to sell well. I think we have some offerings that are really resonating in particular. We called out our retirement services business, more than 200,000 clients now, more than a billion dollars in revenue. So, you know, we feel like we're well-placed both from a pipeline activity perspective, also from Salesforce investments in terms of headcount being on board, some of the tools we spoke about earlier that have been deployed and continuing to be deployed across more and more of our Salesforce. And we feel like we're well-placed for a good year, but there's much work to be done. The number, as you would have seen, is, you know, we delivered last year is $2.2 billion in bookings. So that's a lot of bookings larger than many of our competitors installed revenue base. We have to sell each and every year just to grow our bookings. So much to be done, but we feel like everything's in place and we have a lot of confidence in our sales force to deliver.

Brian Keene, Analyst — Citi

So if you think about Workforce Now and Run and Lyric and Workforce Suite that you're now selling, is there any areas that are going to have outsized growth probably that will carry a faster growth rate to it versus the other maybe segments of the business?

Peter Hadley, CFO

Yeah, I think on the bookings number, I think the enterprise products are probably the ones that will contribute most to an improving growth profile, if you want to call it that. Some of that's a function of the fact that they're newer and the starting point is a little smaller, but we called out Lyric and Workforce Suite as the two largest dollar contributors to dollar growth in the bookings in FY26. And I would expect that likely will probably continue in FY27. So I think, you know, that's really the hot, relatively speaking, new hot hand for us. You know, we continue to perform and execute really well in our established businesses in the mid-market and the down-market. So I see enterprise as probably the opportunity to bend the needle on bookings. Again, that's the one that takes the longest to bend the curve on revenue, but it's also traditionally the longest retention business and the highest retention business and the longest client life business. So it's a bit of a long game when it comes to the enterprise space, but yields great rewards if you're successful. And we feel like we're making all the right steps in that direction.

Brian Keene, Analyst — Citi

How fast have you guys been growing the sales force or are you cutting sales? I just remind me on Salesforce for fiscal year 26. And then what are the plans for growth or for trimming the Salesforce in fiscal year 27?

Peter Hadley, CFO

Yeah. So we grew the Salesforce in 26 and we expect to grow in 27. I would say we grew mid-single digits or low to mid-single digits in 26. And 27, roughly similar, maybe slightly smaller in terms of headcount growth, but not not meaningful still growing our headcount we see still plenty of opportunity to um to add sellers and we look to do that but we're also investing pretty heavily in in our channel alliances and distribution strategies there in more top of the funnel sort of marketing and lead generation activities so there's really a raft of um of different approaches and investments we take in um in our sales and marketing organization headcount is one of those but But we have grown that headcount, and we expect to continue to grow that headcount.

Brian Keene, Analyst — Citi

We've got a little over a minute left, but I have to ask about the EBIT margins. Over the media term, I think you guys have guided maybe to 50 to 75 bps of margin expansion. You've guided a little ahead for this fiscal year, 70 to 90 basis points above fiscal year 26. Can you just talk a little bit about what's maybe driving a little faster margin cadence and kind of as you go out in the medium term is 50 to 75. Is that still the right number, given maybe some of the efficiency gains you're getting on the AI side?

Peter Hadley, CFO

Yeah, so we delivered 80 basis points last fiscal year. And again, as you said, we guided 70 to 90 this year. So we're not necessarily revising our midterm objectives that we set about 18 months ago, but I would say we're a little ahead of where we expected to be in that progression. And, you know, I made that comment on the last two, I think it is earnings calls. So we feel that that's not a temporary phenomenon. Float continues to be very durable for us with yields and also balances continuing to grow. So that's an important element. But really what's lifted the delivery, if you like, has been some of the productivity efficiencies we've been realizing from our AI investments and also other investments we're making in products. in products. So we feel like this is a sustainable level that we delivered last year. We expect to deliver this year. I think it's a bit early for me to be talking about 28 onwards, but I would consider that to be more of where we're at now to be a sustainable sort of level of margin delivery. And I'm not expecting to sort of regress somewhat to maybe at least the lower end of those ranges that we gave 18 months ago from a medium-term guide perspective.

Brian Keene, Analyst — Citi

I am going to sneak in one quick one on just capital return. We've seen some companies be a little more aggressive with stock buybacks, maybe a little more aggressive on dividend. Just quick thoughts on how you are thinking about it currently.

Peter Hadley, CFO

Yeah. So we've been, at least in the ADP terminology, we've been more aggressive on stock buybacks the last year. We did a little over 2% of our shares outstanding last year. Our typical cadence has been to retire around 1% of our share count. So we saw value in the stock. We still do see value in the stock. We issued a note last year in May, I think it was, for a billion dollars to help us continue at those rates basically through FY27. So we expect continued elevated share repurchases absent some sort of major change in the market condition through the rest of FY27 as well. So the dividend continues to be very important to us, 51 years of consecutive dividend growth. We'd expect that to continue to grow. Board approval obviously required later in the calendar year, but likely to grow. But certainly on the sherry purchases, we have the balance sheet capability to continue at this elevated clip without impacting our ability to invest organically in the business and also without the impinging on our ability to look at strategic M&A opportunities as well. So I would expect our shareholder returns to continue at the clip that we're delivering at the moment, at least through the end of FY27.

Brian Keene, Analyst — Citi

Great. Well, with that, Peter, we'll leave it there. Thanks for coming.

Peter Hadley, CFO

Thank you, Brian. Appreciate it.