Automatic Data Processing, Inc. (ADP) Citi’s 2024 Global TMT Conference (Transcript)

Automatic Data Processing, Inc. (NASDAQ:ADP) Citi’s 2024 Global TMT Conference September 5, 2024 10:50 AM ET

Company Participants

Joe DeSilva – Executive Vice President, Global Sales

Conference Call Participants

Peter Christiansen – Citi Investment Research

Peter Christiansen

Good morning, everyone. My name is Pete Christiansen. I’m with Citi’s Equity Research Department covering info services, HR, HCM services, fintech and crypto all have been everywhere here.

But great to have Joe DeSilva here. EVP of Global Sales at ADP. Great to have you on board.

Joe DeSilva

Thank you.

Question-and-Answer Session

Q – Peter Christiansen

A lot of areas of a ton of interest in the space nowadays. I’d love to hear, first of all, let’s get a picture of end market demand. Employment has been kind of interesting how the numbers have all of a sudden changed or been resketched. I’d just love to hear from your perspective as it relates to the employer services business, after growing 7% bookings after last quarter, which was truly impressive and reaching the high end of your 4% to 7% full year growth guidance. How would you characterize end market demand today? What’s driving share gains? And what are you hearing from customers?

Joe DeSilva

Yes. Thanks for the question, and thank you for having me, Pete. Good to see everyone. So you hit on a lot of it. When we came out, we just exited our fiscal year Q4, we had a $2 billion in employer services bookings. We hit the high end of our range. When I think about kind of general demand in the market, like we have not seen any type of slowing. As a matter of fact, we’re starting — we feel the pressure of growing demand for us.

And if I kind of think about our organization and how we spoil the globe, if you will, and think about Q4, not only are we not feeling any kind of the pressure of any type of macro environment or slowing of hiring we’re starting to — we feel this success across the globe. So, if you think about our small market arena, mid-market or large market enterprise space and international, we have broad-based contribution there in Q4.

So, the question that I always ask myself, is that just a function of Q4? And is that something that we’re doing just divide the close, and the answer is, again, knocking on wood, no, we had a great close to a year. And when I look at pipelines in Q1 across that same broad base, we have really healthy pipelines in Q1, which makes me feel good about where we are and lends credence to, we’re not feeling the pressure in the macro environment right now, which is great.

Peter Christiansen

That’s really encouraging. And you’re seeing that on Workforce now. You’re seeing that at enterprise, RUN all these different areas, anything to cause specifically across those particular channels?

Joe DeSilva

No. Again, for maybe the audience here, our RUN market being — RUN product being down market. Workforce now being in the mid and enterprise space. No, we’re seeing that broad-based demand. Nothing particular to call out. We feel it across the globe and across each of the platforms.

Peter Christiansen

That’s encouraging. Now I love a line manager at a conference. That’s great, because we really — we get a chance to do a little bit of nuts and bolts in their specific areas. So — and it’s a very eye opening for investors and particularly for us, but let’s step back a little bit. I would love to understand — how is ADP sales marketing? How is it structured? And how you run the business and what’s your day-to-day like?

Joe DeSilva

Sure. So, think about ADP sales and marketing. First, think about us relative to competition. We spend where you’ve got size, we’ve got scale. We’re across the globe. So, we’re significant in size. When you think about sales person headcount, you think about 8,500 sellers across that footprint. When you think about how we go to market, we’re broken up domestically. We’re broken up internationally. We also have business units. So based on employee size that we sell into.

I wake up every day with the general focus of how you grow that broader number at the top across all of those segments across the board. How you do that is where it gets a little bit more tricky? And I spend a lot of my time focused on certainly you want to figure out how you do that through headcount, adding headcount. But more importantly, in this environment, in my opinion, is how do you do it by way of productivity?

How do you get your people better and there’s a lot to unpack there, which I’m happy to do? But the [indiscernible]. We are a global organization, domestically and internationally. Of course, Think about us as size, scale and reach. Our size in terms of what we do in bookings is bigger than a group of our competitors’ revenue in an average year. So, we’re sized good sized scale there.

Peter Christiansen

Right. Now I think what was maybe 1.5 years ago, you kind of got to the sales headcount that you needed. Now it’s been about that productivity. You talked a little bit about AI and Maria as talked about the propensity modeling, all that kind of stuff. Maybe walk us through some of those components that have improved some of your sales force productivity.

Joe DeSilva

Maybe a point of clarity for the group, Pete. First off, we’re always — our goal is to add headcount every year and call it that mid-single digit environment. So we did that in ’24, and we expect to do that carrying forward. We believe the opportunity is there. We look across the business units in terms of where we have what I would refer to as the hot handler of things going well and we can add the head count. So that is always a lever for us to pull, and we’re going to continue to pull that.

When I talk about productivity and the importance of productivity, maybe unpacked that for the group a little bit the way I think about it. Productivity is something that you get from having people time and seat so your tenure. What additional products do you give them? How do you get to do more? How can you get more out of the same group of people you had the previous year? And while that sounds basic, it’s changed a little bit in the selling environment.

And what I mean by that is if you go back five, six years ago, the predominant lever for was go add head count, have had a case that opportunity. And what that headcount was able to do is walk into a buyer and say, hey, Pete, you didn’t make up thinking about buying payroll today. But I’m going to tell you why you need to buy it from — why you need to buy it, why you need to buy it today and why you need to buy it from ADP. We drove the conversation. We drove the education and we drove the product that you bought.

Today’s world then you could say whether it’s as a function of COVID, where everything was put online, people are more knowledgeable than they ever have been. So, our sellers are walking in. And in most cases, aren’t driving that buying conversation. They’re walking into a conversation where the buyer is far more informed than they ever have been, for whatever that reason is, which first this is us and make sure we have the absolute best sellers in the market and best sellers in terms of knowledge, making sure we give them the best training programs, the best tools, making sure that when they walk in and meet and for buyer that knows our price, knows our competition is, already demoed a product and demoed to competition, how do we bring value to that buyer and help meet that buyer in the journey where they are?

So when I think about growing sales to your question, headcount will always be a component of that equation, but productivity comes more front and center for me this year than it ever has. And by the way, that’s a function of people just have access to more information. And there’s just more competitors out there than they ever have been that are driving, in some cases, could be a better experience because they had a great sales rep or they’re just out there pushing other products that we have to be able to speak to.

Peter Christiansen

We’ve had a thesis — I’d love to hear your perspective on this. We had a little bit of these during COVID. Well, it’s tough to prove. It’s always tough to get that market share pie chart, Matt knows what I’m talking about. But during COVID, you saw tech demands from your end clients increase quite a bit. So, those who were with regional providers, self-filers, naturally gravitated to the national offerings, the larger offerings, the global offerings because they just had the tech, they were able to mee those tech requirements and to be there. Do you feel like that was a part of the growth story that we’ve seen since COVID?

Joe DeSilva

I would love to want to — is it part of it? Yes. Is it the story? No, because we continue to see that demand. We continue to pull the sell filers that we continue to pull — that continues to be a market that we do well in and continue to pull from. So, could it drive some level of growth during that time and maybe expedited? Yes, but to be forthcoming, Pete, it’s nothing different than where we’re at today. It’s just another pool that we fish in, and we continue to pull from.

Peter Christiansen

That sounds great. So back to the productivity part on the sales side, sounds not so much like Hunter, more gather more relationship management, trying to sell those adjacent products, the modules on top of that. Are those some of the key priorities that investors should think about where the sales force is going from here?

Joe DeSilva

So, I would encourage the investors to think about and how you think about ADP is we do it all. So let me give you — quantify it a little bit for the group. 50% of the sales that we do in a year come from our client base. 50% of the sales we do in a year come from prospects. We are currently with ADP that we bring over on to the ADP platform. When I think about our sales organization, our motion to sell, if you will, there’s certainly a group of people that call into the client base that sell them additional modules or products think about retirement services, insurance services, time and labor management, some HR function. There are sales reps that face off with accountants, banks, brokers to drive, leads and referrals from there.

And then, of course, we have sales reps that do what I would call old school prospecting that we give tools and data to and their goal is aimed at getting out there driving awareness and demand from prospects to people that currently aren’t with ADP to bring them over onto our ADP platform. So, while we certainly do the client piece and add-on modules, that’s 50% of the equation, if you will. There’s a big piece in driving prospecting out of referral centers and just pure prospect in to the market.

Peter Christiansen

That’s helpful. Now you did talk about continuing to add sales headcount, which is interesting because I think some of your competitors in some of your areas have actually pulled back on their headcount. Walk us through that onboarding process for a new salesperson, how long does it take to ramp them up before their quota carrier or that kind of thing? And how easily can you flex your sales force capacity up and down?

Joe DeSilva

So maybe — while you didn’t ask the question, the statement around the competition this notion of them pulling back. Maybe just kind of give a perspective on that? My opinion on it is one of two things. It’s I think people are trying to run the ADP playbook, which is this balance of headcount and productivity. There’s another piece of it that I believe — and again, this shows opinion that people believe that just adding headcount was going to drive your bookings and drive it at a meaningful rate.

But what you slowly realize is adding headcount is the — candidly, the easiest part of the puzzle. It’s bringing that headcount on onboarding that headcount and training that pro headcount, giving them the tools and technology to be effective in their job. The incentive programs, the promos, it gets expensive very quick and to do it in an efficient way with scale the way ADP does is very hard. And I think that’s canoe my opinion on why things are starting to slow potentially in terms of headcount, which has no implications on us.

In terms of how we onboard people, I want you bring you back, we onboard quite a few people here, as you can imagine. Call it, three, four years ago, onboarding people was, bring them in, we train them, of course, but we did a lot of on-site or in the field training along other people. And that was in a world where we drive the conversation, we drilled the demand. We made — we forced you to believe we educated you on what — why you should think about ADP today.

If you believe what I shared with you that, buying dynamic has changed, where people are far more educated than they ever have been. We’ve invested a significant amount of money into our training and onboarding program. So, when you think about how we bring people on there, it’s training for our onboarding people that goes the course of a year. They are trading for our tenured reps. There’s product they are training for elite sales representatives that go on through your tenure to make sure that you’re kept up with the time to understand the competitive landscape, you understand our products.

So to answer your first question is we bring someone in, in the low end of the market, which is where we add the majority of our head count. They will go through a year-long training program, coming in and out of the field to continue to morph to be productive sales rep, if you will. Bringing the majority of our sales reps into the small market, also gives us the ability, we call that our feeder system to feed the other business units.

So, you bring in a small market representative, you teach them the lay of the land and how to sell, how to sell AB, out of — or excuse me, additional modules, how to work with partners. Now once you’ve built that platform, if you will, that foundation for that rep, now they become a viable fit to move up into major accounts to sell Workforce Now. Once they want to understand Workforce Now and talent and compensation and the different components, now you become a viable fit to move into the enterprise space.

So, while we add across the board, the majority are added down market, and we have a really rigorous training program to make sure with that notion of that productivity and sales effectiveness is more important than it ever has been, that learning, call it, in the field. We need to put more behind that, and we put a significant amount of money behind that with our tools and our training.

Peter Christiansen

And maybe you can explain — you touched upon it a little bit the role of partners and channel throughout the ecosystem, how that has evolved and maybe playing more to ADP sales strength there?

Joe DeSilva

Sure. So, if you think about our part — so we have our sales ecosystem of, call it, 8,500 sales reps, let’s talk about the down market for just a moment. Roughly 75% of the units that we will sell down market are influenced by a third party. And what I’d ask you to think about those third parties, think about, first, start with CPAs and accountants for the obvious reasons as they uncover new opportunities or existing client base that they could put on payroll because they try to believe in ADP and we work with them.

So we have sales reps that work directly with the accountants. Same thing with banks. We have sales reps that work directly with our bank channel. So one, you open up your ecosystem and your ability to drive more through those channels. The other piece that I would offer to you as part of this question is, okay, so we work with banks, we work with CPAs work with brokers to drive units, to drive deals and forge relationships. The question always becomes, so why do they want to work with you over anyone else?

And why do you have — as you add sales reps, why is it important to face them against that opportunity? And it breaks down into a couple of things. Number one, we have a rev share program that we do with them. So as they benefit in the growth of the sales as they refer more to us, there’s rev share. Another piece of that is our technology. We want to make sure that anybody refers us business, especially out of their client base or out of their book, we want to make sure people feel the value have the visibility, and we put significant investment into our technology. So, you may have heard of Account and Connect. How can we help an accountant best serve their client base?

So, when they refer to us, give them visibility of what they referred, what does the rev share they’re getting and then value-add that they can bring to their client base by way of that technology. So, I put a wrap on it. We have a majority of our units come through the influence of a COI accountants, banks, brokers. And we certainly have partners that we work with as well. And the idea there is, how do we get them involved with rev share? How do we bring value to them by way of not only referrals back, but also investing in technology to make them more valuable to their clients?

Peter Christiansen

And having them use the technology as well, they can be an evangelist for the platform for sure.

Joe DeSilva

Because I mean the worst thing and we’ve experienced it early on as you go through the infant stages of this stuff with the Count and Connect, you also don’t want that accountant to have to call, ADP to learn something about their client or call ADP to do simple transactions you want an accountant to feel empowered how visibility of who I refer to? What is my book of business? How much have it been paid? And then what can I help with where I don’t have to have my client goal or I can act as the center contact for that client. So they can call me and I can help them with information versus having them have to call ADP. And it’s a valuable model and one that we take seriously and continue to invest in.

Peter Christiansen

I want to pivot a little bit to the existing client base Clearly, a code saw this big move to ASO, HRO, more outsourcing of services. Walk us take a minute or two, talk about the upselling, cross-selling opportunity that you’re seeing now, maybe where you’re seeing the heat what — where you’re most excited?

Joe DeSilva

Yes. So, what I’d encourage everybody to think about in our client base is there’s the opportunity to do a couple of things. There’s the opportunity to add on additional business and there is the opportunity to upsell to another platform or another product, if you will. So let me give you an example of both. Part of our upsell motion is we call into the client base to sell them insurance to sell them retirement services, to sell them an HR bundle.

They may be a payroll-only client, and they want HR or through our tools and technology, which we can touch on, certainly, I love the unpack for you is. Our sales reps see, this client is ready for HR because they added employees, whatever that might be. So, there is the motion of selling to the existing base, additional modules. The other piece of that you touched on it is this notion of upgrading clients on platform. So as an example, upgrading a RUN client from RUN to PEO to Workforce Now.

So, if you think about the clients that move on to PEO — the deals that move on a PEO on year, 50% of them come from the existing client base. by way of our sales people, tools, technology identified, that deal is a best fit for outsourcing for whatever the reason might be. So, the same thing applies for upgrading them from RUN to Workforce Now. And those triggers are different based on client, why there might be a better fit for PEO versus Workforce Now. So, there’s two distinct motions: One to sell modules, one to upgrade our clients. And we have sales reps that focus on them independently.

Peter Christiansen

How would you characterize the runway or the TAM that you have within your existing client base?

Joe DeSilva

So PEO. So, if you think about the external market and pure-play PEOs, this is a huge opportunity for us. We have a client base that we can continue to mine 50% of it coming from PEO, 1.1 million clients like with the runway is significant for us in terms of upgrades. And it makes it more exciting. It’s not that there was never trust for a sales rep, but you relied on the sales reps knowledge and motion, if you will, on why one was a good fit to move up with the onset of AI. AI has always been on generative AI, helping that rep and the tools and technology we have to say, that is a best fit and here’s why for that particular product, gives you even more confidence and makes you more effective at going after the opportunity. So, in the spirit of runway, the runway significant for us.

Peter Christiansen

So, we’ll connect the dots kind of tool that, hey — how is your salespeople quite a bit?

Joe DeSilva

Yes. So yes, there is plenty. I mean I’m happy to talk about it now. If you’d like to talk about it later, but you asked the idea is to make sure our sales reps get away from the days of, we have a client, and they said yes to ADP, so they’re a good fit for a bunch of things to now the tent for ADP and they’re a good fit for these things. Here’s why they’re a good fit and here’s what you’re going to say to them when you call them. Helping those them to be more effective and target, if you will, and that does a couple of things.

Not only does it give me excitement about the runway, one, gives me excitement about the effectiveness. You heard Maria talked about client centricity all the time. It makes us more mindful of clients, of the client’s time and not calling them with a lot of things, i.e., client exhaustion. We know who to call, what to sell them and what to say to them and then all of the tools behind them on how to follow up what you do. It’s simply remarkable and it gets me excited about the opportunity.

Peter Christiansen

Earlier this morning, we had a light and we were talking about health care rising costs there. I think they were quoting something like 9% to 12% for the next 12 months, which is insane considering the compounding that we’ve had over the last couple of years. So, it sounds like the value proposition for PEO is just getting even more and more attractive. Are you seeing recent trends in health care costs actually moving that needle additionally or getting more excitement for PEO?

Joe DeSilva

Yes. The short answer is yes. Some — it’s funny when I have these conversations, which are quite a bit, people believe sometimes you look at health care inflation and go what impact they can have on PEO is kind of slow down. We see it as an opportunity for us. So, we often talk about — you probably heard Maria talk about of the value prop and PEO. We’re excited about it, and we see — we talked about the acceleration here. We feel good about the outlook for PEO in particular about — around inflation and how the value that brings to our PEO offering.

Peter Christiansen

That’s great. Very exciting to hear that. I do want to touch upon pricing. And I feel like there has been some mixed messages across the industry, would love to hear your perspective on promotion levels. Are you still seeing attractive retention with escalation, that kind of stuff? Any thoughts on — are there any irrational pricing that you’re seeing out there?

Joe DeSilva

So let me start at the macro general. So like there is no irrational pricing that we see right now. In particular, like if I just take a step back and look at the competition and the focus, there’s been while it looks like quantifiably, not Joe, like that growth has slowed a little bit, there’s been a lot of focus on profitability. So, we’re not seeing irrational pricing in any of our segments, which is a good thing. If anywhere outside of ADP in the competitive landscape that started to happen, I don’t worry so much of the impact potentially it has to us.

When I think about us and you asked a specific question for the team around discount and promos. What I would tell you is there are always discounts and promos going on in any given year. It’s just a function of the way we all go to business. And what I would tell you is that the level of promos or discount could be somewhat focused from — can be driven internally? How much do we want to drive of a certain product that we feel great about externally, do we feel like we need that to win? But when I look at it, call it, on average across the board, pricing irrational discounts, promos all within line in prior years.

Peter Christiansen

Steady Eddy. That’s good to hear. I do — I know that — before being head of sales, you also were President of ADP Small Business Services, but I want to dig a little bit more into some of the strength that we’re seeing in RUN in the down market, which has been really impressive, reported great bookings and retention, added 50,000 new clients in 4Q, clearly showing some momentum here. Just love for you to talk a little bit about why RUN is continuing to win? And how do you see your competitive position there?

Joe DeSilva

Yes. What I’d encourage you to think about RUN. So RUN is an easy to sell, easy to implement easy to understand and easy-to-use product. It is a single platform that is very, very easy to do those things. And so, you’re like, well, that’s wonderful. What that makes for us is it’s easy for us to go out and demo. It’s a very useful product. The things that are in run bring value to the buyer. So as an example, there’s something in one called payroll inspector. Payroll inspector for when you hit enter in your payroll, it tells you, hey, you have an issue here, you put 400 hours, not 40 hours. It brings value to the buyer — excuse me, to the user that you don’t see anywhere else.

When you marry the call the functionality and the ease of use needs of understanding, we’re a small business owner who doesn’t care about much other than run my payroll, make sure it’s right. It makes it very easy to demo and very easy to sell, easy to buy. And you see it in the record retention is people love it. And it’s — so we continue, when I think about it, love to double down on RUN. We think it is the market leader. We feel good about it how it resonates in the market for all those reasons, inclusive of easy for us to sell demo, easy to implement, great ease of use and our buyers love it, and that’s evidenced in the retention rate.

Peter Christiansen

New business formation is a big component of that, obviously. And it’s still at healthy levels, although moderating from COVID. Maybe we’ll see if a Fed pivot can inch that forward. I think that’s part of the thesis in the stock’s performance of late. What are you seeing on the business formation side? Why are people coming to ADP first perhaps? And love for you to talk about some of the sales dynamics there.

Joe DeSilva

Yes. So generally speaking, for the group, maybe you know this. So look, new business formations have slowed a little bit over these historically high numbers for sure. I wouldn’t — I would tell you I don’t lose sleep over that necessarily. One of the things that we keep our eye on is the closing of or the termination of businesses. We believe that’s a potential reality and we reflected that in our retention outlook.

But when I think about our go-to motion and I think about sales, there’s still a huge opportunity out there. If you think about what I said in terms of how we go to market and the different levers we can pull from prospecting. It’s only prospecting to leveraging CPA’s banks, the opportunity for us remains immense, and we remain excited about the growth opportunity down market, not only by way of the channels, the market and the macro, but again, call it, anchored with RUN in such a great product. So, we feel good about the outlook here.

Peter Christiansen

And balance of trade market share?

Joe DeSilva

Look, I feel — I said this to Matt before, there are a lot of different things that I look at internally. And one of the things that’s critically important for us is growing share and certainly, part of that is new business formations. But other part of it is also taking from the competition, and what I will leave you with is I feel really good.

Peter Christiansen

That does sound encouraging. I do want to touch upon next gen payroll from a sales perspective. I’m kind of like how that — maybe that makes you drive a little bit easier, make it a little easier shortened sales cycles, but I’d love for you to hear opine on that perspective. How does next gen payroll help you drive higher attach rates, module sales, what have you?

Joe DeSilva

The way I would think about it is next gen being a more modern offering, if you will. So if you think about the mid-market in particular, when you think about Workforce Now, you’ve already got a great platform in Workforce Now. Now you marry this payroll engine that brings you things like pep-in pricing, continuous caulk, that brings you call a more modern offering, if you will. It excites me because, one, it opens up opportunity for us. Those are the — certainly — those are one of the things that we compete against. I’m a very open person. You’ll hear our competitors sometimes refer to us as legacy, which I don’t think is entirely fair.

But if there is any shadow of a doubt, this puts that to sleep. So, it opens up that door for us. And when I think about next gen payroll. I mean we’re attaching 30 to — excuse me, we’re 30% to 40% of the units we’re selling right now are on our next gen payroll. I feel optimistic that, that’s going to continue to grow. Our sales organization is wrapping their head around it. They’re getting excited about it. As you continue to build, you continue to solve for what we call our knockouts, making sure you have an all-encompassing payroll that looks at all the different needs of a business. I’m excited about the opportunity. So, it helps…

Peter Christiansen

It includes product packaging per se, I guess, right?

Joe DeSilva

It’s product packaging upfront and the excitement of our sales reps and getting in front of — remember what I said before, we’re meeting with fires now that have already met with a lot of our competitors. So, it’s great when you’re in there first, but you have to go in and react to whatever it might be, hey, you don’t have this. This gives us that opportunity to react to it, number one. And number two, it’s just — it’s an exciting, it’s a more modern feel and sales organization gets excited about it. That’s important.

Peter Christiansen

That’s great. That’s great. I do want to pivot on the enterprise side, which is a totally different animal in many respects, I’m thinking pre-COVID, Lifion was rolling out. And right after that, you got everyone upgraded, which is a herculean task from my understand. Cobalt engineers and all that kind of stuff. Can you give us — now Next Gen HCM, can you give us a little bit of a state of the union on the enterprise side of the business? What are you seeing in terms of sales cycles, implementation cycles? Any type of decision delay? How are enterprises thinking about that transition to a Next Gen HCM kind of infrastructure?

Joe DeSilva

Sure. Let’s start with, if you don’t mind, Next Gen HCM and candidly, my excitement for the product and what we’re seeing already. And I want to make — I just don’t want to talk in general terms, having — approaching three years in this job when I came in, this is one of the things on how do you wrap your head around Next Gen HCM? How do you get the organization excited and the market excited about it?

And that’s been a core focus of ours. And there’s a lot of components that go into that, including what does the product road map look like? Where are we with the product, so on and so forth. So, I will tell you, at this point in the juncture, I am super excited about Next Gen HCM, number one. Number two, when you look at our enterprise sales reps, they’re the ones that matter. Are they excited about the product and they sell the product with confidence?

And by the way, that might be a general term, but what I didn’t offer to you is, remember, these enterprise sales reps, majority in relationships that they’ve forged over a lifetime. They can’t mess those relationships up. They have to have confidence in the product that they’re selling and belief in that product. We have confidence in the sales organization. If I look at Q4, we had a phenomenal Q4 in terms of the number of Next Gen HCM logos that we sold, which brings to bear just a quantification of that confidence across ADP, myself and the sales reps.

So, I’m really, really excited about that. And I believe that’s going to be a great growth for us in the enterprise space. Look, we’ve had this discussion on slowing deal cycles now. It feels like — you and I, particularly, but generally in the community about for two years. If you ask 10 people, some would say, well, it slowed a little bit. There’s more decision-makers involved I think that was a fair statement last year as, call it, our first normal year out of COVID. There were more people involved in the decision-making. I would say we’re more at a normal run rate in terms of decision-making and deal cycle. We’re not — could you go through our deals that we’ve closed in Q4 and say, that was a longer deal cycle and you said, absolutely. Do I think it is the norm? I don’t.

Peter Christiansen

I guess in that vein, though, maybe you could talk a little bit like RFP cycle that you’re kind of seeing or inbound interest. What’s driving the motivation for some of these large enterprise potential clients, new logos to come in to ADP, like what are some of the key elements there? What are they looking for?

Joe DeSilva

I wish I had a more profound answer to that. I believe it’s the like — so when you think about how the organization works, the partners they work across, again, whether it’s S&Is, wherever the partners are that they work with, we’re driving excitement in the marketplace around Next Gen HCM. Part of that volume and what the pipeline build is because of that. Other pieces are just pure needs, whatever it might be, they may be expanding to an MNC, and we can help them with their — with the needs they have.

But I would tell you, like when I think about that enterprise piece and I look at what we did in Q4 and I look at — I referenced it earlier on, the growth in pipelines in I’m going to give the team credit that they’re driving favorable excitement out in the marketplace around Next Gen HCM, not only directly with the prospects and their relationships, but with the partner market at large, and I really feel good about that.

Peter Christiansen

It’s — we constantly hear consumers drive tech and it seems like the underlying users and we see this in a bunch of areas within HCM are driving more tech-enabled solutions, more insights, higher engagement, that kind of thing, and that’s driving more enterprises to look at new platforms and new platform solutions. Are you seeing any of that in the decision-making process from — on the enterprise side?

Joe DeSilva

So, I’m giggling a little bit because it has a lot to do with — if you think about the way our competition goes to market right, some of the value they bring. It could lead us into a conversation like, hey, is something like x that I saw a competitor, we find that to be really important and they told us why it should be important whatever that might be, whether it’s how an employee running their own payroll or something else.

We — in the enterprise space, given the amount of the depth of relationships and the time that we’ve been with them, Pete, whether it’s an existing client or prospect, we’re driving a lot of that conversation and helping them whatever that might be, whether it’s the enterprise space is not so much about saving money, but what is the need multi-nationally. How can we help them succeed to expand? We drive more of that conversation to help them. And I think we’re doing a really effective way with it. And what brings more credence to that conversation is Next Gen HCM.

Peter Christiansen

That’s great. I do — we’re almost up on time, but I definitely want to touch upon international and the opportunity there. Certainly, Maria has made this a priority for the Company, is a huge TAM opportunity getting into new markets. From a sales manager perspective, where are we, what inning are we in really trying to scale things scaling Celergo, the GlobalView product to more markets, status report kind of question there.

Joe DeSilva

So first, thanks for reminding me that it’s Maria’s priority because it reminds me [indiscernible]. When I think about maybe a little bit more of a basic answer, which is when I look at the opportunity for us to grow, we talk about headcount, we talked about productivity, but if you look at the market landscape, international is a big opportunity for us. And there’s a multitude of ways.

Look, I tend to giggle sometimes when people say, hey, we’re going to — other parties say we’re going to grow internationally because it is very hard. Every country has its own demand, has its own needs, very hard to build payroll engines in each of those. So, we’ve done a really nice job. We continue to grow and scale GlobalView and Celergo. We’ve seen it in our numbers, continues to grow.

We still level — excuse use best-of-breed in country where necessary, we’re seeing that grow. We’re putting a significant amount of marketing. We’re putting a significant amount of sales headcount to continue to drive, call it, that awareness in the different countries. Your more specific question around what inning we’re in. Look, I’d have to know what inning we started in, and that would be unfair for me to answer that.

I would tell you, when I sit and look at my organization, international, international, what I would tell you is Pete, maybe for the broader group, it’s — I would categorize it more as global. So, there is international in and of itself to grow, but there’s a lot of global MNC. So, when you think about the onset of Next Gen HCM, and these companies that can use it across globally, that gets me excited. That is a huge opportunity.

Peter Christiansen

It’s a great cost synergy to — for a global organization is using multiple in-country providers to have one kind of one throat to choke kind of solution that, but also to leverage more of the technology drive insights. I would — huge — a tremendous value proposition.

Joe DeSilva

The team in what they do right now with Global and Celergo. I mean if I think about just the year we just had there, which was remarkable, coming off of a year where you had a war, you had inflation, you had energy crisis, you had so much — like they had a great year. Another business that is, you look at Q1 pipelines feels really, really good.

They’re doing a phenomenal job with Celergo, GlobalView, but you think about, to your point and to kind of emphasize your point of bringing on Next Gen HCM and having that GlobalView and being called the one throat to choke if you’ll, that is a huge opportunity for us, easy to do business with one stop shop, that exceeds me.

Peter Christiansen

That’s great. Well, that’s an exciting conversation, Joe. Really appreciate you chatting with us today, giving us a little bit of an inside view on the sales perspective at ADP.

Great to have you.

Joe DeSilva

Thank you.