ADP Earnings Call & Webcast

Q2 Fiscal 2022

January 26, 2022

Copyright © 2022 ADP, Inc.

Forward Looking Statements

This document and other written or oral statements made from time to time by ADP may contain "forward-looking statements" within the meaning of the Private

Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like "expects," "assumes," "projects," "anticipates," "estimates," "we believe," "could" "is designed to" and other words of similar meaning, are forward-looking statements. These statements are based on management's expectations and assumptions and depend upon or refer to future events or conditions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Factors that could cause actual results to differ materially from those contemplated by the forward- looking statements or that could contribute to such difference include: ADP's success in obtaining, and retaining, clients, and selling additional services to clients; the pricing of products and services; the success of our new solutions; compliance with existing or new legislation or regulations; changes in, or interpretations of, existing legislation or regulations; overall market, political and economic conditions, including interest rate and foreign currency trends; competitive conditions; our ability to maintain our current credit ratings and the impact on our funding costs and profitability; security or cyber breaches, fraudulent acts, and system interruptions and failures; employment and wage levels; changes in technology; availability of skilled technical associates; the impact of new acquisitions and divestitures; the adequacy, effectiveness and success of our business transformation initiatives; and the impact of any uncertainties related to major natural disasters or catastrophic events, including the COVID-19 pandemic. ADP disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. These risks and uncertainties, along with the risk factors discussed under "Item 1A. Risk Factors" of our most recent Annual Report on Form 10-K, and in other written or oral statements made from time to time by ADP, should be considered in evaluating any forward-looking statements contained herein.

Non-GAAP Measures

Adjusted EBIT, adjusted EBIT margin, adjusted diluted earnings per share, adjusted effective tax rate, and organic constant currency are all non-GAAP financial measures. Please refer to the Q2 fiscal 2022 earnings release available at investors.adp.com for a discussion of why ADP believes these measures are important and for a reconciliation of non-GAAP financial measures to their closest comparable GAAP financial measures.

This presentation is a supplement to our Q2 fiscal 2022 earnings release; it is intended to be read in conjunction with, not as a substitute for, or in isolation from, the earnings release.

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CEO's Perspective

  • Strong Q2 represents continuation of momentum from earlier in the year
    • ES sales productivity ahead of pre-pandemic levels and growth outlook remains robust; PEO sales performance reflects strong demand environment for outsourcing
    • ES and PEO retention levels continue to outperform expectations and drive upside to results
    • PEO average worksite employee growth accelerated further to 16% for the quarter
  • Recent Investor Day highlighted opportunities to drive sustainable growth across ADP businesses
  • New ADP User Experience being deployed across ADP platforms with several milestones reached during Q2

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Q2 Fiscal 2022 Financial Highlights

(unaudited)

Total Revenues

Adjusted EBIT (a)

Adjusted Diluted EPS (a)

h 9%

h 10%

h 9%

h 9% Organic Constant Currency (a)

Adjusted EBIT (a) Margin h 20 bps

$4,025M

$930M

$1.52

$1.65

$3,696M

$848M

Q2 FY21

Q2 FY22

Q2 FY21

Q2 FY22

Q2 FY21

Q2 FY22

(a) For a reconciliation of these non-GAAP financial metrics to their closest comparable GAAP metrics see our Q2 fiscal 2022 earnings release available at investors.adp.com.

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Copyright © 2022 ADP, Inc.

Q2 Fiscal 2022 Employer Services Segment Results

(unaudited)

ES Revenues

  • 6%
  • 7% Organic Constant Currency (a)

$2,511M $2,671M

Q2 FY21

Q2 FY22

  • U.S. pays per control h 6%
  • Average client funds balances h 28%
  • Average client funds yield i 40 bps

ES Margin

  • 40 bps

30.2%

30.6%

Q2 FY21

Q2 FY22

  • Operating leverage from strong revenue growth partially offset by additional headcount in implementation and service organizations

Q2 Highlights

  • Revenue outperformance vs expectations supported by strong bookings, retention, and pays per control performance
  • Sales productivity remains ahead of pre-pandemic levels; no significant impact from new pandemic variant in the quarter
  • ES revenue retention remains robust and near record Q2 levels

(a) For a reconciliation of this non-GAAP financial metric to its closest comparable GAAP metric see our Q2 fiscal 2022 earnings release available at investors.adp.com.

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ADP - Automatic Data Processing Inc. published this content on 26 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 February 2022 18:50:03 UTC.