ADP Shareholder/Stockholder Letter Transcript:
2024
Notice of Annual
Meeting of
Stockholders and
Proxy Statement
Annual Report on Form 10-K
ADP and the ADP logo are registered trademarks of ADP, Inc. All other marks are the property of their respective owners. Copyright 2024 ADP, Inc
A Letter from
our Independent Board Chair
Fellow Shareholders,
Throughout ADP s 75-year history, we have continuously challenged ourselves to take actions that not only strengthen
our company, but also empower us to better serve our clients in the ever-evolving world of work. In fiscal year 2024,
we advanced each of these goals while maintaining our unwavering commitment to strong corporate governance and
shareholder engagement. We are confident that ADP can remain a trusted partner to our clients, providing technology, data
and expertise to navigate through any change, while continuing to deliver sustainable, profitable growth and consistent
shareholder value creation. On behalf of your Board of Directors, we want to thank you for your investment in ADP and the
trust you have placed in us to help continue to drive ADP forward.
Executing in a Dynamic Environment
The Human Capital Management (HCM) industry never stands still, as new business models emerge, technology
evolves, and other significant events continuously reshape the way people work. This is especially true today, as recent
breakthroughs in generative AI promise to profoundly impact how humans interact with technology. To stay ahead of these
trends, ADP recognizes the need to further transform HCM from an administrative challenge facing clients to a strategic
business advantage.
ADP is specifically focused on executing across three key strategic priorities leading with best-in-class HCM technology,
providing unmatched expertise and outsourcing solutions, and benefiting our clients through our global scale. Strong
execution in these areas allowed ADP to grow revenue by 7% and to increase diluted
earnings per share by 11% in fiscal year 2024. We remain well positioned for solid growth
49 consecutive years
in the years ahead, as we continue to establish new client partnerships and build on our
of dividend increases
existing relationships with more than 1.1 million businesses around the world.
ADP s disciplined approach to capital allocation balances near-term financial performance
with investments designed to drive long-term, sustainable growth. In fiscal year 2024, ADP invested nearly $1.3 billion in
research and development to drive innovation in new product development and to leverage recent advances in generative
AI. We also added to our worldwide sales force headcount to support continued growth in our new business bookings.
Finally, the ADP Board raised our dividend for the 49th consecutive year, returning $2.2 billion in dividends, and ADP
repurchased $1.2 billion in shares to further enhance shareholder return.
Committed to Strong Governance
As ADP continues to harness the power of data through both AI and machine learning, we recognize the importance of
accountability, transparency, privacy, explainability and governance. Our commitment to strong governance did not begin
with the introduction of generative AI but has been a part of our best practices for years, including through our active AI &
Data Ethics Council comprised of both industry leaders and ADP experts who meet regularly and have provided guidance
within ADP on the responsible use of AI and machine learning. We have developed a compliance-by-design process that
establishes key guardrails around transparency, bias, and accuracy of our generative AI tools.
Our process also integrates privacy, security and intellectual property principles into our ideation and development phases
for generative AI use cases and to monitor the use of our generative AI tools. This process involves interdisciplinary teams
comprised of our security, privacy and compliance experts to ensure we continue to approach this new technology in an
ethical, secure and compliant way that is beneficial to our clients.
In addition to overseeing important governance matters within ADP s business, the Board takes a thoughtful approach to
its own structure and composition. Following a seamless CEO transition to Maria Black as CEO, the Board returned to an
Independent, Non-Executive Board Chair structure effective January 31, 2024. Board succession plans are also regularly
reviewed with a balance of experience and tenure in mind to ensure the appropriate mix of directors is maintained to
support our strategic direction and our commitment to long-term value creation.
ADP believes that true success is achieved when we contribute to the well-being of our clients, their workers, and the global
communities in which our associates live and work. During fiscal year 2024, we were pleased to issue our latest Global
Corporate Social Responsibility Report, which highlights the steps we continue to take to create value for all stakeholders.
Engaged with our Shareholders
Your Board and the ADP management team believe proactive dialogue with shareholders helps organizations become
stronger. To this end, ADP invited or met with shareholders representing nearly half of the company s shares outstanding
in fiscal year 2024. Our directors participated in these engagement efforts and look forward to continuing to do so. We
appreciate the thoughtful feedback provided.
Thank you for your continued ownership in ADP and trust in our Board.
Sincerely,
Thomas J. Lynch
Independent Board Chair of ADP
A Letter from
our CEO
To our Shareholders,
75 years ago, our founders saw the opportunity to fulfill a critical business need and created a solution that launched an
entire industry.
Through decades of change ADP has remained at the helm of workforce
innovation. Today, we help businesses thrive with insightful Human Capital
Management (HCM) solutions that meet their evolving needs as well as those of
their employees. Our HCM technology, industry and compliance expertise, and data
insights deliver measurable results and peace-of-mind while helping to support an
engaged and productive workforce.
We are designing a
future of work that
is easy, smart and
wonderfully human
As the power of technologies like artificial intelligence, machine learning, and
generative AI continue to transform how people work, we are focused on providing
our clients and our associates with technology that s easy to use, powered with smart insights, and personalized to support
a human-centric experience. We believe our cutting-edge products, premium services, and exceptional experiences will
continue to guide our clients and empower their employees to reach their full potential.
Raising the Bar in Fiscal Year 2024
We delivered strong fiscal year 2024 results amidst a steady HCM demand backdrop in our key markets. Our revenue grew
7%, as we served more than 1.1 million clients and paid over 42 million workers in more than 140 countries and territories
during the year.
FISCAL YEAR 2024
BUSINESS HIGHLIGHTS
7% Revenue growth
1.1M+ Clients
42M+ Workers paid globally
7% Employer Services new
business bookings growth
92.0% Employer Services
client revenue retention
$3.4B in shareholder
distributions
$2.2B Dividends
$1.2B Share Repurchases
Strong execution by our sales force produced 7% growth in Employer Services new
business bookings to a new record of $2.0 billion. This growth was broad-based with
contributions ranging from small businesses in the U.S. to multinational companies
headquartered internationally. We continued adding new clients and selling more to
our existing base given ongoing strong demand for our solutions beyond payroll.
Our Employer Services client revenue retention rate of 92.0% exceeded our
expectations for the year. We also achieved record retention in our mid-market
business for the second consecutive year. Our client satisfaction scores for our total
business also reached new all-time highs. We expect these recent client satisfaction
gains to support our retention results moving forward.
Each year we strive to balance our desire to drive strong revenue growth with our
long-standing goal of delivering annual margin improvement. We succeeded on both
these fronts in fiscal year 2024, with our revenue growth and margin expansion resulting
in 11% growth in diluted earnings per share. Our consistent dividend growth, which we
increased for the 49th consecutive year, further enhanced our total shareholder return.
Executing on our Strategic Priorities
Our fiscal year 2024 accomplishments extended far beyond our strong financial results. We also made great progress on our
three strategic priorities, which serve as our roadmap to the future to help keep us at the forefront of the HCM industry.
Here are just a few highlights.
To continue to Lead with Best-in-Class HCM Technology, we deployed ADP Assist, our generative AI-powered cross-platform
solution. ADP Assist is not just another technical solution, but rather an experience that combines ADP s deep dataset and
expertise to empower HR professionals, leaders, and employees. It provides our clients with enhanced capabilities such as
expedited report creation, natural language search capabilities, and the ability to quickly initiate common HR actions. We are
proud to share that ADP Assist recently earned the Generative AI Innovation Award in the 2024 AI Breakthrough Awards.
In addition to embedding generative AI in our products, we continued to advance our next-gen initiatives, with our number
of active next-gen payroll clients increasing by nearly 50%, and our number of live next-gen HCM clients increasing by more
than 30% in fiscal year 2024.
Our second strategic priority is to Provide Unmatched Expertise and Outsourcing. Our approach to partnering with our
clients has been central to our winning formula for decades, and we introduced new technology in fiscal year 2024 to
help us make an even greater impact for them. To further unlock the value of our expertise, we launched generative AI
support tools including call summarization and real-time guidance for our service associates. We also invested in generative
AI capabilities for our implementation teams, to help reduce manual data entry and minimize the risk of errors. We look
forward to providing additional tools to help our associates deliver better, faster service.
Our third strategic priority is to Benefit our Clients with our Global Scale. In fiscal year 2024, we continued to leverage
our global scale by acquiring the payroll business of our partner in Sweden, expanding the scope of our Celergo offering
to include Iceland, and further growing our on-the-ground presence in the Asia Pacific region. Our iHCM offering also
continued to scale in several European countries, with this platform now serving more than 5,000 clients and paying
more than 1 million client employees. Finally, we deepened our existing partnership with several other leading technology
providers to further simplify HCM processes and broaden the spectrum of support we can provide our clients.
ADP s Future is Bright
Overall, we were extremely pleased with our strong financial and strategic outcomes in fiscal year 2024. During the year,
ADP was recognized as a World s Most Admired Company by Fortune Magazine for the 18th consecutive year, and we
also celebrated our 30th straight year on the Fortune 500. These results and recognition reflect the power of our innovative
HCM solutions and the collective efforts of our talented associates who deliver unmatched service for our clients each day.
As an organization focused on empowering the workforce, we will never stop raising the bar. We will continue to invest
in new products for our clients, tools for our service associates, and powerful technology for our sellers. These investments
promise to support our future growth and allow our client satisfaction scores to continue reaching new record levels. We
will continue to build the next era of workforce innovation driving scale and efficiency in every product design, every
client relationship, and everything we do. I am excited for all we will achieve together.
Thank you for your investment and continued interest in ADP.
Sincerely,
Maria Black
Chief Executive Officer, ADP
9/19/2024 Letter Continued (Full PDF)