Good morning. My name is Shannon, and I will be your conference operator. At this time, I would like to welcome everyone to ADP's Third Quarter Fiscal 2020 Earnings Call. I would like to inform you that this conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press the pound key. Thank you. We'll now turn the conference over to Mr. Danyal Hussain, Vice President, Investor Relations. Please go ahead.
Thank you, Shannon. Good morning, everyone, and thank you for joining ADP's third quarter fiscal 2020 earnings call and webcast. Participating today are Carlos Rodriguez, our President and Chief Executive Officer, and Kathleen Winters, our Chief Financial Officer. Earlier this morning, we released our results for the third quarter of fiscal 2020. The 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, as well as our quarterly history of revenue and pre-tax earnings by reportable segment. During our call today, 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 and the timing 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 risk. 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. As always, please do not hesitate to reach out should you have any questions. With that, let me now turn the call over to Carlos Rodriguez .
Thank you, Danyal Hussain , and thank you, everyone, for joining our call. Before we begin, I want to first say that our thoughts and prayers are with those who have been or know someone who has been impacted by COVID-19. Every day we hear about how much of a challenge this has been for employers and workers alike, including our own. I'd like to recognize our associates for rising to the challenge and delivering exceptional service to our clients despite the extraordinary circumstances they've had to face. To them, I want to say thank you. For our discussion today, we'll spend a little less time talking about the third quarter and more time on the current operating climate. I'd like to offer a couple of upfront points. First is that ADP is not immune to the global pandemic's impact on the labor markets.
While we may make tactical adjustments as we navigate through this crisis, we believe our long-term strategy is unaffected, and we remain optimistic about how we're positioned over the coming years once the business environment and our clients return to more normal operations. The second point is that we will continue to serve our clients in the way we know best, by offering the tools, resources, and support they need to manage their business and their workforce through all types of operating environments, including this challenging one. With that said, this morning we reported our third quarter fiscal 2020 results with revenue of $4 billion, up 6% reported and organic constant currency, and in line with our expectations.
We expanded our Adjusted EBIT margin by 60 basis points in the quarter, which was ahead of our expectations, even though it included an unplanned $50 million global associate assistance payment in response to COVID-19. With the solid revenue and margin performance, we were pleased to deliver 8% adjusted diluted EPS growth, which was also slightly ahead of our expectations coming into the quarter. Turning now to the current situation, I'd like to take a few minutes to go deeper on how COVID-19 has affected our operations and what we've done to respond. As the situation evolved over the past couple of months, we focused first on the safety of our associates. In March, we took steps to quickly shift over 50,000 of our associates to work from home and now have approximately 98% of our workforce working remotely in a secure manner.
In doing so, we leveraged our previous investments in business resiliency, and in addition, we ordered thousands of laptops, expanded remote access capacity, provided at-home internet, and for those critical personnel that needed to work on-site, we took steps to ensure their safety while they performed those essential on-site tasks. This was a huge undertaking by our global IT, security, legal, and HR organizations, and I'm extremely proud of their execution. We also worked with our critical third-party service providers to ensure they were positioned to continue to support us. In March, we also had our field sales force shift from in-person to a virtual sales model. While that's not an ideal circumstance for some of our quota carriers, they're making the most of the situation.
While we were executing on these business resiliency plans, we also worked nonstop to address our clients' needs to ensure uninterrupted service across our HCM solutions. We provide a mission-critical service and process payroll for one in six Americans and over 40 million workers around the world. To offer immediate support, we provided a number of online resources, including an employer preparedness toolkit and webinars attended by tens of thousands of clients. We also quickly made available, for free, the payroll cost and headcount reports necessary to apply for forgivable loans under the Paycheck Protection Program of the CARES Act. These reports have been downloaded hundreds of thousands of times. Service is more important than ever in times like this.
We saw call volumes increase significantly beginning in March and had nearly 2 million inbound requests across our service channels in a matter of weeks, with clients looking for help with a variety of issues, including adding custom pay codes related to COVID-19, redirecting checks to different locations, and requesting new time tracking hardware that doesn't require physical contact. In many cases, they were simply seeking general guidance in understanding new legislation. To meet our clients' needs, we retrained and quickly redeployed hundreds of associates to where they were needed most, and our service and IT teams worked quickly to digest and translate new legislation from the many jurisdictions around the world into our global payroll, time and attendance, and other systems in a short period of time to allow our clients to comply with and benefit from these changes in legislation.
As the environment for companies continues to evolve, whether due to legislative changes or operational realities, we at ADP are committed to supporting our clients to help them best navigate those changes. As we communicated in an open letter to U.S. policy leaders, ADP stands ready to facilitate current and future initiatives that provide support to our clients and their workers. In support of our local communities, ADP has made over $2 million in donations to relief efforts, including a dedicated relief fund for ADP associates that needed assistance, as well as donations of medical supplies for hospitals, food banks, and their workers. With all that said, the significant impact of COVID-19 it is having on the broader economy is in turn having an effect on our reported metrics, and in a much more abrupt fashion as compared to previous macroeconomic slowdowns.
You can see this in our Employer Services new business bookings metric. This quarter, we reported a decrease of 9% as we saw bookings decline significantly and rapidly in mid-March, when we typically would have expected to close many deals for the quarter. These results were, of course, well below our expectations coming into the quarter. While some of our businesses performed slightly better than others in March, the weakness was generally broad-based as the health crisis is affecting companies of all sizes and regions, including internationally. We believe the impact to bookings stems from two factors. First is the buying behavior of our clients and prospects. As with prior uncertain economic environments, our clients and prospects have become time and resource-constrained and are faced with reassessing their own operations to best ride out the impact of this health crisis.
Although our products support mission-critical functions, making decisions about additional HCM services or making the decision to switch from another vendor to ADP can get put off to a later time. Even in circumstances where decisions have already been made, clients are understandably delaying implementation, which can also cause us to adjust down the bookings we record. The general change in behavior is common in recessionary periods, and we are certainly not surprised to see it this time. It's clearly happened in a more abrupt manner compared to what we've experienced in the past. Second, as I mentioned earlier, there have naturally been constraints that limited the activity of our sales force. While we have been able to lean more heavily on an inside sales strategy and virtual interactions by our field sales force, there has still been a reduction in our sales force productivity.
Our sales organization is experienced and resilient and will continue to work hard in the fourth quarter. Because of a variety of factors, which we believe will have an outsized impact on the fourth quarter bookings, including the effectiveness of the Paycheck Protection Program in supporting small to mid-size businesses and how quickly our clients can adapt to working in this new environment and resume more normal buying behavior, there is clearly a very wide range of outcomes. To calibrate your expectations, we are guiding for a full-year ES new business bookings to be down 20%, which implies our fourth quarter bookings will be down by more than 50%. With all that said, we remain confident in our product portfolio and optimistic about our ability to drive sustained growth in ES bookings in a sounder economic environment.
I'd now like to spend a minute or two on some of the other macro-driven trends we've observed in our client base. Our pays per control metric, which represents employee growth for a broad subset of our client base, was solid through February but decelerated to a slight negative growth by the end of March, averaging 1.9% growth for the quarter. Early in April, we saw it deteriorate further to a double-digit negative decline, with the steepest decline among smaller businesses. For context, this level of pays per control decline is significantly worse than even the worst quarter in the financial crisis, underscoring that it's hard to compare this environment even against past recessions. While we hope that legislation aimed at preserving employment will drive a recovery in pays per control, we had not seen it through mid-April.
On retention, we were actually pleased with our performance in the third quarter, with both third quarter and year-to-date retention performance better than our expectations and ahead of pace for our previous annual guidance. We set all-time third-quarter retention records in our down-market and mid-market businesses as client satisfaction scores were at or near all-time highs and as the benefits of our technology and migration strategy over the past several years continued to bear fruit. Clearly, out-of-business losses are a concern for the fourth quarter and beyond. Although they had not yet meaningfully picked up by the end of March or even into April, early indicators of stress in our client base have shown up, and we expect deterioration in retention in May and June. Kathleen Winters will share some of the assumptions for the fourth quarter when she goes through the outlook.
I'd like to pivot now from the current macro environment and focus on our strategy and what we're doing to drive longer-term value for our clients. At ADP, we remain steadfast in our commitment to lead in the HCM industry with best-in-class technology and service. At our February Innovation Day, we shared an update with many of you about the innovation we are driving across our key strategic and next-gen solutions. The HCM industry is an exciting place with constant change, and we will continue to invest to position ourselves to meet the evolving needs of our clients over not just the coming years, but the coming decades. At Innovation Day, we covered several topics, and I'd like to reframe a few of our key products against today's backdrop. With ADP RUN, we help small businesses manage their essential HR tasks from basic payroll to a full HCM suite.
We highlighted our push to drive digital sales and onboarding capabilities, which is especially relevant in today's environment. We also highlighted innovations in automating service and implementation, which relieves pressure on our service organization. We discussed Workforce Now and our public cloud-native version that we are pairing with our next-gen payroll engine, which utilizes a fully transparent policy-based model for improved implementations, maintenance, and self-service, as well as continuous payroll calculations for clients looking for on-demand pay options. We also talked about Wisely and the ease of use and the financial tools that make it an attractive way to get paid. Just this month, we made Wisely Direct available to our mid-market Workforce Now clients, which we believe will be beneficial to the many workers in our base that still get paid by a paper check.
Of course, we discussed our Next Gen HCM, which we believe represents a big step ahead of current offerings in the market, and for which we remain excited about scaling and selling more broadly. Before I turn it over to Kathleen Winters , I'd like to take a moment to once again thank our associates. This health crisis and the resulting economic fallout hasn't been easy on anyone, but our associates have really stepped up to ensure we continue to provide our clients with the support they need. Our clients and I appreciate it. Kathleen Winters , I'll turn it over to you now.
Thank you, Carlos Rodriguez , and good morning, everyone. As Carlos Rodriguez mentioned, we were generally pleased with our execution in Q3, and our financial results were not significantly impacted by COVID-19, with the exception of new business bookings. We expect Q4, however, to be challenging on a few fronts, and I will cover this when I go through our guidance. This quarter's revenue growth of 6% reported in organic constant currency was in line with our expectations. Our Adjusted EBIT margin was up 60 basis points compared to the third quarter of fiscal 2019, even though it included a $50 million cost of a global associate assistance payment related to COVID-19, which we disclosed in an 8-K several weeks ago.
Excluding this, our margin performance was even further ahead of our expectations and continued to benefit from a combination of cost savings related to our transformation initiatives and operating efficiencies, as well as lower-than-expected incentive compensation expenses. These benefits were partially offset by growth in PEO zero-margin benefits pass-through expenses and amortization expense, as well as certain other expenses related to COVID-19. Our adjusted effective tax rate increased 30 basis points to 23.8% compared to the third quarter of fiscal 2019, and adjusted diluted earnings per share increased 8% to $1.92, driven by revenue growth and margin expansion, as well as fewer shares outstanding compared to a year ago. Moving on to segment results. In our Employer Services segment, revenues grew 3% reported and 4% organic constant currency, reflecting steady underlying performance with strong retention trends offset by continued FX pressure and a growing headwind from interest income.
Interest income on client funds declined 5%, and average yield on client funds declined 20 basis points to 2%, offsetting growth in average client funds balances of 4% to $31.3 billion. This growth in balances was driven by a combination of client growth, wage inflation, and growth in our pays per control in the quarter, partially offset by lower SUI collections and the closure of our Netherlands money movement operation earlier this year. Our Employer Services same-store pays per control metrics in the U.S. was 1.9% for the third quarter. I'll talk a bit more about the trends we're seeing in a moment. Employer Services margins increased 100 basis points in the quarter, ahead of expectations and driven by many of the same factors I mentioned earlier when discussing our consolidated results.
Our PEO segment revenues grew 11% for the quarter to $1.2 billion, and average worksite employees grew 7% to 595,000, ahead of our expectations and driven by strong year-to-date new business bookings. We were pleased with this re-acceleration in our worksite employee growth in the third quarter and believe we would have been positioned for further acceleration exiting the year if not for COVID-19. Revenues excluding zero-margin benefits pass-throughs grew 9% to $490 million and continued to include pressure from lower workers' compensation and SUI costs and related pricing. PEO margin expanded 10 basis points in the quarter, in line with our expectations. Let me now turn to our outlook for the remainder of the year. I'll start by discussing some of the specific macro-driven factors that affect our financial performance.
I'll caveat by saying that we're clearly operating in an evolving and uncertain situation, and we're using data currently available to us to make reasonable assumptions on which we are basing our guidance. First, out-of-business losses. We expect our retention to be impacted by elevated out-of-business losses in Q4. Although the federal government is providing stimulus to help companies continue operating, we are seeing clear strain on our client base and have observed certain leading indicators, such as companies going inactive and no longer running payroll, many of whom will restart their operations at some point, but some of whom we expect will not. Based on our experience with these leading indicators, we are building in an expectation for additional losses in our fourth quarter outlook.
As a result, we're lowering our full-year retention guidance to be down 30 to 50 basis points, despite running ahead of our expectations on a year-to-date basis. Next, pays per control. We exited March with negative pays per control growth, and in April, it deteriorated to a double-digit decline. We are assuming a 2% to 2.5% pays per control decline for the full year, which implies a mid-teens decline for Q4. As a reminder of how this affects us, we have varied contracts throughout our businesses that blend base fees and per employee fees, and we also often utilize tiered pricing and have certain annual revenues that are not as affected. As a result, with our current mix of business, the direct revenue impact we expect to see is about 25 basis points in ES revenue growth for every 1% change in PPC.
Some of our businesses are more sensitive to pays per control than others, and so the precise mix of pays per control by business can drive the actual revenue impact higher or lower in any given period. This direct impact also doesn't include the impact from our volume-based businesses like recruiting or payment cards. Finally, on client fund balances. Through the combination of a challenging sales environment, an anticipated increase in out-of-business losses, a decline in pays per control, and potential decline in wages and hours worked, we expect to see pressure in our balances in the near term. Furthermore, the CARES Act has a provision that allows companies to defer the payment of the employer portion of payroll taxes, which represents less than 5% of our average client fund balance. Depending on the actual take rate of that provision, we could see further pressure on our balance growth.
As a result of all these factors, we now expect 1% balance growth for the full year, which implies a low double-digit decline in the fourth quarter. To adjust the size of our client fund investments to match expected changes in average client payroll and tax volumes, beginning in March, we halted all new reinvestment of maturity in our client long and extended portfolios. In April, we took the additional step of selling approximately $1.2 billion of previously purchased securities in the client long and extended portfolios. This decision to suspend new purchases means our Q4 interest income forecast reflects a slightly greater skew to overnight rates than previously forecasted. Both the suspension of new purchases and the completed sale of securities is contemplated in our guidance. To be clear, these decisions represent tactical adjustments and do not represent a change to our overall client fund strategy.
Let's now turn to our revised outlook for the full year and start with the ES segment. We are lowering our guidance to 1%-2% revenue growth versus our prior outlook of 4%, driven mainly by an expectation of lower pays per control, new business bookings, client fund interest, and retention versus our prior outlook. Much of this lost revenue comes at high incremental margins, and as a result, and also due to additional costs related to COVID-19, we now expect our margin in the Employer Services segment to be down 25 to up 25 basis points. For our PEO, we saw good momentum up through the end of March, and as I mentioned earlier, we believe we were on track for continued acceleration exiting the year, but are now layering in our expectation for layoffs and furloughs and additional out-of-business losses.
As a reminder, in our PEO segment, we earn revenues as a percent of the gross payroll we process, and as a result, we are more directly tied to changes in our clients' headcount and hours worked as compared to our Employer Services segment. As a result of these assumptions and our expectations for lower Q4 PEO sales, we are lowering our average worksite employee growth expectation to 3%-5% from 7%-8% previously. We are likewise lowering our revenue guidance and now expect 5%-7% PEO revenue growth in fiscal 2020 and 3%-5% growth in PEO revenues, excluding zero margin benefits pass-throughs. As we also discussed throughout the year, we continue to expect lower workers' compensation and SUI cost and related pricing to pressure our total PEO revenue growth, though we could see those trends change in the coming years.
For PEO margin, we now expect to be down 100-125 basis points in fiscal 2020. As we noted in previous calls, this outlook continues to include pressure from smaller favorable reserve adjustments at ADP Indemnity in fiscal 2020 compared to fiscal 2019. We now expect about 75 basis points of pressure compared to our previous expectation of 50 basis points of pressure, though we still expect a slight benefit this year. With these changes to the segments, we now anticipate total revenue growth of about 3% in fiscal 2020 as compared to our previous outlook of 6%. This revenue outlook continues to assume slight FX unfavorability for fiscal 2020.
As I mentioned, we anticipate our growth in average client funds balances to be about 1%, compared to our previous outlook of 4%, and we expect the average yield earned on our client fund investments to be about 2.1%, compared to our previous outlook of 2.2%. We expect interest income on client funds to be $540 million-$550 million, and for interest income from our extended investment strategy to be $550 million-$560 million. We anticipate our Adjusted EBIT margin to be down 25 to up 25 basis points, as the benefits from our workforce optimization and procurement transformation initiatives are now being offset by the impact of expected lost revenue due to COVID-19, as well as incremental expenses related to COVID-19, including the $50 million in global associate assistance payments. We now anticipate our adjusted effective tax rate to be 22.9%.
The rate includes this quarter's unplanned tax benefit from stock-based compensation related to stock option exercises. It does not include any further estimated tax benefit related to potential future stock option exercises. As a result of our lowered revenue and margin outlook, we now expect adjusted diluted earnings per share to grow 4% to 7% in fiscal 2020. In light of this revised 2020 guidance, the multiple headwinds created by the global pandemic, and the uncertain and evolving situation, we are withdrawing the fiscal 2021 targets that we set out at our 2018 Investor Day, as they are no longer appropriate to the current circumstances. However, we continue to believe in our long-term strategy and are well-positioned to continue to invest to execute this strategy. Finally, before I conclude, I'd like to talk about the strengths of ADP's business model and balance sheet.
We have a highly cash-generative business with low capital intensity, and the HCM solutions we provide give critical support to our clients' HR and management functions, especially at times like these. In addition to having a resilient product and business model, we also have a significant buffer between our free cash flow and our modest debt obligations and our cash dividend. This enables us to absorb the impact of downturns and continue to prioritize investments aligned with our longer-term strategy, as well as our commitments to shareholder-friendly actions. Although our revenue growth can clearly be impacted by challenging macro conditions, our recurring revenue model and high retention rate positions us to continue the type of investments we highlighted at our Innovation Day, even when times are tough. We will, meanwhile, continue to manage our cost base prudently.
We have instituted hiring containment and started to execute on our recession playbook with a preplanned set of areas where we will see some of our expenses self-adjust, such as management and sales incentives, and we will eliminate or defer non-essential spend. We are working through an evolving and uncertain situation and are formulating our approach for next year, and we will, of course, provide you with our expectations and outlook for fiscal 2021 when we report our fourth-quarter results. As always, expect us to be balanced in our approach. With that, I will pass it back to Carlos Rodriguez for some comments before we go to Q&A.
Thanks, Kathleen Winters . Before we move on to the Q&A, I just wanted to share with you an excerpt of one of the many notes we've received from our clients that captures how we want to define ourselves. This one said, "We are a small business that has used ADP for quite a few years now. Every time we call, there's been a knowledgeable professional at ADP that immediately solves the problem and answers the question. We recently needed payroll data to apply for the COVID-19 Paycheck Protection Program. I immediately went to ADP's website to see how I should go about selecting and downloading the required payroll data. Imagine the relief when opening the screen, there was a COVID-19 pop-up that proactively provided your clients with the payroll data needed." I was floored. This type of customer service is unheard of these days.
We just want to tip our hats to everyone at ADP for a great job. As this client suggests, the value of a true HCM partner becomes even more critical at times like these, and it continues to be our goal to exceed the expectations of our clients. With that, I'll turn it over to the operator for Q&A.
If you wish to ask a question, please press star one. Please be aware of the allotted time for questions. Please ask one question with a brief follow-up. We will take our first question from the line of Ramsey El-Assal with Barclays. Please go ahead.
Hi. Thanks so much for taking my question. I hope you both are doing well. I wanted to ask about your visibility on the Paycheck Protection loan Program in terms of, can you see that it's having the desired impact on businesses in the country? Are you seeing furloughed or terminated workers that are being brought back on book? I guess just tying that back to your own performance or potential future performance, are you seeing these leading indicators of bankruptcy sort of staved off a little bit in your book?
It's a great question. We're obviously keeping our eye on that. Unfortunately, what we have is really limited anecdotal evidence that people are beginning to get money to be able to continue their payrolls or continue to pay people. As an example, a few days ago, I was forwarded a letter that was sent to, or an email that was sent to one of our associates from a client that was grateful for kind of the help that we gave him in applying for the loan. They sent a kind of screenshot of their bank account that had $10 the previous day, and then now had $84,000 like, indicating that they had gotten their money from the SBA deposited into their commercial bank account.
I think as you've heard, same as us in the press, the process has been, given the magnitude and the scale of the challenge, it's been a difficult process, both for the SBA and I think for the banks. We've tried to do our part to help, and we're optimistic, and we're hopeful that it will make a difference and that there will be re-hiring and that it will, at least in some respects, stop the furloughing and the elimination of jobs going forward. Unfortunately, it's just a little too early for us to give you any kind of concrete evidence other than some anecdotal stories that money is making its way into the bank accounts of small businesses.
Okay. That's helpful. Thank you. Just a follow-up. In terms of your overall product strategy in the context of this crisis, are there any kind of adjustments you're having to make in terms of how you're thinking of new challenges, employees work from home, thinking about your time and attendance offering, and also just on some of your major initiatives like Lifion? How has timeline to market been impacted? How are you thinking about the product set sort of evolving from here out?
Clearly, we have to be nimble and I think remain open to making further adjustments, but I think it's safe to say that if you go back over the course of decades, the concept of quote unquote, "outsourcing," and now what some people would call the SaaS models, which I think ADP was kind of one of the pioneers of, I think by definition, lend themselves to these kind of remote work environments, whether it's for the technology people, because we generally obviously host and maintain and update all of the systems for our clients, but also through the variety of portals we have for our clients and the employees of our clients.
All of the information that anyone needs is available online through all the tools we have to access that information, whether it's for the payroll practitioners or for the employees of our clients, including when you think about the app that we have for the employees of our clients to be able to check whether they've gotten paid, they can check their hours, they can make changes to 401(k). There's really no need to move paper or for anyone to be in the office to do that kind of work. Clearly, there will be things that we will learn, and we'll probably hear in the early innings of this kind of new challenge and how it might affect our products.
I think in general, as an industry, it's not just for ADP, I think in general for us as an industry, we're pretty well-positioned, I think, for this kind of work environment.
Great. Thank you so much, gentlemen.
If I could just add to that. I think you had asked about, I couldn't quite hear, but I think you had asked about Lifion and any updates to that and changes to our view on go to market. I would say over the longer term, while certainly this year looks like things have slowed down, at least for a little bit, I would say over the long term, no change to how we're thinking about that. We've got a handful of live clients. We're continuing to sell clients and implement clients on Lifion, and we're encouraged about the long-term process there.
Yeah. It's clear, like every time that we have, whether it's an economic downturn or now this is obviously a new challenge, there's always questions about, will this drive greater adoption? I think intellectually, it makes sense that this would drive greater outsourcing and greater adoption of SaaS, but it's kind of hard to make that statement kind of where we are today, but theoretically and intellectually, two to three years from now, there should be more demand and more people using SaaS solutions than there are today.
That makes a lot of sense. Thanks so much for taking my questions.
Thank you. Our next question comes from the line of Tien-Tsin Huang with JP Morgan. Your line is open.
Thanks so much. Appreciate the expanded disclosure here. Somewhat of a follow-up to Ramsey El-Assal's question, just on the sales performance side, you mentioned productivity challenges in addition to the demand factors. How quickly do you think you'll get your productivity back on track and align your sales to where you see the puck going next in terms of demand as it evolves?
We're trying to actually keep an eye on it week to week to get some sense of what levers there are still there. Our sales force is still selling, and they're selling a lot of business, but it's at lower levels than obviously we had expected and at lower levels than you compare it to the previous year. Unfortunately, given the nature of the situation, it's kind of difficult to give you a kind of scientific or concrete answer. I think as we generate more information, I think probably for our guidance for next fiscal year, we'll be able to. I know that's not helpful to you today, but it's really a very difficult thing to talk about.
Our sales force was already what we call an inside sales force, we've proven that we can sell through inside selling, we have some products that are what I would call high involvement decision sales, it doesn't mean that those can't be done remotely, but that hasn't been the norm. When you sell a very large, complicated multinational solution, or frankly, even when you sell the PEO, historically, there's been a relationship that's built there and a trust that gets built before that transaction gets consummated. Clearly these are new and different times, I don't think everyone is going to sit and wait around for everything to go back to normal before making decisions.
I think common sense would tell us that it's safe to assume that there will be some level of hesitation and pullback in terms of decision-making, even though a good percentage of our sales force is still out selling as they have before, although they're doing it virtually now.
Yeah, sure. We'll check in with you on that again next quarter. My quick follow-up, both of you have talked about cost initiatives. You guys did much better than we thought on the margin side, even with the $50 million. You've also both hinted at a pipeline of more cost takeout, potentially pre the pandemic. I'm curious your willingness to pull incremental expense levers, maybe some chunkier stuff. Is that available to you, and are you willing to do that at this stage?
We did have a number of transformation initiatives underway. A lot of them were really around digital transformation efforts to kind of automate and improve the way, you know, our implementation and our service is delivered, which would create a better experience for our clients, the employees of our clients, frankly, also for our associates, that we thought would result in lower cost going forward. Part of the challenge we have is, again, every company may be different in terms of how they approach their level of support for their clients, but based on our model and the way we see ourselves playing a role frankly in society and with our clients, we've actually experienced quite an increase in volume and cost in the short term.
As an example, as the government rolled out the Payroll Protection Program, we saw 40%-50% spikes in inquiries right through, whether it's phone or chat or by email. We had to work people overtime. We had to work people on weekends, which we're very grateful that people were willing to do, because as you can imagine, they've got lots of other concerns and distractions as this is all going on. We made a commitment that we're going to deliver to our clients through this and help them work through it, whether it's for themselves or for their employees. Unfortunately, I would say in the short term, we actually have an increase in cost. Now, realistically, that's not going to continue indefinitely.
Every week that we've said we think our call volumes and our workloads are going to go down, there's a new government program or a change in the government program, which by the way, we think is great. I think that the efforts by the Fed and by policymakers, I think to help clients and their employees I think is the right thing to do, and we're very supportive. As an example, as you know, there was an approval of an additional amount for the Payroll Protection Program, which generates additional volume for us. By the way, I think the banks are probably in the same situation in terms of having to handle kind of increased volumes. We expect these levels to normalize and then to be in a position where we can reevaluate our cost structure.
Again, given the timing of this call and where we are today, we really can't tell you that there's been a meaningful decline in our workloads. In fact, it's actually been an increase.
Got it. I can appreciate the work behind the scenes.
Tien-Tsin Huang , if I could just.
Yeah.
Let me just add a little bit more to that because I can make some comments on our transformation efforts and our transformation work, even with the significant increase in service demand. Even with this kind of very abrupt disruption and need to move practically our entire workforce to work from home, we were able to do that almost seamlessly. I mean, that worked really well through the huge efforts of many of the different parts of the organization, from our technology group to our HR to legal. I mean, it was a huge effort, but it worked really well. That said, we've been able to continue our normal processes, if you will, around transformation work.
There were certainly some projects that we had to look at and assess and say, "Okay, because of the big service demands, we may need to slow down these." Our process in terms of tracking progress, continuing to execute, adjusting as necessary based on service demands, and importantly, continuing to look at pipeline of projects, that continues. I would just add one further comment that in particular, in this environment, the ability to look at procurement and find procurement opportunities is potentially even greater today than it was, say, three or four months ago.
Yeah. I think if I can just one more comment. I think that the part of the challenge here is that the nature of our company and our business and our board is to not focus on one month or one quarter. I think when you look at what we were able to deliver just in this quarter in terms of margin improvement and what we've been able to do in the last couple of years, I think demonstrates very clearly our ability to I think achieve and take advantage of operating leverage and also to manage our costs very effectively. We've had a couple of years with a very modest, if any, true cost increases while revenues were growing at what, for us, is our very healthy rate. I think we've demonstrated what we can do.
Unfortunately, we've been handed a very abrupt change here in the environment, and we're going to handle it first to take care of our associates, next to take care of our clients. I think when we get through this transitory period, which we all know is transitory. What we don't know, is it transitory for a month or two, or is it transitory for six months? Either way, it's not multiple years. We want to make sure that we continue to invest in our business, take care of our people, and take care of our clients, that when we come out of this, we come out of it as strong as we were before we went into it.
Yep. Very clear. I trust that's the case. Thank you.
Our next question comes from the line of Kevin McVeigh with Credit Suisse. Your line is open.
Great. Thank you, and thanks for the guidance in obviously a tough environment. One question we get a lot is how much of the layoffs are going to be furlough versus structural? Just any sense within kind of the pays per control, how much of that would be potentially furloughed workers versus structural? Maybe start there.
It's a great question. As you know, we operate in multiple countries and also multiple segments, small business, mid-size national accounts, but also in many countries and also multinational companies. The policies that companies have around how they treat employees is going to vary from company to company, and generally also varies from segment to segment. What we can tell you is the way we count pays per control is very straightforward. It's whether or not someone got paid during that period of time that we're counting. We would not probably be able to give you a firm number of how many people are furloughed versus how many people are laid off, because we don't control necessarily that coding in the system, and clients can exercise some discretion about how they tag some of their employees.
What we do know is that if somebody doesn't get paid, they don't get counted in pays per control. If they do get paid, even if it's at a reduced wage, that does count. That creates a number of challenges, obviously, because you could have reduced wage levels, which then doesn't negatively impact pays per control, but impacts the employees themselves and may, in some cases, impact our fees, which generally wouldn't other than in the PEO, but could impact our fees as well. I would say that the best thing to do is to stick to trying to use the pays per control metric as a way of building your models and using the guidance that we've provided to around 25 basis points of revenue growth impact from each 1% change in pays per control.
I think that give you -- we spent a lot of time pressure testing that assumption. I think Danyal Hussain did a lot of work on it, and I think it's a pretty solid way for you to look at things. When you hear guidance from us about pays per control and you use that metric for your models, I think that's a much cleaner and easier way than to try to separate how many are furloughs versus how many are layoffs, etcetera.
That's super helpful. I guess just a quick follow-up would be, coming out of this, obviously, in these type of events, you're really counting through in terms of the caliber of the organization. Do you see any change competitively, particularly as obviously coming out of last cycle, much more service-oriented as opposed to shift to the cloud in this one, but from a competitive perspective, any changes where you look to even build on that attrition number longer term in terms of improvement?
I think you do see some subtle differences in terms of company cultures and I think behavior. As an example, one of the things that we have always, I think, touted and talk about is this willingness by us to really help our clients navigate these things, not just provide them the software solution. We actually take some responsibility for the outcomes of what they're trying to accomplish. The support we're providing around all these regulatory changes, I think, is an example of that.
That doesn't mean that other competitors aren't doing similar things, but as an example, some competitors would be more along the lines of providing tools online and directing clients to third parties or directing them to resources where they could get help, versus in our case, we actually take the work on and we help our clients get to where they need to get in order to get their retention credit, tax credit, in order to get their Payroll Protection Program loan. In order to calculate in a few weeks or at least in a couple of months, people are going to be needing help with calculating how to get forgiveness on those loans. This is a complicated environment. By the way, employment, in general, is always complicated, but this is a very complicated environment, and having great tools and technology is incredibly important, and we're totally committed to that.
I think it's undeniable that you also need extra help in these situations to help with questions and to help you navigate through all the various regulatory hurdles. As an example, some of the legislation that was passed in the U.S., you have to really understand the interplay. As an example, you can't take advantage of the deferral of Social Security taxes and the Payroll Protection Program loans. You can take advantage of the Social Security deferrals up until you can get a loan, but then once it's forgiven, you can no longer defer your Social Security taxes. Those are things that are typically not well understood by our client base, and I think just directing them to a website or to a tool, we don't think is the best way to help them.
That's awesome. Thank you.
Our next question comes from the line of Bryan Bergin with Cowen. Your line is open.
Hi. Good morning, thank you. Hope your family's well. I wanted to try on outlook here. Just understanding the material uncertainty, can you help us frame some initial fiscal 2021 guideposts? I'm trying to think how we should be thinking about next year based on some of the implied 4Q run rates. Really any sense of visibility you have across the businesses or maybe thinking across client size would be helpful. Thanks.
First of all, thanks for asking about our families. I hope yours is well also. Unfortunately, it's a very fair question, and I can understand why you're looking for any additional color. As you can imagine, we struggled with even providing fourth quarter metrics because two, three, four weeks ago, people had a certain view of "how long," the issue was going to continue and when things were going to open up again. Then, it got more negative, then now it feels like it's gotten more positive. I think that it's very difficult for us to go really beyond the fourth quarter in this environment. We have to remain optimistic that things are going to, "improve."
I think that we all have to take advantage of the time we have to wait and see how things play out, whether it's with the clients or with GDP or with the economy or with these government programs, so that we can make more informed I think decisions about what 2021 might look at. I apologize for not being able to give you any additional color, but I think it would be a mistake to assume that the levels of activity that we've given you in the fourth quarter will continue into 2021. It's also a mistake to assume that things are going to go back to normal at the beginning of 2021.
We're going to keep an eye on the data and the information and do our best as we gather more information to give you a good view of what's going to happen in 2021 when we get there.
Okay.
Maybe I could just add a few comments around the process and what we're doing and the data that we're looking at. While, as Carlos said, we can't really give you the view right now or the exact guideposts, at least if you understand and know the process we're going, that might help a little bit. Look, things are, as Carlos Rodriguez said, extremely fluid right now. We're spending a lot of time studying and watching developments every single day and kind of looking at -- I think about it in three steps, if you will, in terms of first understanding what's happening from a pandemic standpoint and the epidemiology, then understanding how that impacts the economy broadly around the world, and then understanding how that impacts each of the BUs.
As we do that, obviously we're looking at numerous forecasts that I'm sure you all are looking at the same forecasts that are being put out, but we're really spending a lot of time in parsing through those and eliminating outliers and really utilizing the ones that we feel makes the most sense, and then applying that to, as I said, the implications for our business units. When you do that, as we've said, largely PPC is going to be an extremely significant driver for us. Certainly the shape of the recovery from a new business booking standpoint will be critically important. We're watching that as well as we see different regions and states formulating and attempting the return to work.
Okay. All right. Appreciate that. I wanted to ask on retention. The comments on the assumptions in 4Q, is the reduction wholly due to business closures? I'm curious if you're seeing any change in the competitive client loss.
Well, I think based on the comments we gave you about the third quarter and the year to date, I think we're doing pretty well competitively because I think our retention was up. We don't talk about quarterly retention. Why not? Everything's out the window in this kind of environment. I think we were over 50 basis points improvement in the third quarter. Through the year -to -date, I think we were well ahead of both the guidance we had provided and our own internal expectations. It's pretty clear that we were doing something right competitively. Our NPS scores are at record levels across most of our businesses. Again, the problem is this is not the time to brag and talk about the third quarter. We really had incredible momentum coming into the third quarter on a number of fronts.
That's that, and we're on to now figuring out how to deal with the future challenges, but I have no concerns about the solidity of our business on every front coming into the third quarter.
Thank you. Be well.
Our next question comes from the line of Kartik Mehta with Northcoast Research. Your line is open.
Hi, good morning. Carlos Rodriguez , I was wondering, based on the data you're seeing, and I realize this is so early in, but what kind of changes do you anticipate for the business, permanent changes, or at least over the next 12 to 18 months because of this current crisis?
Well, over the next 12 to 18 months is probably the right focus, because I think it'd be naive to think there aren't some things that are going to change permanently, but I'm not sure I have that kind of crystal ball to be precise about that. For the next 12 to 18 months, because of the focus we have on our associates, it's unlikely that we will be going back to business as usual here in the next few months. Now, the good news is we've adapted to the current work environment. A kind of concrete change in terms of the next 12 to 18 months is we don't anticipate having 100% of our workforce back working in these Win As One locations and some of these other places where we have large populations of associates.
That's a change that we have to make sure that we stay on top of, that we support our people, and lead them remotely and virtually and help them navigate through what's a very different way of working. Obviously, as society kind of normalizes, we plan on coming along for the ride with that. We are formulating plans as we speak, very preliminary plans, around how do we slowly get back into some of our offices with limited number of personnel. That's a change that we're definitely going to have to continue to live with for the next 12 to 18 months. What that means is that impacts our sales force.
The question is, if the demand equation improves significantly and our sales force is still working remotely, how can we make sure that they have the right tools and the right processes to continue to take advantage of the demand that's out there? Because we don't anticipate having large numbers of salespeople back in our offices. Our salespeople, by definition, many of them are inside sales, but many of them are out in face-to-face transactions, and that's not something that's going to normalize in the next 12 to 18 months. Sadly, I'm sad to report that of the number of associates that we had impacted by COVID-19, we were disproportionately impacted in our sales force. As we go back to normalization, we're going to be exceptionally careful about protecting our sales force as well.
Just finally, hey, Carlos Rodriguez , what do you think the recovery will look like? We've heard so much, a V, a U, a L. I'm just interested in your perspective of what you're anticipating from a recovery.
Well, I think, again, we get information from all of the usual places. Like Morgan Stanley is obviously our bank, so they've been very helpful in giving us their information, but we have access to information from a number of other sources. I don't want to say any other names so I don't hurt anybody's feelings, but all the usual banks, we get the information from them. We have information from Moody's. By the way, we also work with the Fed. We work with Treasury. We have a lot of sources of information to give us some sense of kind of where things are headed. The challenge is that I don't think anyone has really. Well, not I don't think.
I know that no one has ever been through this, so there really aren't any great models other than using inputs like PMIs or consumer confidence and other metrics that tend to be -- many of the metrics that people use in these models are lagging indicators, right? You have regression that gives you some sense of where the economy is headed, but as I've seen myself in the last four to five weeks, you have to take any forecast with a large grain of salt. The best approach we think you can have right now is to remain flexible and agile about how you're planning and what you're planning for.
If we had to make a bet today, we would say that, you know, it's not going to be a V-shaped recovery, and it's probably not going to be a U or an L, but it's going to be some other kind of shape where we obviously already had the precipitous decline. We're already seeing some signs of some, you know, stabilization. We have metrics that we track, like in our HR systems of our clients. For example, new job postings or number of screenings that are done, like background checks, and some of those metrics have actually begun to stabilize. I think we've had the abrupt drop. Now the question is the recovery. It feels like that recovery will be not a V, but not an L. The difference between a V and an L is a check mark, like I think some people are out there quoting.
By the way, we have an economist on our board, and he referred to it as the Nike swoosh, but that's probably a copyright or trademark violation, so I won't use the Nike swoosh. You get the idea. Abrupt drop and hopefully a climb back up over some period of time. Hopefully, that climb is over the course of 3 months-6 months and not over the course of 12 months-18 months.
Thank you very much.
Our next question comes from the line of David Grossman with Stifel. Your line's open.
Thank you. Good morning. Carlos Rodriguez , I think you've addressed this in a couple of previous questions, but based on how this may play out coming out of the crisis, and you talked just a moment ago about some possible structural changes, at least in the intermediate term, being work from home or virtual sales. How do you feel the way you're positioned coming out of that versus where you were going into it? How do you view your ability really to leverage that to your advantage? Is it structural or is it based on execution? I'm sure it's a combination of both, but if you could just give us a little more insight into how you're feeling about what you can do with this crisis to really enhance your position both competitively and operationally.
Well, look, I think that some of this is philosophical. I think that I, like everyone else, when we were entering this phase, I was scared like everyone else is. Not just personally for myself and my family, but also for the company and all of our associates and our clients that depend on us. When you see the reaction and the ability of the organization to kind of get through it, and not just get through it, but actually deliver a higher level of service and help with very complicated questions and a very complicated situation, which was changing in some cases on a daily basis with the regulatory landscape. I think it tells you something about the strength of the culture and of the company.
That gives me, again, this is all intellectual, philosophical, but I think gives me great hope about how we emerge from this competitively. We already had incredibly strong momentum going in to the third quarter, as you saw from retention. We think we have a strong product lineup that was beginning to get traction. One of the things we didn't talk about when someone asked the question about our competitive situation, we had really good growth in client counts, particularly in Workforce Now and specifically in our mid-market business. The combination of positive momentum and coming into this, and then the reaction and the strength of the organization through this gives me great optimism and hope that we're going to come out of this stronger than any of our competitors.
Okay, that's it for me.
I would just add to that in addition to the great service that we've been able to provide to our clients throughout this, which theoretically, ideally, should sustain or drive even better retention going forward. I would say the strength of our balance sheet and the ability to continue to invest aligned with what we laid out at our Innovation Day. Investing in our strategic products and Workforce Now and RUN in our Next Gen product, our ability to continue to do that throughout this should position us well.
Okay, that's it for me. Thanks very much, and be well.
Thank you.
Our next question comes from the line of Steven Wald with Morgan Stanley. Your line is open.
Yeah, good morning. I hope you guys are safe and well, and thanks for the shout-out for Morgan Stanley. By the way, to run back to subject. Maybe just starting off on some of the puts and takes of the segments. I think you guys pointed to worksite employee growth still in PEO versus lower pays per control in Employer Services. Just maybe run us through again, because it's come up a lot in recent conversations around why the PEO should still be thought of as employment-wise a little bit more defensive, and how you guys see that tracking this downturn versus prior ones.
I think the number one reason is really just structural in the sense that when you look at overall ADP, we have clients all the way from single employee all the way to very large national accounts. As we've said this, we've said this obviously over multiple decades, our downmarket business tends to be the most sensitive to out of business, but also to decreases in pays per control. As we track this pays per control data, I think we've probably given you some of the color that the pays per control numbers are down more in the downmarket than they are in the mid and the upmarket. The PEO, at least in our case, the PEO tends to the average size client, just from practical standpoint, is 45. We try to stay away from clients that are under 10 employees.
We have some clients, obviously, that are between five and 10 employees. In general, the sweet spot of the PEO is around 45. That's the average. It's just the nature of the structural difference of that business versus the others that the pays per control is not going to decline as much as the overall average, if you will, where you have some of that average being in the small business market. The second, more anecdotal comment would be that PEO clients, our PEO clients, not every PEO's clients, our PEO clients tend to provide health benefits, a retirement plan. They tend to be higher average wage than the average U.S. worker. That makes sense because you're paying for the help that you get with maximizing and managing that sales force.
It tends to be attractive to a higher average wage employer that is very concerned with attracting the right people and retaining the right people. That also tends to lead you in the direction of clients that are a little bit larger, maybe a little bit more financially capable of paying those fees, et cetera. Not sure that we can have a scientific way of proving that one. For sure, the average size client of our PEO is larger than in our SBS business, and hence, the pays per control drop would logically be smaller.
Got it. That's very helpful color. In terms of just a quick follow-up on capital management and dividend, I know both of you have mentioned the strength of the balance sheet, continued ongoing investment and cost-cutting. In terms of how we should think about things like the dividend and the safety there, or your willingness to raise that given the current environment, or buybacks and other forms of acquisition to lower valuations, how are you guys thinking about that from a financial but also a strategic and sort of, I guess, sensitivity to the times type of perspective?
I'm glad you asked that question, as I happened to talk to our chairman yesterday before this call, because I figured somebody might ask that question. It's a tricky question because as you know, it's up to the board to decide on our dividend. I can tell you this, that we had a board meeting on April the 8th, and the board approved an increase and a payment of our dividend. They wouldn't have done that if they had concerns in the short or medium term about our capital position or about our dividend. Again, without speaking for the board, I think we have a very long 45-year track record of paying and increasing our dividend. We have a strong balance sheet. We are a capital-light business with strong cash generation.
Our payout ratio is 55%- 60%, which I think gives us some room to be able to continue even with increases, without running into any major capital constraints or restrictions on our investing. I would feel optimistic that our board would be supportive of continuing the long track record that ADP has of 45 years as it stands. I'll let Kathleen Winters maybe make a comment or two about that as well.
Yes. Thanks. Yeah, you covered it really well, Carlos Rodriguez . I would just say, in support of enabling the board to make dividend decisions, we on a normal basis do ongoing analysis and stress testing and have been continuing to do that through this environment. We've been looking really closely at that stress testing. I really don't have anything to add there on the points Carlos Rodriguez commented.
Great. Thank you.
We have time for one more question, and that's from the line of Lisa Ellis with MoffettNathanson. Your line is open.
Thank you. Thank you for squeezing me in. Great to hear everybody's voices. Glad to hear you're well. Just a little bit of a follow-up on the PEO question. As you just highlighted, the worksite employees and PEO are a bit more resilient because of the larger size of company, but the revenue guidance there is down more significantly in Q4. Maybe a tactical question just around what drives that in the short term, but maybe a broader question, Carlos Rodriguez , for you coming from originally the PEO business. How should we think about how the PEO will act through a recession period? Do you expect increased demand for the PEO or some clients dropping out of the PEO? How do you think about that dynamic? Thank you.
It's a great question. I'll let Danyal Hussain pull up the calculator too, because I'm sure you're right about the drop being greater. There's no intention, there's no signaling or anything intended there, maybe rounding or the math or something, but there's no magic formula there that we're trying to send some kind of message. We think the PEO business is solid and strong and I think tends to weather recessions better. Again, every time you have a recession, it's a different kind of recession. We had our financial crisis last time. This time it's a health crisis. I'm always cautious of making bold, definitive statements, but historically, we've always worried about the PEO going into a recession or into a crisis being challenged because it does tend to be kind of a more expensive, if you will, solution. It also provides an enormously higher amount of value, right?
During these types of situations, for example, our PEO handles the questions not just of our clients, but of the employees of our clients. That's not what we generally do for our typical payroll clients. That helps our clients a lot and relieves them of a big burden and provides those employees a lot of comfort. There's a lot of real positives and good reasons why people want to stay on a PEO or why they want to be on a PEO, even in a recessionary environment. I would say that in the prior recessions, the PEO was not immune, just like it's not this time, from pays per control decreases and from some short-term disruptions due to new bookings. We've been impressed.
I've been through now, I guess this is my third recession at ADP, at least prior to, the PEO performed on a relative basis as well, if not better than the rest of our business. We would expect no different on a go-forward basis.
Lisa Ellis, this is Danyal Hussain . Just to add, because it's fairly in the weeds, which I love, of course. In addition to the impact from worksite employees in the PEO, we charge as a percent of payroll, and so wages themselves, to the extent we have some workers working fewer hours within the PEO base, that can have an impact. Even further in the weeds is you could have a slight mix impact with respect to workers' comp, to the extent that certain industries you have greater impact from pays per control, and those had higher workers' comp rates.
These are very subtle impacts, but together they kind of inform that guidance.
Wonderful. Thank you. Maybe my last one, Carlos Rodriguez , to give you one to end on. Just as you're watching and maybe help us a little bit, what are the top literally one or two things that you are watching that you think are really going to impact as you're looking at your client base, the shape of the swoosh or the check mark over these next couple of months?
I think the first one that we're keeping our eye on is really these kind of leading indicators, if you will. This would be job postings and background checks. Those are, I think the job postings is obvious in the sense that people aren't really going to post new positions if they think that things are not going to, at some point, improve. To me, that's a sign that people are doing the same thing we're doing, which is we're conservative and we're cautious, but we have to be prepared for every eventuality, including the optimistic one.
This increase in postings and job postings to me means that people are starting to think of, well, if in two, three, four weeks this state or this industry has some kind of opening, I need to make sure that I have the people available to handle that work because these are business owners that obviously have to run their businesses. Secondly, when they actually do that, then they actually have to put that person through the new hiring process, which is the screening and selection. We're going to keep an eye on those two figures. Closely behind that, I think, is we have a very large workforce management business, or some people would call time and attendance. That is also data that is very helpful in terms of seeing number of hours worked.
Doesn't always help you a lot with an exempt workforce, but for people who are paid hourly, it's a very good indicator that kind of cuts through the noise of furloughs and layoffs and so forth and so on, and just kind of gives you some sense of quote unquote "hours worked" and whether that is increasing or not increasing. That should show an upturn before we see upturns in other things because people will take the existing people they have now and just have them work longer hours rather than adding additional people. The addition of people will probably be the final, I think, sign of recovery. We have a number of other indicators that we can look at that gives us an earlier view of where we're headed.
Wonderful. Thanks, guys.
This concludes our question and answer portion for today. I am pleased to hand the program over to Carlos Rodriguez for closing remarks.
It's hard to kind of find the words to close the call and describe the situation that we're in. Trying to end on an optimistic note here. I've been now with ADP 20 years, and I've been through, I just mentioned two recessions. This is my third. Been through Y2K, which most of the people on the call don't even remember. Danyal Hussain certainly doesn't remember Y2K. He was too young. Through 9/11. We've been through wars. We've been through multiple changes in technology. Nobody was even talking about SaaS when I joined ADP. Every time we had a challenge, it looked like that was the challenge that we couldn't overcome. Every time, ADP overcame that challenge, and it's no different, I think, for the rest of, in this case, humanity, because this is affecting not just the U.S., but it's affecting the entire world.
People in ADP find a way to evolve and to adapt. I have to be optimistic. We have a propensity to overcome. If not, we wouldn't be here talking to you today, whether it's us as human beings or us as a company. By the way, as I've said multiple times in other calls, we're 70 years old, and I think as a company, and I think that tells you something, that we're a part of a very long history of overcoming challenges, and this one is going to be no different. I'll leave you with something that I shared with our associates at the beginning of the crisis, which is something that our founder, Henry Taub, I think, established as a culture for the company that I think is appropriate.
He always told us, and he told me because I knew him personally, he told me, "Always take care of your associates, and they will take care of your clients." Everything else will take care of itself. I really appreciate the support of all of you for ADP. Thank you for calling in and asking your questions, and my best wishes to all of you for health and safety for you and your families. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.