Good morning, everyone. My name is Pete Christiansen. I'm with Citigroup's Equity Research Department, covering info services, HR, HCM services, fintech, and crypto. A little bit everywhere here, but great to have Joe DeSilva here, EVP, President of Global Sales at ADP. Great to have you on board.
Thank you. Great to be here.
A lot, a lot of areas, 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's been kind of interesting, how the numbers have all of a sudden changed.
Yeah
... or been researched.
Mm-hmm.
I'd just love to hear from your perspective, as it relates to the Employer Services business, you know, after growing 7% bookings after last quarter, which was truly impressive, and reaching the high end of your 4%-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?
Yeah, 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, and we just exited our fiscal year, Q4, we had $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, you know, we feel the pressure of growing demand for us.
If I kind of think about our organization and how we sprawl 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 feel this success across the globe. So if you think about our small market arena, mid-market, major, our large market enterprise space, and international, we had 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 to drive the close? And the answer is, again, knocking on wood, no, we had a great close to our 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!
That's really encouraging, and you're seeing that on Workforce Now. You're seeing that, you know, at Enterprise, RUN-
Yeah
... all these different areas. Is there anything to call out specifically across those particular channels?
No. You know, again, for maybe the audience here, our RUN product being downmarket, Workforce Now being 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.
That's encouraging. Now, I love having a line manager at a conference. It's great because we really get a chance to do a little bit of nuts and bolts in their specific area.
Yeah.
It's 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 and marketing, how is it structured?
Yep.
And how you run the business, and what's your day-to-day like?
Sure. So think about ADP sales and marketing. First, think about us relative to the competition. We span. We've got size, we've got scale. We're across the globe, so we're significant in size. When you think about salespersons 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 do you grow that broader number at the top across all of those segments, across the globe? How you do that is where it gets a little bit more-
Right
... tricky, and, you know, 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, you know, the rap on us is, we're a global organization, domestically and internationally, of course. Think about us as size, scale, and reach. You know, 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. We've got size, scale there.
Right. Now, I think, what was it? Maybe a year and a half ago, you kind of got to the sales headcount that you needed. Now, it's been about that productivity. We talked a little bit about AI. Maria's talked about that.
Yep
... 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.
Yeah, maybe a point of clarity for the group, Pete. First off, we're always... You know, our goal is to add headcount every year and call it that mid-single-digit-
Okay
... environment. So we did that in 2024, 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, things going well, and we can add the headcount. So that is always a lever for us to pull, and we're gonna continue to pull that. When I talk about productivity and the importance of productivity, maybe unpack that for the group a little bit, the way I think about it. Productivity is something that you get from having people time in seat, so your tenure. What additional product 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?
While that sounds basic, it's changed a little bit in this selling environment, and what I mean by that is, if you go back five, six years ago, you know, the predominant lever for it was, go add headcount.... have headcount chase that opportunity. And what that headcount was able to do was walk into a buyer and say, "Hey, Pete, you didn't wake up thinking about buying payroll today, but I'm gonna 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.
Mm-hmm.
Today's world, and you could say whether it's as a function of, 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 forces us to 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 an informed buyer that knows our price, knows the competition, has already demoed our product and demoed the competition, how do we bring value to that buyer and help meet that buyer in their journey where they are?
Right.
When I think about growing sales, to your question, headcount will always be a component of that, of that equation, but productivity comes more front and center for me this year than it ever, ever has. By the way, that's a function of people just have access to more information, and there's just more competitors out there than there ever have been, that are driving, in some cases, could be a better experience, 'cause they had a great sales rep, or they're just out there pushing other products that we have to be able to speak to.
We've had a thesis, like, I'd love to hear your perspective on this. We had a little bit of a thesis during COVID. It was just 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 requirements they were able to meet 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?
I would love to want to. Is it part of it? Yes.
Okay.
Is it the story? No.
Okay.
Because we continue to see that demand, we continue to pull the self-filers. That continues to be a market that we do well in and continue to pull from, so could it have driven 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.
That sounds great. So back to the productivity part on the sales side, sounds not so much like hunter, more gatherer, 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?
So what 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, who aren't currently with ADP, that we bring over onto the ADP platform. When I think about our sales organization or our go-to-market 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 and 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 prospecting to the market.
That, that's helpful. Now, you did talk about continuing to add sales headcount, which is interesting, 'cause 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 they're quota carrier, that kind of thing? And, you know, how easily can you flex your sales force capacity up and down?
So maybe, Pete, while you didn't ask the question, the statement around, you know, the competition, this notion of them pulling back, maybe just kind of give a perspective on that. You know, 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 is Joe's 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, training that 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. I think that's candidly 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 wanna bring you back. We onboard quite a few people a year, 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. That was in a world where we drove the conversation, we drove the demand-
Right
... we educated you on why you should think about ADP today. If you believe what I shared with you, that the 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 is training for our onboarding people that goes the course of a year. There are training for our tenured reps. There's product training. There are training for our elite sales representatives that go on through your tenure to make sure that you're kept up with the times, you understand the competitive landscape, you understand our products.
So the answer to your first question is, we bring someone in in the lower end of the market, which is where we add the majority of our headcount. They will go through a year-long training program, coming in and out of the field to continue to morph and to be a 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 on how to sell, how to sell ADP, or excuse me, additional modules, how to work with partners.
Now, once you've built that platform, if you will, or that foundation for that rep, now they become a viable fit to move up into major accounts to sell Workforce Now. Once they've once they 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 downmarket, and we have a really rigorous training program to make sure with that notion of what that productivity and sales effectiveness is more important than it ever has been, that learning, you know, 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.
Maybe you can explain, and you touched upon it a little bit, the role of partners and channels throughout the ecosystem, how that has evolved, and maybe play more to ADP sales strength there.
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 downmarket for just a moment. Roughly 75% of the units that we will sell downmarket are influenced by a third party. And when I 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 trust and 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 in as part of this question is, okay, so we work with banks, you 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-
Right
... 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 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 Accountant Connect. How can we help an accountant best serve their client base? So when they refer-
Mm
... to us, give them visibility of what they referred, what is the rev share they're getting, and then value add that they can bring to their client base by way of that technology. So, you know, I put a wrapper on it. We have... 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?
Having them use the technology as well. They can be an evangelist for the platform, for sure.
Sure.
Right?
Because, I mean, the worst thing, you know, and we've experienced it, early on, as you go through the infant stages of this stuff, with Accountant Connect, you also don't want that accountant to have to call ADP to learn something about their client-
Mm
... or call ADP to do simple transactions for stuff.
Mm-hmm.
You want an accountant to feel empowered, have visibility of who I referred to you, what is my book of business, how much have you been paid, and then what can I help with, where I don't have to have my client call. Or I can act as the central 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.
I want to pivot a little bit to the existing client base. Clearly, actually, we saw this big move to ASO, HRO, more outsourcing of services. Take a minute or two, talk about the upselling, cross-selling opportunity that you're seeing now, maybe where you're seeing the heat, and what, where you're the most excited.
Yeah, so what I'd encourage everybody to think about in our client base is there's the opportunity to do a couple 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, you know, we can touch on certainly, I'd love to unpack for you, is our sales reps see this client is ready for HR because they added employees, whatever-
Right
That might be. So there's the motion of selling to the existing base, additional modules. The other piece of that, and you touched on it, is this notion of upgrading clients from a 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 to PEO in a year, 50% of them come from the existing client base by way of our salespeople, 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 they 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.
How would you characterize the runway, or, or the TAM that you have within your existing client base?
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-
Yeah
... 50% of it coming from PEO. 1.1 million clients, like, their runway is significant for us in terms of upgrades. And you know what makes it more exciting? It's not that there was never trust for a sales rep, but you relied on the sales rep's knowledge and motion, if you will, on why one was a good fit to move up. With the onset of AI, well, AI has always been around, generative AI, helping that rep and the tools and technology we have say, "That is a best fit, and here's why for that particular product." It gives you even more confidence and makes you more effective at going after the opportunity. So in the spirit of runway, the runway's significant for us.
The real connect-the-dots kind of tool that, hey, it empowers your salespeople quite a bit.
Yeah. So it... Yes, there is plenty. I mean, I'm happy to talk about it now if you'd like to talk about it later.
Sure.
But yes, 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, "No, they're a client 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.
Wow!
Helping those DMs be more effective and target, if you will. And that does a couple things. Not only does it give me excitement about the runway, one, it gives me excitement about the effectiveness. You hear Maria talk about client centricity all the time. It makes us more mindful 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.
Earlier this morning, we had a light, and we were talking about healthcare, rising costs there. I think they were quoting something like 9%-12% for the next twelve 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. You know, are you seeing, you know, recent trends in healthcare costs actually moving that needle additionally or getting more excitement for PEO?
Yes. The short answer is yes.
Okay.
You know, it's funny, when I have these conversations, you know, which are quite a bit, people believe sometimes you look at healthcare inflation and go, "What impact is it going to have on PEOs? Is it going to slow you down?" We see it as an opportunity for us. So we often talk about, and you probably heard Maria talk about, you know, this just excitement of the value prop in PEO. We're excited about it, and we see significant, you know, we talked about the acceleration year. We feel good about the outlook for PEO, in particular about around inflation and how the value that brings to our PEO offering.
That's, 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, promotion levels of, you know, are you still seeing, you know, attractive retention with escalation, that kind of stuff? Any thoughts on... Are there any irrational, pricing, that you're seeing out there?
So let me start at the macro general. Like, there is no irrational pricing that we see right now. In particular, like, again, if I just take a step back and look at the competition and the focus, there's been, well, 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 there, Pete, and for the team around discounting 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 do business, and what I would tell you is that the level of promos or discount could be somewhat focused, can be driven internally. How much do we want to drive of a certain product that we feel great about? Or externally, do we feel like we need that to win? But when I look at it, call it, on average, across the board, pricing is rational, discounts, promos, all in line in prior years.
Steady Eddie. That's good to hear.
Yes.
I know that you, before being 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-
Yeah
... in a 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 you see your competitive position there.
Yeah, 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. It 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 RUN called Payroll Inspector.
Payroll Inspector, before when you hit enter in your payroll, it tells you, "Hey, you have an issue here. You put four hundred hours, not forty hours." It brings value to the buyer, excuse me, to the user, that you don't see anywhere else. When you marry the, call it the functionality and the ease of use and ease of understanding, for 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 and easy to buy. And the re-- you see it in the record retention-
Mm-hmm
... 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 its 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.
New business formation, a big component of that, obviously.
For sure.
It's still at healthy levels, although moderated 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 new business formation side? You know, why are people coming to ADP first, perhaps? Love to for you to talk about some of the sales dynamics there particularly.
Yeah, so generally speaking, for the group, maybe you know this, so you know, look, new business formations have slowed a little bit over these historically high numbers. For sure, I would tell you I don't lose sleep over that necessarily. You know, 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.
Mm-hmm.
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, solely prospecting, to leveraging CPAs, banks, the opportunity for us remains immense, and we remain excited about the growth opportunity downmarket. 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.
Balance of trade, market share?
Look, I feel... I said this to Matt before, there are a lot of different things that I look at internally and, you know, one of the things that's critically important for us is growing share, and certainly part of that is new business formations, but other, all part of it is also taking from the competition. And what I will leave you with is I feel really good.
That does sound encouraging. I do want to touch upon Next Gen Payroll from a sales perspective-
Yeah
... and kind of, like, how that makes the sale a little easier, shorten sales cycles. But I'd love to hear you opine on, you know, on that perspective. How does Next Gen Payroll help you drive higher attach rates, module sales, what have you?
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 PEPDM pricing, continuous calc, that brings you, call it, a more modern offering, if you will. It excites me because, you know, one, it opens up opportunity for us. Those are certainly one of the things that we compete against. Well, you know, I'm a very open person. You know, you'll hear our competitors sometimes refer to us as legacy, which I don't think is entirely fair.
Mm-hmm.
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 30-40% of the units we're selling right now are on our Next Gen Payroll, and 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, it's-
It improves product packaging, per se, I guess, right?
It's product packaging-
And building-
... it's product packaging upfront and the excitement of our-
Right
... sales rep and getting in front of... Remember what I said before, we're meeting with buyers now that have already met with a lot of our competitors. So it's great when you're in there first, but when you have to go in and react to whatever it might be, "Hey, you don't have this"-
Mm
... this gives us that opportunity to react to it, number one. And number two, it's just, it's a more modern feel, and sales organization gets excited about it, and that's important.
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, then right after that, you got everyone upgraded, which is a Herculean task from what I understand, and Cobalt engineers and all that kind of stuff. Well, can you give us now, with 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? You know, how are enterprises thinking about that transition to a Next Gen HCM kind of infrastructure?
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 don't wanna talk in general terms. You know, having approaching three years in this job, when I came in, this was 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.
Mm-hmm
... including, what does the product roadmap 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? Can 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 of these sales are on 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-
Mm
... 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, you know, just the quantification of that confidence across ADP, myself, and the sales reps. So I'm really, really excited about that, and I believe that's gonna be a great growth driver for us in the enterprise space. Look, you know, we've had this discussion on slowing deal cycles. Now it feels like for, not you and I particularly, but generally-
Sure
... in the community, about for two years. If you ask 10 people, some would say, "Well, it's slowed a little bit. There's more decision-makers involved." I think that was a fair statement last year, as calling 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 than usual?" Absolutely. Do I think it is the norm? I don't.
I guess in that vein, though, maybe you could talk a little bit about, 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 coming to ADP? Like, what are some of the key elements there?
Yeah.
What are they looking for?
I wish I had a more profound answer. I believe it's the operation. Like, so when you think about how the organization works, the partners they work across, again, whether it's S, SIs, whoever 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, 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 needs they have.
But I would tell you that, like, when I think about that enterprise space, and I look at the what we've did in Q4, and I look at, I referenced it earlier on, the growth in pipelines in Q1, I'm gonna 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.
We constantly hear, you know, 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, you know, 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 some on the enterprise side?
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
... and some of the value they bring, it could lead us into a conversation like, "Hey, is something like, you know, X that I saw in 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, you know, 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.
That's great. 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. It is a huge TAM opportunity, getting into new markets. You know, from a sales manager perspective, you know, where are we? What inning are we in really trying to scale things, you know, scaling Celergo the GlobalView product to more markets? A status report kind of question there.
Yeah. So first, thanks for reminding me that it's Maria's priority, 'cause she reminds me regularly. So, what I think about maybe a little bit more of a, you know, basic answer, which is when I look at the opportunity for us to grow, we talked about headcount, we talked about productivity, but if you look at the market landscape, international is a big opportunity for us.
Mm.
And there's a multitude of ways. Look, I tend to giggle sometimes when people say, "Hey, we're gonna..." Or other parties say, "We're gonna grow internationally," because it is very hard. Every country has its own demands, 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 our numbers continues to grow. We still leverage 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-
Right
... to continue to drive, call it, that awareness in the different countries. You know, 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.
Fair.
But I will 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's 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 for us.
I imagine it's a great cost synergy to, you know, for a global organization, using multiple in-country providers to have, you know, a one throat to choke kind of solution, but also to leverage more of the technology to drive insights. I would... Huge, a tremendous value proposition.
The team and what they do right now with GlobalView and Celergo, I mean, if I think about just the year we just had there, which was remarkable.
Mm-hmm
... 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. When you think about, to your point, and to kind of emphasize your point of bringing on Next Gen HCM and having that global view and being called the one throat to choke, if you will, that is a huge opportunity for us.
Right.
Easy to do business with, one-stop shop. That excites me.
That's great. Well, it was an exciting conversation, Joe. Really appreciate you chatting with us today, giving us a little bit of the inside view on the sales perspective at ADP. Great to have you. Thanks again.
Appreciate it. Thank you, Pete.
Thank you.