Automatic Data Processing Q2 2022 Earnings Call Transcript


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Presentation

Operator

Good morning. My name is Michelle and I will be your conference operator. At this time, I would like to welcome everyone to ADP's Second Quarter Fiscal 2022 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. [Operator Instructions] I'll now turn the conference over to Mr. Daniel Hussain, Vice President Investor Relations. Please go ahead.

Daniel Hussain
Vice President Investor Relations at Automatic Data Processing

Thank you, Michelle, and welcome everyone to ADP's Second Quarter Fiscal 2022 earnings call. Participating today are Carlos Rodriguez, our CEO, and Don McGuire, our CFO. Also joining us for Q&A is Maria Black, President of ADP. Earlier this morning, we released our results for the quarter. Our earnings materials are available on the SECs website and our Investor Relations website at investors.adp.com where you will also find the investor presentation that accompanies today's call. During our call, 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 of these items along with the reconciliation of non-GAAP measures to the 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. And with that let me turn it over to Carlos.

Carlos Rodriguez
CEO at Automatic Data Processing

Thank you, Dany. And thank you everyone for joining our call. We're pleased to have delivered strong second quarter results, including 9% revenue growth, 20 basis points of adjusted EBIT margin expansion, and a 9% increase in adjusted diluted EPS all ahead of our expectations. It remains a very dynamic and challenging business environment for our clients and prospects. But we believe the value of working with a trusted HCM partner with more than seven years of expertise is more compelling than ever. And we see evidence of this reflected in our continued sales momentum, as well as our very high levels of client satisfaction and retention, which continue to drive upside to our results.

As usual, let me start with some highlights from the quarter. Our Employer Services' new business bookings results were strong despite the onset of Omicron variant at the end of the quarter. We experienced a record Q2 bookings level and like Q1, we were pleased to be ahead of pre-pandemic sales productivity levels. We experienced robust double-digit growth in nearly every one of our ES businesses and as we saw earlier in the year we experienced even stronger performance in our PEO segment where demand is especially robust.

As we outlined at our November Investor Day the pandemic and the dynamic macroeconomic environment have made running HR more challenging for our clients. Today, our clients must navigate a tight labor market across their organizations higher than usual local turnover, new legislative requirements, and in many cases staffing challenges specifically within their payroll and HR departments.

The strong broad-based demand across our ES and PEO segments reflects the fact the clients of all sizes are increasingly looking for greater levels of assistance and expertise to help address their needs in some cases seeking our intuitive yet comprehensive software offerings while in other cases, seeking a more fully outsourced solution. We believe we provide extraordinary value through all business environments and today's environment supports a continuation of a positive decades long secular trend in global HCM.

Moving on to Employer Services retention. We are pleased to have experienced continued strength. Although our retention in the quarter did decline very slightly versus last year's elevated level, it declined by less than we had anticipated and would have represented a record Q2, if you were to exclude last year's pandemic impacted retention levels. With overall client satisfaction once again, reaching a record level this quarter this strong retention is not surprising to us.

Moreover, early January results look strong giving us greater confidence for the rest of the year and we are pleased to be raising our retention guidance once again. Our ES pays per control metric came in slightly better than expected at 6% growth in the quarter. We are very -- very pleased to see the US unemployment rate back to below 4%, which reflects the US economies ongoing improvement and resulting strong demand for workers.

Meanwhile, labor force participation is gradually recovering and as it does, we should continue to benefit from higher than usual pays per control growth. Over the first half of the fiscal year we've tracked ahead of our expectations, and are now raising our pays per control outlook for the full year. In the second quarter our PEO had stellar performance once again and was well ahead of our expectations with 15% revenue growth and 16% average worksite employee growth representing acceleration from last quarter despite a slightly harder growth comparison.

The across-the-board strength in our PEO continues to be driven by several factors including better-than-expected retention and bookings contributing to client growth better than expected hiring within the PEO client base further adding to worksite employee growth and better than expected wage levels further adding to revenue growth. While some of these tailwinds will normalize over time, we remain very confident in the outlook of our PEO business over the coming years.

During our November Investor Day, we also outlined key aspects of our growth strategy by product and by business unit and we are confident about sustaining healthy growth in our fast growing businesses and optimistic about accelerating our growth in our businesses that continue to transition to our most modern offerings. One aspect of our growth strategy that we discussed is an overall greater focus on marketing, which we believe will allow us to better activate our existing scale distribution.

We believe at ADP, we can deliver a lot of incremental value from tactical investments and we look forward to sharing more in the very near future. One key product initiative we talked about during Investor Day that cuts across our businesses is a development of a new unified user experience and in the second quarter, we were pleased to have made further progress on this effort. As a reminder, we shared last quarter that we moved our run client base over to the new ADP UX and now only a quarter in early indicators suggest that clients are in fact finding it more intuitive resulting in fewer client service contracts.

In Europe, we have been gradually transitioning our client base over to our award winning iHCM platform and in Q2 we seamlessly moved those clients over to the new ADP UX and we're now very excited that just this month, we began our pilot of the new ADP user experience for Workforce Now which when coupled with our Next-Gen Payroll engine makes for an even more differentiated offering for what is already the market leading HCM solution in its target markets.

And in terms of a few other highlights I'm pleased to share that we reached a new milestone by running 1 million payslips for a single client on a single day for the first time and at the other end of the spectrum our rural mobile app, which serves the micro segment continues to outperform our initial expectations. In another milestone in calendar 2021 the ADP mobile app had over 1 billion logins highlighting the growing amount of direct engagement we have with employees, and managers around the world.

To that point, this month our return to Workplace mobile solution part of the ADP mobile app was awarded the business intelligence group's 2022 big innovation award. And as a final highlight just this week, we launched our Bill Pay feature in the Wisely App. Bill pay is free to Wisely users and fully integrated into the app and has been a top-requested feature from our user base. We believe this addition will further drive engagement and retention and we look forward to continuing to expand the Wisely ecosystem.

Overall, Q2 represented a solid outcome on both the financial front, as well as with respect to key strategic initiatives. I'd like to thank our associates who continue to deliver these exceptional products and outstanding service to our clients and I'll now turn the call over to Don.

Operator

Thank you, Carlos and good morning everyone. In the second quarter, we delivered 9% revenue growth on both a reported and organic constant currency basis. Our adjusted EBIT margin was up 20 basis points better than planned and supported by our better than expected revenue growth, offset partially by increased PEO pass-throughs and head count growth in our implementation and service organizations.

I'll share more on this last point, but I discuss our outlook. Our tax rate was up slightly in the quarter versus last year, driven by the lapping of a one-time international tax benefit we experienced last year. When including the benefit from share repurchases we had a 9% increase in our adjusted diluted earnings per share. Moving on to the segments our Employer Services revenues increased 6% on a reported basis and 7% on an organic constant currency basis.

In addition to the strong bookings, retention trends, and pays per control performance Carlos outlined our client funds interest grew for the first time since the pandemic started as lower average yield was offset by a tremendous 28% balanced growth. This growth included some benefit from the lapping of last year's deferred employer social security taxes and incremental benefit from the repayment of a portion of those employers social security taxes which together contributed several points of growth in addition to the already robust growth from higher client count, employment growth, and higher wages.

Our ES margin increased 40 basis points ahead of our expectations for the quarter and supported by better-than-expected revenue performance. Moving on, our PEO continued to deliver exceptional performance with 15% revenue growth in the quarter. Average worksite employees accelerated to 16% year-over-year growth and reached 660,000 for the quarter. Key contributors were strong bookings and retention as well as very healthy pays per control growth within the PEO client base.

Revenues excluding zero margin, pass-throughs grew 18%, which was driven by worksite employee growth, as well as higher average wages and higher SUI revenues for worksite employee. PEO margin was down 10 basis points in the quarter, included in that figure was pressure from workers' comp and SUI expenses due primarily to work or mix and wages. Moving on to our updated outlook for the year. For ES revenues, we are narrowing our guidance and now expect growth of about 6% the upper end of our previous guidance range of 5% to 6%.

The primary drivers for our higher outlook are the stronger Q2 performance, our higher client funds interest outlook for the year and higher pays per control growth partially offset by an expectation from incremental FX headwind in the back half of this year on the recent strengthening of the US dollar. For our client funds interest revenue, we're raising our outlook by $20 million to a range of $440 to $450 million. Like last quarter, we're raising our balanced growth assumption meaningfully to now expect growth of 18% to 20%.

Whereas our client funds yield expectation is unchanged despite the improvement in interest rates. This is primarily because our stronger than previously expected balanced performance creates a temporary lag with greater short-term investments before we purchase higher yielding fixed rate securities. For US pays per control, we're raising our outlook by 1% to now expect 5% to 6% growth. We continue to expect that a gradual ongoing recovery in labor force participation will support job growth in the first half of the year was a bit ahead of expectations.

In addition to client funds in pays per control, we are raising our retention guidance slightly and now expect it to be down 40 basis points for the year. Although we still anticipate some normalization in client switching activity trends so far this year have been very positive and January is looking like a continuation of that same strength.

One thing we're not changing at this time is our ES bookings guidance. As Carlos outlined our Q2 performance was strong but bookings is one place for the evolving pandemic conditions and the Omicron variant has potential to create noise as we saw at the outset of the pandemic, although we haven't seen a material impact at this time we still think it's prudent to maintain the wide range of outcomes in our guidance. For our ES margin, we are making no change for our outlook of up 75 to 00 basis points.

Although we are raising our revenue guidance and although some of that is coming from high margin revenues like client fund interest and pays per control at the same time, we are now more fully caught up on implementation and service headcount, after running a bit behind, earlier this year and late last year. This investment in implementation and service teams is critical, both because the current year-end period is important to our clients and their employees and also as we look to get ahead of the needs of our growing client base.

With the continued outperformance in retention, we're now planning to grow our implementation and service teams, slightly more than we had previously planned as we exit this fiscal year. In addition to this growth in personnel we also took one-time compensation actions across our organization in recognition of broader inflation trends in the market. The incremental expenses associated with those actions are now included in our outlook.

Although this tight labor market has traded its own set of challenges for most companies, we are very pleased we've been able to grow our organization as much as we did these past few months and the wage increases we layered in give us confidence regarding our staffing levels at a busy time of year. We are also pleased we've been able to support those changes without detriment to our existing guidance ranges. Moving on to the PEO following the strong first half trends in both client growth and worksite employee growth we are now expecting average worksite employees to grow 13% to 15% and we are likewise raising our guidance for PEO revenues and revenues excluding zero margin, pass-throughs by 2% points each.

Our outlook will continue to be sensitive to employment trends within our PEO client base as well as bookings and retention performance. So although we are currently contemplating growth to be a bit lower in the back half of the year we could continue to see upside if the current robust trends persist. For PEO margin we are making no change to our guidance of flat to down 50 basis points for the year. Although we are raising our revenue guidance, we are at the same time expecting higher SUI and workers' comp expenses to create offsetting margin pressure.

Putting it all together for our consolidated outlook, we now expect revenue to grow 8% to 9%. For adjusted EBIT margin we continue to expect an increase of 50 to 75 basis points as we shared earlier this year, we expect our margin improvement to be concentrated in the fourth quarter and expect our margin to be down in Q3, particularly following the recent personnel growth and wage increases. We're making no change to our tax rate assumption and with these changes, we now expect growth in adjusted diluted earnings per share of 12% to 14%.

Thank you, and I'll now turn it back to Michelle for Q&A.

Questions and Answers

Operator

[Operator Instructions] Our first question comes from Bryan Keane with DB. Your line is open.

Bryan Keane
Analyst at Deutsche Bank Aktiengesellschaft

Hi guys, congrats on the results. I just wanted to ask on the impact of Omicron especially in December and January. Is there -- is there any noticable impact in sales of retention or anything that you would call out particularly from the rise that we've seen from the virus and Omicron.

Carlos Rodriguez
CEO at Automatic Data Processing

Yeah, I think you heard from our prepared comments, the answer was no but when you think about the way the quarter worked, the Omicron really started to pick up in, I would say, middle to late December in terms of my recollection. It's really incredible how fast things have changed with this because now we're back on the down slope in the northeast, it appears at least, in the US, so it's pretty fast moving. But I would say that our answer is no, we didn't see anything in the quarter that we just reported.

Obviously, we're now in the next quarter and it's kind of difficult to start talking about the next quarter given we're only I think three weeks into it, but you've seen probably multiple reports. I saw one this morning in the journal about, I think it was the IMF or someone kind of lowering kind of global growth and so forth and some of it is obviously a result of Omicron or probably other factors as well. We do believe that we're not -- we're not immune from these kind of things that ripple through the economy including Omicron but the truth is, we haven't really seen a big impact yet but if GDP growth -- I think the GDP growth for the full year -- calendar year most people have kind of kept it in the same range.

So I'm guessing that people have lowered their first quarter talking about calendar quarters now. GDP growth forecast slightly and probably increased because I think it's just a matter of pushing activity forward because it does look like in a few weeks, things will start to "normalize" in at least a portion of the country and then I think shortly thereafter economic -- economic activity should be robust again as was I think predicted by a bunch of economists. So anyway, it's a long -- long way of saying not really, not yet, but you know, we are always careful to not assume that -- that we are somehow insulated completely from what happens in the overall economy.

If people are traveling a little bit less. I mean our, for example, our own associate population we proactively asked, we were already back in the process of getting people back into our offices, and we kind of went back in the other direction for about a month or two. That just lowers economic activity, we weren't driving as much and are going to lunch in the local area, et cetera, and those things have a ripple effect through the economy. But, no -- no signs of any kind of major decrease in demand or economic activity from our numbers yet.

Bryan Keane
Analyst at Deutsche Bank Aktiengesellschaft

Got it. That's helpful. And just as a follow-up wanted to ask about the strength and the balanced growth I think it was up 22% last quarter, up 28% this quarter. I don't know if you guys look at how much inflation could be driving that number as well. And any other call-outs. I know you raised the guide there but just surprised at the strength there.

Don McGuire
CFO at Automatic Data Processing

Yeah, we have had some growth, certainly, wages are a little bit of that. But also, as we said in the prepared remarks, the big driver was the grow over from the lapping from last year with the deferral. So certainly the deferrals represented a few points in the growth of that, of those balances in the quarter, although even the deferrals were only for a number of -- a few number of days towards the end of the month of December. So certainly we look at those. But as we said, we do expect the balanced growth to continue. We expect it to be firm based on the pays per control and the increase in number of people working for our clients. I think that's the biggest driver

Carlos Rodriguez
CEO at Automatic Data Processing

And just in terms of a refresher by deferrals I think Don said in his remarks is social security tax deferrals and everyone, this is day-to-day like us, but it was a significant stimulus -- part of the stimulus package, if you will, and those deferrals need to be repaid half just, we just went through that, which is what helped us in terms of tailwind on balances and the other half is next December 31. So that's something maybe to pencil in which would provide some support to our balances next year as well.

Bryan Keane
Analyst at Deutsche Bank Aktiengesellschaft

Okay. Thanks for taking the questions.

Operator

Our next question comes from David Togut with Evercore ISI. Your line is open.

David Togut
Analyst at Evercore ISI

Thank you. Good morning. Could you unpack demand trends looking at Run Workforce Now and Vantage HCM in the quarter and what's embedded in your 12% to 16% ES bookings growth outlook and as a follow-up, if you could comment on your recent announcement that you're expanding Workforce Now with international functionality, what sort of traction, do you expect to see there. Thanks.

Maria Black
President at Automatic Data Processing

Yes, good morning. This is Maria. Thanks for the question David and happy to comment on both. With respect to the overall performance in the quarter, as was stated in the prepared remarks, we had strong double-digit growth that did really go across our scaled offerings, specifically in the down market. We saw the strength in our Run platform, we saw the strength in our retirement solutions, definitely experienced strength in the Workforce Now platform. I'll cover off on your second question as well as we get to the press release that we just issued. Additionally, in the second quarter, we also saw strength in GlobalView, so very happy with our international contribution to the quarter, so that was really the strength across the double-digit growth that we saw in employer services.

As it relates to the Workforce Now press release that I think we issued in the last couple days regarding the offer that now on a global basis, the ability for our US-based and Canadian-based companies to process payroll on the Workforce Now platform across multiple countries, in partnership with our Celergo offering. Very excited to have this offering, as you could imagine. Over the course of the last decade but certainly in the last couple years, the ability for mid-market customers to really be able to support international employees on their end is a growing demand, and we're pretty excited to be able to satisfy that demand with this new offer.

David Togut
Analyst at Evercore ISI

Thank you very much.

Operator

Our next question comes from Kevin McVeigh with Credit Suisse. Your line is open.

Kevin McVeigh
Analyst at Credit Suisse Group

Great, thanks so much. Hey, Carlos, I think you talked about improvement in retention against a still challenging environment overall. Can you maybe reconcile those comments a little bit, because, all things equal, I would think tougher environment maybe you have a little bit more pressure from a client perspective, but just can you unpack that a little bit?

Carlos Rodriguez
CEO at Automatic Data Processing

Yes, I think what we've been saying for probably a few quarters now, it's really not maybe the tougher environment isn't the right term it's tougher comparisons, right, because I think we -- our thesis was that we've done some tailwind from the pandemic -- there were a lot of tailwinds in a lot of areas. But one of them was in retention there is less clients switching and on top of that, there was also lower bankruptcy rates in down market and where it's a significant portion of the turnover of our clients is "out of business". So all the government stimulus and all the low switching, I think really elevated our retention. At the same time our NPS scores and client satisfaction and all the feedback we're getting from is very, very strong. So frankly, it's difficult to separate the two.

So we planned for some moderation in our retention as a result of those tailwinds because those tailwinds are going to go away. I think economically driven and we've seen a little bit of that in our downmarket, I think we've also kind of alluded to that despite our continuing strong retention it's kind of generally playing out the way we expected, which is our downmarket SBS is a little -- is down a little bit over the previous year. But other parts obviously are holding up well, if not improving and the net of that is better than we expected and better than we had planned and the question is are we going to be able to hold on to all of it. Our plan of course is to hold on to all of it, and that is why you saw in Don's comments that we're making sure we have the right levels of service, the right levels of implementation. Because if we can -- if we can achieve the forecast we have for retention for the year, which will be ahead of what our plan and our expectations were that has a meaningful impact on our long-term growth and value creation for the year for the company.

Kevin McVeigh
Analyst at Credit Suisse Group

It's very helpful and then noticeably Carlos or Don, but can you remind us, just the rate sensitivity 25 basis points what that means. And then, I guess I was surprised to see the boost in the extended investment strategy, just given, I thought it was a little bit more of a lagged effect on that. So maybe just because obviously it's been so long. We've been in front of a rate cycle. But just the dynamics of client funds related to extended investment.

Don McGuire
CFO at Automatic Data Processing

Yeah. Why don't I start with the second question first on the, on the rate environment and what that means for us. So generally speaking, we, as you know when the fund balances increased rapidly we have to invest in short-term items or short-term instruments until we have the opportunity to invest in longer-term instruments and as a result, we -- we don't see as much pickup as we would like to see, but I can certainly give you some sensitivity with respect to, if we had a 25 basis point improvements in the rates in our short-term investments, only that would translate into about $9 million of EBIT on a 12-month basis. So not -- not hugely significant. On the other hand, if we saw that growth in the short and in the intermediate term that 25 basis points over a 12-month period would translate into about $23 million of impact before taxes so certainly that becomes meaningful.

So as we look to invest those funds, longer term and as rates continue to go in what we'd say I guess we would say is a better direction I think we have some opportunity in the future, but at this point in time we think that we're not going to see a huge amount of improvement in -- in the client fund interest over the balance of the second half and what we have talked about is in the forecast today.

Carlos Rodriguez
CEO at Automatic Data Processing

Kevin, could you -- could you clarify the question on the extended portion where specifically you are focussed there?

Kevin McVeigh
Analyst at Credit Suisse Group

I guess just the dynamics of the client funds interest revenue versus the extended investment strategy, what the timing differences on those two in terms of when you see it because obviously, you saw a little bit of benefit from extended investment in terms of the outlook not as much on the client fund side but is there a timing element to the extended versus the client funds.

Carlos Rodriguez
CEO at Automatic Data Processing

Well, I think you talking about balanced growth. Extended strategy balanced growth is actually tied more to the volatility of cash flows on a year-to-year basis, it has to do with our forecast of what our low balance is going to be in the year versus our average balance, which is a little bit different from the client funds forecast. So long term, yes the extended balance would grow kind of in line with the client funds balance group. But on a short-term year-to-year basis there is a whole lot more noise. So that is actually driving the difference more so than the lag effect. The lag effect that Don was referring to has more to do with the growth in the client funds balances when there particularly -- when the growth is particularly high. It's often hard for us to reinvest quickly, just given the number of opportunities there are in the market and so forth for the type of credit quality that we're seeking, but within a couple of quarters can catch up. So it's just a question of how quickly we can deploy those additional funds.

Don McGuire
CFO at Automatic Data Processing

But I think -- I think the short answer is, the net impact from our strategy because there is also a re-classing issue in terms of how we do it in terms of accounting and so forth. So I think the right -- the right way to look at it is really what's happening with yields, what's happening with that overall. What's happening with balanced growth and then what's the net impact of our strategy for client fund strategy and I think the short answer is it's looking pretty good like just as an example, our Q1 reinvestments were at about a 1% yield, some new purchases and in Q2 they were 1.5%. So it's been, you see the same thing, we've seen the moves in the two years and the five years or even more significant than the 10 years and so forth. So for us, it's the, when we talked long like our version of long is three, five, seven, not beyond -- beyond that because of the way we invest our portfolio.

And on that front, you could not have a better environment in terms of wage inflation, balanced growth, and increases in interest rates. So I would say, we're now ready to see anything yet about '23 and '24. But all this, it's a lot of -- a lot of talk about mechanics in the short-term or whatnot because I know a lot of the people are focussed on the short term but we're more long-term oriented and we could be in here for a multi-year tailwind finally from client funds interest in a meaningful way.

Kevin McVeigh
Analyst at Credit Suisse Group

You're going to have a high-class margin problem, Carlos.

Carlos Rodriguez
CEO at Automatic Data Processing

Yes, listen. I've been waiting 10 years. I had hair when I started as CEO, and I remember telling the treasurer at the time, rates have to go up next year, and then next year I said rates have to go up next year, and here we are. But this time, dammit, I'm right.

Kevin McVeigh
Analyst at Credit Suisse Group

Thank you.

Operator

Our next question comes from Tien Jian Huang with JP Morgan. Your line is open.

Tien Jian Huang
Analyst at JP Morgan Cazenove

Thanks so much, guys. Good morning. Just really good results better based control looking at better retention in line bookings raising, balanced growth, and other good stuff, I think of all these as positive forces for margin expansion. Right. So you're keeping the margin the same. So is that just a function of the cost you discussed or is that some conservatism as well. Just trying to better understand that.

Carlos Rodriguez
CEO at Automatic Data Processing

The question is about conservatism, I will let Don handle it.

Tien Jian Huang
Analyst at JP Morgan Cazenove

Thank you, Carlos.

Don McGuire
CFO at Automatic Data Processing

Yes, so I think -- I think the answer is that we're -- we have a pretty reasonable forecast in front of us. So I think we're -- we're not being terribly conservative, but I think what you should consider though is that we raised our revenue by $150 million from the prior -- from the prior forecast and we've also raised our expenses by $115 million and if you start to break down those expenses that $115 million of expense increase [Technical Issues] PEO pass-throughs grew $48 million of that. So those $48 million of that expense increase is really having a bit of a drag on our margins. Otherwise, I think our margin is clearly would be -- would be better, but that's really what's preventing us and that's the reason we have been able to, to do more on the margins, but I do think that all in we've done a really good job of making things into our guidance and firming up our -- firming up the expectations we set.

Tien Jian Huang
Analyst at JP Morgan Cazenove

Yeah, for sure. Sure. That's very good.

Carlos Rodriguez
CEO at Automatic Data Processing

Just one other thing I think we should also add, I think to your point to in terms of tone. We want to make sure we're clear here that we're not insulated from the world, there is no question that there is pressure on costs, particularly around wages and we are a technology services company. So we have costs around R&D and so forth. We also have cost around the service side of our business and you heard in the prepared comments that Don mentioned that we've taken some actions that are what I would call mid cycle. So not the typical annual wage increases because we felt we needed to do something to make sure that we held on to our -- to our people and that we were attracting the right kinds of people. So we are doing some things that now the good news on the other side of that coin which I assume we will come up later to the question but may as well address it now. Like some other industries, but not every other industry we do have a fair amount of and the industry has shown, demonstrated historically and I think there are some recent signs from competitors that pricing is more elastic than in many industries. So it's not commodity business and there is a fair amount of room. The problems, you have to exercise that very carefully, because we want to remain competitive and on and on and on. You have heard that story from us for many years too, that we really want to win in the market, we want higher retention rates, so we can't just go around willy-nilly passing through price increases, but the fact is we can and we will if it's driven by market forces and cost increases that are experienced across the board. We're confident that our competitors will do the same thing, and some of them already are.

Tien Jian Huang
Analyst at JP Morgan Cazenove

You answered my follow-up on pricing. Thank you, Carlos. Thank you, Don.

Operator

Our next question comes from Samad Samana with Jefferies. Your line is open.

Samad Samana
Analyst at Jefferies Financial Group

Hi, good morning. Thanks for taking my questions. So I wanted to maybe circle back to the PEO business and the strength there continues formerly well. I was curious, can you remind us when we think about the source of new bookings for PEO, how much of it is new to ADP for the first time versus convergence of potentially existing customers in the SMB side of the base that you're up selling over to PEO just how should we think about the source of new bookings.

Carlos Rodriguez
CEO at Automatic Data Processing

I think it's been pretty consistent for a long time at around 50%. Right. It's about half that we kind of mine our own, it's a combination of mining our own clients, but we also mine our own sales force. Our sales forces are able to kind of bring in obviously new client straight onto the PEO but we also have a very large installed base that as you alluded to, we might, I think it's 50-50 from that. It hasn't really changed that much over the years.

Samad Samana
Analyst at Jefferies Financial Group

Great, that's helpful. And then maybe just as I think about the -- the consolidation of the base on to one UI there's clear user benefits to that, but how should we think about maybe, is there a tailwind to that on the gross margin side as more and more of the base is on a single UI from a -- from I guess a service or a maintenance standpoint in terms of spend going forward and how should we think about that unfolding on the gross margin line.

Carlos Rodriguez
CEO at Automatic Data Processing

I think that's a fair point. There is a lot of things that we do that are intended to really "standardize" right and to be able to get leverage, and this is clearly one of those where ADP, historically, was a little bit more fragmented in terms of our R&D and we've been starting with my predecessor I think trying to become more kind of unified et cetera and the user experience is one of those places where there was an obvious opportunity that I think will make us better competitively and allow us to invest our money more efficiently and there clearly is some back-end benefit to that from a margin standpoint but I would say we would be -- I'd be -- I don't think it would be true to say that that was the primary driver. There has got to be some residual help from a margin standpoint and from an efficiency standpoint, this is really about winning if having the best products and having the best face to the market in terms of the best skin, if you will, on each of our products, it makes a difference. As you know, like we -- we get, we're a technology company and it matters a lot like the experience that are in not just our clients who used to be 20 or 30 years ago, it was only the clients. Now, the employees of our clients are obviously touching and interacting with our products, especially with the mobile app and this user experience stuff matters a lot in terms of engagement.

Samad Samana
Analyst at Jefferies Financial Group

Great, helpful. Congrats on the solid results.

Carlos Rodriguez
CEO at Automatic Data Processing

Thank you.

Operator

Our next question comes from Bryan Bergin with Cowen. Your line is open.

Bryan Bergin
Analyst at Cowen

Hi, good morning. Thank you. I want to follow-up on retention, can you dig in a little bit more about the underlying drivers. So out of business closures to competitive switching behaviors. And when you think about the 40 basis points year-over-year decline you forecasted how much is due to a pickup in that closure rate versus competitive losses?

Carlos Rodriguez
CEO at Automatic Data Processing

Almost all of it is in the down market and related to normalization of economic factors like closure rates. I don't know the closure rate is the right word, but that's one of the -- that's in that category, what we call we tracked uncontrollable losses and controllable losses. Controlled losses would be around service and product et cetera, uncontrollable is the obvious like bankruptcies, out of business, et cetera and what happened during the pandemic, it wasn't just that bankruptcies went down like just all the categories of uncontrollable losses went down and there has been some normalization of that not all the way back to pre-pandemic. But I would say that there is really nothing that you can read into the numbers to tell you anything other than we have fantastic service, solid NPS scores, but there is some normalization in categories specifically more down market. Everywhere else I think our retention rates are good to improving and solid and in many cases better in prior years and we have less tolerance in those other businesses because they are not as economically sensitive. So we have less tolerance for the excuse that there's going to be normalization there because we now have a taste of what's possible in retention in the mid-market and an international and international has been strong all along and in the upmarket and we just want to maintain those retention levels, but it would be foolish in the down market to assume that there won't be some economic factors and normalization. That's what you see reflected in our forecast.

Bryan Bergin
Analyst at Cowen

Okay, makes sense. And then just on the PEO strength on the sequential increase and worksite employees is really notable here. Can you -- could you just dig in a little bit more. I heard the better units, so better retention, better bookings, but it does seem like there has been a release or tipping point here around clients converting to this mark, can you just talk about that?

Carlos Rodriguez
CEO at Automatic Data Processing

Yeah, I mean I think that we're thrilled. Just to be clear, but let me just give you a few factor like these comparisons in the pandemic and noise part of our headwind and PEO sales, which by the way were positive and were good, but not as good as ES last year. I think we shared a little bit of color there that the average client size, so had come down a little bit. Wages weren't growing that much. So all of those things have an impact, more on the PEO than they do in ES, particularly in some of the ES units. Those things have all turned in the other direction now, so the average size client is bigger in terms of client sold and that is meaningful and then any kind of wage growth which flows through the PEO doesn't flow through ES because the billing is not as a percent of wages, whereas in the PEO it is. And so we do have a number of tailwinds that are also -- are also helping, but the most important thing which I mean you're alluding to is the average worksite employee growth, which kind of cuts through the inflation and the wage growth in all of that and that's also robust but that's getting the systems like I just mentioned, from average size client being a little bit -- a little bit bigger in terms of new business bookings, but again that's great news, but it's a little bit of a normalization because it's actually back now so went down from where it was pre-pandemic and now it is back up about to where it was pre-pandemic and hopefully you get 1% to 2% growth going forward. But right now it's more than just 1% to 2% growth.

Bryan Bergin
Analyst at Cowen

Okay, thank you.

Operator

Our next question comes from Ramsey El-Assal with Barclays. Your line is open.

Ramsey El-Assal
Analyst at Barclays

Hi there, thanks for taking my question today. I wanted to ask you about your HCM products and the cross-sell opportunity into your base of payroll customers sort of an update in terms of where you are there and whether you could potentially accelerate that -- that process.

Maria Black
President at Automatic Data Processing

Yeah, happy to comment on our HCM products and how our sellers go to market to drive the combination of new business bookings between new logos as well as add-on business or HCM products from an attach perspective. So if you can imagine, a lot of the investments that we've spoken about for several years in existing products a lot of the investments that we're making into our existing platforms we just talked about the new ES and the impact that's making in a down market and we'll continue to make, coupled with the investments that we're making into our next-gen products are all investments that are anchored in a belief that we can continue to expand the offering to our existing clients as well as new clients so excited about the execution on each one of these initiatives and the impact that it will make to our bookings and mix bookings between new logos and HCM products attached.

Don McGuire
CFO at Automatic Data Processing

I mean our attach rates in general are pretty good on some -- particularly in some categories, like we said this before, like our workforce management, we used to call it time and labor, those products tend to have high attach rates and others have high attach rates, others have low attach rates, I think part of our opportunity for whatever the years to come is to not only sell new logos, which we're now obsessed about because we want to grow market share but share of wallet is a huge opportunity for us. So the fact is, like we have very low-ish penetration still in many of our categories and many of our products.

Ramsey El-Assal
Analyst at Barclays

Interesting. Okay, thank you for that. And a follow-up from me is on M&A and balance sheet deployment here, obviously a lot of the valuation multiples in the sector building quite a bit. I don't know if the environment has created a situation where maybe you had a shopping list a dream shopping list, but maybe now you can go after that you couldn't before but maybe an update on whether -- on your capital allocation and specifically as it relates to M&A plans will be helpful.

Don McGuire
CFO at Automatic Data Processing

Yes, I think that there's always things flowing across everybody's desk and evaluation is being done of opportunities, et cetera, and while it's true that the last few weeks haven't been kind to some -- to some companies. I don't think we've really changed our objectives and our objectives are to make sure that anything that we seriously consider and we pursue has to fit the portfolio. So whether it's some -- it just has to be either the geography extension that we can't currently have, or it has to be something that's filling a product niche and so we're going to continue to work by those -- by those guidelines if you will, and if things become more affordable and something falls into those categories, but certainly, we will take the opportunity to -- to look more seriously or to look a bit harder than we might have, say, three or four months ago. And Carlos you want to explain more.

Carlos Rodriguez
CEO at Automatic Data Processing

No, all I was thinking was that in some cases, if you can pay us we will buy their companies.

Ramsey El-Assal
Analyst at Barclays

All right. Fantastic. I appreciate it. Thanks so much.

Carlos Rodriguez
CEO at Automatic Data Processing

Then we can clean them up.

Operator

Our next question comes from Mark Marcon with Baird. Your line is open.

Mark Marcon
Analyst at Robert W. Baird

Good morning, everybody and congratulations on the quarter. I was wondering, could you give us a couple of updates with regards to some of the products. So in terms of next-generation pay to what extent has that been further rolled out, what's the update there.

Carlos Rodriguez
CEO at Automatic Data Processing

I would say we had a really good, I think, first -- I would call it year-end, because when you get to the midmarket, which is next gen pay, as you know right now is really being sold in a portion of what we call the core part of the midmarket, so call it 50 to 150, and I think we're at -- we're selling somewhere between 20% to 25% of our clients, of our new businesses coming in on the new platform, and we expect to be GA, I think it's end of calendar -- end of calendar year, so that's kind of what we talked about at investor day. I would say that, call it December January sales season, because a lot of those clients, they want to start clean on January 1, so it's a fairly important point of the year in terms of judging where you are in terms of sales results and so forth, and we had a fairly good, I think, number of starts. We were happy, I would say, with the early January, late December, what I would start results -- in other words, those are clients that we sold previously, that we got started and we have up and running. We try and avoid getting into specifics of how many clients, because then every quarter you guys are going to ask us, but I'd say that that's going really well and we're on track for this GA by the end of the calendar quarter, and then we had a good start season for end of December, beginning of January.

Mark Marcon
Analyst at Robert W. Baird

That's great and then it sounds like, one of the early comments that you gave, Carlos was highlighting just the breadth, talking about how Roll is doing on the low end and then also mentioning that with one client, you had a million transactions in a single day, which is obviously impressive. Can you just give us a sense for like in terms of Roll how much is that now that you've had some experience with it, how much more excited are you about that possibility and penetrating that micro part of the market and then on the flip side and with the capabilities of being able to service companies globally and then huge scale, how does that expand the top end of the market.

Carlos Rodriguez
CEO at Automatic Data Processing

Yeah, I mean, as you know we do a little bit different than most in the sense of where 100% all in on HCM and we cut across multiple segments and also geography. So that makes us a little bit unique. So you have to get excited within segment because like Roll is really exciting and we're excited about that opportunity. But that is in that micro segment because if you take the other extreme example of that other client like we process a million, that client obviously has a million employees and we process their payroll and we processed a million Paycheck on one day that's a lot of small rural clients, they make up for that. So they're excited about that, but we're also excited about its role in the growth of ADP and in the marketplace in terms of our ability to compete and to create opportunities for us. So it's a little hard to compare, I guess it is like when you have multiple children and you have to love them all and they're all good looking and smart and so forth, and I think that's the way I feel about Roll in the down market versus the up market versus global view. I mean they really are all I think performing quite well now and I think we're excited about the opportunity in each of those markets separately. I'm trying to give you a non-answer answer but I think that I'm trying my hardest to give you something concrete but it's exciting, because these are all. I mean the growth rate Dany will not allow me to say it, because we were preparing for the call. If we were a start-up we would be quoting you know growth rates for Roll that would make your eyes roll but Dany wont let me say it because it's really frankly insignificant to a $15 billion company today, but it won't be insignificant in five or 10 years.

Mark Marcon
Analyst at Robert W. Baird

I guess that is what I was getting at, was on the -- for example, in terms of Roll when you first introduced it you talked about it in a more modest manner, but it sounds like it's getting really good traction. So I was just wondering if there was some -- some way to capture how you're thinking about how big that could eventually be.

Carlos Rodriguez
CEO at Automatic Data Processing

It's definitely getting good traction. We're definitely excited about it. But again, you shouldn't. I'm not trying to overplay it because we have a very large organization and you guys need to think about like all the pieces fit together so that it fits into our forecast and just from a $1 impact, I mean I hate to go back to that, that product and that segment compete against certain competitors, we feel pretty good about we're going to be able to do there in terms of market share and growth, et cetera. But you should not be thinking about this as something that's going to move ADP's growth rate by 1% to 2% points on the top line in the next year or two. It's just not, that's not the way the math works. I wish it did, all of these things have to work together, Next-Gen Payroll, Next-Gen HCM, Roll, GlobalView, Celergo, there are a lot of things, PEO that have to come together for us to to get to the numbers and we like that where I think a portfolio that as you've seen, we've managed pretty effectively and the combination of all of those businesses having good success, some more than others at times I think leads to the results that we are reporting and forecasting.

Mark Marcon
Analyst at Robert W. Baird

Appreciate that. Thank you.

Operator

Our next question comes from Eugene Simuni with MoffettNathanson. Your line is open.

Eugene Simuni
Analyst at MoffettNathanson

Thank you. Good morning. Congrats on another strong quarter, guys. I wanted to ask about Wisely and your kind of general personal finance product strategies that you highlighted the bill-pay offering in your prepared remarks. Can you just remind us what is the next big milestones for this overall strategy and I know it's a small part of your portfolio, but will do at some point maybe start providing some metrics that can help us track the growth of this area like some businesses like that provides such as number of cardholders, frequency of transactions, the amount spent and so on. Thank you.

Maria Black
President at Automatic Data Processing

Yeah, I'm happy to comment on the overall likely product strategy and where we're heading with the opportunity. It's incredibly exciting for us and then we can talk through what those metrics could be to give some solid basis of growth over time. As it relates to the overall MyWisely App and the strategy we have within the Wisely portfolio, it is really a strategy that is anchored in financial management that financial management happens through education, budgeting, savings tools, reward, what you heard today, which you just mentioned as well, which is the launch of our bill-pay feature. We believe a significant that is exactly what we probably use with respect to any type of an online bill pay where we can scan the check and actually facilitate and bill processing through a mobile device. And so that is all part of the MyWisely App and the overall financial management strategy I think financial wellness et cetera that we've employed in addition to the other thing that's forthcoming is the -- the launch of our early wage access our EWA as we refer to it, which is really that ability for our clients' employees or employees to gain access to wages that they've earned as they earn them, so this is also a big piece to the overall equation with respect to the overall Wisely. Things that we're monitoring actively right now, back to the question around how many cardholders, et cetera, certainly we're looking at that. We're looking at other types of what type of cardholders are using what feature functionality. There is some data that you could look at as it relates to how many reviews we have on the app, the quality of the app certainly supersedes some of the competition in the space. We're pretty proud of the impact that our financial wellness tool, MyWisely app is creating in the market. I'll let Dany or Carlos comment on cardholder tracking and when and if we'll disclose that.

Carlos Rodriguez
CEO at Automatic Data Processing

Yes, I think we'll--I mean, that's a takeaway for us. We'll see if there's something else that we -- I mean, we're always open to suggestions and trying to be open-minded about disclosure, but again, this is not the same as the conversation about Roll, but as excited as we are about Wisely, we're equally excited about things like Roll, and Wisely is much bigger than Roll. But again, relative, I hate to be a broken record, relative to the size of ADP, it wouldn't be at the top of the list of the things that are going to drive the overall results, because again, a portfolio of so many different things that have to go right and that we have to get right in order to get growth on $15 billion. I think that business is probably I'm trying to do the math in my head, it's like 2% to 3% or smaller in terms of total -- actually smaller than that, even, in terms of revenue.

So, by the way, we want that, and it is growing faster than the line average. All the things you're asking about are relevant, and those things would all help the overall growth rate of ADP, but it would be misleading -- because I think others might have done that, where they make a bigger deal out of it than it really is, and maybe relative to their companies it is a big deal. Relative to us, we have lots of other things that we have to do and that have to go right, and us trying to pretend that -- you know, if we tell you this is how much we get per card and then we start giving you math that if 100% of our clients got on the card, this is how much money we would have I mean, we don't need to do that, because that's just distracting and silly, because first of all, it's not going to happen, we're not going to get 100 overnight, and it could take some time anyway.

But we will take that away and think about what, if anything, we can do to give you a little more substance around progress around Wisely, because it's exciting and we're happy about it, but it's not -- there are other parts of our disclosure that would give you more indications like the things we've been talking about pays per control, new business bookings, all those things overall are bigger drivers of our results.

Eugene Simuni
Analyst at MoffettNathanson

Got it. Thank you very much, guys.

Operator

Our next question comes from James Faucette with Morgan Stanley. Your line is open.

James Faucette
Analyst at Morgan Stanley

Thank you very much, and good morning. Most of my questions have been answered, but I wanted to talk just a little bit about, or ask about strategy. In the past, you've mentioned customer service capabilities being a differentiator related to SaaS players. How should we think about the persistence of differentiated service levels as your own AI capability grows in importance and we look at the future of self service initiatives may cause your own services and service levels to look more like traditional SaaS players? I guess I'm just wondering like how we should be thinking about that strategically and what the implications are in the business. I recognize it probably fits well within a few of your most recent comments, just like it takes a while to move the needle, but would love to get a sense of where you think you're going in those areas.

Carlos Rodriguez
CEO at Automatic Data Processing

It's a great question because we -- that's a topic that comes up not just among the management team, but also from the board, because we clearly see the opportunity there. Again, we have a couple of advantages coming out of the gate, like we obviously have a lot of data, so we have a lot of information that can be used to provide, I think, more automated, if you will, whether it's AI, machine learning, whatever term you want to use for it. You have to have information right to be able to then monetize that or turn it into a value-add for the clients, which then can be monetized. So we spent a fair amount of time on that. We've actually recently appointed someone to be our chief data officer, who is kind of overseeing and owning kind of all of our data and then how we can marshal those resources to create the kinds of advantages that you're talking about, which are really advantages for our clients so that we can be able to hold onto them longer, sell them more things, etc. Everything from the simplest things, like chatbots to real true AI, I think are things that we have already deployed and I think are in the process of growing and scaling, if you will, to take advantage of, and I think some of those you've seen around press releases, and we talked about some of them on investor day, but clearly there's a lot more opportunity in front of us that we've already done in that area. I would say that that's a great question and a substantial opportunity for us, that to the previous point about disclosure, we have to find a better way of giving more guidance or more disclosure around how that's going and how it's being leveraged, because it's going to be meaningful, I think, over the next five to 10 years for ADP.

James Faucette
Analyst at Morgan Stanley

That's great, appreciate it, Carlos.

Operator

We have time for one more question. That question comes from Jason Kupferberg with Bank of America. Your line is open.

Jason Kupferberg
Analyst at Bank of America

Thanks guys. I just wanted to start with the EPS guidance for fiscal '22 I guess we're going up 1% at the midpoint, so call it $0.06. Just breaking that down, it looks like the raise in the float income expectations is about $0.04 of that, and presumably the rest [Technical Issues] revenue outlook. I just wanted to see if that math is correct.

Carlos Rodriguez
CEO at Automatic Data Processing

That sounds pretty good. I think that the theme -- whether that's exactly right or not, the theme you should hear is -- I mean, it's maybe a bad thing to end the call with, but you should understand that the second -- we are investing, and this is not the first time you've heard this from ADP. The opportunity in front of us is big, like our bookings are growing, the economy is growing robustly despite the noise in terms of the stock market and so forth. This is a really good environment for us, and so we are preparing ourselves, and you should expect that that is going to lead to kind of long term improvement and hopefully, our growth rates and in our margins and so forth. Just don't get distracted by the short term noise, because I think if the implication is it doesn't seem like we raised the rest of whatever profit by much, the answer is you're probably right, but it's all the things we've been talking about during the call, which is we're making sure that we keep up with the market in terms of wage growth, but we have price levers that we haven't necessarily hit yet because we're not a panicky company.

We're not going to tomorrow do an unplanned price increase to our base, but we have times that are natural and normal where we will do that, but we're not going to wait to take action on wages and hiring and so forth until we get there, because that doesn't make sense. We're not some schleppy little company that needs to panic, so we're going to do the right things and if there's a timing, missed timing by a quarter or two, so be it. We think it's still pretty damn good. When you think about the inflationary pressures we have and the fact that we're still able to kind of deliver the results that we are delivering and able to grow the way we're delivering, we're pretty damn proud of it. But admittedly, we're feeling more pressure on the expenses now than we definitely felt, call it 18 months ago, right? It's the opposite, and this is what happens in, "comparisons" and "lap[Phonetic] things" and all that stuff that you guys like to look at. The pandemic hit and our expenses went down because we were very careful and very frugal and very stingy in terms of hiring and so forth, and our revenues never came down as much as everyone thought and as we thought, and then we now have to go back up and make sure that we're staffed, and at the same time wages started to increase and we have to now factor that into the picture. But we're feeling pretty damn good about our execution and how we're doing, but that is the way the numbers add up, is the way you described it.

Jason Kupferberg
Analyst at Bank of America

Okay, those are all good points. Just last one from me, I wanted to see if you could elaborate a little bit on the competitive landscape, just what you're seeing down market, midmarket, enterprise-wide. Interested in just any changes in the mix or the aggressiveness of any competitors across the spectrum. Thank you.

Carlos Rodriguez
CEO at Automatic Data Processing

Again, because we compete in so many different segments, there's not - -I don't think there's a broad sweep - -I mean, some of our competitors only compete with us in one segment, so it's hard to make a sweeping statement other than I think it's business as usual. That may not be very exciting, but I don't see -- I don't know, Maria, if you see any --t here's been no -- I mean, I think when we look at our balance of trade, we're pretty happy about a couple of people that we've been more focused on recently than maybe before, which we're now doing better than before on. But as usual, there's others that are now gaining ground on us, but I'd say that the general environment is stable and -- what is it, the rising tide lifts all boats? It feels like the industry overall has a lot of, I don't know, growth opportunity and we're all getting our fair share and trying to steal each other's share, but it's a good environment. I don't know if you have any?

Maria Black
President at Automatic Data Processing

I concur. I would echo the sentiment on the overall HCM space and the environment, and I don't think anything has materially changed. But we certainly intend to continue to win our fair share and more.

Jason Kupferberg
Analyst at Bank of America

Okay, I appreciate that. Thanks, guys.

Operator

This concludes our question and answer portion for today. I am pleased to hand the program over to Carlos Rodriguez for closing remarks.

Carlos Rodriguez
CEO at Automatic Data Processing

Thank you. Just back to the general economic conditions and what's happening in the market and so forth, which is not something that we focus on, on a day-to-day basis, but some of the things -- we did have a little bit of a discussion and some questions on capital allocation, structure and so forth, that I would just -- I can't help but I'm obsessed with the dividend, and I love how no one asked about the dividend. Nobody cares about the dividend, but we may be entering an environment where it might matter again, so maybe someday I'll get a question about the dividend, because I think we're in our 47th year of consecutive increases in a dividend, and I think if you go back 10 years and you look at what our cost basis of the stock was and what the dividend yield, given today's dividend, is on that cost basis five, 10 years ago, 15 years ago, 20 years ago, this company is a money machine, and clearly capital gains are important too but the focus changes, obviously, as the market environment changes.

Listen, I'm not wishing a downdraft in the market it hurts us as much as it hurts anyone else, but I like where ADP is positioned competitively and I like where we're positioned in terms of our balance sheet, our dividend, and the way we allocate capital. But the most important thing I'm proud of is our associates, because every quarter now as we get further away from -- despite omicron and so forth, clearly we're in a much better place than we were before. We would not be where we are today without our associates, and I mentioned how we were understaffed for sure in the early times of the pandemic, because we felt like we had to be careful on the expense side, and as we were being careful, the workloads were increasing because of all the government regulation issues that were intended to help and they did, all of the stimulus, and this was across the whole world.

That created a ton of work for our people, of which we had fewer people, and I'm incredibly grateful and will forever be indebted for people stepping up and doing whatever it took to get our clients and get us through that difficult period. I'm so glad that we're able to deliver on all of our commitments, because we were, I think, one important factor besides the Amazon trucks still running and other parts of the economy still functioning. I think we played a role in helping the world economy, I think, get through the pandemic, and our associates deserve all the credit for the role they played. So with that, I appreciate you listening to us, and we look forward to catching up with you again in the next quarter. Thank you.

Operator

This concludes today's conference. You may now disconnect. Everyone have a great day.

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