The Transcripts, Transcripts
Automatic Data Processing, Inc. (ADP) Presents at 51st Annual J.P. Morgan Global Technology, Media and Communications Conference (Transcript)
Automatic Data Processing, Inc. (NASDAQ:ADP) 51st Annual J.P. Morgan Global Technology, Media and Communications Conference May 22, 2023 8:00 AM ET
Maria Black – President and Chief Executive Officer
Conference Call Participants
Tien-Tsin Huang – JPMorgan
Thanks, everybody, for joining for the opening session. My name is Tien-Tsin Huang. I follow the payments processing in the IT services sector at JPMorgan. I was really excited to have ADP kick off the tech conference for us. It’s been a name that I followed. I was just telling Mary, on the back, I’ve been following the name for a couple of decades. I’ve learned a ton following it. And I was getting ready for the session. I was looking back. I think there have been seven CEOs at ADP…
Seven CEOs. That’s right.
And so, I’ve met four including Maria, and super excited to have Maria, the CEO at ADP, who’s been here for a few months now, but he’s been at ADP since 1996.
1996. That’s right. 26 years.
And so, there’s a lot of tenure, which I always appreciated at ADP. So, I thought it was really fitting since it’s been 51 years at this conference to have ADP kick it off. So, thank you for being here, Maria.
Thank you. It’s my pleasure to be here. Good morning.
Yes. So, I thought maybe just — you’ve been what CEO for, I wrote down 115 days.
115. I have to say, I think it’s more like 141.
Not that I’m counting, but it’s more than that.
Q – Tien-Tsin Huang
so, up by a month. So, love to hear a little bit more about your priorities and what you’re working on. There have been any surprises. Again, company has been around for quite a bit, but there’s a lot of change going on. So, I’d love to hear your priorities, Maria.
Yes, absolutely. So, thank you again for having me. I’ve been pretty busy the last 141 days. And as I’ve traveled around and been in and out of a lot of ADP offices, certainly over the years, but specifically the last couple of months, I have to say, I don’t know that there are any surprises necessarily as much as just reminders. And I think for me, you always learn a lot when you step into a role. And one of the things that I’ve been reminded yet again, and I continue to learn is about the excitement, the excitement our associates have for the future of this company. It’s really truly palpable when you engage with them. And I think one of the parts about our future that’s so exciting is how we have the ability to serve and engage and connect with our at this point, over 1 million clients.
We serve those 1 million clients serve 40 million wage earners and it really puts us in a position to be incredibly dedicated to ensuring our clients’ employees are paid on time, accurately, that they have what they need as it relates to the world of HCM. So, I think I was more reminded — and it’s with a lot of pride, I can say that it’s amazing the dedication and excitement the associates have for the future.
Sure. No, you have a very important role in the world of enterprise being ADP empowering HCM. So, you have a great view of the economy, right, Maria? You touched like you said, a lot of employees, a lot of employers. How healthy is the enterprise, how healthy is the employment situation here as you see it?
Yes. So, the — it’s a unique backdrop. It’s interesting when I think about — I spent the last year before becoming CEO in a President role, and so being in and out of a lot of sessions such as this one, it is definitely the question to your way [ph], which is what’s happening, and the backdrop continues to be unique.
I think for ADP, our unique lens based on, again, the 40 million wage earners that we pay is really into the employment side, to the economic backdrop. So, a few things we talked about at the last earnings call, we are still seeing growth in pays per control at 4%. Unemployment continues to be at a record low. I think the last number was at 3.4%, 3.6%, and really, that’s hasn’t been that way since the late ’60s. So, it’s still at a record low, while the BLS jobs, our own labor report actually shows there’s still a tremendous amount of jobs available for talent.
And while we hear about tech layoffs and things in terms of the movement in the labor market, it appears that individuals are getting reemployed. That said, though, what I would say is the converse is there are signs of deceleration. So, while PPC is still stronger, then it typically is for us, it is decelerating.
Unemployment is certainly being called to continue to creep. I think that is actively what’s happening in D.C. today is trying to get unemployment to start moving the other direction and while there’s still close to 10 million jobs available the number of jobs did actually slip under 10 million for the first time in the last couple of months. So, I think it’s a little bit of a — things are incredibly strong still. There’s still a tremendous amount of strength in the employment environment, but there are signs and data points to deceleration.
I think for us, at ADP, the most important part in terms of the health of our business and our industry is about the HCM demand. And what we’re seeing in the marketplace as it relates to the secular tailwinds, if you will, of our industry of HR management, HCM, of HR technology as an example, and that demand is strong and what I would say, is stronger than ever. And I think that’s really the big focal point for us and is a strange, unique time that we’re all facing.
Yes. So, looking back at last quarter, I recall record bookings, like you said, from a demand standpoint, double-digit growth right in your Employer Services business. I know the PEO business has slowed a little bit. But I’m curious, as you come on as CEO, and you’ve inherited the midterm outlook that we’ve known ADP to work against, including margin expansion. How are you tracking against that midterm outlook, given that set up a very strong demand?
Absolutely. We were very pleased with what we reported last quarter as it related to the overall revenue growth — very excited to see specifically, and I’m sure we’ll get to the PEO — to see PEO bookings reaccelerate last quarter. So, let’s talk about the medium-term guidance.
We gave that in November of 2021, just kind of to frame it up real quick. The medium-term guidance is what we would see in a typical year. And as we just referred to or as I just mentioned, we’re far from a typical year. There are a lot of things that have changed since November of ’21, a couple of callouts I would give, as an example, the Fed funds have increased by about 500 basis points. That’s good news for us, as in that it affects our client funds interest program.
On the converse, we also just talked about the labor environment. That’s also a byproduct of the inflationary environment, and that’s proved itself to be less than transitory. And so, when you think about when we guided to the medium-term to where we are today, there’s a lot that’s changed. That said, we are tracking for this year very well, in my mind, against our medium-term targets.
So, when you think about revenue as an example, we’re tracking well against the revenue outlook. I think we — the medium-term outlook was 6%, we’re tracking at 9%. If you look at new business bookings, we’re currently guiding at 6% to 9%. I think we talked about kind of being in the middle of that range versus the 7% to 8%, which was in our medium-term outlook.
In terms of retention, our goal in the medium-term was to keep retention stable at 91%, 92%, and we’re tracking at 92%. So, feel good about the major metrics. You did mention the PEO — the PEO has decelerated faster than we expected, certainly faster than we expected back in the medium-term guidance. So, we are seeing a little bit of softening there. We talked about high single-digits average worksite employee growth and we’re tracking at roughly 6% for this year. So, I would say all things being equal, given the unique backdrop of what’s happening, feel confident in our ability to deliver medium-term.
So, when I think about ADP, the formula for revenue growth is a waterfall, right? New bookings is so important.
Maria so, can you unpack for us what’s driving the strength in new sales? I always think of, again, your own sales efforts, which I know you’re putting a lot of muscle into, but also the pendulum maybe shifting a little bit towards outsourcing versus through your self-software. So where are we in that between sales execution as well as secular?
Sure. So, I think we — I’ll start with the secular because I think we just spent some time on it in terms of the demand environment. It’s certainly not getting any easier for companies these days to navigate being in business, whether you’re a large organization in the enterprise space or global space for that matter or you are a small business trying to figure out all the ins and outs of being in business. And we’re in that sweet spot. And so, I think there are secular tailwinds that certainly help us and the overall industry, which is again, back to the excitement that we all have, one of the reasons I remain as optimistic as I do.
We have made a lot of investments into our go-to-market, into growth — and the two callouts I would really make, one you touch on, which is the sales distribution. And so, we’ve been known — and continue to be known as having one of the best distribution models. I would say, bar none in the world in terms of how we go-to-market. I think you know I spent — essentially how I started. We talked about 26 years ago. I started selling payroll door-to-door. And so, I know this space well. And I would say, I continue to be incredibly proud of our distribution efforts.
But today, there’s so much more than just people on the street that are knocking doors selling payroll, it’s about the entire ecosystem of how we go-to-market. And we’ve made tremendous investments into that ecosystem. So that’s inclusive of our seller headcount, but it’s inclusive of how we go-to-market.
I think channels, we make a lot of investments into the CPA channel, the bank channel, the system integrators’ channel, upmarket. And so, we make investments to ensure that our distribution model is current. And that’s also inclusive of kind of how you think about seller tools, right? So, you think about the modern seller today and how they go-to-market, whether that’s through the likes of ads on LinkedIn and SEM and SEO where it’s actually the infrastructure tools that they need to be able to prospect using video and demos. And all of those things, I would say we’re leading, leading the charge as it relates to sales and go-to-market investments and modernization.
I think the other one, which is an important one to talk about, which is product. Because product impacts, not just our go-to-market distribution, but it also impacts the very other important element of how we grow in the waterfall that you mentioned, which is new business bookings, married with retention is really about net new business. And so, we’ve made a tremendous amount of investments into our product journey over the last, I would argue, 74 years, but specifically the last decade, to continue to modernize our products. And we’ve made investments into our current generation products. I talked a lot on the earnings calls about user experience, but we have 1 UX now that goes across the entire company of ADP that’s modern.
How do I know that it’s working, going back to our distribution because our sellers love it? If you think about the literally tens of thousands of demos that we do in a given quarter to lead with technology and distribute that way, product has a huge impact on our ability to win and win more against the competition and those are the signs that we’re seeing, we’re also seeing that on the retention front.
And so, it’s making an impact, products, investments, into our ability to keep our clients at a faster clip than — or a greater clip than we have in the past. So — very excited about the go-to-market, the growth side to the story. We’re excited about the investments into the ecosystem of sales and very proud of the work that we’ve done on our products.
Good. So, you mentioned competition. You mentioned retention. So, I want to hit on both of those. So, from a competition standpoint, with all the modernization and your distribution advantages, I get the question a lot, who does ADP compete against, why do they win? So, versus direct peers as well as, let’s say, SaaS players or software-first companies, how do you win? How do you bump into them? And why do you lose?
Yes. It’s a great question. I have to say, to answer the first part, which is who do we compete with, if I was able to use this entire screen behind me we compete with a lot of places. I think nobody matches ADP’s breadth and depth. If you think about who we are across the globe, who we are across whether it’s countries or segments or product lines or many, many, many, many competitors to ADP.
But in terms of who we are competing with, call it, day-to-day and in the market, the standouts, and I know you cover many of them, but certainly down market, we have the likes of the new entrants. We also have some stable existing competitors down-market. The mid-market is always a big competition on what’s happening there. And then certainly, there are the enterprise players that also play in the ERP space.
And what I would say is we’re solving for each one of those, right? And when I think about retention and how we’re doing as it relates to continuing to win clients to stay and retain them. To me, it does go back to the product. It does go back to making continued investments into their experience with us. And products is a big piece of that and today’s consumerization of the enterprise, having products that are frictionless where it’s easy for our clients, whether you’re in the down-market or all the way in the global space to engage with us and where we’re able to actually leverage technology for scale, if you will, and this amazing service wrapper that we have around to bring value. So, I think that’s a big piece of that.
We monitor this very, very closely. And so, we use Net Promoter Score. And what I would tell you is the places that we have very — almost record retention or near record retention. In some places, we do have record retention are the places that we have the highest level of experience, right? So, there’s a direct correlation between our NPS results. As an example, in the down market and the near record retention we have across our 800,000-plus clients in the mid-market. It’s an area that we have a record NPS, and we see that in the retention results.
In our international business, again, we made a lot of efforts to improve the other service levels and continue to modernize. And again, we have strength in the retention in that business. And so, we make all these improvements into the products, into how clients engage with us, and is certainly yielding the results, and we can see it in our win rates, and we can see it in our NPS. It’s interesting.
We actually just started looking at — we do blind studies, if you will, for a Net Promoter Score. So, we do our own, but then — which is against ourselves, and then we actually look at us versus the competitive landscape — and it’s pretty incredible what we’ve done over the past few years, specifically, if you look pre-COVID to post-COVID in terms of our Net Promoter Score improvements in the context of the competition.
So, I know a lot of heavy lifting was done to upgrade a lot of the platforms, right, to get there, and you’re seeing the fruits of that. So, tell us what else is left to do in terms of modernizing some of these platforms. I know you’ve done a lot down-market, et cetera. So, catch us up on the modernization journey.
Absolutely. We have been modernizing for 74 years — is the way I think about it. If you ask me where we are, we’re still in the early innings of modernization. I talk a lot about modernization. To me, it’s about growth. It’s about margin. It’s about the things that everybody knows ADP is here to deliver.
We spent a lot of the last decade or so speaking to transformation. To me, the transformation was really about getting ourselves ready. So, all the things I just mentioned in terms of modernizing our products, our current generation, down-market, our mid-market offering, all of those have been anchored in transformation. The experience that I just spoke to in terms of our client’s ability to engage with us in a frictionless way. Again, that’s all been part of our transformation. So, I think of it as Transformation is kind of what we’ve been doing internally to get ready.
I speak a lot more to modernization. And for me, that’s really about the client lens. It’s really about, again, having best-in-class products, best-in-class tools to ensure that our products are as modern as our clients would expect. And at some level, it’s interesting, I say we’re in the early innings. We are. We still have so much opportunity, even new, and I’m sure we’ll get to it, but new technology that’s coming that will yield the next level of modernization.
So, while we’ve been modernizing all along, and we’ve been transforming for a decade, our work has just begun, and I think it will be continuous. And that for me is really what it is because the more we modernize, the more we have the ability to invest and we invest in distribution and growth, and we invest in margin and return shareholder value. So, to me, kind of this virtuous cycle that ADP had for decades to modernize so that we can grow and return margin and do it all over again is, pretty winning formula.
Yes. No, it’s shown whether it was running to the cloud, embracing data, ADP wasn’t afraid of it and still delivered on the margin expansion despite — even with all the pressure to invest, it still came through — so of course, at a tech conference here. I know generative AI is going to get a lot of attention as a big tech wave or a big part of the hype cycle, whatever you want to call it. And I think I asked you on the earnings call, Maria around generative AI, maybe because I ran out of questions. But — now that is something I care about. I think a lot of investors here care about. So, tell us sitting in your seat as CEO, how are you embracing generative AI, how disruptive could it be? And as a services company, I would think there is a lot of opportunity.
There’s a tremendous opportunity. And by the way, I was very grateful for that question. It came at the tail end of the earnings call, and I’m grateful for it today because it’s very exciting for us. It’s very exciting for our industry. And maybe I’ll start there as somebody and you have as well, who’s been in this industry for 26 years and kind of watched it firsthand.
What I would say is generative AI is really the next natural evolution of HCM. So, if you think about HCM over time and you dial all the way back to how did HR start, and it really started as an administrative function. It started as a function to keep track of people. That’s actually kind of how payroll was initially — payroll was where you tally everybody on a roster if you will. And that’s really what HR was in the beginning.
Quickly moved into a kind of behavioral HCM, and behavioral HCM was when HR realized that more than just keeping track of employees, you need to ensure that you’re developing them and keeping them happy and all of these things. And that also happened kind of in the middle of the last century with kind of what happened with the unions and things of that nature. And so — that’s kind of where HR was spent.
Then came really in the early ’80s and ’90s came strategic HR. And that’s when companies started thinking differently about their global footprint and access to talent and how they wanted to run their companies. And for me, what was so exciting about this time because that’s when I stepped into this company was — it was the time where HR got the seat at the table, at the C-suite at some level, side-by-side with the CEO, to ensure that whatever the company was thinking about from a strategic perspective, HR was able to map to that, HR was able to contribute to that. And so strategic and global HR is where we were.
Until about the last decade and then came HR technology and where the technology function. So that’s the history lesson of HCM technology for a minute, and that’s — to me, where we’ve spent the time really trying to sort through HR technology. But while so much HR technology and HCM Tech exists, the candid answer is — it’s not always easy to use. It’s not always easy to get that strategic report that shows you where your labor workforce is across the globe.
And so, to me, what’s so exciting about generative AI is that it’s a monumental moment in that — for the first time, all of this HR technology and all of this data will become usable in a more meaningful way. And that’s a really big deal for the industry, but it’s a really big deal for ADP because we have unique data, and we have more data than anyone else. And so, I’m excited to step into that. I’m excited to watch that evolution in the industry.
But how are we thinking about it for us? I think the first is for our client’s rights. I mentioned earlier the commitment we have to be client-centric and how we think about our products and really putting AI inside. We have that already. We have artificial intelligence inside our products that serve up, whether it’s payroll inspection to ensure that payrolls again, get out on time and accurate or it’s other ways.
If you think about HR — the function of HR, so much of it is administrative, you said, services company. We all have been speaking to things like job descriptions, handbooks, and writing reports, I actually saw a use case over the weekend, real-time where generative AI was consuming a qualified benefit plan in a natural language was able to just return, and give me the output of anyone over this group that needs a distribution, and that’s incredible. I mean that is a — so being able to feed a policy and in a natural language return that level of reporting and not to get all geeky about reporting, but these are meaningful experiences for our clients. And then kind of switching gears and talking about us for a minute.
Generative AI, we’re talking a little bit about this Backstage. For us internally, as we think about it for ADP, it’s really — it’s both, right? It’s both the commitment that I have to this company, which is driving growth as well as returning margin. So, on the growth side, today, as, we get about 50% of our business from our existing client base.
And so, this ability, and we have AI tools today, but Generative AI is going to change this game for us, which is being able to serve up the right lead to the right seller at the right time based on attributes and buying signals and times, that’s a game changer for us. And so very excited about what it can do for us on the booking side. And we’ve been in that space already.
And then I think the other is operational efficiency. And so back to transformation, modernization, we’ve been doing business process improvement for many, many decades, and this will be the next level of that. And so, when I think about anything that has to do with the service agent and a Service Assist, whether it’s key case notes, and we’re already playing with these things, and it’s incredible, the efficiency that it will yield for us internally.
So, all the way around, I’m excited for the industry. I’m excited for ADP and the data that we have and making it more meaningful for our clients. I’m excited to continue to put technology and innovation right at the forefront of our clients’ experience and then I’m really excited internally both for growth as well as efficiency.
That will be fun to track. Maybe — because I get this question a lot Maria, just with all the data you have with across all these employers and employees, I know a lot of other companies are trying to tap into the same data you have and do things like income verification. So, what are you doing now? Were you actually monetizing the data? What are the limits on what you can and cannot do?
It’s a great question. I think a lot about this. As you can imagine, we’re also highly governed both internally. We have the likes of our Board and others making sure that we’re doing the right things as it relates to data. And so, as a company who’s had a lot of data over a lot of years, the good news is we’re well-positioned. Back to the conversation we just have to step into it in terms of the governance and really all the brand values that ADP stands for as it relates to making sure we’re doing it the right way.
And for us, being able to monetize data, the only way to do that is to do it the right way, with the right level of trust from our clients, with the right level of consent from our client’s employees. So, I mentioned the 40 million wage earners. If we are ever to use any of their data, they’re doing a consent on that. If we’re using it in the aggregate, that’s a client consent type of situation.
And so, in all of those things are things we’ve patched out over the last few years. But we are, as you mentioned, working with several credit bureaus on data monetization specifically for employment verification. That’s been a big contributor to ADP over the last couple of years as mortgage rates were actually at one point at all-time lows. But now even today, there are all sorts of new use cases even for employment verification, even in the absence of the mortgage kind of height, if you will.
We also are looking at all sorts of other use cases where we can monetize data. The way that I think about it, and we, as a company, think about it as anywhere we can take a normal process and remove friction. So, in the case of employment verification, that’s a process that forever was littered with complexity and friction for that in this example, an individual that was applying for a mortgage and what we were able to do through technology and this partnership and our data married with somebody else’s data was take a process that’s littered in friction and make it literally seamless.
So, it’s good for the client’s employees. It’s good for the world or the applicant in this case, it’s good for our clients and it’s certainly good for us in our bottom line.
Yes. Well, from a position of trust, obviously, ADP is at the top of the list in terms of being the gold standard. So, the governance piece is going to be important here, I think, as we track it. That will be fun to go. So, we’ve got a little less than eight minutes left. I want to get a few more topics, if you don’t mind…
Yes. So, I think you’ve heard me say this before. I’ve always thought of ADP as the sleeping giant in Fintech as you touch so many employees. You push funds into their accounts and so the opportunity to bank be underbanked and provide them this wisely app and give them the tools to be banked and have a debit card, et cetera, seems quite large. So where does Wisely rank for you in terms of the opportunity to be closer to the employee?
It ranks high on the list. We continue to be, like you are very excited about our Wisely offering — it is an ability for us to connect and bring value directly to our clients’ employees. So, the sleeping giant, to use your terms, are this consumerization, if you will, of these 40 million wage earners. To me, it’s all about meeting them where they are and where they’re engaging. And many of them need — in the case of Wisely, they need access to their wages in a different way, they need access to pay cards in lieu of checks for various reasons. And so, I’m very excited about this and that it will create this ability for us to bring value. And as we grow that value, I have no doubt that the offering will continue to grow.
Some of the things that we’re doing is bringing financial wellness into that app. So, we’re actually helping mention the unbanked. That is a part of the target market. There are also many others, but this concept of financial wellness kind of as an ability for us to help our clients. I talked about it on the last earnings call. We have over $1 billion that has been saved automatically through this wellness app.
Again, our commitment to the world is to make the world a better place, certainly, that’s one way to do it. And I think, all of these ways, whether it’s through Wisely or even our ADP mobile app where we have 10 billion users that engage to either clock in, or check their pay statements or look at their retirement. That’s another key place that if we can continue to drive value, we will tap into this sleeping giant, if you will, of the connectivity that we naturally have today with our clients’ employees.
Okay. Now that’s fun to watch. So, with — Valuations have come in quite a bit for some of the Fintech names. This isn’t specific for Wisely question, but just the balance of doing inorganic investments now at this point in the cycle, versus investing organically. Where do you stand on that?
Fair. We — so our capital priorities, we are committed to organic growth. We are also committed to M&A. We’re committed to dividends. It wouldn’t be an ADP stage presence without shouting about our dividend coming up on 50 years next year and then share repurchases. So, double-clicking really quickly on the M&A side.
We are very disciplined as it relates to how we think about M&A and valuations. We’re incredibly high. They have come down, but we’re going to continue to use the discipline we’ve always used, which is making sure that it has to be incredibly strategic for us to do something that would be outside of the commitments we have, whether it’s growth or on margin, it really has to fit well for us.
But we do a lot of tuck-ins. And I don’t know if we always get all the credit that in my opinion, we should as it relates to the amount of tuck-ins we do in a given year, just to kind of give a couple of them. We recently acquired one of our Streamline or Celergo partners, our international partners in South Africa, we acquired a labor management tool in Italy called Infocom. We acquired a business in Ireland to provide payroll there for our clients. Again, that was one of our partners.
We recently acquired, a company called Integrated Design, IDI, which is really a mid-market ability for us to integrate our offerings. So, we do a lot of these tuck-ins. And the goal would be, especially, as you mentioned, valuations changing a bit. There might be an opportunity for us to accelerate some of those things. And anything bigger than that, again, we’re going to be very disciplined as it relates to the value equation.
All right. Good. We got three minutes left. Debating if I should ask you a PEO question, or we should close it out. What do you think?
PEO question. I’ll take anything.
Well, let’s close it out, by thinking about valuation. I know I’ve been a little bit surprised to see ADP stock under before, year-to-date. And so, I’ll ask you this. What do you think is underappreciated or maybe misunderstood from an ADP perspective? I know you get a lot of questions on unemployment and what’s going on with the macro. But we’ve seen ADP be very defensive through up-and-down cycles. So, what do you think is misunderstood, Maria?
You say defensive. I’d say all weather. And I think — and by the way, my job is to ensure that we remain all weather. That doesn’t mean, by the way, we’re weather-proof. But we are an all-weather company. And so, I think maybe I’ll touch on two things, and we can end on the PEO.
Maybe the two things in my mind that might be slightly underappreciated by the market at this time. The first is there are so many questions around where we started, which is the unique backdrop of the labor economy and what’s happening with employment and is it going this way or that way. And we guide to these things.
But when I think about something such as pace per control over time has actually very minimal impact on ADP and this, you’ve studied us. It all averages out over time. And really, to me, taking us back to kind of where I started. What really matters is the HCM demand. And that demand, the secular demand, and our ability to lean into it, right, through things like best-in-class products through distribution. That, to me, is more important than what’s happening with employment, the correlation or the impact of pays-per-control to our actual results, both bookings and revenues is very minimal in the context of the demand environment.
And so, demand remains strong. I think the other thing getting to the PEO here at the end. I think the other thing that’s underappreciated, if you will, by the market, where I believe maybe even the market is a bit confused because all of the PEOs experienced, I think, a heightened impact as pays book control came back in terms of the post-pandemic year. We all are challenged by these grow over rates, right? And so, I think we all had some element of deceleration and strangeness, if you will, in our results at the same time. And I think the market is very keen to try to figure out what is that one thing that’s happening in the PEO. And the truth is we’re all very different.
We serve different markets at some level, different geographies, and different sizes. We have different offerings. Some of us have PEO and various components of administrative services offerings, and comprehensive services offerings. We are also structurally very different. So, while we are fully insured and that’s what we believe is the right thing for the industry to really look at the disciplined and stable rates over time. Many of our competitors are not. And so, we all have had an impact on the post-pandemic environment.
I think the market is trying to make it one story. And the answer is — and again, I’ve spent — I was in that business since 1999 and I watch these cycles over decades, and they repeat themselves. And that’s all this is. But our cycle looks the way it does because of who we are and everyone else looks a little different. So, there isn’t just one thing. But again, back to the demand environment, which is what matters. The demand is strong in the PEO. It’s not getting any easier to navigate being a client in that space. And we’re right there to step into it. So, demand on both ends remains strong.
Great. We think we can end it on that. And I’m really grateful to have you, Maria. Really excited to be working with you; hopefully, we can do this again.