Maria Black
President and Chief Executive Officer at Automatic Data Processing
Thank you, Danny, and thank you everyone for joining us. This morning, we reported strong 7% revenue growth and 14% adjusted diluted EPS growth for the third quarter as we continued to make progress delivering against our strategic priorities and as the labor market and the overall HCM business environment remained stable. I'll begin with a review of the quarter's results and provide a brief update on our strategy before turning it to Don to update you on our outlook and share some early considerations for next year.
In Q3, we delivered solid Employer Services new business bookings growth reaching record bookings for our Q3 period and keeping us on track for our full-year outlook. We maintained momentum in our small business portfolio with particularly strong growth in our retirement services offering, and in Q3, we also delivered strong bookings results in our mid-market, enterprise and international businesses. With a steady demand backdrop and a healthy new business pipeline, we are focused on continuing to execute for the remainder of the year.
Employer Services retention was very strong in the third quarter and once again exceeded our expectations also reaching a new record level for our Q3 period led by our mid-market business. Our overall retention continues to benefit from ongoing investments in our key platforms and from our commitment to delivering an exceptional client experience, which together helped our client satisfaction scores reach a new all-time high for our Q3.
Our Employer Services pays per control growth was steady at 2% reflecting the resilient overall U.S. labor market and the fact that our clients continue to add to their workforces at a moderate pace. And our PEO revenue growth of 5% for the third quarter was in line with our expectations despite continued short-term pressure from below normal hiring activity we've been experiencing among those clients.
Moving onto a broader update, we continue to push forward on our three strategic priorities, leading with the best HCM technology, unmatched service and expertise in a broader scale to ultimately deliver the best possible experience not just to the buyers of our products but everyone that engages with ADP. We are investing with purpose to deeply understand and deliver value to a vast set of personas from small business owners that count on us to HR professionals and executives of the largest global enterprises to millions of employees and gig workers around the world who engage with our solutions through [Phonetic] CPAs, banks, brokers and other key partners to our thousands of dedicated service and implementation associates and to our sellers who represent ADP in the market every day.
It's with these personas in mind that we continue pushing forward on our strategic priorities, and in Q3, we made steady progress. Our first priority is to lead with best-in-class HCM technology. We've been rolling out ADP Assist these past couple of quarters, which as a reminder will be embedded in our key platforms and utilizes GenAI to surface insights, aid decision-making and streamline day-to-day tasks for our clients and their employees.
In Q3, we were very excited to begin piloting a new feature that enables our small business clients to not only leverage GenAI to answer questions and better understand how to initiate an HR action which we outlined in recent quarters but to actually allow them to issue commands to complete that HR action. For example, users can now type I need to rehire Alex or I would like to give Alex a leave of absence and are expedited through that workflow.
Our second priority is to provide unmatched expertise in outsourcing. We continue to extend GenAI capabilities to a broader portion of our service associates, and in Q3, we started rolling out a new tool for some of our implementation teams. Now they can use GenAI to take in unstructured client employee data reducing manual data entry and minimizing errors during the implementation process. While it's still early, we are excited about its potential benefits.
Our third priority is to benefit our clients with our global scale. The ADP marketplace remains a differentiator for us and is a perfect example of a benefit our clients receive from partnering with the leader in HCM. As a growing number of our hundreds of partners offer AI-enabled solutions, in Q3, we established ADP marketplace AI principles that require our partners to commit for the same type of responsible AI principles that govern our own products including human oversight, monitoring, explainability and mitigating bias. Our clients put a huge amount of trust in us and this is another example of how ADP strives to ensure the responsible use of AI throughout the ADP ecosystem.
We also continued to extend our market-leading global scale, and in Q3, we reached 1 million paid employees on our I-HCM platform, which continues to scale in several countries in Europe and we made further progress in growing our presence in the APAC region, where we have recently been expanding our in-country payroll and workforce management presence in a number of markets.
In 2024, we are celebrating our 75th anniversary and we pride ourselves on having built ourselves into a brand that truly matters to employers, their employees and the broader world of work. Our focus on our strategic priorities positions us to deliver more value than ever for our over 1 million current clients and to the tens of thousands of new clients we welcome to the ADP family every quarter.
I'd like to highlight just a few of these new client wins from Q3 to give you an appreciation for the variety of ways in which we deliver value for them. In U.S. small business, we had a new Boutique Donut Shop referred to us from one of our CPA partners. The client chose ADP for the strength of our RUN platform, our reputation for great service, our strong relationship with our CPA and our ability to provide retirement services. Since this was a first time small business owner, our sales team even took the time to help the business owner set up their business the right way from guiding the client on obtaining a state tax ID to making sure the client obtained the appropriate workers compensation insurance.
In U.S. mid-market, we won a multistate operator of rehabilitation centers, this client wasn't happy with their prior HCM provider and workforce now proved a much better fit. What makes me the most proud in this example is how one of our ADP marketplace partners played a key role in the decision to switch to ADP by independently highlighting the advantages we offered in terms of ease of integrations, a capability we have invested in over the years.
In U.S. enterprise, we welcomed a large luxury resort that operates multiple hotels, restaurants and retail stores onsite and was dissatisfied with the prior provider's level of client service. The client was so happy following their seamless ADP implementation, which included onsite training for their HR team that they accelerated their plans to add-on features like benefits, recruiting, onboarding, wage garnishment and tax credits.
In our International business, one recent win was a leading airline that utilized ADP in certain countries and asked us to help better define their global payroll strategy. Ultimately, they expanded the scope of our services to include in additional 18 countries and started that rollout in the third quarter with plans to add other countries over the next year to enable true consolidated global reporting and analytics.
And as a final example, our HRO team started a New York-based design firm after its leadership team recognized the company lacked the HR infrastructure required to adequately attract and retain the right talent. They turned to our PEO offering for truly comprehensive support, attracted by the breadth of our offering including features like the MyLife Advisors program, which supports employees as they make benefit in other important life decisions. We also advised this client in the development of a comprehensive benefits strategy to support their multigenerational workforce and help them attract the talent that they need to grow.
As you can tell from these examples, it's often a combination of our technology, expertise and overall breadth that resonated with these businesses, and the result is incredible diversity in our client base and a resilient overall business model. We look forward to leaning in and delivering even greater differentiation in the market going forward.
Overall, we were pleased with the strong financial and strategic outcomes in the third quarter. I'd like to thank our associates who continued to deliver exceptional products and service to our clients and whose efforts drive these client wins and retention. Thank you again for all you do for ADP and for our clients. And now, I'll turn it over to Don.
