Automatic Data Processing, Inc. (ADP) Q3 2015 Earnings Report, Transcript and Summary

Good morning. My name is Sayeed, and I will be your conference operator. At this time, I would like to welcome everyone to ADP's Third Quarter Fiscal 2015 Earnings Webcast. I would like to inform you that this conference is being recorded. [Operator Instructions] Thank you. I will now turn the conference over to Ms. Sara Grilliot, Vice President, Investor Relations. Please go ahead, ma'am.

Thank you. Good morning, everyone. This is Sara Grilliot, ADP's Vice President, Investor Relations, and I'm here today with Carlos Rodriguez, ADP's President and Chief Executive Officer; and Jan Siegmund, ADP's Chief Financial Officer. Thank you for joining us for our Third Quarter Fiscal 2015 Earnings Call and Webcast. Before Carlos begins with a discussion of our achievements in the quarter, I'd like to remind everyone that today's call will contain forward-looking statements that refer to future events and as such, involves some risk. We encourage you to review our filings with the SEC for additional information on risk factors that could cause actual results to differ materially from our current expectations. With that, I will turn the call over to Carlos.

Thank you, Sara, and good morning, everyone. This morning, we reported solid results for our third quarter of fiscal 2015, which included revenue growth of 7% despite increased pressure from foreign currency translation. Worldwide new business bookings grew 6% in the quarter compared with a third strong quarter last year. I'm pleased that, fiscal year-to-date, our new business bookings growth is a solid 11%, putting us squarely on track to meet our full year forecast of about 10% growth. Our results are directly attributable to the continued focus and dedication of ADP teams across the world that are driving our HCM strategy. Recently, we had the opportunity to detail this strategy during our Investor Day, which was held on March 3. If you did not have a chance to attend or listen live to the webcast, a recording of the event continues to be available on our website. During our Investor Day, we outlined our strategy, which consists of 3 pillars: first, to continue to innovate from our core platforms to grow a full suite of cloud-based HCM solutions that work together seamlessly; second, continue to scale our industry-leading outsourcing solutions; and third, to expand into global markets that can benefit from our HCM offering and grow globally with our clients. We see evidence of success in executing on all 3 pillars, which contributed to our performance in the quarter. Our SaaS platforms continue to meet expectations, and fiscal year-to-date, our client revenue retention remains at record levels. We continue to expand the capabilities of these platforms to meet the demands of clients and to respond to their need to comply with an increasingly complex regulatory environment. One example of this is ADP Health Compliance, which helps clients manage the complexities of compliance with the Affordable Care Act. This product continues to receive significant interest from our upmarket clients and has recently been introduced to our mid-market clients. Another opportunity for our clients and ADP is big data. Big data represents an opportunity for clients to make better HR decisions. We pay 1 in 6 private sector workers in the U.S. That's the biggest data set of its kind in HCM and affords us a unique opportunity to deliver insights that enable better HR decisions. For years, we've been bringing data-driven insights to the market through the ADP Research Institute, and we will soon be announcing new products which leverage our unique data to deliver insight across HR, wages, time, benefits and talent depending on the client's HCM platform. We continue to be excited with the performance of RUN, our strategic platform targeted to small businesses, which continues to perform well. We now have all of our small-market clients using RUN, an important milestone for our business as we were able to sunset the legacy platform, EasyPay, during the quarter. This is a big achievement, not only because we completed the migrations and can sunset the platform, but also because the execution exceeded our expectations on several other fronts. Notably, we exceeded expectations in client retention during the transition. I believe the high level of retention we experienced is a testament to our product and our clients' confidence in ADP. In addition, throughout the migration, we benefited from greater adoption of HCM modules -- greater adoption of HCM modules than anticipated. While this has not driven a significant amount of revenue for ADP, it is certainly a positive outcome. And while we do not -- while we do anticipate some level of cost savings associated with this platform shutdown, we plan to reinvest the savings to support further migration efforts of legacy systems to our cloud-based platforms. Again, I could not be more proud of our associates for successfully completing these small-market migrations, and this success reinforces our confidence as we push forward on this multiyear migration journey. On the global front, we've continued to grow our capabilities outside North America and have now expanded our offerings of HCM solutions to 104 countries. For clients in these countries, we continue to expand our service capabilities to ensure we are delivering consistent, scalable and valuable services. In February, we announced the opening of a new Center of Excellence in Bucharest, Romania. This is a terrific team that will use standardized and automated systems to help our systems, our clients optimize HR and payroll operations to build great workforces. The services they are delivering start with implementation and migration and include fully managed outsourced services. Together with our operations in Prague and Barcelona, the Bucharest center enhances our capabilities in Europe. And while we're excited about our progress, it's even more satisfying when our clients recognize it. Last month, I had the pleasure of participating in ADP's annual Meeting of the Minds event in Nashville. The buzz and positive feedback we received from customers and industry analysts validated for me that we are, indeed, on the right path. It was great to share the stage with clients willing to talk about their experiences in driving specific, tangible value from our solutions. We're also proud of the recognition we continue to receive from third parties recognizing the value our solutions are delivering to the market. Most recently, NelsonHall, a global BPO analyst firm, named ADP a leader in recruitment process outsourcing. Their analysis recognizes our comprehensive recruitment service, which helps clients recruit high-quality talent at scale. This is a fantastic recognition as we continue to grow our BPO services. So we are pleased with the progress we are making on our strategy and believe it's contributing meaningfully to our performance. In the end, ADP is the only company that serves clients across the globe, across the full spectrum of HCM and across the full range of client sizes, and we have the resources, scale and expertise to meet the market needs. With this in mind, we are improving how we communicate the ADP brand to our clients and prospects. To better articulate what makes the ADP experience unique, we have developed a new tagline: ADP, a more human resource. We believe this tagline succinctly captures what sets us apart. We believe that software alone is not enough. To win in HCM requires deep expertise and outstanding service to help clients not just manage their employees, but build better workforces. We love this new tagline, which you'll start seeing in the market shortly. Overall, we have great confidence in our team, our strategy, our ability to execute and our message to the market. And with that, I'll turn the call over to Jan to walk you through the third quarter results.

Thank you very much, Carlos, and good morning, everyone. For the quarter, ADP's revenue grew 7% and pretax earnings grew 12%. This revenue and pretax earnings growth includes a negative impact of approximately 2 percentage points from the effects of foreign currency translation. Earnings per share grew 16% in the quarter on a lower effective tax rate and fewer shares outstanding compared with the year ago and included a negative impact of about $0.02 from the effects of foreign currency translation. I'm pleased with this solid performance despite the headwinds experienced from foreign currency. Our tax rate was lower than anticipated in the quarter as we were able to realize benefits from certain tax items that were not previously forecasted. ADP remains committed to shareholder-friendly actions and has repurchased more than 13 million shares throughout the end of the third quarter at a cost of $1.1 billion. These share repurchases were partially funded by the dividend proceeds of $825 million ADP received from CDK as a result of the spin-off, which occurred on September 30. Employer Services revenues grew 5% and were negatively impacted by 3 percentage points from foreign currency translation. This revenue growth was driven primarily by additions of our new recurring revenues from our HCM solutions as well as the benefit of revenues from certain tax credits filed on behalf of our clients that we received in the third quarter of this fiscal year. While our client revenue retention was down in the quarter compared with last year, and we are paying attention to this change, on a fiscal year-to-date basis, our retention remains at record levels. Same-store pays per control in the U.S. remained strong with an increase of 3.1%. Average client fund balances grew 4%. This growth was driven by net new business and growth in pays per control, but was moderated by decreased balances from lower state unemployment tax rates compared with the prior year in the U.S. -- as U.S. employment continues to improve as well as the negative effects of foreign currency translation. Our international business continues to perform well with growth coming from each major geographic region that we serve. Multinational solutions continue to perform very well with solid revenue and earnings growth. And while the economic situation in Europe is showing some signs of improvement, we are seeing some slowdown in our Latin American business. Our pretax margin expansion in Employer Services was 190 basis points in the quarter, primarily from scale and productivity. The PEO posted 15% revenue growth compared to last year's third quarter with growth in average worksite employees of 13%. And although this growth has slowed from the first half of the fiscal year because of a difficult compare, the business continues to perform well as more businesses seek to fully outsource their HCM needs. The PEO continues to deliver solid margin expansion through sales productivity and operating efficiencies, expanding margins by approximately 150 basis points in the quarter. ADP's consolidated pretax margin improved by 110 basis points in the third quarter, which included a drag of about 20 points from the slower growth of our high-margin client funds interest revenues as these highly profitable revenues grew at a slower rate than overall revenues. So now I will take you through our updated fiscal 2015 outlook. As Carlos mentioned earlier in the call, we are still anticipating worldwide new business bookings growth of about 10%. Because of the negative FX anticipated from foreign currency translation, we are now anticipating revenue growth for total ADP of about 7% compared with our prior forecast of 7% to 8%. Our revenue forecast for Employer Services still anticipates growth of about 5%. This forecast includes a negative drag of about 2 percentage points for the fiscal year due to foreign currency translation. However, the impact on the full year growth is expected to be more pronounced in the fourth fiscal quarter. This forecast assumes pays per control growth of about 3% compared with our prior forecast of 2% to 3% growth. For the PEO, we are now anticipating revenue growth of about 16% compared with our prior forecast of 15% to 17%. Our forecast anticipates pretax margin expansion for total ADP of at least 75 basis points from 18.4% at fiscal year 2014 compared with our prior forecasted range of 75 to 100 basis points of pretax margin expansion. On a segment level, we are revising our fiscal year 2015 forecast for Employer Services pretax margin expansion to contemplate our year-to-date results and are now anticipating margin expansion of about 125 basis points compared with our prior forecast of about 100 basis points. We are now anticipating about 100 basis points of margin expansion in the PEO. We have narrowed our forecast for the client funds extended investment strategy. And primarily due to the impact of foreign currency translation on interest earned outside of the U.S., we are now anticipating an increase of about $5 million over the last year. This compares with the prior forecast of an increase of $5 million to $15 million over last year. This forecast anticipates average client fund balances growth of about 5%, which is at the low end of our prior range of 5% to 7%. The detail of this forecast is available both in the press release and in the supplemental slides on our website. The improvement in our effective tax rate is expected to continue for the balance of the fiscal year and we are updating our forecasted effective tax rate to reflect this improvement. We are now anticipating tax rate of 33.7% compared with our prior forecasted tax rate of 34.2%. This tax rate improvement, combined with the impact of share repurchases on our earnings per share growth, is expected to offset earnings pressure we anticipate from foreign currency translation. And due to the solid performance of our business year-to-date, we are now anticipating growth in diluted earnings per share of approximately 14% compared with our prior forecast of 12% to 14%. This forecast does not contemplate any further share buybacks beyond the anticipated dilution related to equity comp plans. However, it remains our intent to continue to return excess cash to shareholders subject to market conditions. With that, I will turn it over to the operator to take your questions.

[Operator Instructions] And we'll take our first question from the line of Sara Gubins from Bank of America.

First question on competition. I'm wondering if you could give us an update on the competitive environment around midsized clients for payroll services.

Our sales performance, I think, in the mid-market, I think was kind of in line with the overall results and maybe even a little bit stronger, but again we don't like to get into specific detail. That's really the only way -- we don't have a lot of other pieces of data or information that we can give you around -- specifics around competitors other than, for these quarterly calls, Jan and I both look at, in addition to the sales results, we look at win-losses against competitors whether it's in mid-market, upmarket or the low end of the market. And I would say that we're doing a little bit better from a sequential standpoint and executing really well, particularly in what we call the lower end of mid-market for us, which is we refer to it as core. We define mid-market as 50 to 1,000 employees and we define core as 50 to 150, and that's a place where I think our performance appears to have improved a little bit. But again, it's a limited amount of information, only 1 quarter's worth of data. But I think there's not much to report in terms of change there. I don't know if, Jan, you have anything?

I would say there's a -- continue to be competitive in the marketplace, but unchanged compared to prior quarters. No major change.

Great. And just as a quick follow-up, at your Investor Day you spoke about the potential for leverage capacity given the move to the AA credit rating. I know that there's no particular rush as you think through that, but I'm wondering if you could give us an update on how you and the board are thinking about over the longer term.

Sounds like a question for the CFO, but since you're asking me, I'll take a stab at it and then I'll let Jan also answer. So I think that, as we acknowledged at our Investor Day, I think we, like everyone else, could see that our -- from a capital structure standpoint, we could probably optimize our capital structure a bit more and stay within, I think, our strong credit rating that we have that is important to us for a variety of reasons around our money movement strategies and client investment funds. So I think that we -- as you can tell over the last quarter, we returned the entire amount that we received from CDK, $825 million and then some, in the form of share repurchases back to shareholders. That still leaves us with a, what I would call, a very comfortable amount of cash on the balance sheet. And as you know, we're not really market timers and so we believe in steady returns to our shareholders over time through dividends and share repurchases without trying to actually time the market. So I think, today, as we sit here today, we're comfortable with where we are, but highly aware of the capacity that we have on our balance sheet. And again, that's a discussion that we've been actively engaged in with the board and I think as things develop and we have more to report, we will. But I think we don't want to be shy about making sure that it's clear that we are certainly considering the potential to optimize our capital structure and add some debt to the balance sheet. So Jan?

I think that captures it. I think relative to the time line, Sara, it's kind of this year, we have been focused on returning the dividend to our shareholders. And as we evaluate that, we would update, of course, the investment community about the progress. But right now, there is no update, really.

Our next question comes from Smittipon Srethapramote from Morgan Stanley.

This Danyal Hussain calling for Smitti. Just wanted to touch on R&D in light of sunsetting EasyPay. Perhaps could you just give us an update on where you are in terms of R&D spend and how that's, right now, broken down between maintenance and new product development?

Yes, so we've actually set a goal 3 or 4 years ago, to try to move how much we were spending on maintenance versus -- and I think what we relayed to you was that about 40% of our R&D spend was on new and 60% was on maintenance. And so I think it's a couple of quarters ago that we actually switched that around and now we're spending 60% on new and 40% on old. I think as Jan likes to point out to the organization, some of that is because our total spend has gone up and most of that spend, the increased spend, is on new. And so we have not necessarily decreased dramatically our spend on some of our legacy platforms, but as you can tell from our financials over the last 2 or 3 years, we have been steadily increasing our R&D spend. In grand ADP fashion, it's not -- it may not jump out at you, it may not be dramatic, but it is for us because we've been growing our P&L view spend at the same rate as revenue growth, which means as we get margin improvement in other areas from service, operations, implementation and sales because this is a place where we've not been trying to get operating leverage is in R&D. And so as you see those increased spend levels -- which, by the way, don't reflect really the true picture of our gross spend, which includes capitalized software, which you could see through our balance sheet and through our 10-Qs and our other reporting. But I think the message you should take away is that we have been, in ADP terms, spending aggressively on R&D, we believe for the right reasons, and I think it will translate into a better competitive set of products for us as you've seen already happen here over the last 2 or 3 years with some of our strategic platforms that we already have in the market. But the bottom line is, I think as we've increased the spend overall and we've held or slightly decreased the spend on our legacy platforms, that mix has shifted over now to 60% on new products and services and 40% on old. So we're very, very happy about that because that was a goal that we set several years ago that, by the way, happened to be in my management MBOs and as well as my team's because we think it's the right thing to do to continue to invest more in product and technology.

Got it. And just looking at Employer Services growth, I guess, FX adjusted, it looks like it was about 8%. So you mentioned the tax credits, can you just talk a little bit about what else is driving the strength there and how much of that tax credit benefit is sort of onetime in nature?

The Tax Credit Services business that we have as part of our Employer Services business is a long-running business. It suffered from the lack of renewal by Congress of certain return-to-work credits in the past years. So those tax credits have been reinstated and the business is in catch-up mode to collect those tax credits for our clients and receive the fees for it. So while the revenue is bumpy, I wouldn't describe it as onetime revenues because these are long-term processing contracts that we have with our clients. They are just dependent on the U.S. government and Congress to renew at certain time points for it. So they were suspended and we lacked the revenue throughout the last 4 quarters; and this quarter, the revenues started to kick in and they contribute a little bit more than a percentage point to the growth about. So it's just part of our business that now regains momentum as part of it.

Our next question comes from Gary Bisbee from RBC Capital Markets.

The PEO, you've had at several quarters in a row really strong margin expansion after what has been more -- much more flattish, up a little, down a little over the last few years. What's really driven that this year? Is it a change in the pass-throughs? Or are you getting more leverage because of the faster growth you've been delivering? And how do we think about that going forward?

Well, I think first and foremost, you always have to give credit to the people on the ground running the business, so I think they -- that's number one. I think it's good execution and -- but I think you're right that it also, particularly in that business, the mathematics matter. And so the faster these pass-throughs grow, the harder it is to get margin expansion from a percentage standpoint. We try to focus more on dollars of profit per worksite employee or dollars of profit overall from that segment rather than margin percentage because of the pass-throughs. But you're correct that a slightly slower growth rate of pass-throughs mathematically helps in terms of achieving percentage margin improvement. But notwithstanding that, I think we have both things happening. We have slightly slower growth of pass-through, which helps make -- helps create the environment for potential margin improvement, and then they've just executed incredibly well. They've gotten good operating leverage, including on the distribution side, so the sales productivity there has been phenomenal as you've seen from the sales results over the last 2, 3, 4 quarters and that obviously helps quite a bit because sales costs tend to be relatively fixed, and if you get big improvements in sales results, you get nice productivity lift there. And that business tends to start relatively quickly as compared to some of our other businesses in the upmarket, so you get some of that margin help from distribution costs relatively quickly. The last thing that I'll mention is, just as a caution, is that's a 10 percentage -- around a 10% to 11% margin business right now in large part because of the pass-throughs. So in the end, because of the size of the pass-throughs and the level of the margin, that's a business that you should expect modest margin improvement from. So the results that you're seeing from a margin standpoint are terrific, frankly impressive, but not sustainable. So just to be clear. And part of that is because you never know what's going to happen with the pass-throughs and we have some visibility to that, so we would obviously give you guidance in the appropriate time frame in August around what's happening with pass-throughs. But in general, when you really run through -- if you take 5 minutes to run through the mathematics, it is a business that is inherently a lower margin than our other business, but we still love it because it's -- like our other businesses, it's not capital intensive, and every dollar of profit that we generate in that segment is a dollar of profit that goes to our shareholders, into our EPS. And so we love that business despite the fact that it requires some explanation around the percentage margin.

The point on profit per average worksite employees is a good one. I think I've got 10 years of data I'm looking at here, and it looks like you're trending towards, by far, the highest level that, that's ever been, up solid double digits this year. And so is it the sales leverage you mentioned and I guess just leverage of fixed cost with the business growing faster? But is there any reason that level of profits wouldn't be sustainable or be able to continue to trend somewhat higher?

As in all businesses, that level of profitability is dependent on your differentiation and your competitive position in the market. In other words, how strong your value proposition is. We feel very, very bullish and very good about not only the execution of that business today, but also the value proposition in part because of how complex the environment has gotten because of ACA for all employers, not just for large employers. So this is just really creating, I think, a natural trend towards people looking for help. And you could get help in a variety of ways, and the good news is ADP has all types of ways we can help you, all the way from basic payroll to the PEO, which is the ultimate BPO bundle. And I think this kind of environment where you have increased regulatory compliance and complexity around health care is really a very, very favorable environment for the PEO. But on top of that, I think the PEO has not been, to their credit, over the last 5 years, has not just been sitting there kind of waiting for things to happen on the regulatory front. They've also made great strides in terms of the products and services that they deliver and the value that they add to the clients that they serve. And again, this is not the appropriate call to get into those details, but we feel very, very bullish about the value proposition that has emerged there over the last 3 to 5 years.

Great. And then just a quick follow-up, Carlos, you said you didn't -- it's great that you're selling more HCM into RUN customers, but it doesn't impact revenue. Is that just a scale issue? Or is there some other reason that's not really benefiting?

It is a little bit of a scale issue that, obviously because this is the conundrum that we always have when we talk about ADP is, in some respect, it's a good thing that we serve all markets globally at all levels in all segments. That really means that any 1 segment in 1 country doesn't usually move the needle when it -- we need multiple parts of ADP moving in tandem to really move the needle. And so the SBS business, our downmarket business is a scaled business and it's a nice-sized business, but the amount of additional HCM penetration that you get as we migrated clients over in relation to the total size of that business and the total size of ADP just doesn't -- it doesn't register. So we appreciate it and it helps the overall cause, but we added that line in the script because we want you to understand that we're not getting $40 million, $50 million of lift in 1 year from that. Now over time, if we end up having a higher penetration rate of things like HR, and time and attendance, and insurance services, and 401(k) and other products because the RUN product itself is easier to use and more integrated, then that, over time, would help us. But just the nature of our business model, these are not big onetime lifts that we got, and we just want to make sure that, that was clear to all of you. But we're very happy about it, and it also was an indirect way of making sure that you understood that if we get similar, which we are, getting similar lift in mid-market and upmarket where you would assume and we are experiencing higher penetration rates of some of these other products, some of these other HCM products, that it bodes well for us as we continue these migrations and we complete some of the migrations in of some of our other segments. We think it could be a more significant lift than what we experienced already in our low end.

Our next question comes from S.K. Prasad Borra from Goldman Sachs.

Probably just to start off, as you continue to increase your focus on expanding your HR suite, what are the metrics you are using internally to judge your success, both from an R&D and sales perspective? Is it the number of products you're offering? Is it attach rates? And if you could provide any update on attach rates post migration.

I know Jan has those attach rates at the tip of his tongue, and I think that's probably, besides our sales results and the attach rates in our upfront sales, I think the attach rates on our migrations, those 2 metrics are important metrics for us to judge our success of kind of our overall HCM strategy. So for example, in the upmarket, Jan has the exact numbers, but when you compare to kind of prior platforms that we had, the attach rates are much higher of the traditional HCM products around time and attendance, benefits, HR, talent, et cetera, and we're experiencing the same thing in mid-market where the concept of a seamless product that provides the entire solution in one-stop shopping, I think, is resonating in the marketplace. But what we needed to have is the products to actually reflect that, and I think we have that now in our strategic products and we're seeing it in the sales results. And now what you've been hearing us talk about over the last 2 or 3 years that we want to do that also with our client base by moving them on to our strategic products, which is what we just finished doing in Small Business and we're now trying to do in mid-market and also in national accounts. So I don't know, Jan, if you have the attach rates.

Yes, we have. In the upmarket, there's really no change from what we have reported in prior quarters in the mid-70s to low 70s for some of these modules, but they remain high for Vantage. And in the mid-market for Workforce Now, we have seen actually some increase in the attach rate of our benefits bundle that we believe coincides with strong interest of our ACA offerings. So there's definitely something going on in the mid-market driving demand for a complete -- more complete bundle including benefits due to the insurance changes and things. So we're looking at these attach rates, which are important for new clients as well as for migrated clients and how they buy. And the trend has continued really in line with the numbers that we have previously disclosed. There's no big change.

I think we should be clear that our sales force responds to product -- to good product and the market responds to good product. So for example, the release of our recent talent solutions, you could see, as I was going through some of the data for the call, you could see a fairly large jump, which we're not going to give the specific percentages, but a meaningful and significant jump in attach rates in new sales as -- since we released our new talent solutions. So I think we remain on the same track of being confident that, despite the fact that we want to continue to focus on our compliance, on our service, that product really matters and really drives our attach rates.

That's great. Just following up on one of the earlier questions on the PEO business, taking into consideration the pass-through costs and the mechanics related to that, but are there any other levers for margin expansion? You alluded to expansion of your products and services in this business. So can those products and services provide some upside, more from a mid- to long-term perspective, but are we going to be just range stuck? Or do you think these newer products and services should just allow you to expand margins?

We're never going to be range stuck. So I believe that -- what I was trying to make sure that I communicated is that the improvements that you should expect are not along the lines of 10% going to 20% over 3 years. It's more in the line of 10.5% going to 10.8% or 10.9% and then 10.9% going to 11.2%. It's just a different situation. When you have more than half of your revenues, we treat more than half of those revenues as pass-through revenues, and they literally are pass-through in the sense that on the health care side, we take no risk and we basically pass through the costs that we pay for those health care plans to the employees of our clients and to the clients, depending on which percent the client pays versus the employees. That just mathematically creates a very different opportunity for margin expansion than in a business where you have 90% to 100% of the costs available for leverage. And so we just -- we have a -- the value proposition can get stronger. And the other half of our revenue, so the other products and services that we provide that we charge administrative fees for, are leverageable and we can get operating scale from. But it's just mathematically important for people to understand that in that business there is a limit because of the large pass-throughs. But we do not believe that we're range stuck, and what we don't want is to take advantage of the largest leverage opportunity, which is slower growth. And so in all of the ADP businesses including the PEO, the fact of the matter is that distribution costs, even though we're getting operating leverage from distribution costs in the PEO today, the fact of the matter is that the faster we grow because of the nature of the business, we book all of our distribution expense up front. And so fast growth puts very, very big pressure and it's really quite impressive the business is performing the way it is given the high sales growth and the high revenue growth. So we hope that, that doesn't happen any time in the near future, but that would be probably the largest single source of operating leverage and margin improvement someday down the road is slower growth.

Our next question comes from Bryan Keane from Deutsche Bank.

This is Ashish Sabadra calling on behalf of Bryan Keane. I was just wondering if you could provide some more color on [Audio Gap]. We saw that decline 50 basis points this quarter. Was there any large client? Or was it mostly in the small and medium businesses?

So as you know, we typically don't get into specifics around where our retention is going up or down. And so the good news is that for several quarters as retention went up, we didn't get into the details and didn't brag. And so we're going to take the same approach today, which is this has happened before. I think it was probably 4, 5 quarters ago where we do have variability and it does tend to happen more in the upmarket where, when transactions or deals are large enough, they can move the needle in any 1 quarter. But today, we have really nothing to report other than, on a year-to-date basis, we're still about 10 basis points above last year and still at record levels. And so I think Jan put it well, which is we're going to obviously watch this very, very carefully and we are obviously watching it and digging in and looking at to see if there's anything underneath the covers. But we spend a lot of time on this topic. And today, we really don't have anything to report other than the usual fluctuations in the business. I don't know if, Jan, you have...

I think, in particular, between the second and the third quarter, you should be aware there can be timing of losses between those 2 quarters. So we -- the more reliable number is really the year-to-date number because we can have timing differences and prior year timing differences that make the quarterly number a little bit harder to interpret, so that I don't think we should put -- other than you pay attention to your retention, put -- read too much into it one way or the other.

And I think we said in prior calls that of all -- as people think about us going forward, including at Investor Day, this is not a place where we are making assumptions of 1 to 2 percentage points of retention improvement over the next 2 or 3 years. We've been in this business for so long that we know exactly what is realistic and reasonable and what isn't. And it's possible that as we go through these migrations, that we end up in a different place with a higher potential retention rate than what we've had historically because we'll be in a stronger competitive position. But from here to there, it's still multiyears, and from here to there, there's going to be turbulence as we go through some of these migrations. So we're not giving up and are not saying that there isn't a potential higher absolute retention rate that could be achievable, but we have enough experience and know enough to tell you that, and we've said it multiple times in prior calls, that when we are at record client retention levels, that is not the time to be factoring in big increases in retention going forward.

Just quickly, on Europe, I was wondering if you could provide some more color on the European business and how do the people control trending in Europe?

So coincidentally, I happened to be in Europe last week and the environment in Europe is obviously, from an employment standpoint, not fabulous: slow GDP growth, high unemployment, and relatively, the labor markets experience enough friction that it's not a place where you have big fluctuations either up or down. So the good news is as the economy tends to weaken in Europe, you don't have the same level of decrease of employment and layoffs that you have -- it takes a little longer. Having said that, the absolute levels of unemployment and the absolute levels of GDP are not attractive backdrops for those markets for us. And for our total international business, Europe is the largest single segment of our international business by a long shot. So we do have a fair amount of exposure there as you've noticed from the FX pressure that we just experienced. But relative to other companies, it's relatively contained. We have less than 20% of our revenues coming from our international business and only a portion of that is from Europe. But having said that, my view of Europe is that -- and it's a big continent so it's hard to make a generalization. But overall, when you consider the backdrop and the macroeconomic environment, I would say it's been outstanding performance in the business in terms of new business sales, client retention and revenue growth. So as we've said in prior quarters, it's not necessarily additive. Europe has not been additive to our growth rate from a revenue standpoint, but it is positive. And relative to what you hear in terms of other stories, of other situations in other industries, we're very, very pleased with the performance of that business and the leadership there. So one of the interesting things that I saw when I was visiting Europe as I spent some time in the U.K., and the U.K. is actually a nice example of what might be achievable for us over the next 10 to 20 years. In the U.K., we have strong product from a technology standpoint. We have Money Movement operations that are generating float income. We have time and attendance systems that we have now added, along with HR, to our payroll to really create an HCM solution. And so it's really a great example of what I think might be achievable for us worldwide and creates some potential growth opportunity for us for many, many years to come because it's really a replication of a little bit of what we've done in the U.S. Obviously, every country and every situation is going to be different in terms of the product needs and the regulatory environment, but in general, I think it supports the notion that the ADP model is replicable in other parts of the world where we have very, very low market share today.

Our next question comes from Mark Marcon from Robert W Baird. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: With regards to international, just a little more color, if you could, with regards to what you're seeing in terms of the play or the strategy in terms of expanding globally. Can you give us some sense in terms of what sort of deals you're seeing? What the pipeline looks like? How quickly you think you may be able to expand and ramp that?

We appreciate all the questions about international because we do tend to be creatures of habit here and focus a lot on our U.S. business, which obviously is our most mature business, but our biggest opportunities undoubtedly from a growth standpoint are outside of the U.S., and I'm talking 5, 10, 20 years down the road. The biggest single positive thing that we're seeing right now is our multinational solutions. So I also spent some time when I was in Europe in Prague, where we have a high concentration of our multinational solutions folks working, providing service there and from a service -- from a Center of Excellence. And the performance of our multinational business is really quite phenomenal. And I remember 2 or 3 years ago, every quarter getting questions about whether GlobalView was going to be profitable or when it was going to break even and so forth, and I'm not going to get into the details of the profitability of GlobalView, but the way it always happens in business, once things get paused and no one stops -- no one continues to ask questions about it. But it was a very, very positive view in Prague because the NPS scores of that multinational business -- and we define multinational as not just GlobalView, but also our Streamline solutions because clients don't care whether it's GlobalView or Streamline. They see it as one integrated multinational solution. And the NPS scores there are, particularly on the GlobalView platform side, are up. Again, I'm not going to get into the specifics, but they're up a lot versus 3 or 4 years ago. Profitability, it's not just a break-even business anymore; it's a very profitable business. Growth, strong double-digit growth in that business. That's a business that, it's approaching, including its backlog, around $0.5 billion business still growing nicely and still every quarter generating new clients that are really the who's who of the Global 100. So it's just a phenomenal opportunity for us, the multinational opportunity overall. In addition to that, what we're doing to some of our platforms in North America and probably eventually we'll do some of the same things to some of our more in-country, best-of-breed solutions is allowing those platforms to also be global. So for example, being able to -- without having to move to necessarily a multinational solution, having Vantage or Workforce Now have global capabilities is something that we have now that we believe will drive some additional opportunity for us in North America. So the whole global landscape, I think, is an important one for ADP over the next X number of decades and we're still on it. Even though we tend to be creatures of habit and go back to talking about balances in the U.S. and growth of our sales in Employer Services domestically, it's a very, very important part of our future and we're still focused on it. Obviously, the fact that the European business, which is a significant part of our company -- I'm sorry, a significant part of our international results, has had the kind of economic backdrop that it has had, has probably caused us to be less talkative about our international business, but we're not any less excited about it. I think Latin America and Asia also continue to grow very rapidly. But again, they're so small still in relative terms to $11 billion as a total company that it's just going to take a while for us to be able to report that it's actually having a significant impact on the overall results. I don't know, Jan, if you have anything you want to add on the international front.

No, I think that the multinational is the key driver for us, and ADP is the clear market leader in that space. And that drives that multinational business that is now close to $0.5 billion, so that's really what makes it successful. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: That's great to hear. And then just a follow-up, you mentioned Vantage and the potential to take that international. Can you just give us a progress report on Vantage? You've done such a great job on RUN and Workforce Now. Where do we stand with Vantage?

Yes, let me just clarify. It's really -- providing global capabilities to Vantage is different from taking it internationally, although I guess that's semantics, but I just want to make sure that I clarify that. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: Understood.

I think that Vantage continues to perform well. We believe that for -- based on the track that we're on now in terms of sales year-to-date, that we will have good growth of Vantage over the prior year in terms of new business sales. We have a couple of hundred clients sold, I think over 100 now implemented. So we're very -- we continue to be very excited. That's our strategic platform in the upmarket, and we think it's continuing to perform well. I think Jan mentioned the attach rates. It's very, very exciting for us to see attach rates in the kind of 70 percentage range for, I believe that's for benefits -- sorry, for time and attendance. And then benefits and talent and HR are like -- HR is automatically part, it's 100% attached. But when you look at talent and benefits in the 60s, I think 60 percentage range, those are much higher attach rates than when we used to sell a separate payroll module with a separate benefits platform with a separate time and attendance system. So this seamless integration works and it's driving higher attach rates, and I think it's also driving stronger value proposition in the marketplace.

Our next question comes from Jason Kupferberg from Jefferies.

This is Ryan Cary for Jason. I was just hoping you could just speak to some of the trends in new business bookings. I know growth in the first half of the year came against a weaker comparison, at least compared to the 14% in third quarter of '14. Is the third quarter 6% due primarily to the tougher comp? Or is there something else? And just rough ask, it looks like the guidance suggests about 8% in the fourth quarter. How should we be thinking about this number trending as we, say, get beyond '15?

So it's a good question. This may help you, that the 6% was actually exactly 100% of our plan for sales for the third quarter. So I think that, that's probably an indication that it was in line with our expectations. We always like to be positively surprised, but we knew that we had a 14% growth rate last year in the third quarter -- is it -- was it 14%? 14% in the third quarter last year, which is, at our size -- again, we're selling $1.6 billion annually. So the quarter obviously is approximately 1/4 of that. These are big numbers. And so when you have a 14% growth -- again, we've been doing this long enough that we know, as you can tell from the planning process, a planned 6% growth and so -- and I think we tried to telegraph that and signal it as best we could in the March Analyst Day and through other means. So I think we're exactly on plan. Very excited that we're 11% year-to-date compared to 8% last year, year-to-date. So we are nothing but positive and bullish on our sales force and our distribution, and I think the trends are positive. We're -- I don't know how else to, I guess, to put it. Like we're -- at this size, I'm just thrilled that we can get double-digit sales growth because that is exactly what we need to drive the financial results that we're trying to drive for our shareholders.

Great. And just as a follow-up. At the recent Analyst Day, you spoke a lot about the new technology and offerings, particularly speaking about big data and analytics. When do you believe these could be needle-moving to results? Or do you see these offerings more along the lines of helping to win new clients?

Well, I think winning new clients would be needle-moving. I think that's what -- I think that it's a part of the ongoing, I think, desire to create a stronger value proposition and to differentiate ourselves. So I think that if you hear a slight change in our tone as we keep talking about HCM and about helping our clients build better workforces and also focusing on their business results, that's really where the big data comes into play. Like, we think that besides the traditional strength that we have around operating efficiencies and compliance, all the things that we're traditionally known for, for getting mission-critical employment-related tasks done, in addition to that, if we can help our clients do better by giving them more information to make better decisions around their people, we think that creates a stronger value proposition and should lead to more client wins and hopefully higher market share. Because at the end of the day, we talked about this at Analyst Day, there really is no company where the people are not the most important asset. Even if you employ a lot of equipment and you're a manufacturer, at the end of the day because of what's happening with technology, people are the difference maker. And so hiring the best people, keeping the best people and making sure that you are -- that they have the proper training and that you are tracking their performance and compensating them the right way through compensation systems and managing that talent, these are all crucial parts of our HCM strategy that we think are going to drive additional sales in the form of new client wins and hopefully a slightly better market share over time.

Our next question comes from Jeff Silber from BMO Capital Markets.

Jan, in your remarks, when you were talking about the funds-held balances, you mentioned something about lower balances because of SUI tax rates going down. I just want to confirm that, if you can give a little bit more color. And is this an issue that we need to think about in the upcoming quarters as well?

Yes, I think we adjusted our forecast for the client-fund balances to the lower end. So the SUI impact is traditionally the biggest impact in the third quarter. These are the withholding rates for unemployment taxes, and if the economy improves, traditionally, SUI rate should go down because the high employment and unemployment funds are better funded as a consequence. So that was a large driver for the decline this quarter. And we have also actually measurable impact on the growth due to the currency translation that we have for our Canadian client fund balances that actually impacted the overall growth. So I think that's going to be to-be-continued for sure in the fourth quarter, and then we'll give guidance for '15 in August.

And I think one thing that I need just to add because I think a number of people here hate it when I do this, but I just can't resist. Reminding you that in fiscal year '08, we generated $691 million from the net client funds strategy on approximately $15 billion of balances. In fiscal year '15, we'll generate around $420 million on $22 billion of balances, and I think that just shows the magnitude of what's happened in terms of our yield going from 4.4% in fiscal year '08 to 1.89% today in fiscal year '15. And we have no expectations that we're going to achieve 4.4% any time in the near future, so we get that. But I just want to make sure that everyone understands the magnitude of the pressure that we've been able to get ourselves through here and the potential opportunity down the road because our balances obviously have grown despite this little hiccup with unemployment in the quarter, which, frankly, tends to happen every time there's an employment cycle that's improving, and it's just very hard to predict exactly where that state unemployment level is going to come down. But overall, our balances are still up from $15.7 billion to $22.1 billion, and unfortunately, interest rates have not cooperated with us during that period of time. But I think history tells us that we will have our day.

Okay, appreciate you pointing that out again. And actually, just shifting gears back to the discussion about your international business. If I remember correctly, you get about 11% or 12% of your total revenues from Europe. Is there a major difference between your Employer Services and your PEO Services in terms of the exposure there?

The PEO has no exposure outside of the U.S. I don't know if that was the question, but the PEO is an only-U.S. business, not even North America. It's U.S.-only business. So there's no exposure internationally and we really don't break out -- Employer Services is reported as one segment from a segment reporting standpoint, but I think that you're generally correct or close in percentage that Europe would represent of our overall results.

Okay. I just wanted to make sure there weren't any other HCM businesses in the PEO segment. It doesn't sound like there is.

No, it is an HCM business. There's no possible way because it does everything. It's already like a bundle from -- all the way from recruitment to retirement.

Our next question comes from Lisa Ellis from Bernstein. Lisa Dejong Ellis - Sanford C. Bernstein & Co., LLC., Research Division: I like your new tagline, by the way. Can you give an idea of -- as you're driving these substantially increased attach rates, what type of revenue uplift you're looking for or aspiring for, like sort of in the ideal scenario where a client buys kind of like the full suite as you've got it defined today?

Well, obviously, it clearly depends on whether they buy 1, 2 or 3 additional modules in addition to kind of our core payroll. But again, just to put it into context so -- because, again, because of the way our business model works, these things take time and work slowly over time. But in -- as an example, the older platforms that we have where the clients have only payroll, when they migrate over to a new platform if they purchase a couple of additional modules, you can literally get, in some cases, up to 2x or 3x revenue multiple. Not every client that migrates does that. Some purchase one module, some purchase 2 models. But the numbers are fairly significant and we have not only kind of a traditional HCM modules that people can purchase and attach on to, but we are releasing obviously new products as things go forward like, for example, our Health Compliance solutions are an additional charge and they're not really in the category of benefits or time and attendance. They are an additional sale, if you will, that people can purchase that adds also to the overall revenue number. And I think if I'm not mistaken, Jan, maybe can help me, but I think -- I can't remember what the percentages of our new sales come from, I guess, additional attach rates versus -- but it's a fairly healthy number.

It's a healthy number. I think we roughly say 50%-50% new clients versus incremental business to it, although the consideration has to be that in the lower end, it's clearly much higher on acquiring new clients; whereas on the upper end, as you know, we serve 90% of the Fortune 100 companies. So there's a -- naturally it will be almost all incremental and upsell. So it shifts fairly smoothly from small to low in how we distribute, but a very important component is selling incremental modules to our existing clients.

And I think that -- that was my recollection, is around 50-50. And just to be clear in terms of what our strategic objective is, which is not to have that number become 40-60 or 30-70. We want to grow both and so we are -- part of what we're driving around our technology solutions and our investments in product is that we want to win market share, and we want to win additional clients. We also want to benefit from these higher attach rates, which we are benefiting from. But one of the very, very important objectives that we have internally is to really be much more attentive to unit growth and to market share. And the good news is that, that's been a pretty good story here for the last few years, but we're going to still stay focused on that because we're not trying only to grow through higher attach rates. Lisa Dejong Ellis - Sanford C. Bernstein & Co., LLC., Research Division: Terrific. And then, you've been a little bit quiet so far on M&A. Can you just give us an update on if there's particular areas you're looking at for acquisitions either product or geography, I suppose?

Other than telling you we're not the ones buying Salesforce.com, I don't -- we really don't have much to add versus what we said at the March analyst meeting, which is we recognize, again, because of our capital situation, that we have capital, that we can deploy in a variety of ways in terms of returning cash to shareholders, but also reinvesting in the business organically and also potentially for M&A. But I think we've become -- I think we've put ourselves in a box, so to speak, because we have to be very, very careful and very, very disciplined because it's going to be hard for me to convince you that it made sense to buy another payroll platform or another benefit platform and that, that makes sense for us. And I'm making it even harder for myself now that I'm saying this on a call because it's not our strategy. Our strategy is to create seamless, integrated solutions that we build ourselves organically, right, and that have an incredible UI and an incredible experience from a user standpoint for the clients and for the employees of our clients. So creating more migration issues and more platform proliferation is not our #1 objective. Having said that, you should know that we are actively looking at things and actively in the market because you never say never and you have to be willing to accept the fact that we're not great at everything and so we know that. And so as long as something fits into our strategic direction and as long as it's on our terms, we're going to use our capital. But today, we have nothing to report.

Our next question comes from Matt O'Neill from Autonomous Research. Matthew O'Neill - Credit Agricole Securities (USA) Inc., Research Division: You answered most of my questions already, but I figured just to round out the discussion on international, if you could just add a little bit more color to the LATAM discussion or the weakness there that you mentioned. Is that just macro FX based? Or is there anything else to think about there?

I think we mentioned Latin America because, in prior calls, we talked about the success story that Brazil really was for us over the last few years with very high growth rates and great performance. And the current slowdown in Latin America, I think, particularly in Brazil, is mostly due to the softening of the economic environment in that country. So there's really not -- it's not that material actually to the overall result, but we felt it was consistent as we had bragged about it and talked about the success in prior quarters that we would update also when it's getting a little bit slower.

And if we brag about the progress of GlobalView or our multinational solutions over multiple years, we have to brag about Brazil as well. So there's no question that a good economic environment there, prior to this last year or 2, helped a little bit. But we have a great team there that's executing very well and has helped us expand into a few other countries in South America. And so we're still long term very bullish on the management team there and on the business there. But I think Jan is correct that I think we have to make sure that we help you understand kind of where things are going in terms of the different parts of our business. But we're still incredibly excited about what they've accomplished. Again, not for today, it's too much detail, but the last 5 years have been an amazing run for that business.

Our next question comes from David Togut from Evercore.

I apologize if this has been addressed since I did join a little late from another call, but I noticed, Jan, you raised your ES pretax margin expansion target to 125 basis points. And my question is, does this represent the beginning of a more aggressive margin expansion trajectory for this business longer term? And if so, what would be the underlying drivers behind that?

It probably depends on who you ask. So Jan is over here smiling, thinking, yes, it does and I'm over here saying, no, it doesn't. And I think the truth is somewhere in between. Clearly, this business is performing better than it was sometime back from a margin standpoint. Some of that, in all fairness, is that we've -- our organic growth strategy, I think, has helped a little bit in the sense that we were relatively acquisitive in Employer Services over the years and that generally added margin pressure to us year-to-year. And eventually, those acquisitions helped with scale and should have been helping to drive margin, but it's just hard with a lot of M&A activity and a lot of noise in the system and a lot of platforms to drive good margin improvements. So I think that we haven't necessarily made huge progress, with the exception of EasyPay and a few other places on the migration front, but we certainly slowed the proliferation and the increase of, which I think creates a better backdrop for Employer Services to drive margin improvement. I think the second thing like I did with the PEO or with Brazil or with GlobalView, you've got to give credit to the people running those businesses. So there's really, really good execution on the ground as well. So having said all that, I really appreciate the question because it's important for people to get the tone from us, and I think Jan and I are on the same page, which is that you should not expect this kind of margin improvement in the future because we like -- or I, like many of my predecessors, are incredibly sensitive to making sure that we manage this business for the long term. And the long term doesn't mean like the next quarter; it means 3, 5, 10, 20 years down the road. And if you extrapolate 125 basis point margin improvement over 20 years, it becomes very, very difficult to believe. And so we are very, very committed to reinvesting in our business and that would make me nervous about pushing too hard on the margin front. So I guess the best way to answer this is that we're very, very comfortable with the guidance that we gave in March, which I believe was 50 to 75 basis point margin improvement over multiple years, and we're also very comfortable with the guidance that we've given for this year and we would not encourage you to focus on 1 quarter.

That's very helpful. I asked the question, in part, given the increase in activism we're seeing in the sector, particularly among your former colleagues at Dealer Services.

Okay.

Our next question comes from Tien-tsin Huang from JPMorgan. Tien-tsin Huang - JP Morgan Chase & Co, Research Division: Just a quick follow-up on the retention side. Any change in -- I've been giving this question a lot, any change in level of competitiveness from your rivals? I know Ultimate highlighted its largest win in their quarter. So any thoughts there, pricing, et cetera?

Well, look at the discount levels that we have in our sales, that's really unchanged year-over-year. So that substantiates our earlier comment that the competitive situation continues to be intense, but it has not dramatically changed over time. And we do focus on some of our key competitors, not naming any, and we have seen improvements for some of our competitors and we have improved our own performance, which we are very pleased with. Tien-tsin Huang - JP Morgan Chase & Co, Research Division: Got it. So no real change then. It sounds like an intensity from the usual suspects. Is that fair?

Overall, yes. But as the portfolio has many competitors, some that you might be interested, I think we are doing pretty well actually. Tien-tsin Huang - JP Morgan Chase & Co, Research Division: Okay. Yes, that's historically been the case. I figured I'd ask. Just as a follow-up then, any change in ADP's share of wins coming from your referral partners?

Well, the referral partners are particularly important in our Small Business segment, and we're pleased with the channel -- the channels that we have built out. And they're wide ranging from banks over accountants to other referral channels, and they are an important source of our success in the downmarket.

And what the good news is, I think that some of that, as we've tried to become more "One ADP", some of the success I think is starting to move up into -- for example, the person who's running our Small Business division is now running our mid-market business. I think those types of things help in terms of spreading some of this knowledge of how much strong referral networks can help. So I think our mid-market business is -- now has a very robust referral network with insurance agents and brokers, in addition to traditional accountants that I think is helping that business as well. And in the upmarket, we have improved -- I think there's, again, nothing dramatic to report, but really improved the focus there with working with third parties as well including, for example, we created a little private equity group that works with private equity firms to help there as well.

And our final question comes from Mark Marcon from Robert W Baird. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: Just wanted to come back to the retention question. A year ago, in the third quarter, you had an 80 bp increase in your client retention. So it seems like it's a pretty tough comp. I was just wondering if you could kind of frame on a dollar basis where your retention is currently running and what a reasonable expectation is from a longer-term perspective.

Mark, I don't give you -- won't give you the dollar numbers, but maybe to help you, which I tried to explain earlier, this is -- what you're alluding in the compare to the third quarter prior year is definitely true. It's more difficult to compare with improvement of retention rate in the third quarter last year, and that retention rate may have been impacted if you look sequentially also. So you have to have a look sequential retention rates and year-over-year compare, which makes this a harder quarter to do so, but -- and you have natural variation in retention rates by quarter because some deals can move it. All these, together, make it risky, even if I were to give you these dollars to correctly interpret them. It's better to think about year-to-date in larger loss dollars aggregating to a total here for the good insight. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: Yes, I was just thinking about percentage -- overall percentage retention.

We don't give that quarterly. We only provide that once a year. But again, our forecast is -- again our internal forecast, we have 1 quarter left and so if we had something dramatic to report, we would. So I think that we expect to have retention be where we expected it to be for the year. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: Which was?

Which is I think we guided to prior year.

We actually don't guide.

We don't guide, but about record high.

Yes.

Thank you. And ladies and gentlemen, this concludes our question-and-answer portion for today. I'm pleased to hand the program back over to Mr. Carlos Rodriguez for closing remarks.

So thank you for joining us today for the call. I think just a couple of points. One is, as you can tell, we continue to be very, very sensitive to making sure that we're treating our shareholders well. We said that we were going to return the $825 million dividend that we've received from CDK and we did that via the share repurchase that exceeded the $1.1 billion. And so I think you'll continue to see us focusing on returning capital to our shareholders. The other thing that I just wanted to mention is we really had the same kind of pressures that everyone else is having from foreign currency translation and we may not have focused as much as others, but very, very pleased that despite that pressure, which was significant both on the top line and on the bottom line, that our year-to-date performance was -- I'm sorry, that our quarter performance and our year-to-date performance are strong as they are. So I believe that, that is evidence that we continue to execute well against our HCM strategy. We appreciate the time today, and we look forward to having you join us again next quarter. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect, and have a wonderful day.