Good morning. My name is Karen, and I will be your conference operator. At this time, I would like to welcome everyone to ADP’s Second Quarter Fiscal 2016 Earnings Call. I would like to inform you that this conference is being recorded and all lines have been placed on mute to prevent any background noise. [Operator Instructions] Thank you. I will now turn the conference over to Ms. Sara Grilliot, Vice President, Investor Relations. Please go ahead.

Thank you. Good morning, everyone. This is Sara Grilliot, ADP’s Vice President, Investor Relations, and I am 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 second quarter fiscal 2016 earnings call and webcast. Carlos will begin today’s call with some opening remarks, and then Jan will take you through the quarter’s results and provide an update on what you expect for fiscal 2016. During our call today, we will reference certain non-GAAP financial measures, which we believe to be useful to investors. A reconciliation of these non-GAAP financial measures to their comparable GAAP measures is included in our earnings release and in the supplemental slides on our Investor Relations website. I would like to remind everyone that today’s call will contain forward-looking statements that refer to future events and as such involve 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 results for our second quarter of fiscal 2016, which included revenue growth of 6% or 8% on a constant dollar basis. This solid revenue growth was impacted by about 1 percentage point from the sale of our AdvancedMD business at the end of the first fiscal quarter. In the second quarter, we continued to see very strong demand for our solutions, which is evidenced by our new business bookings growth of 15%. Sales of additional human capital management modules that assist with Affordable Care Act or ACA compliance continued to contribute meaningfully to this performance, which has exceeded our expectations on a year-to-date basis. As a result, we are now forecasting new business bookings growth of at least 12% for fiscal 2016. In addition to delivering this solid performance, we have returned to shareholders an additional $780 million through share repurchases in the first half of the fiscal year. And in November of 2015, our Board approved an increase of our cash dividend of 8% marking our 41st consecutive year of dividend increases. These actions demonstrate our commitment to shareholder friendly actions and are intended to contribute to ADP’s goal of achieving top-quartile total shareholder return. It has been an exciting and challenging quarter for ADP and our associates as we help our clients prepare to comply with the ACA. Our teams have worked very hard to implement, human capital management modules that were sold during calendar 2015, and I am pleased with the number of units started on our ACA platforms during the quarter. This is performance that we should be proud of. And I want to thank our associates for all of their hard work and dedication to our clients. We now have more than 14,000 US…

Thank you very much, Carlos and good morning everyone. During the quarter, we realized a gain of $14 million from the sale of the building. My comments on the quarter refer to adjusted results, which exclude the impact of this gain. ADP revenues grew 6% or 8% on a constant dollar basis. This growth includes approximately 1 percentage point of pressure due to the divestiture of the AdvancedMD business, which occurred at the end of the first quarter. As Carlos mentioned, our new business bookings remained strong posting 15% growth for the second quarter. Adjusted earnings, before interest and taxes or adjusted EBIT grew 2% or 4% on a constant dollar basis. Adjusted EBIT margin decreased about 70 basis points compared to 18.7% in the last year's second quarter. Adjusted diluted earnings per share grew 4% to $0.72 or 6% on a constant dollar basis, and benefited from a lower effective tax rate and fewer shares outstanding compared with the year ago. The slower earnings growth we realized in the second quarter as well as the decline in margins were anticipated as we made planned investments to increase operational resources in support of our service teams and new product implementations. In addition, increased selling expenses resulting from higher than anticipated new business bookings also contributed to the slower growth. In our Employer Services segment, revenues grew 3% for the quarter or 6% on a constant dollar basis. This growth was primarily driven by net new business additions in the quarter. As a reminder, new recurring revenue from ACA related modules is not expected to impact revenue growth until the third fiscal quarter. As Carlos discussed, client revenue retention decreased 120 basis points for the quarter as we continued to experience an elevated losses from clients on legacy platforms. Our same-store…

Thank you. [Operator Instructions] Our first question comes from the line of David Grossman from Stifel Financial.

Thank you. You mentioned that the Sunset PCPW platform in the mid-market during the quarter, given that a lot of the churn has happened in the legacy platform, should that favorably impact retention just arithmetically as we go into the back half of the year?

So we have been keeping track of retention by platform which is obviously where we have the information about our legacy platforms versus our strategic platforms and there is no question that the PCPW platform as it got into its final stages of migrations had very low retention rate, but over the last 12 months that was relative to the total size of ADP and even to the size of our mid-market business, I would say that, it would not be a material change. We have other legacy products that are - the largest of more clients on them that are also underperforming from a retention standpoint that are greater focus for us than just a mathematical improvement from PCPW retirement, because it is just not mathematically, I think, significant because it's been waning over the last 12 months even as we got close to the final retirement of the final clients.

I see. So, I mean, if you step back and you just look at some of the some changes, Carlos, in the enterprise IP staff impact that’s having on customer buying patterns, with that as a backdrop, are you seeing any change in the way the market is segmenting between those that choose a platform like ADP with services wrapped around it and the software-only platform and if you are, what are the key differentiators that are changing between the different buyers?

I think if you take our new business bookings as an indication it would seem that there is still quite a lot of strength and interest in buying a solution that has services wrapped around it. And I think the fact that we’ve had these robust sales around ACA compliance which does include a service component to it in terms of assistance with compliance, not just providing the software, reinforces our belief that we think our technology and services enabled model is the right model. It doesn’t mean that other models are not good and that other people won’t choose other models, but we like our approach and it seems to be frankly right now gaining traction in the marketplace.

Very good. Thank you.

Thank you. And our next question comes from the line of Gary Bisbee from RBC Capital Markets.

Hi, this Jay Hanna covering for Gary today. I just had a question regarding the buyback. Are you anticipating using any additional operating cash flow in addition to the $2 billion you already planned on the buyback or are you happy with the offering covering most of the buyback for the remainder over the next two years? Thanks.

Jay, you will see our cash balances of slightly below $3 billion at the end of the quarter and we stopped really thinking in ADP about separating our initial debt offering from the cash at hand that is generated out of the operating cash flow. So we continue on our steady path of returning the cash to shareholders via an ongoing share buyback program and will proceed to work those cash balances down over time.

Okay, thank you.

Thank you. And our next question comes from the line of Sara Gubins from Bank of America-Merrill Lynch.

Thank you. Good morning. Could you remind us where you are in the migration of midmarket clients to Workforce Now, so what percent are still on legacy platforms? And are the retention issues largely concentrated with those mid-market customers?

Sara, we have a - I’d give very rough numbers here to give you more an idea directionally around 75,000 clients in the mid-market and we have about 45,000 clients. So, around 60% or so on the latest version of Workforce Now. So this gives - answers also a little bit David’s first question around the impact that the settlement of PCPW had. It was a small client base and we still have a large number of clients to be migrated in the remainder of this fiscal year and the next fiscal year. That's kind of - those are big milestones and we have communicated prior that we are anticipating to make significant progress towards the end fiscal year ‘17. That's still our plan.

Okay. And just from a retention perspective, is that really where the primary issue is?

I think that’s fair. I think that’s what we said in the first quarter. There has really been no material change and again, I think that consistent with what we said in the first quarter, I think the piece of migrations was quite accelerated in the first quarter versus the prior year first quarter. And in the second quarter, it was the same, in part because we had a lot of migrations already in the pipeline and we had momentum. And so I think it’s safe to say that we were on kind of in the same place, if you will, in terms of the pressure that migrations which were the benefit of hindsight and I take some accountability or I take all the accountability as the boss for this that migration is a very big priority for us, but not at any cost. And organizational, we have put a lot of focus and a lot of pressure and the organization as usual responded to the boss. And I think we may have overdone and created an inordinate amount of pressure on the organization as a result of the piece of migrations. I think we also have mentioned that I think the ACA decisions that some of our mid-market clients were making, because in the up-market these are not decisions that you can make over the course of two or three months and in the low end of the market, it doesn’t apply, because companies under 50 employees don’t have to comply. So it really is a mid-market issue and we think it had an impact. We just don't know really how to measure that. And then lastly, I also knowledge that I think we exited the last fiscal year with not enough resources to handle everything I just mentioned,…

Great. Thank you.

Thank you. And our next question comes from the line of Lisa Ellis from Bernstein.

Hi, good morning, guys. Can you give any qualitative feedback that you get back from the sales teams out there around how clients are thinking about the ACA implementation and whether this is sort of it as we go through this season or whether you expect or they are anticipating making some additional changes over the next year?

Maybe two comments. Number one, the number of clients that we now have and are eligible and which is the part that’s eligible represents approximately - sold about half of our client base. So we still have I think another half of the client base that we expect to offer some future opportunities, although probably at a slower rate than we expect in the first year to sell the product. And then secondly, the product is for use on an ongoing basis, so it is not really just the implementation and the printing of tax form. It is an advisory tool that helps clients to manage actually their liabilities and the compliance on an ongoing basis, so it's really just a component of an HCM module that clients use and we expect the clients to benefit from it throughout the year as they keep the employees in compliance and like an ongoing tax filing offer.

Terrific. Thanks.

Thank you. And our next question comes from the line of Rick Eskelsen from Wells Fargo.

Hi, good morning. Thank you for taking my question. I guess I was wondering if you could touch more on the new business bookings and talk about sort of the trends that you are seeing in terms of winning new clients versus expanding and up-selling with the existing clients? So what’s been the biggest driver of the bookings beyond the ACA stuff that you are seeing? Thanks.

Again, given that we historically don't get into a lot of detail for obviously competitive reasons on our new business bookings, in terms of breaking by segment or by product, but I think it's important for you to understand directionally. And so I think the wording we've used and I think it may have been in my comments or in Jan’s opening comments is that clearly ACA added to our new business bookings growth and exceeded our - or allowed us to exceed our expectations in terms of bookings. So I guess an indirect way of answering your question is that the long-term 8% to 10% new bookings growth that we strive for absent changes [indiscernible] ACA would be safe to say that this year we're on track to achieve that and that performance above and beyond that would be attributable to ACA. And of course that's only with six months done that could change in the third quarter and in the fourth quarter. But I think right now based on the information we have and what we see in terms of market activity, I think that the fair way to look at it and it's important for all of you to understand that because as Jan said, even though we still have an opportunity in front of us, the opportunity is obviously smaller now then it was in the prior year. And so, we don't expect to get as much lift, we hope we do, but we won't expect to get as much lift from ACA in fiscal 2017 in terms of our new bookings growth. Having said all that, most exciting thing for me around ACA and this event in general is it, it should and we hope will drive companies to look at the full HCM bundle. So ACA compliance really requires that you have information not just about how many employees and what they're paid but also about their time, how many hours they work per week, whether they have benefits or don't have benefits. So having for example a Workforce Now platform like we in the mid-market really helps a lot with ACA compliance, not to mention that as we rollout analytics tool and other things to help manage people better those are also attractive features. So I think the combination of the improvements in our user experience, the information that we provide through analytics plus the advantages you get through compliance, we believe and this is our expectation and our hope is that that will continue to generate new business bookings growth in terms of clients and also sales dollars into the future even if the tailwind that we get from ACA diminishes a little bit in fiscal 2017.

Thank you, that's helpful. Just as a follow-up, I was wondering if you talk a little bit more on the mix shift that's you’re seeing in terms of the strong new business bookings and still some challenges with the retention. Any margin implications we should be thinking about here longer term from that mix shift? Thank you.

As you saw our adjustment for the forecasts on margins it’s really primarily driven by only two factors. It's driven by higher selling expense, which is, levels above our long-term expectation of new business bookings growth and FX. So, you saw that in that we upped our revenue guidance for the year on a constant dollar basis on a slightly, which kind of takes into account the cost for a higher selling more clients and of course slightly elevated retention if you will. So it's all contemplated in this overall. So the recent adjustment of the margin has really mostly to do with FX and selling expense.

And I think the base - mathematically with the information that we have today and baked into our forecast is an assumption that despite the pressure we're getting from retention, our revenue growth is accelerating as a result of our strong new business bookings growth. So I think net-net, Jan and I are happy, and I think the organization is very happy because obviously that growth rate, our plan obviously is to get retention stabilized and to make improvements in that area as you've heard because of our additional resources. Assuming that we do that and acceleration in our long-term revenue growth rate is very, very positive for ADP because of the recurring revenue nature and the lifetime value of these clients that we're bringing in.

Thank you. And our next question comes from the line of David Togut from Evercore ISI.

Thank you, I appreciate the helpful detail you gave on the remaining conversion schedule, the Workforce Now. Just taking a step back, should we expect client retention to begin to improve again once you complete the conversion to Workforce Now or you just in general seeing much greater competition in the mid-market. And so retention should be something we should keep an eye on even post the conversion to Workforce Now.

Again, consistent with what we mentioned in the first quarter and I think mentioned a few minutes ago, we have information around both our sales successes against competitors and we also information around our lawsuits against competitors. So unless all of the sudden all of the competitors got together and did something different, there would be nothing in our information that shows that this is a competitive issue in terms of what's driving our retention. So, I think that's one answer to the - one part of the answer to the question. So again, note we don't see any changes in the pricing environment or in the competitive environment. In terms of you know the conversions and immigrations; it is clear as we're pointing out that we're getting pressure on legacy platforms. But it doesn't mean that we can have a better retention rate even on the legacy platform. So, take the example of our down market SBS business. In that business, we went through a migration similar to the one we're describing in majors over the course of multiple years. And as in this case, you have to balance speed with the desire to get done. And in that case, I think we've felt some level of pressure around retention at various points and when we were done with that migration, our retention rates have definitely improved. So they just didn't stabilize but they improved. But in the case of that client migration, we did not encounter some of these - what we term as self-inflicted wounds that we're having here that we believe we can address and we believe we can correct as we're going through the migration. So again, the problem is there is a lot of uncertainty and it's you know very would be I think responsible for us to make definitive statements because we just don't know for sure but I want to make sure that everyone is very, very clear that we believe that we can impact the retention rates in the mid-market even as we're doing these migrations. And I also everybody to understand that we're not going to stop doing the migrations, but we will moderate, we still are on track to be finished by the end of fiscal '17, which was our original plan but the pace at which we do these and the timing of when we do them, I think we will do on our terms in order to maximize the balance between client retention and also the long-term health of our business and what's right for our clients.

Thank you that's very helpful. Just a quick follow-up. Recognizing you don't give guidance beyond the current year, I'm just trying to understand clearly the bookings growth has been terrific and well above expectations. Client retention possibly could be an issue going into '17 as you continue to convert from legacy mid-market onto Workforce Now. Should we think of the retention issue with being offset by the stronger bookings trajectory or should we think that the retention issue potentially could be an issue for FY17 and beyond?

So, I'm going to let Jan make a comment but you should again back to the discussion we had about PCPW, just if you think about this mathematically, clearly as we continue to migrate clients, the number of clients on legacy platforms becomes smaller and smaller and mathematically has a smaller and smaller impact on our retention rate. So I would just caution a linear assumption around retention into 2017 even though that's clearly a possibility. But I would caution against making that assumption because that base of clients is becoming smaller and smaller and will have a smaller impact of our overall retention rate. I also want to just reiterate and I'll let Jan weigh in, what we just said earlier, which is, at this point our new business bookings is more than offsetting the pressure we're having from retention. And our revenue growth rate we moved up in terms of our guidance for this year and we're very, very happy with where we are versus our long term range. We have said in the first quarter and we'll say again today that in the second half of this fiscal year on a constant dollar basis, if you adjust for the AdvancedMD disposition which typically would have been included in discontinued ops but because of accounting changes is not in discontinued ops, so if you adjust for that, we will be at the high-end of our long-term revenue growth guidance.

And David I think, while we don't give guidance for fiscal year '17, of course I have to wait for two quarters for that. I have only maybe one more comment to emphasize I think in the script call I said, retention of our strategic platforms remains very good. So and I think out of that you can deduct that as that base is growing there should be a mathematical re-weighing of the retention rate that will help and plus what we hope to achieve an improvement of retention in the legacy base. So, those things together plus our revenue update guidance, I think sends you the signal about how we think about the impact on retention really.

Thank you. And our next question comes from the line of SKPrasad Borra from Goldman Sachs.

Thanks for taking my question. Carlos, just on the client migrations levels, can you remind us what was the client migration level in mid-market beginning of calendar 2015. And also a small clarification is the FY17 objective for only for mid-market or does that apply to up market as well?

So I - you addressed it to Carlos, but I'll give you some idea. We migrated almost 7,000 clients in the first quarter of fiscal year '16 in the mid-market and close to 4,000 clients in the second quarter; year-end slowed migrations down a little bit and for the reasons that Carlos described obviously that tempered a little bit in the second half of the last quarter. So that migration pace compared to the prior year was accelerated as we increased the resources available to them. So you should expect basically continued focus on migrations maybe at a similar level as last year maybe slightly accelerated, we're going to go and determine that as operations allow to maintain our goal of finishing migrations, the vast majority of migrations in the mid-market by the end of fiscal year '17. So that's the goal, the up market migrations will be a multi-year effort and we're going to proceed together in partnership with our clients and I don't think we're going to give specific migration numbers for the up market, will be an ongoing effort to move those clients.

Jan, this question is definitely for you. Just on the margins, obviously ACA business is the mix of products, services and various offerings from your end. To the point you can clarify, is the margin profile of the ACA business going to be post all this implementation costs and higher selling costs. Is the margin profile going to be more closer to the products business or is it going to be closer to the PEO business.

Well that is a loaded question because the PEO has pass-throughs in its P&L and if you exclude the pass-throughs from the P&L, PEO margins you'll see actually there even slightly ahead of our ES margins. So, the characteristic of ADP and then very interesting way is that we have a margin profile that is actually very similar between our product sets and even our HR BPO products excluding the pass-throughs have margin characteristics that are roughly in line for most of the cases with our overall margin profiles. So if you think about ADP as a kind of growth margin for an ongoing contribution of the recurring revenue model. The ACA product is to have - expected to have exactly that margin profile. So we don't think about it in anyway different than the rest of our product set.

Thank you. And our next question comes from the line of Bryan Keane from Deutsche Bank.

Hello. This is Ashish Sabadra calling on behalf of Bryan Keane. A quick question on the PEO, the gap between revenues and the worksite that was 4% this quarter. So on the last call, you had mentioned that it may normalize to 2 to 3 points, but it looks like it's trending north of it. I was just wondering do you continue to see some good traction there on the benefit adoption, what's driving it and how do you think about that gap going forward for the rest of the year?

Yeah. I think that you hit the nail on the head, which has been the benefits. The number of clients selecting and the number of worksite employees selecting benefits does have an impact on the growth of our top line revenue versus worksite employee growth because of the pass-through nature of the benefits revenues. And so we do have a chart that shows and I think we may have even mentioned it in our comments in the script that the benefits participation rate is trending upwards, so it had been trending downwards several years ago pre-ACA, and now it's trending upwards, it's not a dramatic increase, but it's enough to help drive additional difference between our worksite employee growth and our top line revenue growth, which is why it’s so important until we get the margin dynamics of that business, excluding those pass-through revenues.

That's great color. And then quickly on the pricing, you’re in the peak selling season, are you seeing any shift in the pricing environment?

No. We observe pricing very closely and two factors are important. One is our discounting levels, as we distribute new business in our new business bookings and those discounting levels have been very consistent with prior quarters, so no change in the marketplace. And secondly, we indicated that our long-term goal is to have price increases to our client base closer to 50 basis points than the historic 100 basis points and we're trending right along that, right in between this year, a little bit less than a percent of price increases to our client base, unchanged and 100% in line with our expectations.

Okay, thanks.

Thank you. And our next question comes from the line of Daniel Hussain from Morgan Stanley.

Hi, Carols and Jan. Thanks for taking the question. I just wanted to ask a couple of clarifying questions about new business bookings. So first on your back half guidance, it seems to bake in 10% growth, is that just conservatism given you’re not really sure what demand for ACA would look like in the next couple of quarters or are you actually already seeing some slowdown there? And then secondly, I know new business bookings is at the run rate revenue number, so wouldn't there be FX impact in there as well, and therefore with newer bookings a couple of points higher, or would it be very similar given a lot of that came from the ACA product, which is mostly US? Thanks.

I think at the risk of getting into trouble, I think the answer is yes to both questions, but it is what our forecast is. So I think you’re mathematically correct about second-half bookings growth, so I don't think we want to say much more, rather than its accurate that we have no real definite sense of what's going to happen in terms of the tailwind around ACA in the second half and hence it is what it is, in terms of our forecast. And then the second part of your question is accurate, too, I would just remind you that our bookings outside of the US are not a large part of the overall sales result, but there would be some impact from FX in it. That would be a fair statement. But I would not quantify a couple of percentage points extra growth in new business bookings.

I think that's fair. And maybe one point that we finished our last fiscal year 2015 in the fourth quarter with a very, very strong quarter. So there is a big growth over in the fourth quarter that you would also have to consider. So that probably factored also in our overall expectations.

Got it. Thanks. And then maybe a high-level question on PEO, so it's been growing at a healthy pace for the past 15 years or so since you've been in the business, and I imagine a lot of your customer base has now been educated about it or has heard of it, but at the same time, the value prop seems to be increasing over time, so just in that context, is there a way that you can help us think about maybe what inning we’re in, in terms of double-digit growth or is it just really hard to tell and it just depends too much on regulation and insurance, and so forth?

Well, again, I am not going to attempt to answer that question, because if you had asked me that question six or seven years ago, I would have probably said that it was going to get really, really hard because how big the business had gone. So we’re selling now just each month, the number of worksite employees we have to sell in order to and start in order to maintain this growth rate is close to what the size of the business was when I first entered that business, because that's where I started my career was in a PEO. I then got acquired by ADP. So I’m the wrong person to answer that question in terms of, because it is large numbers, it’s becoming - as we said, it’s now one of the largest private employers in the US, but it is a very, very strong value proposition with very strong momentum and very talented management team. So we definitely don't have any plans to slow it down and to see a slowdown because on a per client or per worksite employee basis, no matter how you look at it, that business is a winner for ADP. And we convert about half of the business that starts into PEO, comes from existing ADP clients that we upsell and that's an incredibly powerful formula for us because I think we are one of the few that have that advantage of having the salesforce and the installed client base that we have that we have the ability to upgrade. So we’re very, very happy with that business and we hope that it continues to grow at these robust rates.

Understood. Thank you very much.

Thank you. And our next question comes from the line of Tien-tsin Huang from JP Morgan.

Thanks. Just two questions, just on the upper end of the market or the enterprise side of the market, what's going on there in terms of sales and retention, any change in trend there given the macro?

Again, I will say that we try to avoid for a variety of reasons getting into specifics by segment or by business unit. But I think it's safe to say that we don't see any - in that business, you do have to look at it, I think multiple quarters, I think one month or a couple of months does not make a trend, just because of the lumpiness of that business, but I think if you look at our upmarket business overall, I don't think we see any material change. I think our vantage platform is still selling well. Our multinational international platform is selling well. I think on the retention front, there is really nothing to report either in terms of any trends. So I think that we’re I guess satisfied with that business in terms of - well, obviously, we'd love to have more, but I don't think there is anything material to report in the upmarket.

Thank you for that. And then just on the PEO, just one question there, just with I guess Paychex, they’ve introduced minimum premium plan and I guess TriNet is also looking to make some changes in how they handle the risk side of insurance. Given all these changes, does that create share opportunity for ADP and are you considering making some changes as well, I'm assuming not, but I figured that out, given some of the changes happening in the marketplace?

I think we’re always looking at all of our options, but there is no current plans to make any changes and we have really no way of knowing what competitive impact it's going to have in terms of what other people are doing.

Okay. Thanks for taking my questions.

Thank you. And our next question comes from the line of Mark Marcon from Baird.

Good morning and thanks for taking my questions as well. Just on the PEO side, you mentioned that half of the clients are basically existing payroll clients. Can you describe a little bit how much more profitable or what the revenue uptick is when we typically go through a conversion from a payroll centric to a more comprehensive PEO solution?

Excluding pass-throughs, it obviously depends on what the client had when they were a payroll client and depends on what the pricing is when they become a PEO client, but you can think of the range being between 8 and 10 times multiple of revenue on a net basis, excluding pass-throughs.

That's great. And then - when we talk about the new bookings, how much of the new bookings is from upsells of either modules or versus brand-new clients?

Mark, historically, our mix has been 50-50, about 50% of bookings roughly towards new client counts and logos and 50% of upsell. And but obviously at the elevated levels of ACA selling, the mix has shifted a little bit because most of the ACA has been really selling to our existing client base. So in the current year, that mix is a little shifted, but as we indicated without ACA, we would have grown with our long-term expectation of new business bookings going up 8% to 10% for that component that roughly holds in line.

Great. And then you mentioned 14,000 clients using you for the ACA, can you give us a percentage of the core target there in terms of the companies, above 50 employees, but not overly huge that are using you for the ACA, like how far penetrated are you?

I think we have captured about half of the opportunity in total. At the large market, this is a smaller number. So at these ranges, it doesn't really make that big of a difference to include them or not include them. So I think we have captured about half the opportunity.

We have time for one more question.

Thank you. Our final question for today comes from the line of Jim Macdonald from First Analysis.

Yeah. Thanks for squeezing me in. With the fall selling season over, could you talk about if there are any qualitative differences, like more active than normal or people frozen because of the ACA or?

I think based on our results, excitement would be the qualitative description.

Okay. So you are at success. And then you mentioned that the ACA revenue would be more felt in the third quarter and that was maybe for the modules. I know you’ve been charging monthly to some people, could you just talk about how the revenue from ACA will dovetail in?

Yes. It is a monthly per employee charge that the clients start to incur with really January or February, depending on when they launch their product. So you will see the full swing of our implementations that we finished in December into January by building up, and that's basically reflected in our revenue guidance as Carlos indicated we will reach kind of by the end of the year the double-digit revenue growth, 10% revenue growth if you adjust for FX impact of the AdvancedMD business. So you will see it kind of from our current organic growth rate accelerating to those levels in order for us to make the full-year guidance.

Okay, thanks very much.

Thank you. And this concludes our question-and-answer session for today. I am pleased to hand the program over to Carlos Rodriguez for closing remarks.

So thank you all for joining the call today. We’re obviously halfway through this fiscal year and I think we’ve described some of the challenges we still have ahead of us, but obviously we’re very happy with the progress we've made. I don't usually use the word, exciting, but I just used it in the last question to describe how we feel about our new business bookings growth. Clearly getting some help from ACA compliance, but it’s really an incredible achievement to have the kind of bookings growth that we have this year on top of what we had last year. I want also just to remind the folks on the call that we still remain committed to the shareholder friendly option that we've always been committed to around share repurchases and increasing our dividend. And I want to end by, besides thanking all of you for joining us and thanking you for your interest in ADP, I just want to end by saying that there has always been a strong work ethic here at ADP. But over the last 12 months, it has been a very challenging environment for our associates with the ACA rollout and some of the challenges we've had around our resource constraints. So, I once again would like to thank all of our associates for their dedication to ADP and more importantly to our clients. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a good day.