Good morning. My name is Andrew and I will be your conference operator today. At this time I would like to welcome everyone to ADP's Fourth Quarter FY ‘16 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]. I will now turn the conference over to Miss Sara Grilliot, Vice President of Investor or Relations. Please go ahead.

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 fourth quarter FY '16 earnings call and webcast. Before we begin, you may have noticed in the slide presentation posted on our website that we included the detail of our client funds available for sale portfolios as of June 30th, 2016 which shows the embedded book yields of the portfolio by year of maturity. This is chart is in the appendix of the presentation and is provided for your information. 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 sides on our Investor Relations website. Before Carlos begins, I'd 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 filing with the SEC for additional information on risk factors that could cause actual results to differ materially from our current expectations. Now let me turn the call over to Carlos.

Thank you, Sara and good morning everyone. Thanks for joining our call and for your continued interest in ADP. This morning we reported solid results for the fourth quarter and full FY '16, with revenue up 8% for the quarter and 7% for the year. Excluding the impacts of foreign currency translation, FY '16 revenue grew 8%. Please keep in mind that our 8% growth in FY '16 was negatively impacted by about 1% from the sale of our AdvancedMD business which occurred at the end of the first fiscal quarter. In addition to the solid FY '16 revenue growth, I'm very pleased with the robust new business bookings results we experienced during FY '16, posting 12% growth for the year. This represents $1.75 billion in new recurring revenue generated by our sales force during the fiscal year. Strong sales of human capital management modules that assist clients in complying with the Affordable Care Act contributed meaningfully to the out performance we've seen in new business bookings for the past two fiscal years. This important regulatory change impacted the ATM industry in material ways. ADP responded well and sold our ACA compliance solutions to about half of our addressable base in a relatively short period of time. Because of this very strong recent performance and the resulting difficult compare, we expect FY '17 new business bookings to grow 4% to 6% from the $1.75 billion sold in FY '16. If achieved this will result in a three year compounded annual growth rate of 9% which is within our long-term expected range of 8% to 10%. FY '16 was an exciting year that showcased ADP's agility as we continued to adapt to the dynamic needs of our clients. When we look back at our progress, it's clear that the long-term trends…

Thank you very much, Carlos and good morning everyone. During the fourth quarter, we took a severance charge of $48 million that was related to a broad-based workforce optimization effort. Certain non-GAAP measures and my commentary to follow exclude the impact of this charge, as well as certain other one-time items recognized earlier in the fiscal year. A reconciliation of these non-GAAP measures can be found in this morning's press release and in the supplemental charts of our Investor Relations website. As Carlos mentioned, FY '16 was a successful year for ADP. New business bookings grew 12% to $1.75 billion sold. Revenues grew 7% to $11.7 billion. Excluding the impacts of foreign currency translation, revenues grew 8% for the year. On a reported basis, net earnings grew 8% and diluted earnings per share grew 12%. Adjusted earnings before interest and taxes or adjusted EBIT, grew 10% or 11% on a constant dollar basis. For the year, adjusted EBIT margin expanded 60 basis points from the 18.8% in FY '15. I'm pleased with this solid margin expansion which includes the impact of investments and operational resources that were made during the fiscal year as we supported our clients through the first year of the ACA related reporting requirements. Adjusted diluted earnings per share grew 13% to $3.26, reflecting a lower effective tax rate and fewer shares outstanding compared with a year ago. In addition to delivering this solid operating performance, we have paid more than $900 million in dividends and returned about $1.2 billion through share repurchases for FY '16. During the fourth quarter, ADP returned $100 million to shareholders through share repurchases which was at a reduced pace compared with prior quarters. Market conditions were not a factor and our longstanding commitment to return cash to our shareholders remains unchanged.…

[Operator Instructions]. We will take our first question from the line of James Schneider from Goldman Sachs. Your line is open.

I was wondering if you could maybe give us an update on the migrations in the mid-market segment. I think you said 45,000 had already migrated. It sounds like maybe that's under 40,000 clients to go. Can you maybe talk about any changes you're seeing in terms of, as you make those migrations, whether you're seeing any kind of additional client losses and maybe you can just talk about the pace of migrations over the course of FY '17, whether that's going to be back or front-half loaded or just ratable over the course of the year?

Sure. I think the number was really 49,000 that have been migrated and I think we have about 25,000 to go. In terms of the other questions, you know, we did have some time to kind of reset how we were doing migrations and the pace also based on, you know, I mentioned that there were three factors that I think impacted our retention back over the last three quarters and we think one of them was the pace of migrations and also the execution around migrations. So a lot of work was done during what we call our year-end blackout because we really prefer not to do migrations anyway in the call it November to January, February time frame, because there are so many things going on at the calendar year-end in a typical HCM payroll company. And so that gave us a little bit of time for those folks to focus on kind of stabilizing that organization and rethinking what the proper pace is and to put it in perspective, we migrated approximately 4000 clients during the quarter. And when we experienced challenges with some of the migrations, we were up as high as 7000 in a quarter. This is back in the beginning of this fiscal year. So hopefully that gives you a little bit of color and I think the overall comment is clearly I think our competitors are fishing in those waters, because we see it in the numbers in terms of our losses being concentrated in our legacy platforms. And we're trying to reduce the size of the fishing pond, so there's still some variability there in the retention. But I think we've gotten better at how we're doing the migrations and I think our pace is more manageable and I think easier for us to control at this point.

Our next question from the line of Jason Kupferberg from Jefferies. Your line is open.

This is Christin Chen for Jason. Thank you for taking my question. We were under the impression in FY '16, your bookings growth in excess of the traditional 8% to 10% range was mostly due to ACA. Just looking at the 4% to 6% for FY '17, it would imply a slowdown of, you know, kind of more than just what the tough comps from ACA would imply. Can you just talk about the things you're seeing or the underlying drivers behind that deceleration for this metric? Thanks.

Sure, I will let maybe Jan talk a little about the math, but I think the math does kind of work in within maybe 0.5 point to 1 point, one way or the other depending on your perspective. Because we don't provide exact numbers. But we want to reiterate that we had strong growth in new business bookings this year excluding, ACA. And then mathematically, what that creates is a grow-over for next year. I think I've previously said and we will say today that we don't expect the same level of new business bookings from ACA. Since we've already sold half of our addressable market, even if we assume that we sell half of the remaining half next year, that creates a mathematical grow-over issue for us. I'll let maybe Jan comment on the math. But I think the message you should hear from us is that we believe over the course of three years, as you can imagine, we look very carefully about, is the sales strength coming from core operations, is it coming from additional business, is it coming from ACA and we feel pretty good on a three-year compounded basis about where our new business bookings growth is right now.

Yes, thank you Carlos. And there are two different methods you can look at this, you could exclude the ACA impact on all three years and look at the underlining growth of the rest of our new business bookings. We would be delivering exactly what we have said are in-line with our long-term goals expectations of 8% to 10% over those three years. And you can also look at is the decline driven by a slowing of ACA sales in FY '17 and that is yes, because we have at rest already half of our business opportunity in the first year and we don't expect to close, cover 100% of the sales opportunity in FY '17. So we had to make assumptions about that and so both are in line within a percentage point plus, minus. So this is for government work, an estimate that keeps it intact.

Yes, I think more government work, again, these are not the right numbers, but mathematically if you take 4% out of the 12% it gives you 8%. And if you add 4% to the 4% to 6%, you get back to 8% to 9% and you're still within the 8% to 10% range. So I hate to be so simplistic, but I think that's really the way the math works.

Our next question comes from the line of Sara Gubins from Bank of America Merrill Lynch. Your line is open.

The EF guidance for 4% to 5% revenue growth just slower growth in constant currency than what we've been seeing recently, in spite of the ACA bookings that you got this past year. Is that because of retention and could you give us any color on what kind of revenue you did get from ACA last year and what you're expecting for this coming year?

I think that the ES revenue growth has been accelerating for the last five years. And I think some of that obviously is driven by the economy, in terms of as the economy rebounded, I think we had some help in pace per control and a number of other factors and just the strong new business bookings growth has created a bigger gap between our starts, what we call our starts and our losses and I think that has contributed to this accelerating growth in employer services. I think you're right that the losses that we experienced this year obviously have an effect this year and they have an effect on the following year as well. But again, back to kind of simplistic math for government work, I think we're probably plus or minus 0.5 point in terms of ES revenue growth. So maybe some of that is rounding, but we don't feel any weakness, I guess, to be clear. And the ACA revenues, Jan probably has the exact number, that clearly provided lift in our new business bookings and does provide lift to revenues that then also presents somewhat of a grow-over. It's not as pronounced a grow-over, because it's a revenue number versus a new business bookings number, but it does have the same impact. But we feel where we're right now, employer services, feels like a pretty good place in terms of trend and, in terms of trajectory as well.

And we don't provide, really, the precise revenue numbers, but it's kind of a little bit above, in the $100 million plus range of ACA impact to ADP.

Thank you. Our next question comes from the line of Bryan Keane from Deutsche Bank. Your line is open.

This is Ashish Sabadra calling on behalf of Bryan Keane. Just a follow up question on retention. So last quarter, you had mentioned you had taken steps around improving the service capability which gave you some more confidence around retention, but we still saw the retention grow -- or decline. Now my question was when you think about the mid-market customer base you still have 25,000 customers remaining which are going to be migrated over the next four quarters and normally you don't do the migration in November, December which should imply around north of 6,000 customers being migrated every quarter, versus 4,000 that you saw in the last quarter. So with this elevated level of migration, how should we think about retention going forward? Could we see retention get worse before it starts to get better? Any clarity that you can provide on the retention front, that will be helpful. Thanks.

Sure, it's a good question, it's a fair question. I think your math is actually very close, the only thing I would add to that math is that, you know, you do have to apply a retention -- or a loss factor to that 25,000 itself over the course of 12 months. We naturally, even if we weren't migrating, would lose call it 10% of those clients. It might be a little bit higher than that, just because they're legacy type clients. The absolute number you're starting with that you have to divide over four quarters is a little bit smaller. But you're in the right ballpark. It's probably around 5000 or so clients that need to be migrated per quarter. We feel pretty comfortable with that pace, given the infrastructure that we've created and the new process we have for migrations. In terms of additional color, as you're pointing out, the results didn't cooperate with our desires and with our intentions and in part, that's because our retention is a reflection of the overall Company's results and there's variability across a lot of other businesses. I wouldn't read in to it, even though we still have a concentration of our retentions issues in the mid-market and they have been for this fiscal year. There is another $8 billion to $9 billion of revenue in ADP that also experiences variability in retention. But having said that to give you specifics around, you know, why our confidence level was high that things would get better and why it still remains high, we have a number of, in specifically the mid-market, issues that we were experiencing with rewards to retention. We have a lot of metrics, as you can imagine, that we look at that are leading indicators versus retention which is a lagging indicator. For example, the speed to answer phone calls, number of cases that are unresolved in a backlog, we have a number of escalations in terms of people escalating client service issues and the metrics are -- most of the metrics in the mid-market regarding service experience for our clients are either back to where they were prior to our retention issues or in some cases better. So we feel confident that even if there's some kind of lag in the sense that some clients may have already been in process due to a poor service experience of looking at alternatives and the fact that there are other parts of ADP that have variability and retention as well, I think not withstanding all those things, I think my confidence in the improvements in service, stability and service experience in the mid-market remain quite high actually.

And if I add a more technical comment, relative to our losses that we see over the fiscal year, we have cyclicality in our loss volumes and so year-end -- calendar year-end on the third quarter for us, fiscal year -- are traditionally higher loss months and the fourth quarter month is a lower loss months. So hence, there can be variability in the quarterly shifts of the retention numbers and this case it impacted a relatively low loss volume that we typically experience in the fourth quarter. So my general council would be to observe those retention changes that we report, but not to get overly analytical and mathematical quarter-by-quarter. It is a better indicator to think about basically our retention number of 100 basis points decline. So in the fiscal year, in closing, we're aiming to be better. We don't guide to retention, but as you might imagine as a Company, we clearly have aspirations to improve.

Our next question from the line of David Grossman from Stifel Financial. Your line is open.

I wonder if I could ask a question about the margin guidance. I think you gave us some good color on what the headwinds were going to be into FY '17, but if I understood you right, but if I understood you right there's about 20 basis points of incremental headwinds over and above what you're isolating as nonrecurring. Perhaps you could give us more insight in to, you know, what those incremental charges are and when you bundle everything together, you know, as you come out of FY '17, how should we look at how the model has changed and how the leverage in the model changes beyond FY '17?

So as we described, our initiative is really to create more concentrated centers of excellence and strategic locations and we indicate basically five big cities that we're doing. So as a consequence, approximately 5% of our employee population is going to be transferring or moving or the work will be moving and impacting about 5% of our associate population in this fiscal year. And there are costs that are related to this which are which we're non-GAAPing which are related in essence to employee costs to facilitate the transfer of the work that is basically included in the 20 basis points of our guidance. We clearly hope that the outcome of this service alignment initiative is multi-folded. I believe strongly it will enhance our service valuable proposition, because we're going to have larger centers with bigger capabilities, leveraging ADP's strength and compliance in service and offering a better value proposition to our clients which is the most exciting part for this service alignment initiative. Hopefully resulting in better competitiveness and higher retention rates and also as you can see, these centers are located in geographies of the U.S. that offer certain advantages, relative to the cost where they operate, so that we should be in the longer run also contribution to our margins. We're a little bit hesitant to specify this for 2018 because the initiative will actually bleed over in to FY '18, we mentioned in particular the center and investors West is going to come later in 2017 and will bleed over 2018. So 2018 will still have some impact, but we're clearly hoping that it will guarantee basically that we can fulfill our commitment to the 50 to 75 basis points of margin expansion in the long run, so this is an important supporting initiative for that.

And David, I think you're right, the 20 basis points is above what we've put in quote, unquote the non-GAAP numbers. And I think, you know, that's just a frictional cost. They are identified. We know what those costs are and they are costed. It's not appropriate to bucket into the non-GAAP charges, I guess is the best way to put it. I'm not, obviously, the accountant, but I think your math is or your comment was spot on. So that's the, when we provided that color to give you more information to be able to come up with what you might think might be the longer term potential performance of the Company which as Jan said, we're optimistic about. And I think we're doing these things, you know, really there's two things that we're always focused on, service experience, the client experience from our service organization and implementation and just the operations of the organizational role and our competitiveness and our efficiency. I would call this a large initiative and a complex initiative that hopefully is coming across with the significance that it should and it's multi-year.

And can I ask just one follow up on just the CapEx comment at well. So it sounds like CapEx is over $2 million related to this, so is there anything we should think differently about the year-over-year growth and pre-cash flow in FY '17?

I'll let, maybe Jan can comment a little more on the CapEx. We weren't implying that the entire CapEx was because of this initiative. We have normal ongoing normal CapEx. It's just trending higher than it has historically. So wanted to make sure that we put that out there. But I do want to comment, besides Jan giving you the specifics on the numbers, that we're investing in this Company. So this Company has an industry that has positive global dynamics in terms of growth. We just saw it with ACA in the U.S. We're going to see it with FLSA and the EEOC equity pay rules and we're seeing the same thing in other countries. And so this Company has opportunity. And we intend to invest in order to seize those opportunities. And so I think what you're seeing is our investment in CapEx and frankly also our investment in capitalized software which we disclosed but is not something that we necessarily always focus on, are all trending higher. And we take the deployment of capital very, very seriously as you know. But people should not mistake what our actions are for anything other than optimism about the future and the potential for these investments to have incremental returns for our shareholders over the long-term.

I have really only two comments to add is, so there's a temporarily higher capital expenditure rate and the increase is to the very largest amount driven by investments into our real estate project to get these facilities up and going. And related investments for this initiative. And secondly, I'd like also to remind you that ADP has pursued over the last couple of years a growth strategy that is more focused on our organic growth capabilities, focusing on investments into our own product set and focusing in this initiative on enhancing and developing additional market-leading service capabilities. So I think it's right in line with how the strategy has worked for ADP and it's really quite an exciting moment for ADP.

Our next question comes from the line of Rick Eccleston from Wells Fargo. Your line is open.

I wonder if we could go back on the new service initiative. Just kind of see if you could tie it in to the investments that you've made earlier in the delivery side, what informed this and how related or not was it to the service delivery issues and investments that you had earlier and just tie those two together. Thank you.

So I'll make a comment and then Jan I think can add. I really appreciate the question because they are, actually, quite separate topics. As though the service delivery issues that we experienced were concentrated in a particular part of our business in the mid-market and they were execution related. And I think what we're talking about in terms of our new service alignment initiative is a broad strategic objective across the entire Company. It's partly driven by the fact that the industry has evolved and I think the clients need to have evolved and the products have evolved. So as an example,10 years ago, having three or four different products that were serviced differently and different databases was not an issue. Our platforms now are single-database integrated solutions that provide an HCM solution if a client wants to buy it that way, in a comprehensive and seamless way. The service model had not moved in the same direction. And I think that this initiative is really intended to have our service and implementation really align with the way the market is going, the way buyers are buying and the way clients want to be serviced. So we've done similar things in our sales organization where that also requires that our sales force be trained and equipped to be able to sell in the new environment. So our belief is that now we will have our products, our service and our distribution all aligned.

And I think it is probably the best way to connect our focus on creating competitive technology platforms that are cloud-based and integrated as a prerequisite to create the integrated service model, so we have made really A, great progress with these strategic platforms, but B, also migrated now large numbers of clients on to these platforms. So it really does make good sense at this point in time to launch the service alignment initiative. And as you might imagine, we did have, we have tested these service models and components of our organization at smaller scale. And we have seen great results out of those pilots.

And then if I could just quickly follow up, Jan, on the comment you made earlier about how you've been making more organic investments. Has anything changed just in general in terms of your portfolio shaping, any sort of divestitures, small ones to come and how are you approaching M&A currently? Thank you.

The, no I think our principal stand on M&A has not changed. We have a very solid balanced sheet, we have the capital to investment in the industry and we continue to evaluate opportunities, but we evaluate M&A opportunities in light of our strategic priorities which is -- which are focused at this point in time on reduction of complexity and aligning and focus on our client needs. So any acquisitions that support that drive, what we will actively and aggressively pursue. But it has played out over the last three years to a more organic growth pattern that has seen great results. And so I think that stand stays the same. I would not expect any dramatic shift in our attitude towards M&A, from what you have seen in the last three years. And relative to divestitures and adjusting the portfolio, I think the large portfolio alignment initiatives have happened, with the spinoff of CDK and I think our larger, last larger divestiture was advanced. There will be here and there smaller type of things as we continually to evaluate the performance of our product portfolio and if we see opportunities to enhance shareholder value, we will pursue it as we have done so in the past. But it's really, in essence, I would anticipate FY '17 to run under the same guide polls as in the last three years.

I think Jan's absolutely right on all those points. I would just add that back to the discussion about capital and the seriousness with which we take capital deployment, we do have a strong balance sheet so we have capital we can deploy. But as Jan said, you know, consumptionally if something really fit into our technology roadmap and accelerated our progress, we'd use our capital. But we're not going to use our capital to have something that, for lack of a better term, sits next to everything else that we have. So it has to be able to be integrated rapidly and seamlessly into what we already are pursuing in terms of our product strategy. That's a little bit of a departure from, call it six, seven years ago when it was really more about leveraging our distribution and adding capabilities and products without as much, necessarily, regard to how they fit tightly into the technology road map. And that's really not so much a change in strategy. It's a change in the market and the way people want to buy and the way products behave which makes it very, very important to have tight alignment and seamlessness in your products. And then the last just factual comment I'll make to Jan's point, is we -- because we have capital, if something accelerated our progress, we would do it no different than we're doing some of these internal organic things that we're investing in to accelerate our progress. So if there's an external opportunity to use our capital, we would. But the fact is that over the last couple years, when you look at the balance of capital deployment, Jan and I have this discussion all the time, we haven't consciously avoided doing acquisitions. It's just been harder to find ones that make sense and fit in what we're doing in terms of our strategy. But net-net when you get down to it, we're spending, call it $300 million to $400 million less on acquisitions and we're spending more on things like internally developed products, capital expenditures and the investments that we 're talking about for FY '17. So it wasn't necessarily planned that way, but it just so happens that, you know, we 're not necessarily deploying any more capital, but we 're just deploying it in a slightly different way. But we do retain the right to deploy capital towards acquisitions as well.

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

Just wondering if you could just add a little more color in terms of the service realignment, in terms of, you know, how clients may end up being serviced? Is it -- you know, is there going to be a transition to like a dedicated service rap for the mid-market? What did you see out of the pilot studies and what's the -- what's the reaction internally, you know, with some of the service providers in terms of potentially geographically relocating?

It's a great question. We'll give you a little bit of color and then maybe Jan can add in terms of what he's hearing out in the field. It's interesting the term dedicated reps, because we do have parts of our business, obviously in the up-market and national accounts, we have very specific people that service specific clients. And then when you get in the small business market, we tend to have a model where, you know, the execution and the delivery is very important, but the person that you reach is not as important. We believe that's the right model. We believe our retention rates and our growth in the small business market prove that our model works as long as you execute well and we would also argue that in today's world, having a dedicated rep who works eight hours a day might not be the best service model for a small company or any other company. So we prefer to focus on how -- what's the best way to deliver the best service to the client in the way they want it delivered. And it varies from small business up to the up-market in terms of whether you need a dedicated person or not, but I would encourage you to kind of visualize this service realignment as being more around teams rather than dedicated people, so having alignment around teams. So as an example, given the attach rates that we've discussed over multiple quarters that we're experiencing now in the mid-market and in the up-market, around additional HCM modules -- in other words, clients are rarely buying just payroll by itself or just benefits administration by itself. So this service model really is intended to be able to provide a group of people or a team of…

Carlos mentioned most of the factors. I would add, too, we have seen a rise in our associate engagement scores as a consequence for those who work in those intact teams. And it reflects probably better of how in a modern team environment our associates want to work. So that's really exciting for our associates as well. And one additional component that a strategic move on locations allows you to plan for is also a coordinated effort between our market segments, small, medium and large. So I think we mentioned it in the call. So now we have collocation between those market segments and there can be natural growth and exchange of best practices between the different platforms. And for some of the platforms, the back end is fairly similar. If you think about sender-self excellence for our tax filing operation and so forth, so it allows us also to create buckets of scale that are very hard to create in smaller locations. So it really, I believe, will transform of how associates be perceiving A, the value of the job they're in and the job opportunities then that can reach in the future and allows us to deliver additional service capabilities to our clients which is the strategic benefit that we're reaping out of it.

Certainly seems to make a lot of sense. I applaud you for taking this long-term step. Can you talk also with regards to the expectation for new bookings growth, where you would expect to see the strongest growth in terms of which areas?

Yes, I'll take this right on -- if you look at FY '16, we had actually fairly balanced growth across the business. We had great performance really along all segments and continued strength in multinational, great performance really across all segments. Maybe the only spot that has been a little bit harder was Europe as you might imagine and our best of breed solutions, but that was really more than balanced by good demand from multinational solutions. So when we look at the plan, other than specific grow-over challenges that we had because ACA cells were concentrated in the mid-market and in the up-market. If you take that out it's really each of the business units continues with very good performance and just as a reminder, it was $1.75 billion of recurring revenue that sales force generated for ADP and even if the growth is a few percentage points slower, this kind of still a very significant number.

Our last question for today will be coming from the line of Gary Bisbee from RBC. Your line is open.

I wanted to go back to an earlier question, just around the concept of revenue acceleration. So you've had two years of above-trend bookings, you've got pace for control continuing to click along at a similar pace, you had a drag this year from selling a business that will no longer be a drag in 2017 and you know, retention was a drag, I guess you're not saying specifically, but maybe still a drag, but it sounds like a lesser one potentially in 2017. So why don't -- you've always said the current-year bookings don't do a lot to revenue. Why wouldn't we see some acceleration? Is it as simple as PEO? You're calling for that to be slower? It just feels like there should be a bit better revenue growth from, you know, thinking through all these moving parts. Thank you.

Yes, the math is how the math is going to work out between the starts that we have sold and the retention and there's really no change in how we have built our business models over time. We did have a little bit of unusual revenue skewing that created the more revenue acceleration, I guess, in this year than for next year which contributes a little bit to the thing. But if you -- if you take that into account, there's really nothing that unusual in next year's revenue growth.

Yes and I think that all the things you mentioned it's important to acknowledge what you said. We do, again even though we don't give specific guidance, we do expect less of a drag for example from retentions, because we expect things to get better. We have some metrics and some things underlying, I think, data that give us hope at least, right? Because we don't know for sure that will improve your math, the comments you made about new the business bookings, all those things are correct. I think I would just encourage you to maybe spend some time offline with us in terms of kind of the math and how the revenue works. One of the interesting things about this business, this is an incredibly stable and predictable business model. It's also very, very hard to move the numbers dramatically one way or the other over the course of one year. So over the course of four or five years, we've had double digit new business bookings and this year we had a blip with retention. But retention's also been fairly stable. That's allowed us to accelerate our revenue growth about 1/2 to 1 percentage point from, call it five years ago, in employer services. The PEO, as you said, also happens to be a factor because it's growing faster and it's becoming a larger portion of the overall results. So if it slows slightly that has an impact, too. So we'll spend the time to make sure we do the math, but what I can tell you is that you're right, that this year, if you exclude the impact of the divestiture or if you don't factor the divestiture in, we were close to 9% revenue growth. We're really proud of that. And next year we're slightly…

Okay, great. And then if I could add just one quick follow up. On the ACA product, how much of the revenue would be charged for sending out like the 1095 forms and what not versus -- I assume there's some ongoing revenue related to the analytics and compliance tool--

Yes, this allows me to make another pitch for our fantastic and very differentiated ACA product. It is actually far more than just sending out 1095 and 1094 forms. It is really a compliance service that we offer, that ongoing offers -- ongoing monitoring and assessment services for eligibility and affordability. And also which is really very differentiated in this market, offers what we call notice management services at the back-end to react to agency and exchange notices and keep the company in compliance with those, that's where a bulk of the fines can actually incur. So we build our clients on a per-employee per month basis. So the revenue stream is actually not concentrated on a specific form delivery, it's an annualized recurring revenue. And so you should think about the revenues exactly the same way you think about the rest of ADP.

Thank you. This concludes our question and answer session for today. I'm pleased to hand the program over to Carlos Rodriguez for closing remarks.

Thanks. This is our 67th year and where we've combined world class operations with innovative products and services that meet the dynamic needs of our clients. This was never more evident than in 2016 and I'm proud of the success of our business in getting the solutions to market to meet those needs of the clients and if I can get on my soap box for a second, I mentioned previously that ADP -- this is ADP's 41st consecutive year of paying and increasing our dividend. And as a dividend aristocrat, ADP is one of just over 50 companies in the S&P 500 who have paid an increase of dividend for more than 25 years. Now with some of the things we're talking about for FY '17, ADP leaders and associates are making the investments to lay the foundation for ADP to join the dividend royals in nine years. And that's a list of just 17 companies who have paid and increased their dividend for more than 50 years. Any student of business knows that only the most durable and enduring icons of business make either list. This success is entirely attributable to the hard work and dedication of our associates, who commit themselves every day to ensuring our clients' success. So to them and to all before them, I say thank you. And I thank you all for joining the call today and for your interest in ADP.

Ladies and gentlemen, this now concludes today's conference. We appreciate your participation. You may now disconnect at this time. Everyone have a great day.