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  "documentTitle": "Automatic Data Processing (ADP) (ADP)",
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  "authorName": "William Ackman",
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  "presentationDate": "2017-08-17 00:00:00",
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      "text": "At ~32%, Kronos' Adj. EBITDA margins are ~900bps(1) higher than Employer Services margins. This is despite the fact that:",
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      "text": "We believe Kronos is poised to achieve long-term margins of ~40%",
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      "text": "Kronos generates net operational revenue per employee of $240k (vs. ADP at $161k)",
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      "text": "Kronos is investing significant resources for growth: Kronos is investing significant resources building out HCM solutions, currently a sub-scale product with ~$100m of revenue.(3) Current R&D as a percent of revenue is ~11%(4)",
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      "text": "Kronos is engaged in a business transformation initiative: Kronos is engaged in an ongoing migration of legacy clients from an on-premise, software licensing model to a cloud / SaaS payment ecosystem, depressing current profit margins",
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      "text": "Kronos is sub-scale compared to ADP: Kronos produces ~$1.2bn(2) of revenue compared to ADP Employer Services of $8.5bn",
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      "text": "Kronos, the legacy provider of enterprise time and attendance, is aggressively expanding beyond Workforce Management into the broader Human Capital Management vertical",
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      "text": "(1) Based on Kronos press releases and public news articles. Adj. EBITDA is a company defined Non-GAAP term which excludes D&S and stock-based compensation. We estimate the comparable margin for Employer Services would be ~23%. (2) Fiscal year 2016 based on Kronos' press release. (3) Kronos has reported Workforce Ready is a $100m run-rate product. (4) A 2015 press release announced Kronos' intention to spend $130m in R&D for fiscal year 2016 on revenue of $1.2bn.",
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      "text": "Case Study: Kronos (pp.74)",
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