{
  "docId": "019dd923-622c-750b-8b9b-d9b3dd5a51e8",
  "docSlug": "1c9c0f306991",
  "documentTitle": "Automatic Data Processing (ADP) (ADP)",
  "authorId": "01_Pershing_Square",
  "authorName": "William Ackman",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "activist_investor",
  "sourceTypeLabel": "Activist investor",
  "presentationDate": "2017-08-17 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.3333334,
  "pageNumber": 75,
  "pageCount": 168,
  "prevPage": 74,
  "nextPage": 76,
  "slideType": "peer_benchmark",
  "function": "compare_peers",
  "density": "overcrowded",
  "nDataPoints": 30,
  "notes": "Includes a sensitivity table for operating profit margins based on lower margin revenue.",
  "elementsJson": [
    "headline_text",
    "bullet_list",
    "bar_chart_vertical",
    "data_table",
    "callout_box",
    "footnote"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b9b-d9b3dd5a51e8/75",
  "deckHref": "/decks/019dd923-622c-750b-8b9b-d9b3dd5a51e8",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b9b-d9b3dd5a51e8.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b9b-d9b3dd5a51e8#slide-75",
  "components": [
    {
      "bbox": {
        "h": 0.1,
        "w": 0.45,
        "x": 0.03,
        "y": 0.485
      },
      "kind": "callout",
      "text": "Ultimate Software’s structural operating profit margins are mid-30s% to 40% when it reaches scale and rapid growth slows",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "700bbced-6122-4c58-a572-099c87bc368a",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "callout",
      "text": "We believe Enterprise should have consolidated operating margins of mid-20s% to 30%, including the drag from lower-margin BPO / benefits, etc.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd952-ee38-728b-98d6-a0326b60b257",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.23,
        "w": 0.43,
        "x": 0.54,
        "y": 0.225
      },
      "kind": "chart",
      "text": "Alternate Enterprise Providers: Adj. EBITDA Margins (%)",
      "attrs": null,
      "subkind": "bar-vertical",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "93a35c87-1c30-42a0-aca9-a17ac330e02a",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.94,
        "x": 0.03,
        "y": 0.93
      },
      "kind": "disclaimer",
      "text": "(1) ADP management commentary. Q3'2017 Earnings Call. May 3, 2017. (2) https://www.bizjournals.com/boston/blog/techflash/2016/01/mass-software-firm-eyes-1-2b-in-revenue-considers.html; see appendix case study. (3) Q4'2017 Lender Update, pro forma \"cash\" adjusted EBITDA. Note only a minority of Infor revenue is HCM specific. Current margins are suppressed by license to SaaS transition. (4) Assumes total segment revenue of $1.7bn and structural SaaS margins of 37%.",
      "attrs": null,
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "bc01eead-44a4-4ada-9c81-79a03442e346",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.3,
        "w": 0.45,
        "x": 0.03,
        "y": 0.19
      },
      "kind": "list",
      "text": "Enterprise is now ADP’s smallest sub-segment at ~20% of ES revenue. Segment margins suppressed by legacy, sprawling product portfolio and archaic back-end infrastructure. Vantage scaling; may be replaced by next-gen HCM platform.",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "21b46ff9-c758-4e0a-93be-8ab3f50121f3",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.45,
        "x": 0.03,
        "y": 0.6
      },
      "kind": "list",
      "text": "Segment includes certain lower margin / labor-intensive offerings, including COS, RPO, Benefits, 401(k), etc. Estimated at ~40% of Enterprise revenue; structural margin potential likely ~16%-20%+",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "f90115d9-6129-483e-ac05-501099e8a26c",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "operating profit margin: 30%",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd952-ee38-728b-98d6-a4fcaf941e1d",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.25,
        "w": 0.43,
        "x": 0.54,
        "y": 0.59
      },
      "kind": "table",
      "text": "WEIGHTED AVERAGE SEGMENT MARGINS (%)",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "28a4e143-c3bc-4797-8441-2c4df04bd772",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.12,
        "w": 0.94,
        "x": 0.03,
        "y": 0.05
      },
      "kind": "title",
      "text": "Enterprise: HCM SaaS Margins 35% – 40%, but Decline to ~26% to 30% When Lower Margin Sub-Segments are Included",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "63acf1ac-c3e3-4e9b-ac88-978f4bf8f0be",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "comparison_frame",
      "slug": null,
      "matchId": "bc7b0607-03b6-43ca-b9ba-211fccbbc37d",
      "evidence": "Comparing internal segment margins against peer benchmarks and sensitivity analysis.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}