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  "docSlug": "1c9c0f306991",
  "documentTitle": "Automatic Data Processing (ADP) (ADP)",
  "authorId": "01_Pershing_Square",
  "authorName": "William Ackman",
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  "presentationDate": "2017-08-17 00:00:00",
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  "pageNumber": 98,
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  "notes": "The slide uses a 'problem-solution' structure, identifying the productivity decline and then quantifying the upside of fixing it.",
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      "kind": "callout",
      "text": "Properly analyzed on net bookings, ADP’s sales force productivity has declined meaningfully in recent years",
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      "text": "If ADP returned to FY 2012 productivity levels in ES this would drive ~$65m–$90m of profit, or ~75bps – 110bps of margin opportunity for ES(2)",
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      "text": "ADP has grown its sales force in recent years despite the abatement of ACA-related activity in an attempt to make up for declining productivity",
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      "text": "In light of the significant decline in aggregate productivity, we suspect there are likely some very low productivity sales associates",
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      "text": "Sales associates have grown from ~5,000 in FY 2014 to ~6,540+ currently,(1) (targeting 4% additional growth in FY 2018) while total Net and Employer Services Bookings have increased only modestly",
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      "text": "ADP sales productivity should be analyzed on a net basis, isolating the gross up of PEO pass-through revenue on bookings",
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      "text": "margin opportunity: ~$65m-$90m",
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      "text": "(1) ADP reported having 6,000 quota-carrying sales heads at the Nasdaq OMX investor conference (Dec'2015). On the Q4'2017 conference call ADP management disclosed sales heads had increased 9% over fiscal year 2016.\n(2) Consistent with FY 2012, assumes ES bookings per sales head of ~$190k. Assumes normalized ES net bookings of $900m, implying 4,800 quota-carrying ES sales reps vs. the current ~6,100 estimated in ES (assumes 450 sales reps are PEO specific). Assumes average sales head at $50k-$70k per year (given lower relative productivity).",
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      "kind": "title",
      "text": "Sales Force Productivity Opportunity",
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