Question-and-Answer Session
Operator Thank you. We will now begin the question and answer session. (Operator Instructions) Our first question comes from Adam Frisch - UBS.
Analyst for Adam Frisch – UBS
How is it that total service revenue guidance was unchanged but the payroll component --
John M. Morphy
The change in payroll revenue wasn’t big enough to effect the change in service revenue.
Analyst for Adam Frisch – UBS
As simple as that?
John M. Morphy
The change in the revenue wasn’t big enough to effect the change in service revenue. Understood?
Analyst for Adam Frisch – UBS
Okay, and then in HR and benefits, we’re seeing average revenue per client grow year over year. Can you talk about what’s driving this positive trend and do you expect it continue?
John M. Morphy
You say average revenue per client. How are you calculating that?
Analyst for Adam Frisch – UBS
Annualizing the total revenue in a quarter --
John M. Morphy
Into the 560 some odd thousand clients?
Analyst for Adam Frisch – UBS
Exactly.
John M. Morphy
I have never even done that, so you just gave me a statistic I’ve never looked at. What I think the key factor is, we keep driving human resource revenue growth with all the areas around and that business is growing at 20% plus and we keep pushing it. I wouldn’t have an answer for why it changed the first time in eight quarters because we’ve actually never looked at the calculation that way.
Jonathan J. Judge
Well the penetration in HRS to begin with across the entire client base goes from an extremely penetrated in some to no penetration in others. Some of our clients that are in that number might have two, three, four, five employees.
Analyst for Adam Frisch – UBS
Okay and you have current sales force growth plans of about 9% out there and I don’t see that has changed. Has the components between the different verticals that you’re adding sales force to changed at all or are you still on track with your guidance?
Jonathan J. Judge
We’re on track with our guidance but again that’s a number that’s not across the board. There will be years where we’ll be increasing our sales head count into specific targeted areas like the build up that we’re doing in insurance right now. There will be years where we might shift that to putting more people in the computer world. There will be years when we’ll have more or less in core and more or less in MMS so it’s a number that works itself up from the bottom and it will... The components will change but because the penetration rates in the United States are not yet anywhere near saturation levels and because we continue to try to find new offerings which would drive the requirement for new salespeople, we don’t see anything that tells us in the future that we’re going to significantly decrease the addition of sales people. The market is still that good for us and the results that we get by putting new sales people into play are that good for us that it appears that we will continue to be adding sales people for the foreseeable future.
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