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Automatic Data Processing (ADP) Q2 Earnings Beat Estimates
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Automatic Data Processing, Inc. (ADP - Free Report) reported impressive second-quarter fiscal 2024 results, wherein both earnings and revenues beat their respective Zacks Consensus Estimate.
Adjusted earnings per share (EPS) of $2.13 beat the consensus estimate by 1.4% and grew 8.7% from the year-ago quarter’s figure.
Total revenues of $4.67 billion surpassed the consensus estimate by 0.2% and improved 6.3% from the year-ago quarter’s reading on a reported basis as well as at cc.
Segments
Employer Services’ revenues of $2.9 billion increased 8% on a reported basis and 7% at cc. The figure met our estimate. Pays per control increased 2% from the year-ago quarter’s reading.
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
PEO Services’ revenues were up 3% year over year to $1.54 billion and beat our estimate of $1.53 billion for the first quarter. Average worksite employees paid by PEO Services were 725,000, up 2% from the year-ago quarter’s figure.
Interest on funds held for clients increased 20% to $225 million and beat our estimate of $222 million. ADP’s average client funds balance decreased 2% to $32.6 billion. Average interest yield on client funds expanded 50 basis points to 2.8%.
Margins
Adjusted EBIT increased 7% from the year-ago quarter’s reading to $1.1 billion. Adjusted EBIT margin grew 20 basis points (bps) to 24.6%.
The margin of Employer Services increased 170 bps while PEO Services declined 50 bps.
Balance Sheet and Cash Flow
ADP exited second-quarter fiscal 2024 with cash and cash equivalents of $1.64 billion compared with $2.08 billion in the prior quarter. Long-term debt of $2.99 billion was flat sequentially.
Automatic Data Processing generated $1.03 billion in cash from operating activities in the quarter. Capital expenditures amounted to $54.8 million.
Fiscal 2024 Outlook
ADP still expects revenues to register 6-7% growth. Adjusted EPS is expected to register 10-12% growth. The adjusted effective tax rate is estimated to be approximately 23%. Adjusted EBIT margin is expected to grow 60-70 bps, down from the previously guided 60-80 bps.
Automatic Data Processing expects Employer Services revenues to grow at a rate of about 7-8%, while PEO Services revenues are expected to grow 3-4%.
Booz Allen Hamilton Holding Corp. (BAH - Free Report) reported better-than-expected third-quarter fiscal 2024 results.
Quarterly adjusted EPS of $1.41 surpassed the Zacks Consensus Estimate by 24.8% and exceeded the year-ago quarter's figure by 31.8%. The company reported revenues of $2.57 billion, which beat the consensus estimate by 1.5% and increased 12.9% year over year. Revenues, excluding billable expenses, totaled $1.77 billion, up 13% year over year.
Xerox Holdings Corporation (XRX - Free Report) reported lower-than-expected fourth-quarter 2023 results, wherein both earnings and revenues declined from the year-ago quarter's level. Despite the earnings miss, the stock rose 5% since the company’s earnings release on Jan 25.
Adjusted EPS of 43 cents missed the Zacks Consensus Estimate by 15.7% and decreased 51.7% year over year. Total revenues of $1.77 billion lagged the consensus mark by 1.6% and decreased 9.1% year over year on a reported basis. Revenues declined 7.4% at cc.
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Automatic Data Processing (ADP) Q2 Earnings Beat Estimates
Automatic Data Processing, Inc. (ADP - Free Report) reported impressive second-quarter fiscal 2024 results, wherein both earnings and revenues beat their respective Zacks Consensus Estimate.
Adjusted earnings per share (EPS) of $2.13 beat the consensus estimate by 1.4% and grew 8.7% from the year-ago quarter’s figure.
Total revenues of $4.67 billion surpassed the consensus estimate by 0.2% and improved 6.3% from the year-ago quarter’s reading on a reported basis as well as at cc.
Segments
Employer Services’ revenues of $2.9 billion increased 8% on a reported basis and 7% at cc. The figure met our estimate. Pays per control increased 2% from the year-ago quarter’s reading.
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
Automatic Data Processing, Inc. price-consensus-eps-surprise-chart | Automatic Data Processing, Inc. Quote
PEO Services’ revenues were up 3% year over year to $1.54 billion and beat our estimate of $1.53 billion for the first quarter. Average worksite employees paid by PEO Services were 725,000, up 2% from the year-ago quarter’s figure.
Interest on funds held for clients increased 20% to $225 million and beat our estimate of $222 million. ADP’s average client funds balance decreased 2% to $32.6 billion. Average interest yield on client funds expanded 50 basis points to 2.8%.
Margins
Adjusted EBIT increased 7% from the year-ago quarter’s reading to $1.1 billion. Adjusted EBIT margin grew 20 basis points (bps) to 24.6%.
The margin of Employer Services increased 170 bps while PEO Services declined 50 bps.
Balance Sheet and Cash Flow
ADP exited second-quarter fiscal 2024 with cash and cash equivalents of $1.64 billion compared with $2.08 billion in the prior quarter. Long-term debt of $2.99 billion was flat sequentially.
Automatic Data Processing generated $1.03 billion in cash from operating activities in the quarter. Capital expenditures amounted to $54.8 million.
Fiscal 2024 Outlook
ADP still expects revenues to register 6-7% growth. Adjusted EPS is expected to register 10-12% growth. The adjusted effective tax rate is estimated to be approximately 23%. Adjusted EBIT margin is expected to grow 60-70 bps, down from the previously guided 60-80 bps.
Automatic Data Processing expects Employer Services revenues to grow at a rate of about 7-8%, while PEO Services revenues are expected to grow 3-4%.
Currently, ADP carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Snapshot
Booz Allen Hamilton Holding Corp. (BAH - Free Report) reported better-than-expected third-quarter fiscal 2024 results.
Quarterly adjusted EPS of $1.41 surpassed the Zacks Consensus Estimate by 24.8% and exceeded the year-ago quarter's figure by 31.8%. The company reported revenues of $2.57 billion, which beat the consensus estimate by 1.5% and increased 12.9% year over year. Revenues, excluding billable expenses, totaled $1.77 billion, up 13% year over year.
Xerox Holdings Corporation (XRX - Free Report) reported lower-than-expected fourth-quarter 2023 results, wherein both earnings and revenues declined from the year-ago quarter's level. Despite the earnings miss, the stock rose 5% since the company’s earnings release on Jan 25.
Adjusted EPS of 43 cents missed the Zacks Consensus Estimate by 15.7% and decreased 51.7% year over year. Total revenues of $1.77 billion lagged the consensus mark by 1.6% and decreased 9.1% year over year on a reported basis. Revenues declined 7.4% at cc.