We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Automatic Data Processing Q1 Earnings & Revenues Beat Estimates
Read MoreHide Full Article
Automatic Data Processing, Inc. (ADP - Free Report) has reported impressive first-quarter fiscal 2025 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
ADP’s earnings per share of $2.3 beat the consensus estimate by 5.9% and increased 12% from the year-ago quarter. Total revenues of $4.8 billion beat the consensus estimate by 1.5% and grew 7.1% on a year-over-year basis.
The ADP stock has gained 25.7% year to date, outperforming the 21.8% rally of the industry it belongs to and the 23.7% rise of the Zacks S&P 500 Composite.
YTD Price Performance
Image Source: Zacks Investment Research
ADP’s Segmental Results
Employer Services’ revenues of $3.3 billion increased 7% on a reported basis and 7% at constant currency, beating our estimate of $3.2 billion. Pays per control increased 2% from the year-ago quarter.
PEO Services’ revenues rose 7% from the year-ago quarter to $1.6 billion and surpassed our projection of $1.5 billion for the first quarter of fiscal 2025. Average worksite employees paid by PEO Services were 737,000, gaining 3% from the year-ago quarter.
Interest on funds held for clients grew 26% from the year-ago quarter to $253 million and outpaced our estimate of $252 million. ADP’s average client funds balance rose 5% to $32.8 billion. Average interest yield on client funds expanded 50 basis points to 3.1%.
Automatic Data Processing’s Margins
Adjusted EBIT rose 13% on a year-over-year basis to $1.2 billion. The adjusted EBIT margin grew 130 basis points (bps) to 25.5%.
The margin of Employer Services increased by 200 bps, while PEO Services decreased by 80 bps.
Balance Sheet & Cash Flow of ADP
ADP exited first-quarter fiscal 2025 with cash and cash equivalents of $2.1 billion compared with $2.9 billion at the end of the preceding quarter. The long-term debt of $3 billion was flat with the preceding quarter.
The company generated $824.4 billion in cash from operating activities in the quarter.
Automatic Data Processing’s FY25 Outlook
For fiscal 2025, ADP has updated its guidance for revenue growth to 6-7% from the 5-6% rise mentioned in the previous quarter. The adjusted EPS growth guidance is lowered to 7-9% from the 8-10% stated in the previous quarter. The adjusted effective tax rate is estimated to be 23%. The adjusted EBIT margin is reduced to 30-50 bps from the 60-80 bps provided in the preceding quarter.
Automatic Data Processing has updated its guidance for Employer Services revenue growth to 6-7% from the 5-6% rise mentioned in the previous quarter. The guidance for PEO Services’ revenue growth is updated to 5-6% from the 4-6% provided in the preceding quarter.
FI’s adjusted earnings per share (excluding $1.3 from non-recurring items) of $2.3 beat the consensus mark by 2.2% and gained 17.4% year over year. Adjusted revenues of $4.9 billion missed the consensus estimate by a slight margin but rose a tad on a year-over-year basis.
PAYX’s earnings of $1.2 per share beat the Zacks Consensus Estimate by 1.8% and increased 1.8% from the year-ago quarter. Total revenues of $1.3 billion outpaced the consensus estimate by a slight margin and gained 2.5% from the year-ago quarter.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Automatic Data Processing Q1 Earnings & Revenues Beat Estimates
Automatic Data Processing, Inc. (ADP - Free Report) has reported impressive first-quarter fiscal 2025 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
See Zacks Earnings Calendar to stay ahead of market-making news.
ADP’s earnings per share of $2.3 beat the consensus estimate by 5.9% and increased 12% from the year-ago quarter. Total revenues of $4.8 billion beat the consensus estimate by 1.5% and grew 7.1% on a year-over-year basis.
The ADP stock has gained 25.7% year to date, outperforming the 21.8% rally of the industry it belongs to and the 23.7% rise of the Zacks S&P 500 Composite.
YTD Price Performance
ADP’s Segmental Results
Employer Services’ revenues of $3.3 billion increased 7% on a reported basis and 7% at constant currency, beating our estimate of $3.2 billion. Pays per control increased 2% from the year-ago quarter.
PEO Services’ revenues rose 7% from the year-ago quarter to $1.6 billion and surpassed our projection of $1.5 billion for the first quarter of fiscal 2025. Average worksite employees paid by PEO Services were 737,000, gaining 3% from the year-ago quarter.
Interest on funds held for clients grew 26% from the year-ago quarter to $253 million and outpaced our estimate of $252 million. ADP’s average client funds balance rose 5% to $32.8 billion. Average interest yield on client funds expanded 50 basis points to 3.1%.
Automatic Data Processing’s Margins
Adjusted EBIT rose 13% on a year-over-year basis to $1.2 billion. The adjusted EBIT margin grew 130 basis points (bps) to 25.5%.
The margin of Employer Services increased by 200 bps, while PEO Services decreased by 80 bps.
Balance Sheet & Cash Flow of ADP
ADP exited first-quarter fiscal 2025 with cash and cash equivalents of $2.1 billion compared with $2.9 billion at the end of the preceding quarter. The long-term debt of $3 billion was flat with the preceding quarter.
The company generated $824.4 billion in cash from operating activities in the quarter.
Automatic Data Processing’s FY25 Outlook
For fiscal 2025, ADP has updated its guidance for revenue growth to 6-7% from the 5-6% rise mentioned in the previous quarter. The adjusted EPS growth guidance is lowered to 7-9% from the 8-10% stated in the previous quarter. The adjusted effective tax rate is estimated to be 23%. The adjusted EBIT margin is reduced to 30-50 bps from the 60-80 bps provided in the preceding quarter.
Automatic Data Processing has updated its guidance for Employer Services revenue growth to 6-7% from the 5-6% rise mentioned in the previous quarter. The guidance for PEO Services’ revenue growth is updated to 5-6% from the 4-6% provided in the preceding quarter.
ADP carries a Zacks Rank #4 (Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Snapshot of ADP's Peers
Fiserv, Inc. (FI - Free Report) reported mixed third-quarter 2024 results.
FI’s adjusted earnings per share (excluding $1.3 from non-recurring items) of $2.3 beat the consensus mark by 2.2% and gained 17.4% year over year. Adjusted revenues of $4.9 billion missed the consensus estimate by a slight margin but rose a tad on a year-over-year basis.
Paychex, Inc. (PAYX - Free Report) reported impressive first-quarter fiscal 2025 results.
PAYX’s earnings of $1.2 per share beat the Zacks Consensus Estimate by 1.8% and increased 1.8% from the year-ago quarter. Total revenues of $1.3 billion outpaced the consensus estimate by a slight margin and gained 2.5% from the year-ago quarter.