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Automatic Data Processing Q3 Earnings & Revenues Beat Estimates

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Automatic Data Processing, Inc. (ADP - Free Report) has reported impressive third-quarter fiscal 2025 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.

ADP’s earnings per share of $3.06 beat the consensus estimate by 3.4% and increased 6.3% from the year-ago quarter. Total revenues of $5.6 billion surpassed the consensus estimate by 1.1% and grew 5.7% on a year-over-year basis.

The ADP stock has gained 22.1% in the past year rallying closely with its industry and outperforming the 12.5% rise of the Zacks S&P 500 Composite.

Automatic Data Processing, Inc. Price, Consensus and EPS Surprise

 

ADP’s Segmental Results

Employer Services’ revenues of $3.4 billion increased 5% on a reported and constant-currency basis, missing our estimate of $3.8 billion. Pays per control increased 1% from the year-ago quarter.

PEO Services’ revenues gained 7% from the year-ago quarter to $1.8 billion and surpassed our projection of $1.7 billion for the third quarter of fiscal 2025. Average worksite employees paid by PEO Services were 748,000, rising 2% from the year-ago quarter.

Interest on funds held for clients grew 11% from the year-ago quarter to $355 million and outpaced our estimate of $342.4 million. ADP’s average client funds balance rose 7% to $44.5 billion. The average interest yield on client funds expanded 10 basis points (bps) to 3.2%.

Automatic Data Processing’s Margins

Adjusted EBIT increased 6% on a year-over-year basis to $1.6 billion. The adjusted EBIT margin rose 10 bps to 29.3%.

The margin of Employer Services increased by 20 bps, while PEO Services was flat with the year-ago quarter.

Balance Sheet & Cash Flow of ADP

Automatic Data Processing exited third-quarter fiscal 2025 with cash and cash equivalents of $2.7 billion compared with $2.2 billion at the end of the preceding quarter. The long-term debt of $3 billion was flat with the preceding quarter.

The company generated $1.5 billion in cash from operating activities in the quarter.

Automatic Data Processing’s FY25 Outlook

For fiscal 2025, ADP expects revenue growth of 6-7%. Adjusted EPS growth is updated to 8-9% from the preceding quarter’s view of 7-9%. The adjusted effective tax rate is estimated to be 23%. The guidance for adjusted EBIT margin is updated to 40-50 bps from the previous quarter’s view of 30-50 bps.

Automatic Data Processing expects Employer Services’ revenues to grow 6-7%. The guidance for PEO Services is raised to 6-7% from the preceding quarter’s view of 5-6%.

ADP carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot

Equifax Inc. (EFX - Free Report) reported impressive first-quarter 2025 results.

EFX’s adjusted earnings were $1.53 per share, outpacing the Zacks Consensus Estimate by 9.3% and increasing 2% from the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Total revenues of $1.4 billion surpassed the consensus estimate by 1.9% and grew 3.6% on a year-over-year basis.

WM (WM - Free Report) reported mixed first-quarter 2025 results.

WM’s quarterly adjusted earnings of $1.67 per share surpassed the consensus mark by 1.2% but declined 4.6% year over year.

Total revenues of $6 billion missed the consensus mark by a 1.3% margin but grew 16.7% from the year-ago quarter.


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