Automatic Data Processing, Inc. ADP 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
Automatic Data Processing, Inc. price-consensus-eps-surprise-chart | Automatic Data Processing, Inc. Quote
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 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 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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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
