01—Abstract
Summary
Summary of the 10-K filed August 4, 2017. Cited figures are marked; the original filing is the authoritative source.
Automatic Data Processing, Inc. (ADP) reported strong financial performance for the fiscal year ended June 30, 2017.
The company experienced revenue growth of 6%a, driven by increases in its Employer Services and PEO Services segments, reflecting successful new business bookings and a healthy client retention rate. ADP demonstrated solid profitability, with net earnings from continuing operations increasing by 16% and diluted earnings per share rising by 18% year-over-year.
The company also continued its commitment to shareholder returns, repurchasing approximately $1.3 billionb in shares and increasing dividends for the 42nd consecutive year. Strategic initiatives, including investments in cloud-based HCM solutions and the acquisition of The Marcus Buckingham Company, position ADP for continued growth in the human capital management market.
02—Key points
Key Highlights
- Revenue increased by 6% to $12,379.8 million in fiscal year 2017.
- Net earnings from continuing operations grew by 16% to $1,733.4 million.
- Diluted earnings per share from continuing operations increased by 18% to $3.85.
- Worldwide new business bookings declined 5% in fiscal 2017, primarily due to a strong prior year driven by Affordable Care Act (ACA) compliance solutions.
- Client revenue retention for Employer Services decreased by 50 basis points to 90.0%, attributed to legacy platforms and the loss of a large client.
- ADP returned $2.3 billion to shareholders through share repurchases ($1.3 billion) and dividends ($1 billion).
- The company acquired The Marcus Buckingham Company to enhance its talent management capabilities.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed August 4, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $12.37B$11.67B | +6.0% |
| Cost of Revenue | $7.24B— | — |
| Gross Profit | $5.13B— | — |
| SG&A Expenses | $2.77B$2.64B | +5.2% |
| Operating Expenses | $10.10B$9.53B | +5.9% |
| Interest Expense | $80.00M$56.20M | +42.3% |
| Net Income | $1.79B$1.49B | +19.8% |
| EPS (Basic) | $3.99$3.27 | +22.0% |
| EPS (Diluted) | $3.97$3.25 | +22.2% |
| Shares Outstanding (Basic) | 447.80M457.00M | −2.0% |
| Shares Outstanding (Diluted) | 450.30M459.10M | −1.9% |
05—Questions
Frequently Asked Questions
What was ADP's revenue growth in fiscal year 2017?
ADP's total revenues increased by 6% to $12,379.8 million for the fiscal year ended June 30, 2017, compared to the prior year. This growth was supported by new business bookings and increased client payrolls.
How did ADP's profitability change in fiscal year 2017?
ADP showed strong profitability improvements. Net earnings from continuing operations increased by 16% to $1,733.4 million, and diluted earnings per share from continuing operations rose by 18% to $3.85, reflecting operational efficiencies and strategic investments.
What is ADP's strategy for future growth?
ADP's growth strategy is centered on three pillars: expanding its suite of cloud-based HCM solutions, scaling its HR Business Process Outsourcing services, and leveraging its global presence to offer HCM solutions wherever clients operate. The acquisition of The Marcus Buckingham Company further supports this strategy by strengthening its talent management offerings.
What factors impacted ADP's new business bookings in fiscal year 2017?
New business bookings declined by 5% in fiscal 2017 compared to fiscal 2016. This was primarily attributed to a high demand in the prior year for solutions that helped clients comply with the Affordable Care Act (ACA), which is a cyclical demand.
06—Continue