01—Abstract
Summary
Summary of the 10-K filed August 3, 2022. Cited figures are marked; the original filing is the authoritative source.
Automatic Data Processing, Inc. (ADP) reported strong performance for the fiscal year ended June 30, 2022, with a 10% increase in total revenue to $16.5 billiona.
This growth was driven by strong client retention, an increase in "pays per control" (a measure of employees on ADP clients' payrolls), and robust new business bookings in the Employer Services segment. The Professional Employer Organization (PEO) segment also showed significant growth with a 15%b increase in average worksite employees. The company generated substantial free cash flow, enabling significant returns to shareholders through dividends and share repurchases.
ADP continues to invest in its cloud-based Human Capital Management (HCM) solutions, focusing on platform enhancements, user experience (UX) improvements, and data-driven insights through ADP DataCloud, positioning itself for continued long-term growth in a dynamic labor market. Financially, ADP demonstrated solid operational efficiency, with its Adjusted EBIT margin expanding by 90 basis points. Diluted EPS also saw a healthy increase of 15%c.
The company maintains a strong financial position with $1.4 billiond in cash and cash equivalents and significant committed credit facilities, providing ample liquidity for operations, investments, and shareholder returns. ADP's strategic focus on innovation and client service, combined with its extensive scale and expertise, underpins its market leadership and ability to navigate evolving workplace trends.
02—Key points
Key Highlights
- Total revenue increased by 10% year-over-year to $16.5 billion.
- Employer Services segment revenue grew 8%, driven by new business bookings and strong retention.
- PEO Services segment revenue increased by 15%, primarily due to a 15% rise in average worksite employees.
- Diluted Earnings Per Share (EPS) grew by 15% to $7.00.
- The company returned $3.6 billion to shareholders through dividends ($1.7 billion) and share repurchases ($2.0 billion).
- ADP invested significantly in system development and programming ($1.210 billion), focusing on new product development and platform enhancements.
- Adjusted EBIT margin expanded by 90 basis points, indicating improved profitability.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed August 3, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $16.50B$15.01B | +9.9% |
| Cost of Revenue | $9.46B$8.64B | +9.5% |
| Gross Profit | $7.04B$6.37B | +10.5% |
| R&D Expenses | $798.60M— | — |
| SG&A Expenses | $3.23B$3.04B | +6.3% |
| Operating Expenses | $12.78B$11.74B | +8.8% |
| Interest Expense | $81.90M$59.70M | +37.2% |
| Net Income | $2.95B$2.60B | +13.5% |
| EPS (Basic) | $7.04$6.10 | +15.4% |
| EPS (Diluted) | $7.00$6.07 | +15.3% |
| Shares Outstanding (Basic) | 418.80M426.30M | −1.8% |
| Shares Outstanding (Diluted) | 421.10M428.10M | −1.6% |
05—Questions
Frequently Asked Questions
What was ADP's revenue growth in fiscal year 2022?
ADP reported a 10% increase in total revenue for the fiscal year ended June 30, 2022, reaching $16.5 billion. The Employer Services segment grew 8%, while the PEO Services segment saw a 15% increase in revenue.
How did ADP return capital to shareholders in fiscal year 2022?
ADP demonstrated a strong commitment to shareholder returns by distributing $3.6 billion. This included $1.7 billion in dividends and $2.0 billion through share repurchases.
What are ADP's key strategic priorities for growth?
ADP's strategy is centered around three pillars: growing its cloud-based Human Capital Management (HCM) solutions, scaling its HR Outsourcing (HRO) solutions, and leveraging its global presence. Key priorities include investing in next-generation platforms, offering a broad suite of complete solutions, enhancing distribution through data and digital technology, accelerating digital transformation, and providing comprehensive HR and payroll capabilities globally.
What is the financial health of ADP based on this filing?
ADP maintains a solid financial condition. As of June 30, 2022, the company had $1.4 billion in cash and cash equivalents and substantial committed credit facilities. It generated strong cash flows from operations, supporting its dividend payments, share repurchases, and capital expenditures, indicating financial stability and liquidity for future operations.
06—Continue