01—Abstract
Summary
Summary of the 10-K filed August 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Automatic Data Processing, Inc. (ADP) reported a solid fiscal year 2024, demonstrating 7% revenue growth to $19.2 billiona, driven by new client acquisition, pricing increases, and strong client retention.
The company highlighted its strategic priorities, focusing on leading with best-in-class HCM technology, providing unmatched expertise and outsourcing solutions, and leveraging its global scale. Investments in artificial intelligence, particularly the launch of ADP Assist, are a key area of innovation, aimed at enhancing client and employee experiences. ADP's financial health remains strong, with significant cash flow generation and a commitment to shareholder returns through dividends and share repurchases, totaling $3.4 billionb in fiscal year 2024.
02—Key points
Key Highlights
- Reported 7% revenue growth, reaching $19.2 billion in fiscal year 2024.
- Achieved 11% and 12% growth in Diluted EPS and Adjusted Diluted EPS, respectively.
- Returned $3.4 billion to shareholders through dividends ($2.2 billion) and share repurchases ($1.2 billion).
- Launched ADP Assist, a generative AI-powered solution to provide actionable insights for HR and payroll.
- Maintained strong client retention, with an estimated 13 years in Employer Services.
- PEO (Professional Employer Organization) average worksite employees increased by 2% year-over-year.
- Invested $1.276 billion in research and development, including significant investments in generative AI.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2024filed August 7, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $19.20B$18.01B | +6.6% |
| Cost of Revenue | $10.48B$9.95B | +5.3% |
| Gross Profit | $8.73B$8.06B | +8.3% |
| R&D Expenses | $955.70M$844.80M | +13.1% |
| SG&A Expenses | $3.78B$3.55B | +6.4% |
| Operating Expenses | $14.62B$13.76B | +6.2% |
| Interest Expense | $361.40M$253.30M | +42.7% |
| Net Income | $3.75B$3.41B | +10.0% |
| EPS (Basic) | $9.14$8.25 | +10.8% |
| EPS (Diluted) | $9.10$8.21 | +10.8% |
| Shares Outstanding (Basic) | 410.60M413.70M | −0.7% |
| Shares Outstanding (Diluted) | 412.20M415.70M | −0.8% |
05—Questions
Frequently Asked Questions
What was ADP's revenue performance in fiscal year 2024?
ADP reported total revenues of $19.2 billion for the year ended June 30, 2024, representing a 7% increase compared to the prior year. On an organic constant currency basis, revenue grew by 6%.
How is ADP leveraging Artificial Intelligence (AI) in its offerings?
ADP is significantly investing in and integrating AI, particularly generative AI (GenAI), into its solutions. Key initiatives include the launch of ADP Assist, a cross-platform solution that uses GenAI to provide HR and payroll insights, and integrating GenAI into the Roll by ADP mobile solution for enhanced user experience. These advancements are aimed at automating processes, delivering proactive insights, and personalizing experiences for clients and their employees.
What is ADP's approach to returning capital to shareholders?
ADP demonstrates a strong commitment to shareholder returns. In fiscal year 2024, the company returned $3.4 billion to shareholders, consisting of $2.2 billion in dividends and $1.2 billion in share repurchases. The company also has an ongoing share repurchase program with significant authorization remaining.
How did ADP's two main segments, Employer Services and PEO Services, perform?
The Employer Services segment saw revenue grow by 8% (7% organic constant currency), with its segment margin increasing by 210 basis points to 35.1%. The PEO Services segment's revenue grew by 4% (3% excluding zero-margin benefits pass-throughs), but its segment margin decreased by 150 basis points to 14.8%, primarily due to less favorable actuarial loss development in workers' compensation reserves and increased selling expenses.
06—Continue