How did ADP's revenue performance compare between the Employer Services and PEO Services segments?

For the nine months ended March 31, 2016, Employer Services revenue grew 4% year-over-year, driven by new business bookings and price increases, though partially offset by client losses and foreign currency translation. PEO Services revenue saw a stronger increase of 17%, primarily due to a 14% rise in the average number of worksite employees and higher client participation.

What impact did the company's investment strategy and financing activities have on its financial position?

ADP maintained a strong financial condition with approximately $3.0 billion in cash and cash equivalents and marketable securities as of March 31, 2016. The company issued $2.0 billion in senior notes during the nine-month period to support share repurchases, enhancing shareholder return. Its investment portfolio, including funds held for clients, remained focused on safety of principal, liquidity, and diversification, primarily in investment-grade fixed-income securities.

Are there any significant legal or compliance issues that investors should be aware of?

Yes, ADP voluntarily notified OFAC of past service arrangements by its French subsidiaries with entities designated as Specially Designated Nationals (SDNs). These arrangements, which provided managed payroll services, have been terminated. The company is cooperating with OFAC, but potential fines and penalties are not yet reasonably estimable due to the ongoing nature of the review.

How did the company's share repurchase program affect its financial results?

ADP repurchased approximately 13.2 million shares during the nine months ended March 31, 2016. This activity, along with prior repurchases, contributed to fewer outstanding shares, positively impacting diluted earnings per share from continuing operations.

ADP 10-Q Quarterly Report Q3 FY2016 — Revenue, Net Income, EPS

Summary

Automatic Data Processing, Inc. (ADP) reported solid financial performance for the nine months ended March 31, 2016, with total revenues increasing by 6% to $8.8 billion and net earnings from continuing operations up 8% to $1.21 billion year-over-year. Diluted earnings per share from continuing operations saw a 12% increase to $2.63. The company highlighted strong new business bookings, driven by demand for its Human Capital Management (HCM) solutions, particularly those aiding in Affordable Care Act (ACA) compliance. While Employer Services revenue grew, it experienced some pressure from foreign currency translation and client losses on legacy platforms. PEO Services demonstrated robust growth, with revenues up 17% due to an increase in worksite employees. The company also strengthened its balance sheet by issuing $2 billion in senior notes and continued its share repurchase program. Management emphasized the company's strong business model characterized by recurring revenues, healthy margins, and consistent cash flow generation.

Financial Highlights

51 data points

Beta

Revenue

$3.25B

0.4% Gross Margin

Net Income

$532.50M

0.2% Net Margin

EPS (Diluted)

$1.17

Total Assets

$51.13B

Cash & Equivalents

$2.94B

Free Cash Flow

$719.00M

Financial Statements

Beta

Revenue	$3.25B
Gross Profit	$1.44B
SG&A Expenses	$634.40M
Operating Expenses	$2.46B
Interest Expense	$16.30M
Net Income	$532.50M
EPS (Basic)	$1.17
EPS (Diluted)	$1.17
Shares Outstanding (Basic)	454.40M
Shares Outstanding (Diluted)	456.90M

Key Highlights

1Total revenues increased by 6% year-over-year to $8.8 billion for the nine months ended March 31, 2016.
2Net earnings from continuing operations rose by 8% to $1.21 billion for the same period.
3Diluted earnings per share from continuing operations increased by 12% to $2.63.
4Strong new business bookings were driven by demand for HCM solutions, including ACA compliance products.
5PEO Services showed significant revenue growth of 17% due to an expanding worksite employee base.
6The company issued $2 billion in senior notes and continued its share repurchase program to enhance shareholder return.
7A compliance review identified past service arrangements with entities designated as Specially Designated Nationals (SDNs) by OFAC; these arrangements have been terminated, and the company is cooperating with OFAC, though potential fines are not yet estimable.

AUTOMATIC DATA PROCESSING INC Quarterly Report for Q3 Ended Mar 31, 2016

Summary

Financial Highlights

Key Highlights

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