Summary
Automatic Data Processing, Inc. (ADP) reported solid financial results for the first quarter of fiscal year 2020, ending September 30, 2019. Total revenues increased by 6% year-over-year to $3.5 billion, driven by growth in both the Employer Services and PEO Services segments. Net earnings saw a significant increase of 15% to $582.4 million, or $1.34 per diluted share, up from $505.4 million, or $1.15 per diluted share, in the prior year period. This performance reflects the company's successful execution of its transformation initiatives and continued investment in its cloud-based Human Capital Management (HCM) solutions. The company highlighted a 6% increase in Employer Services revenue and an 8% increase in PEO Services revenue. Interest income on funds held for clients also rose due to higher average interest rates and increased client fund balances. ADP continues to return capital to shareholders, with approximately $340 million distributed via dividends and $310 million through share repurchases during the quarter. The company's financial condition remains solid, supported by strong cash flows and a robust business model.
Financial Highlights
53 data points| Revenue | $3.50B |
| Cost of Revenue | $2.04B |
| Gross Profit | $1.45B |
| SG&A Expenses | $726.50M |
| Operating Expenses | $2.81B |
| Interest Expense | $39.90M |
| Net Income | $582.40M |
| EPS (Basic) | $1.35 |
| EPS (Diluted) | $1.34 |
| Shares Outstanding (Basic) | 432.70M |
| Shares Outstanding (Diluted) | 435.40M |
Key Highlights
- 1Total revenues increased by 6% to $3.5 billion for the three months ended September 30, 2019, compared to $3.3 billion in the prior year period.
- 2Net earnings rose by 15% to $582.4 million, with diluted earnings per share (EPS) increasing to $1.34 from $1.15.
- 3Employer Services segment revenue grew by 4% year-over-year to $2.44 billion, driven by new business bookings and strong client retention.
- 4PEO Services segment revenue increased by 8% to $1.06 billion, primarily due to a 7% rise in the average number of Worksite Employees.
- 5Interest on funds held for clients increased by 13% to $133.9 million, benefiting from higher average interest rates and an increased client fund balance.
- 6The company returned approximately $340 million to shareholders through dividends and $310 million through share repurchases during the quarter.
- 7Operating expenses increased by 6% to $2.04 billion, largely driven by higher PEO Services zero-margin benefits pass-through costs and increased servicing costs, partially offset by transformation efficiencies.