Summary
Automatic Data Processing, Inc. (ADP) reported stable financial performance for the third quarter of fiscal year 2021, with total revenues of $4.1 billion, a slight increase of 1% compared to the prior year period. Net earnings were $810.7 million, a marginal decrease of 1% from $820.9 million in the prior year. The company demonstrated resilience amidst ongoing economic uncertainties, with its Employer Services segment showing signs of reacceleration, particularly in new business bookings which surpassed pre-pandemic levels. However, interest income on funds held for clients continued to be a headwind, with a notable decrease due to lower interest rates, impacting overall revenue growth. Despite the modest revenue and earnings figures, ADP maintained a strong financial position. The company generated significant operating cash flow and continued to return value to shareholders through dividends and share repurchases, totaling $2.1 billion in the nine-month period. Investments in product innovation and business transformation initiatives remain a focus, positioning ADP for sustained growth in the evolving world of work. The company's outlook suggests continued execution and a focus on client needs.
Financial Highlights
54 data points| Revenue | $4.10B |
| Cost of Revenue | $2.28B |
| Gross Profit | $1.82B |
| SG&A Expenses | $763.00M |
| Operating Expenses | $3.05B |
| Interest Expense | $13.50M |
| Net Income | $810.70M |
| EPS (Basic) | $1.90 |
| EPS (Diluted) | $1.90 |
| Shares Outstanding (Basic) | 425.80M |
| Shares Outstanding (Diluted) | 427.70M |
Key Highlights
- 1Total revenues for the three months ended March 31, 2021, were $4.1 billion, a 1% increase year-over-year, and $11.3 billion for the nine months ended March 31, 2021, a flat year-over-year performance.
- 2Net earnings for the three months ended March 31, 2021, were $810.7 million, a slight decrease of 1% from $820.9 million in the prior year. For the nine months, net earnings were $2.06 billion, a slight increase of less than 1%.
- 3Employer Services segment revenues saw a slight decrease of 1% for the quarter but showed positive momentum in new business bookings, reaccelerating to 7% growth for the quarter and exceeding pre-pandemic levels.
- 4PEO Services segment revenues increased by 7% for the quarter and 5% for the nine months, driven by increases in zero-margin benefits pass-throughs and higher wages per worksite employee.
- 5Interest earned on funds held for clients decreased significantly, impacting overall revenue, due to lower average interest rates (1.3% vs. 2.0% for the quarter) despite a slight increase in average client fund balances.
- 6The company returned $2.1 billion in cash to shareholders during the first nine months of the fiscal year, comprising $1.2 billion in dividends and $0.9 billion in share repurchases.
- 7Total expenses increased by 1% for the quarter and were flat for the nine months, with increases in operating expenses and systems development costs offset by decreases in interest expense and SG&A for the nine-month period.