Summary
Automatic Data Processing, Inc. (ADP) reported solid financial results for the second quarter and first half of fiscal year 2024, ending December 31, 2023. Total revenues grew 6% year-over-year for the quarter and 7% for the six-month period, reaching $4.7 billion and $9.2 billion respectively. This growth was driven by new business, strong client retention, pricing adjustments, and increased interest income on client funds, which benefited from higher average interest rates. Profitability also showed improvement, with earnings before income taxes (EBIT) increasing by 8% for both periods. The company highlighted its strategic focus on best-in-class HCM technology, expert solutions, and global scale, noting progress in rolling out AI-powered features like ADP Assist to enhance client experience and HR productivity. ADP returned $1.5 billion to shareholders through dividends and share repurchases, underscoring its commitment to capital return while maintaining a solid financial position and liquidity.
Financial Highlights
54 data points| Revenue | $4.67B |
| Cost of Revenue | $2.56B |
| Gross Profit | $2.11B |
| R&D Expenses | $228.70M |
| SG&A Expenses | $922.50M |
| Operating Expenses | $3.59B |
| Interest Expense | $104.90M |
| Net Income | $878.40M |
| EPS (Basic) | $2.14 |
| EPS (Diluted) | $2.13 |
| Shares Outstanding (Basic) | 411.10M |
| Shares Outstanding (Diluted) | 412.50M |
Key Highlights
- 1Total revenues increased by 6% to $4.7 billion for the three months ended December 31, 2023, and by 7% to $9.2 billion for the six months ended December 31, 2023.
- 2Earnings Before Income Taxes (EBIT) grew by 8% for both the three-month ($1.14 billion) and six-month ($2.24 billion) periods, indicating improved profitability.
- 3Interest on funds held for clients significantly increased due to higher average interest rates, contributing positively to total revenues.
- 4The company is actively investing in technology, including the rollout of generative AI (GenAI) features like ADP Assist to improve HR productivity and client engagement.
- 5ADP returned $1.5 billion to shareholders through $1.0 billion in dividends and $0.5 billion in share repurchases during the six-month period.
- 6Employer Services segment revenue saw robust growth of 8% for the quarter and 9% for the six months, driven by various factors including pricing and new business.
- 7PEO Services revenue increased by 3% for both periods, although its EBIT margin slightly decreased due to increased selling expenses and changes in indemnity loss estimates.