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AUTOMATIC DATA PROCESSING INC 8-K Report, Financial Results (Apr 30, 2025)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed April 30, 2025
Period End
April 30, 2025
Security
ADP
In the record · 2016–202610-K1110-Q328-K103

ADP filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 103 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jun ’18Jun ’18
  2. Leadership change8-K · Jun ’20Jun ’20
  3. Material agreement8-K · Jul ’22Jul ’22
  4. Material agreement8-K · Jun ’26Jun ’26

01—Abstract

Summary

Summary of the 8-K filed April 30, 2025. Cited figures are marked; the original filing is the authoritative source.

ADP (Nasdaq: ADP) reported third quarter fiscal 2025 results (quarter ended March 31, 2025) on April 30, 2025, delivering solid top- and bottom-line growth.

Total revenues rose 6% to $5.55 billiona (6% organic constant currency), net earnings rose 5% to $1.25 billion, and diluted EPS grew 6% to $3.06. Adjusted EBIT grew 6% to $1.63 billion with adjusted EBIT margin up 10 basis points to 29.3%. Employer Services revenue grew 5% and segment margin expanded 20 basis points to 39.8%, while PEO Services revenue grew 7% on a 2% increase in average worksite employees to about 748,000.

Interest on funds held for clients rose 11% to $355 millionb, a meaningful contributor to growth. Management raised its fiscal 2025 outlook for adjusted EBIT margin (now expanding 40 to 50 basis points, up from 30 to 50) and adjusted diluted EPS growth (now 8% to 9%, up from 7% to 9%). Revenue growth guidance of 6% to 7% was maintained, while the Employer Services margin outlook was raised to 50 to 60 basis points and the PEO Services margin outlook was lowered to a decline of 60 to 80 basis points.

The client funds interest revenue outlook was also raised to $1.160 to $1.170 billionc, reflecting higher expected client fund balances and yields. For investors, the quarter reflects consistent execution with record client satisfaction and a rising contribution from client funds interest.

Balance sheet items to watch include short-term debt rising to about $1.0 billion and goodwill increasing to $3.30 billiond following acquisitions, which consumed $1.17 billion of cash in the first nine months. This 8-K furnishes earnings materials under Item 2.02 and does not itself contain new disclosures beyond the earnings release.

02—Key points

Key Highlights

  1. Total revenues increased 6% to $5.55 billion in Q3 FY2025 (6% organic constant currency), with nine-month revenues up 7% to $15.43 billion.
  2. Diluted EPS rose 6% to $3.06 and adjusted diluted EPS rose 6% to $3.06; nine-month diluted EPS was $7.75, up 10%.
  3. Adjusted EBIT grew 6% to $1.63 billion, with adjusted EBIT margin up 10 basis points to 29.3%.
  4. Raised FY2025 guidance: adjusted EBIT margin expansion now 40 to 50 basis points (previously 30 to 50) and adjusted diluted EPS growth now 8% to 9% (previously 7% to 9%).
  5. Employer Services revenue rose 5% with segment margin up 20 basis points to 39.8%; PEO Services revenue rose 7% with average worksite employees up 2% to about 748,000.
  6. Interest on funds held for clients rose 11% to $355 million on average balances of $44.5 billion and a 3.2% yield; FY2025 client funds interest revenue outlook raised to $1.160 to $1.170 billion.
  7. Balance sheet shows short-term debt of $1.0 billion and goodwill up to $3.30 billion from acquisitions, with $1.17 billion spent on business acquisitions in the first nine months.

03—Questions

Frequently Asked Questions

  1. How did ADP perform in its fiscal third quarter of 2025?

    ADP grew total revenues 6% to $5.55 billion and net earnings 5% to $1.25 billion. Diluted EPS increased 6% to $3.06, and adjusted EBIT margin improved 10 basis points to 29.3%.

  2. What changed in ADP's full-year fiscal 2025 outlook?

    ADP raised its adjusted EBIT margin expansion guidance to 40 to 50 basis points (from 30 to 50) and its adjusted diluted EPS growth guidance to 8% to 9% (from 7% to 9%). Revenue growth of 6% to 7% was unchanged, and the client funds interest revenue outlook was raised to $1.160 to $1.170 billion.

  3. Why is interest on client funds important to ADP's results?

    Interest on funds held for clients rose 11% to $355 million in the quarter, driven by a 7% increase in average client fund balances to $44.5 billion and a yield increase to 3.2%. This income is sensitive to interest rates and forms a meaningful part of earnings growth, so changes in rate expectations can materially affect results.

  4. Are there concerns in the segment results?

    PEO Services margin was flat in the quarter and management expects a full-year decline of 60 to 80 basis points, partly reflecting zero-margin benefits pass-throughs. Employer Services U.S. pays per control grew only about 1%, and client revenue retention is guided to be down up to 20 basis points or flat for the year.

  5. Did ADP make acquisitions or change its balance sheet materially?

    Yes. Goodwill rose to $3.30 billion from $2.35 billion at June 30, 2024, intangible assets rose to $1.60 billion, and acquisitions used $1.17 billion of cash in the first nine months. Short-term debt increased to $1.0 billion after $989 million of debt issuance, while the company repurchased $957 million of common stock and paid $1.77 billion in dividends.

04—Continue

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