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Automatic Data Processing (ADP) Q4 Earnings Beat Estimates
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Automatic Data Processing, Inc. (ADP - Free Report) has reported impressive fourth-quarter fiscal 2024 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
ADP’s earnings per share of $2.1 beat the consensus estimate by 1% and increased 10.6% from the year-ago quarter. Total revenues of $4.8 billion surpassed the consensus estimate by a slight margin and grew 6.5% from the year-ago quarter.
The ADP stock has gained 10.6% over the year-to-date period, outperforming the 9.2% rally of the industry it belongs to.
Automatic Data Processing, Inc. Price and EPS Surprise
Employer Services’ revenues of $3.2 billion grew 7% on a reported basis and 7% at constant currency, meeting our estimate. Pays per control increased 2% from the year-ago quarter.
PEO Services’ revenues rose 6% from the year-ago quarter to $1.6 billion and surpassed our expectation of $1.5 billion for the fourth quarter of fiscal 2024. Average worksite employees paid by PEO Services were 729,000, growing 3% from the year-ago quarter.
Interest on funds held for clients rose 17% from the year-ago quarter to $227 million and missed our estimate of $257.9 million. ADP’s average client funds balance grew 4% to $36.1 billion. Average interest yield on client funds expanded 30 basis points to 3.1%.
Margins
Adjusted EBIT increased 9% on a year-over-year basis to $4.9 billion. The adjusted EBIT margin grew 70 basis points (bps) to 25.5%.
The margin of Employer Services increased 220 bps, while PEO Services declined 240 bps.
Balance Sheet & Cash Flow
ADP exited fourth-quarter fiscal 2024 with cash and cash equivalents of $2.9 billion compared with $3.3 billion reported at the end of the preceding quarter. The long-term debt of $3 billion was flat with the preceding quarter.
Automatic Data Processing generated $1.3 billion in cash from operating activities in the quarter.
FY25 Outlook
For 2024, ADP has reduced its guidance for revenue growth to 5-6% from the 6-7% mentioned previously. The adjusted EPS growth guidance is lowered to 8-10% from the 10-12% stated earlier. The adjusted effective tax rate is estimated to be 23%. The adjusted EBIT margin is updated to 60-80 bps from the 60-70 bps mentioned previously.
Automatic Data Processing has reduced its guidance for Employer Services revenue growth to 5-6% compared with the 7-8% mentioned previously. The guidance for PEO Services’ revenue growth is pegged at 4-6%, whereas it reported a rise of 3-4% in the preceding quarter.
S&P Global Inc. (SPGI - Free Report) reported impressive second-quarter 2024 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
SPGI’s adjusted EPS (excluding 82 cents from non-recurring items) of $4.04 surpassed the Zacks Consensus Estimate by 10.1% and increased 29.5% year over year. Revenues of $3.5 billion beat the consensus estimate by 3.4% and improved 14.5% year over year.
IT’s adjusted earnings (excluding 28 cents from non-recurring items) per share of $3.22 beat the Zacks Consensus Estimate by 6.3% and increased 13% from the year-ago quarter. Revenues of $1.6 billion beat the consensus estimate marginally and improved 6.1% year over year.
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Automatic Data Processing (ADP) Q4 Earnings Beat Estimates
Automatic Data Processing, Inc. (ADP - Free Report) has reported impressive fourth-quarter fiscal 2024 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
ADP’s earnings per share of $2.1 beat the consensus estimate by 1% and increased 10.6% from the year-ago quarter. Total revenues of $4.8 billion surpassed the consensus estimate by a slight margin and grew 6.5% from the year-ago quarter.
The ADP stock has gained 10.6% over the year-to-date period, outperforming the 9.2% rally of the industry it belongs to.
Automatic Data Processing, Inc. Price and EPS Surprise
Automatic Data Processing, Inc. price-eps-surprise | Automatic Data Processing, Inc. Quote
Segmental Results
Employer Services’ revenues of $3.2 billion grew 7% on a reported basis and 7% at constant currency, meeting our estimate. Pays per control increased 2% from the year-ago quarter.
PEO Services’ revenues rose 6% from the year-ago quarter to $1.6 billion and surpassed our expectation of $1.5 billion for the fourth quarter of fiscal 2024. Average worksite employees paid by PEO Services were 729,000, growing 3% from the year-ago quarter.
Interest on funds held for clients rose 17% from the year-ago quarter to $227 million and missed our estimate of $257.9 million. ADP’s average client funds balance grew 4% to $36.1 billion. Average interest yield on client funds expanded 30 basis points to 3.1%.
Margins
Adjusted EBIT increased 9% on a year-over-year basis to $4.9 billion. The adjusted EBIT margin grew 70 basis points (bps) to 25.5%.
The margin of Employer Services increased 220 bps, while PEO Services declined 240 bps.
Balance Sheet & Cash Flow
ADP exited fourth-quarter fiscal 2024 with cash and cash equivalents of $2.9 billion compared with $3.3 billion reported at the end of the preceding quarter. The long-term debt of $3 billion was flat with the preceding quarter.
Automatic Data Processing generated $1.3 billion in cash from operating activities in the quarter.
FY25 Outlook
For 2024, ADP has reduced its guidance for revenue growth to 5-6% from the 6-7% mentioned previously. The adjusted EPS growth guidance is lowered to 8-10% from the 10-12% stated earlier. The adjusted effective tax rate is estimated to be 23%. The adjusted EBIT margin is updated to 60-80 bps from the 60-70 bps mentioned previously.
Automatic Data Processing has reduced its guidance for Employer Services revenue growth to 5-6% compared with the 7-8% mentioned previously. The guidance for PEO Services’ revenue growth is pegged at 4-6%, whereas it reported a rise of 3-4% in the preceding quarter.
Currently, ADP carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Snapshot
S&P Global Inc. (SPGI - Free Report) reported impressive second-quarter 2024 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
SPGI’s adjusted EPS (excluding 82 cents from non-recurring items) of $4.04 surpassed the Zacks Consensus Estimate by 10.1% and increased 29.5% year over year. Revenues of $3.5 billion beat the consensus estimate by 3.4% and improved 14.5% year over year.
Gartner, Inc. (IT - Free Report) reported better-than-expected second-quarter 2024 results.
IT’s adjusted earnings (excluding 28 cents from non-recurring items) per share of $3.22 beat the Zacks Consensus Estimate by 6.3% and increased 13% from the year-ago quarter. Revenues of $1.6 billion beat the consensus estimate marginally and improved 6.1% year over year.