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Automatic Data (ADP) Q4 Earnings Beat on Segmental Performance

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Automatic Data Processing (ADP - Free Report) delivered robust results in the fourth quarter of fiscal 2024, driven by broad-based strengths in employer services with exceptional new business bookings, better-than-expected retention and stable pay-per-control growth.

Automatic Data Processing, Inc. Price and EPS Surprise

 

Automatic Data Processing, Inc. Price and EPS Surprise

Automatic Data Processing, Inc. price-eps-surprise | Automatic Data Processing, Inc. Quote

ADP’s earnings per share of $2.1 surpassed the consensus mark by 1%. It increased 10.6% on a year-over-year basis. The company’s revenues of $4.8 billion surpassed the Zacks Consensus Estimate by a slight margin. The top line gained 6.5% from the year-ago quarter.

The employer services revenues were $3.2 billion, up 7% year over year on a reported basis and 7% on a constant-currency basis. This metric met our estimate, marking 6.2% growth from the year-ago quarter. New business bookings grew to $2 billion, increasing 7% from the year-ago quarter. Client retention declined to 92% from 92.2% in the year-ago quarter. Pays per control rose 2% on a year-over-year basis. This segment’s margin increased 220 basis points (bps) year over year.

The PEO Services segment’s revenues were $1.6 billion, gaining 6% from the year-ago quarter. This compares favorably with our estimate of $1.5 billion, implying 3.5% growth on a year-over-year basis. Average worksite employees paid by PEO Services amounted to 742,000, increasing 3% on a year-over-year basis. This segment’s margin decreased by 240 bps from the year-ago quarter.

The Interest on funds held for clients was $227 million, up 17% year over year. This, however, compares unfavorably with our revenue estimate of $257.9 million, which had suggested 5.7% year-over-year growth. Average client funds balances grew 4% to $36.1 billion from the year-ago quarter. The average interest yield on client funds rose 30 bps year over year to 3.1%.

Currently, ADP carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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