Automatic Data Processing Q4 Earnings & Revenues Beat Estimates

Automatic Data Processing, Inc. ADP has reported impressive fourth-quarter fiscal 2025 results, wherein earnings and revenues outpaced the Zacks Consensus Estimate.

ADP’s earnings per share of $2.26 beat the consensus estimate by 1.8% and increased 8.1% from the year-ago quarter. Total revenues of $5.1 billion surpassed the consensus estimate by 1.5% and grew 7.5% on a year-over-year basis.

The ADP stock has gained 5.4% in the year-to-date period compared with the industry’s 15.7% growth and the 7.5% rise of the Zacks S&P 500 Composite.

ADP’s Segmental Results

Employer Services’ revenues of $3.5 billion increased 8% on a reported basis and 6% on an organic constant-currency basis, missing our estimate of $3.8 billion. Pays per control increased 1% from the year-ago quarter.

PEO Services’ revenues gained 9% from the year-ago quarter to $1.2 billion and missed our estimate of $1.7 billion for the fourth quarter of fiscal 2025. Average worksite employees paid by PEO Services were 761,000, rising 3% from the year-ago quarter.

Interest on funds held for clients grew 11% from the year-ago quarter to $308 million and missed our estimate of $342.4 million. ADP’s average client funds balance rose 6% to $38.1 billion. The average interest yield on client funds expanded 20 basis points (bps) to 3.2%.

Automatic Data Processing’s Margins

Adjusted EBIT increased 9% on a year-over-year basis to $5.3 billion. The adjusted EBIT margin rose 50 bps to 26%.

The margin of Employer Services increased by 50 bps, while PEO Services decreased 20 bps from the year-ago quarter.

Balance Sheet & Cash Flow of ADP

Automatic Data Processing exited fourth-quarter fiscal 2025 with cash and cash equivalents of $3.3 billion compared with $2.7 billion at the end of the preceding quarter. The long-term debt of $4 billion compared with $3 billion in the preceding quarter.

The company generated $1.4 billion in cash from operating activities in the quarter.

Automatic Data Processing’s FY25 Outlook

For fiscal 2025, ADP lowered the revenue growth guidance to 5-6% from the preceding quarter’s view of 6-7%. The adjusted EPS growth guidance is updated to 8-10% from the preceding quarter’s view of 8-9%. The adjusted effective tax rate is estimated to be 23%. The guidance for the adjusted EBIT margin is hiked to 50-70 bps from the previous quarter’s view of 40-50 bps.

Automatic Data Processing lowered Employer Services’ revenue growth expectations to 5-6% from the 6-7% provided in the preceding quarter. The guidance for PEO Services is updated to 5-7% from the 6-7% provided in the preceding quarter.

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

Earnings Snapshot

Waste Connections, Inc. WCN reported impressive second-quarter 2025 results.

Waste Connections’ adjusted earnings (excluding 17 cents from non-recurring items) of $1.29 per share surpassed the Zacks Consensus Estimate by 3.2% and increased 4% year over year. Revenues of $2.4 billion beat the consensus estimate marginally and grew 7.1% from the year-ago quarter.

The Interpublic Group of Companies, Inc. IPG posted impressive second-quarter 2025 results.

IPG’s adjusted earnings of 75 cents per share surpassed the Zacks Consensus Estimate by 36.4% and jumped 23% from the year-ago quarter. Revenues before billable expenses (net revenues) of $2.2 billion beat the consensus estimate by a slight margin but declined 19.8% year over year. Total revenues of $2.5 billion decreased 7.2% year over year and outpaced the Zacks Consensus Estimate of $2.2 billion.

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This article originally published on Zacks Investment Research (zacks.com).

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