Automatic Data Processing (ADP) Q3 Earnings Beat, Up Y/Y
Automatic Data Processing, Inc. (ADP) reported better-than-expected third-quarter fiscal 2023 results.
Adjusted earnings per share of $2.52 (excluding 1 cent from non-recurring items) beat the Zacks Consensus Estimate by 4.1% and our estimate by 4.6% and grew 14% from the year-ago fiscal quarter’s figure.
Total revenues of $4.9 billion beat the Zacks Consensus Estimate by 0.9% and our estimate by 1.2% and improved 9.2% from the year-ago fiscal quarter’s reading on a reported basis and 10% on an organic constant-currency basis.
Over the past year, shares of ADP have dropped 7.1% compared with the 9.1% decline of the industry it belongs to.
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
Automatic Data Processing, Inc. price-consensus-eps-surprise-chart | Automatic Data Processing, Inc. Quote
Third Quarter in Details
Segments:
Employer Services’ revenues of $3.1 billion increased 11% on a reported basis and 12% on an organic constant-currency basis. Pays per control increased 4% from the year-ago fiscal quarter’s reading.
PEO Services’ revenues were up 5% year over year to $1.6 billion. Average paid worksite employees were 710,000, up 3.2% from the year-ago fiscal quarter’s figures.
Interest on funds for clients increased more than 100% to $249.4 million. ADP’s average client funds balance increased 3% to $39.2 billion. The average interest yield on client funds expanded 130 basis points to 2.5%.
Margins:
Adjusted EBIT increased 14% from the year-ago fiscal quarter’s reading to $1.4 billion. Adjusted EBIT margin grew 110 basis points to 27.8%.
The margin of Employer Services and PEO Services increased 170 bps and 130 bps, respectively.
Balance Sheet and Cash Flow
ADP exited third-quarter fiscal 2023 with cash and cash equivalents of $1.83 billion compared with $1.35 billion in the prior fiscal quarter. Long-term debt of $2.99 billion was flat sequentially.
Automatic Data Processing generated $1.4 billion in cash from operating activities in the quarter. Capital expenditures were $50.3 million. ADP paid out dividends worth $520.6 million and repurchased shares worth $264 million in the reported quarter.
Fiscal 2023 Outlook
ADP still expects revenues to register 8-9% growth. Adjusted EPS is expected to register 16-17% growth as compared to the previous guidance of 15-17%. The adjusted effective tax rate is estimated to be approximately 23%.
Automatic Data Processing expects Employer Services revenues to grow at a rate of about 9%, while PEO Services revenues are still expected to grow at 8%.
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
Equifax EFX reported better-than-expected first-quarter 2023 results. Adjusted earnings (excluding 52 cents from non-recurring items) came in at $1.43, beating the Zacks Consensus Estimate by 4.4% but declining 35.6% from the year-ago figure. Total revenues of $1.3 billion surpassed the consensus estimate by 1.5% but decreased 4.5% on a reported basis from the year-ago figure. The top line was down 3% on a local currency basis.
OmnicomOMC reported better-than-expected first-quarter 2023 results. OMC’s earnings of $1.56 per share beat the Zacks Consensus Estimate by 13% and our estimates by 11.4%. EPS increased 12.2% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 2.3% and our estimate by 1.4%. The top line increased 1% year over year.
Fiserv FISV reported impressive first-quarter 2023 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Adjusted earnings per share (excluding 69 cents from non-recurring items) of $1.58 increased 12.9% year over year, beating the consensus mark by 1.3%. Earnings beat our estimate by 2.6%. Adjusted revenues of $4.28 billion beat the Zacks Consensus Estimate by 3% and increased 9.5% year over year. Revenues surpassed our estimates by 4.65%.
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