Automatic Data Processing Inc (ADP) Reports 7% Revenue Increase in Q1 Fiscal 2024
ADP's Q1 2024 revenues increased by 7% to $4.5 billion compared to the same period last year.
Net earnings increased by 10% to $859 million, and adjusted net earnings increased by 11% to $860 million.
Diluted earnings per share increased by 11% to $2.08.
ADP maintains its fiscal 2024 consolidated outlook for revenue growth of 6% to 7%.
Automatic Data Processing Inc (NASDAQ:ADP) released its first quarter fiscal 2024 earnings report on October 25, 2023. The company reported a 7% increase in revenues to $4.5 billion compared to the same period last year. Net earnings increased by 10% to $859 million, and adjusted net earnings increased by 11% to $860 million. The company's adjusted EBIT increased by 7% to $1.1 billion, representing an adjusted EBIT margin increase of 10 basis points in the quarter to 24.2%.
Financial Performance Highlights
ADP's diluted earnings per share (EPS) increased by 11% to $2.08, while the adjusted diluted EPS increased by 12% to $2.08. The company's effective tax rate for the quarter was 21.4% on both a reported basis and an adjusted basis.
ADP's Employer Services revenues increased by 9% on a reported basis and 8% on an organic constant currency basis. The U.S. pays per control increased by 2%, and the Employer Services segment margin increased by 220 basis points. On the other hand, PEO Services revenues increased by 3%, and the average worksite employees paid by PEO Services increased by 2% to about 717,000.
Company's Outlook
ADP maintains its fiscal 2024 consolidated outlook for revenue growth of 6% to 7%, adjusted EBIT margin expansion of 60 to 80 basis points, and adjusted diluted EPS growth of 10% to 12%. The company's Employer Services segment is expected to see revenue growth of 7% to 8%, while the PEO Services segment is expected to see revenue growth of 3% to 4%.
Management Commentary
Fiscal 2024 started off with strong financial performance and meaningful progress across our strategic priorities," said Maria Black, President and Chief Executive Officer, ADP. "Our mission is to develop and deploy best-in-class HCM technology along with a deep level of insight and expertise that together improve the HR experience."
Our first quarter revenue growth and margin performance exceeded our expectations, as we benefited from solid new business bookings growth, strong client revenue retention, and higher client funds interest revenue," said Don McGuire, Chief Financial Officer, ADP. "We remain focused on delivering against our profitability commitments while at the same time investing in our business to drive sustainable long-term growth."
Financial Tables Summary
ADP's financial tables reveal a solid financial performance with a 7% increase in total revenues to $4.5 billion. The company's total expenses amounted to $3.5 billion, resulting in earnings before income taxes of $1.1 billion. The company's net earnings amounted to $859.4 million, with basic earnings per share of $2.09 and diluted earnings per share of $2.08.
ADP's balance sheet shows total assets of $49.3 billion and total liabilities of $45.9 billion, resulting in total stockholders' equity of $3.5 billion. The company's cash flow statement reveals net cash flows provided by operating activities of $326.5 million and net cash flows used in investing activities of $216.1 million.
Overall, ADP's Q1 fiscal 2024 earnings report demonstrates a strong financial performance with significant increases in revenues, net earnings, and earnings per share. The company's strategic progress and commitment to delivering against profitability commitments are reflected in its positive financial results.
This article first appeared on GuruFocus.
