Automatic Data Processing (ADP -0.34%), a leader in human capital management (HCM), announced results for the third quarter of fiscal 2024 on May 1. Surpassing analysts' expectations, ADP reported diluted earnings per share (EPS) of $2.88 against an estimate of $2.12 and exceeding $2.51 in the year-ago period. On the top line, revenue of $5.3 billion beat a forecast of about $4.75 billion.
| Current Period | Analyst Estimates | Prior Year Period | Change (YOY) | |
|---|---|---|---|---|
| Earnings per share (EPS), diluted | $2.88 | $2.12 | $2.51 | 14.7% |
| Revenue (in billions) | $5.25 | $4.75 | $4.93 | 7.6% |
| Net earnings (in billions) | $1.18 | N/A | $1.04 | 14.8% |
| Adjusted EBIT margin | 29.3% | N/A | 27.8% | N/A |
About Automatic Data Processing
ADP provides software and services for a workforce, including payroll, talent management, benefits, and time and attendance. In all, ADP serves over a million businesses worldwide, processing payroll for tens of millions of employees.
The company aims to lead with best-in-class technology, longtime expertise, and innovative products like ADP DataCloud and artificial intelligence-enhanced solutions.
Quarter highlights
The third quarter saw good progress as revenue grew 7% year-over-year and net earnings increased 14%, underscoring the company's effective business strategy. The adjusted margin for earnings before interest and taxes (EBIT) expanded to 29.3% from 27.8% in the prior year, highlighting effective cost management.
ADP reported growth across its main business segments. Employer Services showed an impressive margin increase thanks to strong market demand. Despite a marginal decline in the PEO Services segment, overall performances contribute positively to ADP's leading market position.
Technological investments continue to be a priority, with ADP focused on integrating Generative AI into existing platforms to further solidifying its competitive position. The company also acquired BTR, a Swedish payroll business, and expanded its HR app -- known as Roll -- into Ireland.
Looking ahead
ADP remains optimistic about fiscal 2024, projecting revenue growth of 6-7% and an adjusted EBIT margin expansion of 60 to 70 basis points. This reflects the company's confidence in its strategic initiatives, innovation, and global expansion efforts. But investors should monitor ADP's progress on all these fronts, including how well it can maintain its leadership in the HCM industry.
