Automatic Data Processing (NASDAQ:ADP) announced impressive fiscal first-quarter 2019 results late last week, detailing strong new business bookings and the early fruits of its restructuring and cost-savings initiatives. The HR management software leader also raised its full-year guidance to reflect its relative outperformance over the past few months. 

With shares up around 5% in response, let's take a closer look at what drove ADP in its strong start to the new fiscal year.

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Automatic Data Processing results: The raw numbers


Fiscal Q1 2019*

Fiscal Q1 2018

Growth (YOY)


$3.323 billion

$3.077 billion


GAAP net income

$505.4 million

$412.6 million


GAAP earnings per share (diluted)





What happened with ADP this quarter?

  • Organic revenue grew 7% on a constant-currency basis.
  • Adjusted to exclude one-time items such as transformation expenses, ADP's non-GAAP earnings were $528.8 million, or $1.20 per diluted share. That's $0.09 per share above most estimates, and up nearly 28% from $0.94 per share in the same year-ago period.
  • Employer Services new business bookings grew 8% year over year.
  • Employer Services revenue increased 7% (or 6% on an organic constant-currency basis) to $2.338 billion.
  • PEO Services revenue grew 10% year over year to $987.8 million.
  • Average worksite employees paid by PEO services grew to 528,000, up 9% year over year and from 523,000 last quarter.
  • Average client funds balances grew 5% to $22.2 billion, and interest on funds held for clients grew 19% to $119 million.

What management had to say

"We are pleased with our strong start to the fiscal year and with the continued momentum by our sales force as it delivered another solid quarter of New Business Bookings growth," stated ADP CEO Carlos Rodriguez. "We also continue to execute well on our transformation initiatives, and remain focused on enhancing our product, service, and operations to maximize value for our clients and shareholders alike."

"We continue to see clear positive results from the investments we have made in recent years," added ADP CFO Jan Siegmund. "Our Service Alignment Initiative, client migrations, and transformation initiatives are yielding improvements in our client satisfaction scores and gains in productivity, keeping us firmly on a path of
delivering balanced revenue and profit growth over the long term."

Looking ahead

As such, ADP raised its full fiscal-year 2019 guidance to call for revenue growth of 6% to 7% (up from 5% to 7% previously), and growth in adjusted earnings of 15% to 17% from $4.53 in fiscal 2018 (up from 13% to 15% before).

Bottom line: There were no enormous surprises from Automatic Data Processing this quarter. But given its modest beat and raise to kick off the new fiscal year, it's equally unsurprising to see ADP stock up nearly 30% over the past year and hovering near an all-time high as of this writing.

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