Source: Automatic Data Processing.

Automatic Data Processing (NASDAQ:ADP) reported 2016 fiscal first quarter results late last month. The payroll and human resources company continues to win new business at an impressive rate.

ADP results: The raw numbers


Q1 2016

Q1 2015

YOY Growth


$2.714 billion

$2.566 billion


Net Income From Continuing Operations

$337.5 million

$296.6 million


Earnings Per Share




Source: ADP Q1 2016 earnings press release.

What happened with ADP this quarter?

  • Worldwide new business bookings grew 13% in the first quarter.
  • Revenue increased 6% year over year to $2.7 billion -- 9% on a constant dollar basis -- as employer services revenue rose 3%, and PEO Services revenue jumped 18%.
  • Adjusted pre-tax earnings, which exclude divesture-related gains, grew 6% to $477 million -- 8% on a constant dollar basis -- as adjusted pre-tax margin expanded 10 basis points to 17.6%.
  • Adjusted EPS from continuing operations increased 10% to $0.68 -- 11% on a constant dollar basis -- boosted by share buybacks and a lower effective tax rate.
  • ADP acquired 4.2 million shares of its stock at a cost of $334 million in the first quarter. ADP also completed a $2 billion debt offering during the quarter and intends to use the proceeds to repurchase more stock during the next 12 to 24 months.
  • In September, ADP completed the sale of its non-core AdvancedMD business for a gain of $29 million as part of its strategy to better focus its operations on human capital management solutions.

Looking forward
ADP now anticipates growth in worldwide new business bookings of at least 10% over $1.6 billion sold in fiscal 2015, compared to the company's prior forecast of 8% to 10%.

"ADP had a good start to fiscal 2016, and we continue to experience very good momentum in new business bookings," said CEO Carlos Rodriguez. "Our new business bookings performance for the quarter reflects the confidence our clients have in ADP's ability to assist them with their HCM needs, including compliance with the Affordable Care Act."

After accounting for the divestiture of the AdvancedMD business, ADP now anticipates revenue growth of 7% to 8%, down from its previous estimate of 7% to 9%, with employer services and PEO revenue expected to grow 5% to 6% and 15% to 17%, respectively.

ADP also now expects its full-year fiscal 2016 adjusted EPS growth to come in at the low-end of its previous forecast.

"Because of the added expense pressure we expect from continued strong new business bookings, along with investments required to convert these bookings into new recurring revenue, we now expect adjusted diluted earnings per share growth will be at the lower end of our 12% to 14% range for the fiscal year," said CFO Jan Siegmund. "We believe these investments will position ADP well for future growth."

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends Automatic Data Processing. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.