Automatic Data Processing, Inc. (ADP) Bundle
A Brief History of Automatic Data Processing, Inc. (ADP)
Automatic Data Processing, Inc. (ADP), founded in 1949, has evolved from a small payroll processing company into a leading global provider of human capital management (HCM) solutions. As of 2024, ADP serves over 1 million clients in more than 140 countries. The company is listed on the NASDAQ under the ticker symbol ADP.
Financial Performance
For the three months ended September 30, 2024, ADP reported total revenues of $4,832.7 million, reflecting a year-over-year growth of 7% compared to $4,512.4 million in the same period of 2023. The breakdown of revenues is as follows:
| Segment | Revenue (2024) | Revenue (2023) | YoY Growth (%) |
|---|---|---|---|
| Employer Services | $3,261.0 million | $3,046.4 million | 7% |
| PEO Services | $1,574.5 million | $1,469.6 million | 7% |
| Other | ($2.8 million) | ($3.6 million) | n/m |
Earnings Overview
ADP's net earnings for the same quarter were $956.3 million, up 11% from $859.4 million in 2023. The diluted earnings per share (EPS) increased to $2.34, a 13% rise from $2.08 in the prior year. The adjusted diluted EPS was $2.33, reflecting a 12% increase year-over-year.
Operating Expenses
Total operating expenses for the three months ended September 30, 2024, were $3,698.2 million, a 6% increase from $3,487.3 million in 2023. The costs of revenues included:
| Expense Type | Amount (2024) | Amount (2023) | Change (%) |
|---|---|---|---|
| Operating expenses | $2,285.8 million | $2,157.6 million | 6% |
| Research and development | $232.6 million | $236.5 million | (2)% |
| Depreciation and amortization | $115.3 million | $121.3 million | (5)% |
| Selling, general and administrative expenses | $926.7 million | $880.3 million | 5% |
| Interest expense | $137.8 million | $91.6 million | 50% |
Cash Flow and Liquidity
For the three months ended September 30, 2024, cash flows from operating activities totaled $824.4 million, an increase of $497.9 million compared to $326.5 million in 2023. The company reported investing activities cash outflows of ($1,644.4 million), primarily due to the acquisition of WorkForce Software for approximately $1.2 billion in cash. Financing activities showed a net cash outflow of ($6,491.5 million), reflecting changes in client funds obligations and share repurchase activities.
As of September 30, 2024, ADP had cash and cash equivalents amounting to $2.1 billion, ensuring adequate liquidity for operational needs and future investments.
Market Position and Future Outlook
ADP's strategic focus on technology and innovation continues to drive growth. The company has committed to investing in research and development and enhancing its service offerings, including the integration of advanced technologies such as artificial intelligence into its solutions. This commitment positions ADP favorably for future growth in the competitive HCM market.
As of October 2024, ADP has successfully acquired WorkForce Software, further expanding its capabilities in workforce management solutions for large enterprises.
A Who Owns Automatic Data Processing, Inc. (ADP)
Major Shareholders
As of 2024, Automatic Data Processing, Inc. (ADP) has a diverse ownership structure with significant stakes held by both institutional and individual investors. The largest shareholders include:
| Shareholder Type | Shareholder Name | Ownership Percentage |
|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 8.3% |
| Institutional Investor | BlackRock, Inc. | 7.5% |
| Institutional Investor | State Street Corporation | 4.2% |
| Individual Investor | Maria Black (CEO) | 0.01% |
| Institutional Investor | Fidelity Investments | 6.1% |
| Institutional Investor | Wellington Management Company, LLP | 5.0% |
Insider Ownership
Insider ownership is relatively small compared to institutional investors. Key executives and board members hold a combined total of approximately 1.5% of the company’s shares. Significant insider holdings include:
| Insider Name | Position | Shares Owned |
|---|---|---|
| Maria Black | President & CEO | 46,783 |
| John Ayala | Chief Operating Officer | 47,709 |
| Don McGuire | Chief Financial Officer | 24,387 |
| Sreeni Kutam | President, Global Product and Innovation | 49,907 |
Stock Performance and Market Capitalization
As of September 30, 2024, ADP's stock performance has been strong, reflecting overall market conditions and company performance:
| Metric | Value |
|---|---|
| Current Stock Price | $276.23 |
| Market Capitalization | $114.1 billion |
| 52-Week High | $284.47 |
| 52-Week Low | $215.03 |
| Dividend Yield | 2.02% |
Recent Share Repurchase Activity
ADP has engaged in significant share repurchase activities, which reflect its strategy to enhance shareholder value:
| Period | Shares Repurchased | Average Price | Total Cost |
|---|---|---|---|
| July 2024 | 602,492 | $243.74 | $2.93 billion |
| August 2024 | 468,040 | $264.95 | $2.81 billion |
| September 2024 | 678,382 | $276.23 | $2.71 billion |
| Total | 1,748,914 | - | $8.45 billion |
Institutional Ownership Trends
Institutional ownership has shown a steady increase, with the latest figures indicating the following trends:
| Year | Institutional Ownership Percentage |
|---|---|
| 2021 | 81.2% |
| 2022 | 82.5% |
| 2023 | 83.6% |
| 2024 | 84.1% |
Conclusion on Ownership Structure
The ownership of Automatic Data Processing, Inc. is characterized by a strong institutional presence, with major investment firms holding significant stakes. Insider ownership remains modest, indicating confidence in the company's long-term strategy among executive leadership.
Automatic Data Processing, Inc. (ADP) Mission Statement
Mission Statement Overview
The mission of Automatic Data Processing, Inc. (ADP) is to provide comprehensive payroll services, human capital management (HCM) solutions, and technology to help businesses manage their workforce effectively. ADP aims to empower clients with innovative solutions that enhance productivity and compliance while delivering exceptional customer service.
Financial Performance Indicators
As of September 30, 2024, ADP reported the following financial performance metrics that reflect its operational success and alignment with its mission:
| Metric | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Total Revenues | $4,832.7 million | $4,512.4 million | +7% |
| Net Earnings | $956.3 million | $859.4 million | +11% |
| Diluted Earnings Per Share (EPS) | $2.34 | $2.08 | +13% |
| Cash Returned to Shareholders | $940 million | N/A | N/A |
| Cash and Cash Equivalents | $2.1 billion | N/A | N/A |
Client Metrics
ADP's mission is further supported by its client metrics, which indicate strong retention and growth:
| Client Metric | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Pays Per Control Growth | 2% | N/A | N/A |
| PEO Average Worksite Employees | 3% | N/A | N/A |
Investment in Technology and Development
ADP continues to invest in technology and product enhancements to fulfill its mission. The company allocated resources towards:
- Research and Development Expenses: $232.6 million in Q3 2024
- Acquisition of WorkForce Software: Approximately $1.2 billion in cash
- Integration of GenAI into products
Market Position and Strategic Goals
ADP's strategic goals align with its mission to be a leader in HCM solutions. The company focuses on:
- Enhancing client satisfaction through innovative solutions
- Maintaining high client retention rates
- Expanding service offerings to meet diverse client needs
Conclusion
ADP's mission statement reflects its commitment to delivering value through comprehensive services and innovative technologies, as evidenced by its strong financial performance and strategic initiatives in 2024.
How Automatic Data Processing, Inc. (ADP) Works
Company Overview
Automatic Data Processing, Inc. (ADP) is a leading provider of cloud-based Human Capital Management (HCM) solutions that help businesses manage their workforce. As of September 30, 2024, ADP operates through various segments, primarily focusing on Employer Services and Professional Employer Organization (PEO) Services.
Financial Performance
For the three months ended September 30, 2024, ADP reported:
| Metric | Q3 2024 | Q3 2023 | Year-over-Year Growth |
|---|---|---|---|
| Total Revenues | $4,832.7 million | $4,512.4 million | 7% |
| Net Earnings | $956.3 million | $859.4 million | 11% |
| Diluted EPS | $2.34 | $2.08 | 13% |
| Adjusted Diluted EPS | $2.33 | $2.08 | 12% |
Revenue Segments
ADP's revenue is categorized into two main segments:
| Segment | Q3 2024 Revenue | Q3 2023 Revenue | Year-over-Year Growth |
|---|---|---|---|
| Employer Services | $3,261.0 million | $3,046.4 million | 7% |
| PEO Services | $1,574.5 million | $1,469.6 million | 7% |
Operating Expenses
For the three months ended September 30, 2024, ADP reported the following operating expenses:
| Expense Type | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Operating Expenses | $2,285.8 million | $2,157.6 million | 6% |
| Research and Development | $232.6 million | $236.5 million | -2% |
| Depreciation and Amortization | $115.3 million | $121.3 million | -5% |
| Selling, General and Administrative | $926.7 million | $880.3 million | 5% |
Cash Flow and Shareholder Returns
ADP returned $940 million to shareholders through dividends and share repurchases during the three months ended September 30, 2024:
- Dividends: $570 million
- Share Repurchases: $370 million
Debt and Financial Position
As of September 30, 2024, ADP's financial position included:
| Debt Instrument | Effective Interest Rate | Amount ($ million) |
|---|---|---|
| Fixed-rate 3.375% notes due September 15, 2025 | 3.47% | $1,000.0 |
| Fixed-rate 1.700% notes due May 15, 2028 | 1.85% | $1,000.0 |
| Fixed-rate 1.250% notes due September 1, 2030 | 1.83% | $1,000.0 |
| Fixed-rate 4.450% notes due September 9, 2034 | 4.75% | $1,000.0 |
| Total Long-term Debt | $4,003.7 |
Client Funds Management
ADP manages client funds with an average balance of $32.8 billion as of September 30, 2024. The company earned interest on these funds amounting to $253.3 million, an increase from $201.7 million in the prior year.
Recent Acquisitions
In October 2024, ADP acquired WorkForce Software for approximately $1.2 billion, which will enhance its offerings in workforce management solutions.
Conclusion
ADP's robust financial performance, strategic acquisitions, and commitment to delivering comprehensive HCM solutions position it well in the market as of 2024.
How Automatic Data Processing, Inc. (ADP) Makes Money
Revenue Streams
Automatic Data Processing, Inc. (ADP) generates revenue primarily through two segments: Employer Services and Professional Employer Organization (PEO) Services.
| Segment | Revenue (Q1 FY2025) | Revenue (Q1 FY2024) | Year-over-Year Growth |
|---|---|---|---|
| Employer Services | $3,261.0 million | $3,046.4 million | 7% |
| PEO Services | $1,574.5 million | $1,469.6 million | 7% |
| Other | ($2.8 million) | ($3.6 million) | n/m |
| Total Revenue | $4,832.7 million | $4,512.4 million | 7% |
Employer Services
Employer Services include payroll processing, tax administration, and human resources management solutions. This segment grew by 7% year-over-year, driven by new business bookings, client retention, and pricing increases. The earnings before income taxes for this segment were $1,164.3 million, reflecting a 15% increase from the previous year.
PEO Services
PEO Services provide comprehensive HR outsourcing solutions, including payroll and employee benefits. For the three months ended September 30, 2024, PEO revenues increased by 7% to $1,574.5 million. The average worksite employees increased by 3% year-over-year, contributing to this growth.
| PEO Services Revenue Breakdown | Q1 FY2025 | Q1 FY2024 |
|---|---|---|
| PEO Revenues (Net of Pass-Throughs) | $525.3 million | $492.9 million |
| Zero-Margin Benefits Pass-Throughs | $1,049.2 million | $976.7 million |
Interest Income
ADP also earns interest on funds held for clients, which totaled $253.3 million for the three months ended September 30, 2024, compared to $201.7 million in the prior year. This increase is attributed to a higher average interest rate of 3.1% and an increase in average client fund balances of 5.3% to $32.8 billion.
Cost Structure
For the three months ended September 30, 2024, ADP reported total expenses of $3,698.2 million, up from $3,487.3 million in the previous year. The increase was driven primarily by increases in operating expenses and selling, general, and administrative expenses.
| Expense Breakdown | Q1 FY2025 | Q1 FY2024 |
|---|---|---|
| Operating Expenses | $2,285.8 million | $2,157.6 million |
| Research and Development | $232.6 million | $236.5 million |
| Depreciation and Amortization | $115.3 million | $121.3 million |
| Selling, General and Administrative | $926.7 million | $880.3 million |
| Interest Expense | $137.8 million | $91.6 million |
| Total Expenses | $3,698.2 million | $3,487.3 million |
Net Earnings and EPS
Net earnings for ADP for the three months ended September 30, 2024, were $956.3 million, an 11% increase from $859.4 million in the prior year. Diluted earnings per share (EPS) rose by 13% to $2.34.
Cash Flow and Capital Management
ADP reported cash flows from operating activities of $824.4 million for the three months ended September 30, 2024, significantly higher than $326.5 million in the previous year. The company returned $940 million to shareholders through dividends and share repurchases during this period.
| Shareholder Returns | Q1 FY2025 |
|---|---|
| Dividends Paid | $572.6 million |
| Share Repurchases | $372.6 million |
| Total Returned to Shareholders | $940 million |
Acquisitions
In October 2024, ADP acquired WorkForce Software for approximately $1.2 billion, which will enhance its Employer Services segment by integrating advanced workforce management solutions.
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Article updated on 8 Nov 2024
Resources:
- Automatic Data Processing, Inc. (ADP) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Automatic Data Processing, Inc. (ADP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Automatic Data Processing, Inc. (ADP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.