Financial Performance Highlights - Total revenues for fiscal year 2025 reached $20561 million, a 7% increase year-over-year[14] - Adjusted EBIT for fiscal year 2025 was $5347 million, a 9% increase year-over-year, with a margin expansion of 50 basis points[14] - Adjusted diluted EPS for fiscal year 2025 was $1001, a 9% increase year-over-year[14] - In Q4 2025, total revenues were $5127 million, an 8% increase year-over-year[10] - Q4 2025 adjusted diluted EPS was $226, an 8% increase year-over-year[10] Segment Results - Employer Services (ES) revenue grew by 7% for fiscal year 2025 and 8% for Q4 2025[8, 17] - ES retention rate was 921%[8] - Professional Employer Organization (PEO) revenue grew by 7% for both fiscal year 2025 and Q4 2025[8, 27] - Average worksite employees (WSEs) in PEO reached 761000, a 3% increase[34] Fiscal Year 2026 Outlook - The company anticipates total ADP revenue growth of 5% to 6%[36] - Adjusted EBIT margin is expected to increase by 50 to 70 basis points[36] - Adjusted diluted EPS is projected to grow by 8% to 10%[36] - Client Funds Interest Revenue is expected to be between $1290 million and $1310 million[36]

Group 1 - Automatic Data Processing (ADP) was founded in 1949 to assist business managers in focusing on core tasks by handling payroll and other non-core functions [1] - The company aims to provide data-driven insights that are often overlooked, potentially revealing profitable opportunities [1] Group 2 - The article emphasizes the importance of identifying deficiencies and sharing insights regarding companies that serve society [1]

Group 1 - The core point of the article is that ADP reported an increase of 104,000 private sector jobs in July, indicating a positive trend in employment growth [1] - Additionally, wages in the private sector experienced a year-over-year growth of 4.4%, reflecting an upward movement in compensation for workers [1]

Group 1 - ADP announced its fourth quarter and fiscal 2025 financial results along with its fiscal 2026 outlook [1] - A conference call for financial analysts was scheduled for July 30, 2025, at 8:30 a.m. ET, which will be webcast live [2] - ADP has over 1.1 million clients across more than 140 countries, showcasing its global reach and expertise in HR and payroll solutions [3] Group 2 - The company has been a leader in HR and payroll solutions for over 75 years, focusing on innovation and solving complex business challenges [3] - ADP emphasizes its commitment to enhancing human potential through data insights and innovative technology [3]

[Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) This section summarizes ADP's consolidated financial performance for the fourth quarter and full fiscal year 2025, including key revenue, earnings, and margin metrics [Fourth Quarter Fiscal 2025 Consolidated Results](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Consolidated%20Results) In the fourth quarter of fiscal 2025, ADP reported an 8% increase in revenues to $5.1 billion (6% organic constant currency). Net earnings grew 10% to $911 million, and adjusted diluted EPS rose 8% to $2.26. The adjusted EBIT margin expanded by 40 basis points to 23.7% Q4 FY2025 Key Financial Metrics | Metric | Value | YoY Change | | :--- | :--- | :--- | | Revenues | $5.1 billion | +8% | | Organic Constant Currency Revenue | - | +6% | | Net Earnings | $911 million | +10% | | Adjusted Net Earnings | $923 million | +8% | | Adjusted EBIT | $1.2 billion | +9% | | Adjusted EBIT Margin | 23.7% | +40 bps | | Diluted EPS | $2.23 | +10% | | Adjusted Diluted EPS | $2.26 | +8% | [Full Fiscal Year 2025 Consolidated Results](index=1&type=section&id=Full%20Fiscal%20Year%202025%20Consolidated%20Results) For the full fiscal year 2025, revenues grew 7% to $20.6 billion. Net earnings increased by 9% to $4.1 billion, while adjusted diluted EPS rose 9% to $10.01. The company achieved a 50 basis point expansion in adjusted EBIT margin to 26.0% Full Fiscal Year 2025 Key Financial Metrics | Metric | Value | YoY Change | | :--- | :--- | :--- | | Revenues | $20.6 billion | +7% | | Organic Constant Currency Revenue | - | +7% | | Net Earnings | $4.1 billion | +9% | | Adjusted Net Earnings | $4.1 billion | +8% | | Adjusted EBIT | $5.3 billion | +9% | | Adjusted EBIT Margin | 26.0% | +50 bps | | Diluted EPS | $9.98 | +10% | | Adjusted Diluted EPS | $10.01 | +9% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted strong revenue and earnings growth for fiscal 2025, driven by record-high client satisfaction in both Employer Services and PEO segments. The company remains focused on delivering consistent growth and margin expansion for fiscal 2026 - CEO Maria Black attributed the strong performance to **record-high client satisfaction levels** and the company's commitment to meeting client needs through innovative products and services[5](index=5&type=chunk) - CFO Peter Hadley noted that solid execution and a resilient business model produced strong results, and the focus for fiscal 2026 is on delivering **strong revenue growth and continued margin expansion**[5](index=5&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) This section details the financial performance of ADP's key segments, including Employer Services, PEO Services, and Interest on Funds Held for Clients, for fiscal year 2025 [Employer Services](index=2&type=section&id=Employer%20Services) The Employer Services segment reported a 7% revenue increase for fiscal year 2025, with new business bookings growing 3% to $2.1 billion. The segment's margin expanded by 100 basis points for the full year, and client revenue retention slightly improved to 92.1% Employer Services FY2025 Performance | Metric | Q4 FY2025 Growth | Full Year FY2025 Growth | | :--- | :--- | :--- | | Revenues | +8% | +7% | | Organic Constant Currency Revenue | +6% | +6% | | New Business Bookings | N/A | +3% ($2.1B) | | Segment Margin | +50 bps | +100 bps | - Client revenue retention for the fiscal year increased to **92.1%** from 92.0% in the prior year[9](index=9&type=chunk) - U.S. pays per control, a measure of employment levels at ADP clients, increased by **1%** for both the fourth quarter and the full fiscal year[9](index=9&type=chunk) [PEO Services](index=2&type=section&id=PEO%20Services) PEO Services revenue grew 7% for fiscal year 2025, driven by a 3% increase in average worksite employees to approximately 748,000. However, the segment margin decreased by 60 basis points for the full year PEO Services FY2025 Performance | Metric | Q4 FY2025 Growth | Full Year FY2025 Growth | | :--- | :--- | :--- | | Revenues | +7% | +7% | | Revenues (ex. zero-margin pass-throughs) | +5% | +6% | | Average Worksite Employees | +3% (~761k) | +3% (~748k) | | Segment Margin | -20 bps | -60 bps | [Interest on Funds Held for Clients](index=2&type=section&id=Interest%20on%20Funds%20Held%20for%20Clients) For fiscal year 2025, interest on funds held for clients increased 16% to $1.2 billion. This was driven by a 6% increase in average client funds balances to $37.6 billion and a 30 basis point increase in the average interest yield to 3.2% Client Funds FY2025 Performance | Metric | Q4 FY2025 | Full Year FY2025 | | :--- | :--- | :--- | | Interest on Funds | $308M (+11%) | $1.2B (+16%) | | Avg. Client Funds Balances | $38.1B (+6%) | $37.6B (+6%) | | Avg. Interest Yield | 3.2% (+20 bps) | 3.2% (+30 bps) | [Fiscal 2026 Outlook](index=3&type=section&id=Fiscal%202026%20Outlook) This section provides ADP's financial guidance for fiscal year 2026, including consolidated revenue, earnings, and segment-specific projections [Consolidated Fiscal 2026 Outlook](index=3&type=section&id=Consolidated%20Fiscal%202026%20Outlook) ADP anticipates consolidated revenue growth of 5% to 6% for fiscal 2026. The company projects an adjusted EBIT margin expansion of 50 to 70 basis points and adjusted diluted EPS growth of 8% to 10% Consolidated FY2026 Guidance | Metric | Outlook | | :--- | :--- | | Revenue Growth | 5% to 6% | | Adjusted EBIT Margin Expansion | 50 to 70 bps | | Adjusted Effective Tax Rate | ~23% | | Adjusted Diluted EPS Growth | 8% to 10% | [Segment Fiscal 2026 Outlook](index=3&type=section&id=Segment%20Fiscal%202026%20Outlook) For fiscal 2026, Employer Services revenue is expected to grow 5% to 6%, with new business bookings growth accelerating to 4% to 7%. PEO Services revenue is projected to grow 5% to 7%, supported by a 2% to 3% increase in average worksite employees Employer Services FY2026 Guidance | Metric | Outlook | | :--- | :--- | | Revenue Growth | 5% to 6% | | New Business Bookings Growth | 4% to 7% | | Client Revenue Retention | Decrease of 10 to 30 bps | | U.S. Pays Per Control | 0% to 1% | PEO Services FY2026 Guidance | Metric | Outlook | | :--- | :--- | | Revenue Growth | 5% to 7% | | Revenue Growth (ex. zero-margin) | 3% to 5% | | Average Worksite Employee Growth | 2% to 3% | [Client Funds Extended Investment Strategy Fiscal 2026 Outlook](index=3&type=section&id=Client%20Funds%20Extended%20Investment%20Strategy%20Fiscal%202026%20Outlook) ADP forecasts interest on funds held for clients to be between $1.290 billion and $1.310 billion in fiscal 2026. This is based on anticipated growth in client funds balances of 2% to 3% and an expected increase in the average yield to approximately 3.4% Client Funds FY2026 Guidance | Metric | Outlook | | :--- | :--- | | Interest on Funds Held for Clients | $1.290B to $1.310B | | Growth in Client Funds Balances | 2% to 3% | | Average Yield | ~3.4% | | Total Contribution from Client Funds Strategy | $1.250B to $1.270B | [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents ADP's consolidated financial statements, including the statements of earnings, balance sheets, and cash flows for the fiscal year 2025 [Statements of Consolidated Earnings](index=5&type=section&id=Statements%20of%20Consolidated%20Earnings) For the twelve months ended June 30, 2025, total revenues were $20.56 billion, up from $19.20 billion in the prior year. Net earnings increased to $4.08 billion from $3.75 billion, resulting in a diluted EPS of $9.98, compared to $9.10 in fiscal 2024 FY2025 vs FY2024 Income Statement Highlights (in millions) | Line Item | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Total Revenues | $20,560.9 | $19,202.6 | | Total Expenses | $15,604.9 | $14,617.0 | | Earnings Before Income Taxes | $5,310.1 | $4,872.3 | | Net Earnings | $4,079.7 | $3,752.0 | | Diluted EPS | $9.98 | $9.10 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, ADP's total assets were $53.37 billion, a slight decrease from $54.36 billion in the prior year. Total liabilities decreased to $47.18 billion from $49.82 billion, while total stockholders' equity increased to $6.19 billion from $4.55 billion Balance Sheet Summary (in millions) | Line Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Assets | $53,369.3 | $54,362.7 | | Total Liabilities | $47,181.3 | $49,815.1 | | Total Stockholders' Equity | $6,188.0 | $4,547.6 | [Statements of Consolidated Cash Flows](index=7&type=section&id=Statements%20of%20Consolidated%20Cash%20Flows) For fiscal year 2025, net cash provided by operating activities was $4.94 billion, an increase from $4.16 billion in the prior year. The company used $3.04 billion in investing activities and $6.97 billion in financing activities, which included $2.40 billion in dividends paid and $1.28 billion in stock repurchases FY2025 Cash Flow Summary (in millions) | Cash Flow Activity | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $4,939.7 | $4,157.6 | | Net Cash used in Investing Activities | ($3,035.0) | ($1,389.0) | | Net Cash used in Financing Activities | ($6,973.4) | ($1,431.7) | - Key financing activities included **$2.40 billion in dividend payments** and **$1.28 billion in common stock repurchases**[22](index=22&type=chunk) [Supplemental Financial Data and Non-GAAP Reconciliations](index=8&type=section&id=Supplemental%20Financial%20Data%20and%20Non-GAAP%20Reconciliations) This section provides additional financial details by segment, client funds strategy information, and reconciliations of GAAP to non-GAAP financial measures [Selected Financial Data by Segment](index=8&type=section&id=Selected%20Financial%20Data%20by%20Segment) For fiscal year 2025, Employer Services generated $13.88 billion in revenue and $5.01 billion in segment earnings, with a margin of 36.1%. PEO Services had revenues of $6.69 billion and earnings of $950.5 million, with a margin of 14.2% FY2025 Segment Performance (in millions) | Segment | Revenues | % Change | Earnings | % Change | Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Employer Services | $13,883.1 | 7% | $5,008.5 | 10% | 36.1% | | PEO Services | $6,690.4 | 7% | $950.5 | 3% | 14.2% | [Client Funds Strategy Supplemental Information](index=9&type=section&id=Client%20Funds%20Strategy%20Supplemental%20Information) In fiscal 2025, the net impact from the Client Funds Strategy was $1.07 billion, a 22% increase from the prior year. This was driven by a 6% rise in average client fund balances to $37.6 billion and higher interest rates earned on these funds FY2025 Client Funds Strategy Performance (in millions) | Metric | FY 2025 | FY 2024 | % Change | | :--- | :--- | :--- | :--- | | Avg. Funds Held for Clients (billions) | $37.6 | $35.4 | 6% | | Interest on Funds Held for Clients | $1,189.1 | $1,024.7 | 16% | | Net Impact from Client Funds Strategy | $1,073.3 | $879.0 | 22% | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) ADP provides non-GAAP measures like Adjusted EBIT and Adjusted Diluted EPS to offer a clearer view of underlying business performance. For fiscal 2025, GAAP Net Earnings of $4.08 billion were adjusted to $4.09 billion. GAAP Diluted EPS of $9.98 was adjusted to $10.01, primarily accounting for optimization initiatives - The company uses **adjusted results** to evaluate operating performance by excluding items like **optimization initiatives, legal settlements, and gains on asset sales**, which are not considered fundamental to underlying operations[26](index=26&type=chunk) FY2025 GAAP to Non-GAAP Reconciliation (in millions) | Metric | GAAP | Adjustments | Non-GAAP (Adjusted) | | :--- | :--- | :--- | :--- | | Net Earnings | $4,079.7M | +$12.3M | $4,092.0M | | Diluted EPS | $9.98 | +$0.03 | $10.01 | - The reconciliation for the Fiscal 2026 outlook shows that the guided **50 to 70 bps of Adjusted EBIT margin expansion** is derived from a GAAP earnings before income taxes margin expansion of **60 to 80 bps**[35](index=35&type=chunk) [Safe Harbor Statement](index=14&type=section&id=Safe%20Harbor%20Statement) This section outlines the forward-looking nature of the report's statements and the inherent risks and uncertainties that could impact actual future results [Forward-Looking Statements](index=14&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements regarding future performance, which are subject to risks and uncertainties. Key factors that could cause actual results to differ include client retention, pricing, technological changes like AI, regulatory shifts, and overall economic conditions - The document contains **forward-looking statements** identified by words like 'outlook,' 'expects,' and 'anticipates,' which are based on current management expectations and are not guarantees of future performance[36](index=36&type=chunk) - Material risks include **success in client retention, competitive conditions, ability to respond to technological changes (including AI), interest rate trends, and security breaches**[36](index=36&type=chunk)

Group 1 - Automatic Data Processing, Inc. (ADP) is expected to report fourth-quarter earnings of $2.23 per share, an increase from $2.09 per share in the same period last year [1] - The projected quarterly revenue for ADP is $5.05 billion, compared to $4.77 billion a year earlier [1] - In the third quarter, ADP reported revenues of $5.55 billion, surpassing the analyst consensus estimate of $5.49 billion [2] Group 2 - BMO Capital analyst Daniel Jester initiated coverage on ADP with a Market Perform rating and a price target of $340 [8] - Morgan Stanley analyst James Faucette maintained an Equal-Weight rating and raised the price target from $305 to $310 [8] - Mizuho analyst Dan Dolev maintained an Outperform rating and increased the price target from $321 to $332 [8] - RBC Capital analyst Ashish Sabadra reiterated a Sector Perform rating with a price target of $315 [8] - TD Securities analyst Bryan Bergin maintained a Hold rating and raised the price target from $298 to $321 [8]

Market Overview - The S&P 500 and Nasdaq reached intra-day record highs but closed in the red, with the Dow down 204 points (-0.46%), S&P 500 down 18 points (-0.30%), Nasdaq down 80 points (-0.38%), and Russell 2000 down 13 points (-0.61%) [1] - Trade deals are progressing but lack the strength to drive the market higher, with Q2 earnings showing some weaknesses outside of Big Tech [2] Federal Reserve Policy - A new announcement on Fed policy is expected, with the current interest rate of 4.25-4.50% likely to remain unchanged for the fifth consecutive FOMC meeting [3] - Some analysts anticipate dissent among Fed members regarding the need for rate cuts despite current unemployment at +4.1% and inflation at +2.7% [3] Earnings Reports - **Starbucks (SBUX)**: Reported Q3 earnings of $0.50 per share, missing the consensus of $0.65, attributed to a one-time charge of $0.11. Revenues were $9.50 billion, exceeding expectations of $9.30 billion. Same-store sales fell -2% compared to a -1.3% consensus [4][5] - **Visa (V)**: Reported earnings of $2.98 per share, beating expectations of $2.86, with revenues of $10.2 billion surpassing the $9.87 billion forecast. Despite strong performance, shares fell -3% in after-hours trading [6] - **Booking Holdings (BKNG)**: Reported Q2 earnings of $55.40 per share, exceeding the $50.59 estimate, with revenues of $6.8 billion above the $6.56 billion consensus. Gross bookings reached $46.7 billion [7] - **Mondelez (MDLZ)**: Reported earnings of $0.73 per share, beating estimates by $0.05, with revenues of $8.98 billion exceeding the $8.88 billion expectation. The company faced challenges from rising cocoa prices and tariffs [8] Upcoming Market Events - The earnings season is expected to peak with reports from major companies like Microsoft and Meta Platforms, along with others such as Ford and Qualcomm [9] - Private-sector payroll data from ADP is anticipated, with a consensus of +64K jobs for July, following a previous decline of -33K [10] - Q2 GDP is projected to rebound to +2.3% from Q1's -0.5%, influenced by tariff policies and economic outlook improvements [10]

Group 1 - Automatic Data Processing has been recognized as a Top 25 "Dividend Giant" by ETF Channel, with $23.77 billion worth of stock held by ETFs [1] - The company boasts an above-average "DividendRank" with a strong yield of 2.01% [1] - A strong quarterly dividend history and favorable long-term multi-year growth rates in key fundamental data points were highlighted in the report [1] Group 2 - The annualized dividend paid by Automatic Data Processing Inc. is $6.16 per share, distributed in quarterly installments [2] - The most recent dividend ex-date was on June 13, 2025, indicating the company's commitment to regular dividend payments [2] - The report emphasizes the importance of studying the company's long-term dividend history to assess the likelihood of continued dividend payments [2]

Earnings Reports - Q2 earnings season is ramping up with major companies like Microsoft, Meta Platforms, Apple, and Amazon set to report earnings this week [2][3] - A total of 164 companies in the S&P 500 are expected to release their earnings results by August 1st [3] Federal Reserve Outlook - The Federal Reserve is unlikely to lower interest rates in the upcoming FOMC meeting, maintaining the current rate of +4.25-4.50% [4] - There is only a 2% chance that the Fed will cut rates at this meeting, with a 67% probability of a 25 basis-point cut in September [5] Labor Market Insights - Initial Jobless Claims have decreased to 217K, but the labor market may be weakening as ADP reported a negative -33K jobs filled in June, the first decline in over two years [7] - The BLS report indicated +147K new jobs in June, but only about 70K were outside government hires, which may not be sufficient to offset the retiring workforce [8]

Core Insights - Automatic Data Processing, Inc. (ADP) is set to release its fourth-quarter fiscal 2025 results on July 30, with a history of surpassing earnings estimates, averaging a surprise of 3.5% over the last four quarters [1][5]. Revenue Expectations - The Zacks Consensus Estimate for ADP's revenue is $5.1 billion, reflecting a 5.9% year-over-year increase, driven by growth across various segments [2][10]. - Revenue from Employer Services is estimated at $3.4 billion, indicating a 5.7% increase from the previous year, supported by strong business bookings [2][10]. - Professional Employer Organization (PEO) services are projected to generate $1.6 billion in revenue, representing a 5.6% year-over-year growth, attributed to higher wages and strong client retention [3][10]. - Interest on funds held for clients is expected to be $287.9 million, a 4% rise from the prior year, benefiting from a stronger average client funds balance [3]. Earnings Projections - The consensus estimate for earnings per share is $2.22, suggesting a 6.2% increase year-over-year, supported by strong revenue growth and disciplined cost control [4]. - The average number of paid PEO worksite employees is estimated at 762, with a minimal change of 0.1% in pay per control anticipated for the quarter [4]. Earnings Prediction Model - Current analysis indicates that ADP does not conclusively predict an earnings beat, with an Earnings ESP of -0.53% and a Zacks Rank of 3 (Hold) [5][6].