Company Overview - Automatic Data Processing, Inc. (ADP) is represented by Maria Black, the President and CEO, at the J.P. Morgan Global Technology, Media and Communications Conference [1][2]. Economic Outlook - The macro environment is described as broadly constructive, indicating a positive overall economic outlook from the perspective of employment trends [5]. - There is an emphasis on the importance of understanding various client bases and the differing trends observed across them, highlighting both optimism and caution in certain areas [5].

Summary of Automatic Data Processing (ADP) FY Conference Call - May 13, 2025 Company Overview - **Company**: Automatic Data Processing (ADP) - **Industry**: Human Capital Management (HCM) and Payroll Services Key Points Retention and Demand - ADP has reported strong retention rates, which have improved compared to pre-pandemic levels, attributed to investments in product and service tools [3][4][5] - International bookings showed some softness, which was noted as a change from previous quarters, but overall demand in international markets remains solid [6][8] - The company is optimistic about its international pipelines despite elongation in sales processes [7][8] Outsourcing Trends - There is a discernible trend towards HCM outsourcing, driven by increasing complexity in compliance and talent management [10][11] - ADP's extensive sales force of 8,500 sellers across multiple countries supports this trend [12] Competitive Landscape - ADP maintains a competitive edge through its broad offerings and strong retention, although competition remains fierce across various market segments [21][22] - The company has seen an increase in its balance of trade, indicating a positive competitive position [20][21] Product Development: Lyric - ADP introduced "Lyric," a next-generation HCM offering designed to be adaptable and user-friendly, which has received positive market feedback [27][30] - The integration of Lyric with the workforce software acquisition is expected to enhance ADP's market position and drive bookings [31][32] Digital Transformation and AI - ADP is on a continuous digital transformation journey, focusing on making products frictionless and incorporating generative AI into its offerings [35][36] - The company aims to leverage AI for both efficiency and growth, enhancing the onboarding process and sales productivity [45][50] Strategic Acquisitions - Recent acquisition of PEI in Mexico is part of ADP's strategy to strengthen its local expertise and global scale [56][58] - The company continues to pursue acquisitions that align with its strategic pillars of growth and efficiency [66][68] Partnership with Fiserv - ADP's partnership with Fiserv aims to enhance distribution channels and create a revenue-sharing model that benefits both companies [73][74] Future Outlook - ADP plans to showcase its progress and strategic initiatives at the upcoming Investor Day, emphasizing its commitment to innovation and client service [81][82] Conclusion - ADP is positioned well in the HCM industry with strong retention, a focus on outsourcing trends, innovative product offerings like Lyric, and a commitment to digital transformation and strategic acquisitions. The company is optimistic about future growth and market opportunities.

Market Capitalization Changes - Tesla's market capitalization increased by 6.75% to $1,025.4 billion [3] - TSMC's market capitalization rose by 5.93% to $969.7 billion [3] - Tencent's market capitalization grew by 4.66% to $609.8 billion [3] - Netflix's market capitalization decreased by 2.65% to $472.3 billion [3] - Oracle's market capitalization increased by 4.58% to $440.8 billion [3] Notable Performers - Shopify saw a significant increase of 13.7% in market capitalization, reaching $136.2 billion [4] - AppLovin experienced a remarkable rise of 89% to $1.177 billion [4] - AMD's market capitalization increased by 5.13% to $175.3 billion [5] - Uber's market capitalization rose by 6.39% to $184.2 billion [5] Decliners - Pinduoduo's market capitalization fell by 6.14% to $165.2 billion [4] - Xiaomi's market capitalization decreased by 2.11% to $163.4 billion [4] - Spotify's market capitalization declined by 4.23% to $127.3 billion [4] Other Companies of Interest - Adobe's market capitalization increased by 3.3% to $168.7 billion [4] - Qualcomm's market capitalization rose by 4.78% to $167.0 billion [4] - Intel's market capitalization increased by 3.55% to $96.7 billion [5] - Airbnb's market capitalization grew by 5.64% to $828 million [5]

Core Viewpoint - ADP has announced a public offering of $1.0 billion in senior notes with a 4.750% interest rate, maturing in 2032, aimed at refinancing existing debt and supporting general corporate purposes [1][2]. Group 1: Offering Details - The public offering consists of $1.0 billion aggregate principal amount of senior notes due in 2032 [1]. - The expected net proceeds from the offering will be received around May 8, 2025 [2]. - The proceeds will primarily be used to refinance existing debt, with any remaining funds allocated for general corporate purposes [2]. Group 2: Regulatory and Legal Information - ADP has filed a registration statement with the SEC, which includes a prospectus and preliminary prospectus supplement for the offering [3]. - The press release clarifies that it does not constitute an offer to sell or solicit offers to buy the debt securities [4]. Group 3: Company Overview - ADP is a leading global technology company specializing in cloud-based human capital management solutions, focusing on HR, talent, time management, benefits, and payroll [5].

Core Insights - Small businesses are navigating a complex landscape influenced by new technologies, changing employee expectations, and compliance challenges, as highlighted during National Small Business Week [1][3] - ADP's Grit & Wisdom Contest gathered insights from nearly 18,000 small businesses, revealing key strategies for success [1][4] Group 1: Key Advice from Small Business Owners - Success requires patience and persistence, with an emphasis on adaptability and continuous innovation [4] - The importance of a strong team and positive workplace culture is crucial for growth, encouraging leaders to motivate employees and foster curiosity [4] - Small business owners express love and enjoyment as key emotions that sustain them, enhancing customer relationships and team morale [4] Group 2: Expert Insights from ADP - A comprehensive benefits strategy is essential for attracting talent, with a focus on high-impact benefits and employee education to enhance retention [9] - Learning and development are vital for growth, emphasizing practical experience and on-the-job training to cultivate employee skills [9] - Staying updated on compliance changes is critical, as small businesses must adapt to evolving laws regarding wages, pay transparency, and leave policies [9] - Technology is increasingly important for streamlining operations while maintaining human connections, with a focus on intuitive solutions that support business growth [9]

Group 1 - Domo is a member of the Computer and Technology sector, which includes 609 individual stocks and holds a Zacks Sector Rank of 9 [2] - Domo currently has a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] - The Zacks Consensus Estimate for Domo's full-year earnings has increased by 5.4% in the past quarter, reflecting improved analyst sentiment [3] Group 2 - Domo has returned 6.4% year-to-date, outperforming the average loss of 8.9% in the Computer and Technology sector [4] - Automatic Data Processing (ADP) is another stock in the sector that has outperformed, with a year-to-date return of 2% [4] - Domo belongs to the Internet - Software industry, which includes 168 companies and currently ranks 143 in the Zacks Industry Rank, with an average loss of 3.1% this year [6] Group 3 - Investors should continue to monitor Domo and Automatic Data Processing for potential sustained solid performance in the Computer and Technology sector [7]

Core Viewpoint - Automatic Data Processing, Inc. (NASDAQ: ADP) recently reported its Q3 earnings, prompting a detailed analysis of the company's financial performance and investment potential [1]. Financial Performance - The company has shown a consistent focus on long-term growth, appealing to investors with a 5-10 year investment horizon [1]. - The investment strategy emphasizes a balanced portfolio that includes growth, value, and dividend-paying stocks, with a particular focus on value investments [1].

Revenue and Earnings Growth - Revenue growth of 7% to $15,434.1 million for the nine months ended March 31, 2025, with 7% organic constant currency growth[84] - Adjusted diluted earnings per share (EPS) grew by 9% to $7.75[84] - Net earnings for the three months ended March 31, 2025, were $1,249.5 million, up 5% from $1,184.9 million in the same period last year[106] - Diluted EPS for the nine months ended March 31, 2025, increased to $7.75, representing a 10% growth from $7.07 in the prior year[106] - Adjusted EBIT for the nine months ended March 31, 2025, reached $4,134.2 million, reflecting a 9% increase compared to $3,779.1 million in the previous year[99] Client and Employee Metrics - Pays per control metric grew 1% for the nine months ended March 31, 2025, compared to the same period in 2024[82] - PEO average worksite employees increased by 3% for the nine months ended March 31, 2025, compared to the same period in 2024[82] - The average client funds balance increased by 6.6% to $37.5 billion for the nine months ended March 31, 2025[88] - Funds held for clients rose to $44,495.8 million for the three months ended March 31, 2025, up from $41,701.7 million in 2024, indicating an increase of 6.8%[147] Operating Expenses and Cash Flow - Operating expenses increased by 6% to $11,571.2 million for the nine months ended March 31, 2025[89] - Cash provided by operating activities for the nine months ended March 31, 2025, was $3,500.5 million, up $643.5 million from $2,857.0 million in 2024[132] - Cash returned to shareholders totaled $2.8 billion, including $1.8 billion in dividends and $1.0 billion in share repurchases[84] Acquisitions and Investments - The company closed the acquisition of PEI in January and WorkForce Software in October, enhancing its global payroll capabilities[81] - Net cash flows used in investing activities included a net cash disbursement of $1,158.3 million for the acquisition of Workforce Software[133] - Capital expenditures for the nine months ended March 31, 2025, were $139.9 million, down from $151.6 million for the same period in 2024, with expectations for fiscal 2025 capital expenditures between $180.0 million and $200.0 million[140] Financial Position and Securities - Cash and cash equivalents as of March 31, 2025, were $2.7 billion, primarily invested in time deposits and money market funds[129] - The total available-for-sale securities at fair value increased from $31.2 billion as of June 30, 2024, to $33.9 billion as of March 31, 2025[147] - The company reported net unrealized pre-tax losses on available-for-sale securities of $(688.0) million as of March 31, 2025, compared to $(1,515.8) million as of June 30, 2024[147] Debt and Credit Facilities - The company has $10.3 billion available under committed credit facilities, with no borrowings through March 31, 2025[138] - The company has $4.0 billion of senior unsecured notes maturing in 2025, 2028, 2030, and 2034, and may revisit the long-term debt market for refinancing and acquisitions[136] Market and Risk Management - The company is exposed to market risk from foreign currency exchange rates, which could impact consolidated results, and manages this risk through operating activities and derivative financial instruments[149] - The company limits credit risk by investing primarily in AAA-rated and AA-rated securities, ensuring a focus on investment-grade securities[148] Accounting and Compliance - The preparation of financial statements requires management to make estimates and assumptions that could differ from actual results, as noted in the critical accounting policies[150] - Recent accounting pronouncements are discussed in Note 2 of the Consolidated Financial Statements, indicating ongoing compliance with updated accounting standards[151]

Core Insights - Automatic Data Processing, Inc. (ADP) reported strong third-quarter fiscal 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate [1] Financial Performance - Earnings per share were $3.06, beating the consensus estimate by 3.4% and increasing 6.3% year-over-year [1] - Total revenues reached $5.6 billion, surpassing the consensus estimate by 1.1% and growing 5.7% year-over-year [1][2] Segment Performance - Employer Services generated revenues of $3.4 billion, a 5% increase year-over-year, but fell short of the estimate of $3.8 billion [3] - PEO Services revenues rose 7% year-over-year to $1.8 billion, exceeding the projection of $1.7 billion [4] Interest and Client Funds - Interest on funds held for clients grew 11% year-over-year to $355 million, surpassing the estimate of $342.4 million [5] - Average client funds balance increased by 7% to $44.5 billion, with an average interest yield of 3.2%, up 10 basis points [5] Margins - Adjusted EBIT increased 6% year-over-year to $1.6 billion, with an adjusted EBIT margin of 29.3%, up 10 basis points [6] - The margin for Employer Services increased by 20 basis points, while PEO Services remained flat compared to the previous year [6] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the quarter were $2.7 billion, up from $2.2 billion in the previous quarter [7] - Long-term debt remained stable at $3 billion, with $1.5 billion generated from operating activities during the quarter [7] Fiscal Year 2025 Outlook - ADP expects revenue growth of 6-7% for fiscal 2025, with adjusted EPS growth revised to 8-9% [8] - The adjusted effective tax rate is estimated at 23%, and the guidance for adjusted EBIT margin has been updated to 40-50 basis points [8] - Revenue growth for Employer Services is projected at 6-7%, while the guidance for PEO Services has been raised to 6-7% from the previous 5-6% [8]

Core Insights - Automatic Data Processing (ADP) reported strong fiscal 2025 Q3 earnings, exceeding analysts' expectations with adjusted EPS of $3.06 and revenue of $5.55 billion [2][3] - The company demonstrated solid financial efficacy despite competitive challenges and economic conditions [2] Financial Performance - Adjusted EPS for Q3 2025 was $3.06, surpassing the estimate of $2.97, and increased by 6.3% from Q3 2024's $2.88 [3] - Total revenue reached $5.55 billion, exceeding the estimate of $5.49 billion, and reflecting a 5.7% increase from $5.25 billion in Q3 2024 [3] - Adjusted EBIT margin remained stable at 29.3%, with adjusted EBIT rising 6% to $1.6 billion [3][7] - Net income for the quarter was $1.25 billion, a 5% increase from $1.18 billion in the previous year [3] Segment Performance - The Employer Services segment revenue increased by 5% to $3.77 billion [6] - The PEO Services segment reported a 7% revenue increase to $1.79 billion, contributing significantly to total revenue [6] Strategic Focus - ADP aims to reinforce its technological dominance and expand international outreach while maintaining strong compliance and risk management capabilities [5] - The company continues to enhance its service offerings through technology-driven tools and AI platforms, such as ADP Assist [7] Future Outlook - Management raised full-year fiscal 2025 guidance, projecting adjusted diluted EPS growth of 8% to 9% and total revenue growth of 6% to 7% [9] - Adjusted EBIT margin is expected to expand by 40 to 50 basis points from the 2024 margin of 25.5% [9] - Average client fund balances are forecasted to grow by 5% to 6% from the 2024 figure of $35.4 billion [9]