Core Insights - Automatic Data Processing, Inc. (ADP) reported strong third-quarter fiscal 2024 results, with earnings and revenues exceeding expectations [1] Financial Performance - Earnings per share reached $2.9, surpassing the consensus estimate by 4.4% and increasing 14.3% year-over-year [1] - Total revenues amounted to $5.3 billion, slightly beating the consensus estimate and growing 6.6% year-over-year on a reported basis, and 6% on an organic constant-currency basis [1] Segmental Results - Employer Services generated revenues of $3.6 billion, an 8% increase on a reported basis and 7% at constant currency, meeting estimates [2] - PEO Services revenues rose 5% year-over-year to $1.7 billion, exceeding the estimate of $1.6 billion [2] - Interest on funds held for clients grew 29% year-over-year to $321 million, surpassing the estimate of $255.8 million [2] - Average client funds balance increased 6% to $41.7 billion, with an average interest yield on client funds expanding 50 basis points to 3.1% [2] Margins - Adjusted EBIT increased 12% year-over-year to $1.5 billion, with the adjusted EBIT margin growing 140 basis points to 29.3% [3] - The margin for Employer Services increased by 230 basis points, while PEO Services saw a decrease of 220 basis points [3] Balance Sheet & Cash Flow - ADP ended the third quarter with cash and cash equivalents of $3.3 billion, up from $1.6 billion in the previous quarter [4] - Long-term debt remained flat at $3 billion [4] - The company generated $1.5 billion in cash from operating activities during the quarter, with capital expenditure amounting to $1.9 million [4] FY24 Outlook - For fiscal year 2024, ADP anticipates revenue growth of 6-7% and adjusted EPS growth of 10-12% [5] - The adjusted effective tax rate is expected to be 23%, with an adjusted EBIT margin growth of 60-70 basis points [5] - Employer Services revenues are projected to grow by 7-8%, while PEO Services revenues are expected to rise by 3-4% [5]

Labor Market Insights - Private-sector payrolls for April increased by 192K, surpassing the consensus estimate of 183K, but down from the revised 208K in March, indicating a warming trend in job growth [1] - The three-month average for private-sector job growth is now higher than the previous six months, suggesting a positive shift in the labor market [1] - Wage growth has moderated, with those remaining in their positions seeing a flat increase of 5%, while job changers experienced a decrease in wage growth to 9.3% from 10% in March [1] Job Creation by Company Size - Large companies (over 500 employees) contributed the majority of new jobs at 98K, while smaller companies (fewer than 50 employees) added the least at 38K, and medium-sized firms added 62K [2] - The Leisure & Hospitality sector led job creation with 56K new jobs, followed by Construction with 35K and Trade/Transportation/Utilities with 26K, indicating a trend towards industries requiring less formal education [2] Employment Projections - The upcoming nonfarm payroll estimate is projected at 240K new jobs, reflecting a recovery from a sub-200K period late last year, with an average of 280K new jobs per month since December [3] - Employment remains strong, although a slight decrease is expected in future reports [3] Corporate Earnings Reports - Mastercard reported Q1 earnings of $3.31 per share, exceeding expectations of $3.22 and significantly higher than $2.80 from the same quarter last year, with revenues of $6.35 billion slightly above the consensus [5] - Despite beating estimates, Mastercard's stock experienced a -3% decline in early trading due to guidance being lowered [5] - Estee Lauder's fiscal Q3 earnings of 97 cents per share more than doubled expectations of 48 cents, with revenues of $3.94 billion slightly exceeding projections [5] - However, Estee Lauder's stock fell -4% in pre-market trading due to lowered guidance related to concerns in the Chinese market [5]

Financial Data and Key Metrics Changes - The company reported a strong 7% revenue growth and a 14% adjusted diluted EPS growth for Q3 2024, indicating solid financial performance [6][18] - Employer Services (ES) segment revenue grew 8% on a reported basis and 7% on an organic constant currency basis [18] - The ES margin increased by 230 basis points in Q3, driven by operating leverage and client funds interest revenue growth [21] Business Line Data and Key Metrics Changes - Employer Services new business bookings reached record levels, with strong growth across small business, midmarket, enterprise, and international segments [6][7] - PEO revenue growth was 5% for Q3, driven by a 3% increase in average worksite employees [22] - The ES pays per control growth remained steady at 2%, reflecting a resilient U.S. labor market [8][20] Market Data and Key Metrics Changes - The company reached 1 million paid employees on its I-HCM platform, expanding its presence in Europe and the APAC region [12] - The demand environment remains steady, with companies continuing to hire and invest in HCM solutions [39] Company Strategy and Development Direction - The company is focused on three strategic priorities: leading with best-in-class HCM technology, providing unmatched service and expertise, and leveraging global scale [9][11] - Investments in GenAI are aimed at enhancing client experience and operational efficiency, with a focus on embedding AI capabilities across various platforms [10][63] - The company is optimistic about growth opportunities in international markets, particularly in Asia-Pacific and the Nordics [72][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the overall retention results and the positive impact of investments in product and client satisfaction [31][32] - The company anticipates some margin pressure due to increased GenAI-related spending but expects continued tailwinds from interest rates [25][51] - For fiscal 2025, the company plans for pays per control growth to be below normal levels, with a focus on maintaining strong client satisfaction and retention [24][25] Other Important Information - The company is celebrating its 75th anniversary in 2024, emphasizing its commitment to delivering value to clients [12] - The ADP marketplace continues to be a differentiator, with established AI principles for partners to ensure responsible AI use [11] Q&A Session Summary Question: Trends in open enrollment season for client benefit elections within the PEO - Management noted it is too early to make a full-year call on retention but observed slight improvement in PEO retention this year [28] Question: Drivers of client retention - Management highlighted investments in product and record client satisfaction as key drivers of strong retention results [31] Question: Underlying assumptions for ES revenue growth - Management indicated that strong retention and favorable client funds interest impacts are contributing to confidence in revenue growth [36] Question: Competitive landscape in the mid-market - Management stated that the mid-market remains competitive, but ADP's strong execution and product investments are yielding positive results [80] Question: Pricing strategy and market conditions - Management emphasized a thoughtful approach to pricing, monitoring market conditions, and ensuring value for clients [59][84] Question: Market share gains in the mid-market - Management indicated that ADP is winning market share from various competitors, driven by product investments and strong execution [88]

Labor Market Overview - Private-sector payrolls for April increased by 192K, surpassing the consensus estimate of 183K, but down from the revised 208K in March, indicating a warming labor market [1] - The three-month average job growth is now higher than the previous six months, suggesting a positive trend in employment [1] Wage Growth Insights - Wage growth has moderated, with those remaining in their positions seeing a flat increase of 5%, while job changers experienced a decrease in wage growth to 9.3% from 10% in March [1] - The slower wage growth relative to job growth is viewed positively, as it alleviates concerns about rising wage costs [1] Job Creation by Company Size - Large companies (over 500 employees) contributed the majority of new jobs at 98K, while small companies (fewer than 50 employees) added the least at 38K, and medium-sized firms added 62K [2] - The Leisure & Hospitality sector led job creation with 56K new jobs, followed by Construction with 35K and Trade/Transportation/Utilities with 26K, indicating a trend towards industries requiring less formal education [2] Upcoming Economic Reports - The upcoming nonfarm payroll estimate is projected at 240K new jobs, reflecting a recovery from a sub-200K period late last year, with an average of 280K new jobs per month since December [3] - The March JOLTS report, Construction Spending for March, and ISM Manufacturing for April are expected to be released, along with the Federal Reserve's decision on interest rates [4] Company Earnings Reports - Mastercard reported Q1 earnings of $3.31 per share, exceeding expectations of $3.22, with revenues of $6.35 billion slightly above the consensus of $6.33 billion, but the stock fell 3% due to lowered guidance [5] - Estee Lauder's fiscal Q3 earnings of 97 cents per share significantly surpassed the anticipated 48 cents, with revenues of $3.94 billion slightly above projections, yet the stock declined 4% due to lowered guidance related to concerns in the Chinese market [5]

Core Insights - Automatic Data Processing (ADP) reported $5.25 billion in revenue for the quarter ended March 2024, reflecting a year-over-year increase of 6.6% and an EPS of $2.88 compared to $2.52 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $5.22 billion by 0.58%, while the EPS surpassed the consensus estimate of $2.76 by 4.35% [1] Financial Performance Metrics - Average paid PEO worksite employees during the period: 732, matching the average estimate [2] - Revenues from interest on funds held for clients: $320.80 million, exceeding the estimate of $285.58 million by 28.6% year-over-year [2] - PEO revenues: $1.66 billion, slightly below the estimate of $1.67 billion, with a year-over-year change of 4.6% [2] - Other revenues (excluding interest and PEO revenues): $3.27 billion, slightly below the estimate of $3.28 billion, with a year-over-year increase of 5.9% [2] - Employer Services segment revenues: $3.59 billion, exceeding the estimate of $3.57 billion, with a year-over-year increase of 7.5% [2] - PEO Services segment revenues: $1.67 billion, slightly above the estimate of $1.66 billion, with a year-over-year increase of 4.6% [2] - Other segment revenues: -$2.50 million, better than the estimate of -$2.73 million, with a year-over-year change of -24.2% [2] Stock Performance - ADP shares have returned -2.3% over the past month, compared to the Zacks S&P 500 composite's -4.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Automatic Data Processing (ADP) came out with quarterly earnings of $2.88 per share, beating the Zacks Consensus Estimate of $2.76 per share. This compares to earnings of $2.52 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 4.35%. A quarter ago, it was expected that this payroll and human resources company would post earnings of $2.10 per share when it actually produced earnings of $2.13, delivering a surprise of 1.43%.Over t ...

ADP Reports Third Quarter Fiscal 2024 Results • Revenues increased 7% compared to last year's third quarter to $5.3 billion; 6% organic constant currency • Net earnings increased 14% to $1.2 billion, and adjusted net earnings increased 13% to $1.2 billion • Adjusted EBIT increased 12% to $1.5 billion, and adjusted EBIT margin increased 140 basis points to 29.3% • Diluted earnings per share ("EPS") increased 15% to $2.88; adjusted diluted EPS increased 14% to $2.88 ROSELAND, N.J. – May 1, 2024 – ADP (Nasdaq: ...

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Core Viewpoint - Automatic Data Processing, Inc. (ADP) is expected to report strong third-quarter fiscal 2024 results, with positive revenue and earnings growth anticipated based on historical performance and current estimates [1][4]. Group 1: Revenue Expectations - The Zacks Consensus Estimate for ADP's revenue is $5.2 billion, reflecting a 6% year-over-year increase [2]. - Revenue from Employer Services is estimated at $3.6 billion, indicating a 6.9% growth compared to the previous year [2]. - PEO services revenues are projected to be $1.6 billion, suggesting a 3.6% rise from the year-ago quarter [2]. Group 2: Earnings Expectations - The consensus estimate for earnings per share is $2.8, representing a 9.5% increase from the prior year [3]. - The growth in bottom-line performance is expected to be driven by strong revenue results [3]. Group 3: Earnings Prediction Model - ADP has an Earnings ESP of +1.72%, indicating a favorable outlook for an earnings beat [4]. - The company holds a Zacks Rank of 3, which suggests a stable position in the market [4]. Group 4: Comparisons with Other Stocks - Confluent (CFLT) is projected to have first-quarter revenues of $211.5 million, showing a year-over-year growth of 21.4% [5]. - Envestnet (ENV) is expected to report first-quarter revenues of $324.9 million, indicating an 8.8% year-over-year increase [6].

In its upcoming report, Automatic Data Processing (ADP) is predicted by Wall Street analysts to post quarterly earnings of $2.76 per share, reflecting an increase of 9.5% compared to the same period last year. Revenues are forecasted to be $5.22 billion, representing a year-over-year increase of 6%.The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe.Ahead ...