Adjusted EBIT, adjusted EBIT margin, adjusted diluted earnings per share, adjusted effective tax rate, and organic constant currency are all non-GAAP financial measures. Please refer to the Q2 fiscal 2025 earnings release available at investors.adp.com for a discussion of why ADP believes these measures are important and for a reconciliation of non-GAAP financial measures to their closest comparable GAAP financial measures. ADP Earnings Call & Webcast Q2 Fiscal 2025 January 29, 2025 Copyright © 2025 ADP, In ...

Core Viewpoint - Automatic Data Processing (ADP) reported quarterly earnings of $2.35 per share, exceeding the Zacks Consensus Estimate of $2.27 per share, and showing an increase from $2.13 per share a year ago, indicating a positive earnings surprise of 3.52% [1][2] Financial Performance - ADP's revenues for the quarter ended December 2024 were $5.05 billion, surpassing the Zacks Consensus Estimate by 1.64%, and up from $4.67 billion year-over-year [2] - The company has consistently outperformed consensus EPS estimates over the last four quarters [2] Stock Performance and Outlook - ADP shares have increased approximately 1.9% year-to-date, while the S&P 500 has gained 3.2% [3] - The company's earnings outlook is crucial for future stock performance, with current consensus EPS estimates at $3.05 for the next quarter and $9.94 for the current fiscal year [4][7] Industry Context - The Outsourcing industry, to which ADP belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and earnings estimate revisions, which can be tracked by investors [5]

Core Insights - ADP announced its second quarter fiscal 2025 financial results and revised fiscal 2025 outlook [1] - A conference call for financial analysts is scheduled for January 29, 2025, at 8:30 a.m. ET [2] Company Overview - ADP is a leading global technology company specializing in human capital management (HCM) solutions [1][3] - The company focuses on designing better ways to work through innovative products and exceptional services [3] Investor Relations - ADP has provided contact information for investor relations and media inquiries [4]

Financial Performance - Revenues increased 8% year-over-year to $5.0 billion, with an 8% increase on an organic constant currency basis[3] - Net earnings rose 10% to $963 million, and adjusted net earnings also increased 9% to $963 million[3] - Adjusted EBIT increased 11% to $1.3 billion, with an adjusted EBIT margin improvement of 60 basis points to 25.2%[3] - Diluted EPS grew 10% to $2.35, with adjusted diluted EPS also increasing 10% to $2.35[3] - Total revenues for the six months ended December 31, 2024, increased by 8% to $9,881.1 million compared to $9,180.3 million for the same period in 2023[24] - Net earnings for the six months ended December 31, 2024, were $1,919.5 million, reflecting a 10% increase from $1,737.8 million in the prior year[24] - The diluted earnings per share for the six months ended December 31, 2024, increased by 12% to $4.69 from $4.20 in the same period of 2023[24] - Net earnings for Q2 2024 reached $963.2 million, reflecting a 10% growth from $878.4 million in Q2 2023[30] - Adjusted EBIT for the first half of fiscal 2024 was $2,504.5 million, an increase of 12% from $2,240.4 million in the same period last year[30] - The adjusted diluted earnings per share for Q2 2024 was $2.35, a 10% increase from $2.13 in Q2 2023[30] - Consolidated revenue growth for Q2 2024 was reported at 8%, compared to 6% in Q2 2023[35] Revenue Segments - Employer Services revenues increased 8% on a reported basis and 7% on an organic constant currency basis[9] - PEO Services revenues increased 8%, with average worksite employees paid by PEO Services rising 3% to approximately 746,000[9] - Employer Services segment revenues for the three months ended December 31, 2024, rose by 8% to $3,388.5 million from $3,125.2 million in 2023[24] Cash Flow and Assets - Cash flows provided by operating activities for the six months ended December 31, 2024, were $1,974.7 million, up from $1,358.9 million in the same period of 2023[23] - The total assets as of December 31, 2024, increased to $64,096.7 million from $54,362.7 million as of June 30, 2024[22] - The company reported a total current liabilities of $54,303.1 million as of December 31, 2024, compared to $45,080.0 million as of June 30, 2024[22] - The net cash flows provided by financing activities for the six months ended December 31, 2024, were $7,482.5 million, compared to $3,816.1 million in the prior year[23] Client Funds and Interest Income - Interest on funds held for clients rose 21% to $273 million, with average client funds balances increasing 8% to $35.3 billion[10] - The average interest yield on client funds increased by 30 basis points to 3.1%[10] - Average investment balances for client funds increased to $35.3 billion in Q2 2024, up 8% from $32.6 billion in Q2 2023[26] - Interest income from funds held for clients rose to $272.8 million, a 21% increase compared to $225.3 million in the previous year[26] - Corporate extended interest income surged to $65.0 million, a 64% increase from $39.7 million in the previous year[26] - The average interest rate on funds held for clients increased to 3.1% in Q2 2024, up from 2.8% in Q2 2023[26] Future Outlook - The company maintains a fiscal 2025 revenue growth outlook of 6% to 7% and adjusted diluted EPS growth of 7% to 9%[6] - The company expects adjusted EBIT margin expansion of 30 to 50 basis points for fiscal 2025[13] - The company expects adjusted diluted earnings per share for fiscal 2025 to be in the range of $9.18, reflecting a growth of 7% to 9%[37] Risks and Considerations - ADP's forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations[39] - Key factors affecting performance include client retention, pricing of products, and success of new solutions[39] - The company emphasizes the importance of adapting to technological changes, including artificial intelligence[39] - ADP's performance may be influenced by overall market conditions, interest rates, and inflation trends[39] - The adequacy and effectiveness of business transformation initiatives are critical for future success[39] - Security breaches and system failures pose significant risks to operational integrity[39] - Employment and wage levels, along with the availability of skilled associates, are vital for maintaining service quality[39] - The impact of acquisitions and divestitures will play a role in shaping the company's future[39] - ADP does not commit to updating forward-looking statements unless legally required[39] - The company highlights the importance of considering risk factors outlined in their most recent Annual Report[39]

Earnings Season Overview - The fourth-quarter 2024 earnings season is in its initial stage, with results aligning with expectations. As of January 24, 78 S&P 500 companies reported total earnings up 17.4% year over year on 6.2% higher revenues, with 83.3% beating EPS estimates and 66.7% beating revenue estimates [1] Third Quarter Earnings Expectations - For the third quarter, total earnings for the S&P 500 Index are expected to rise 9.2% year over year on 4.8% higher revenues, following an 8.4% EPS growth on 5.5% higher revenues in the previous quarter [2] Upcoming Earnings Reports - Four "Magnificent 7" companies will report earnings this week, along with several other major firms. Investing in these companies, which are expected to beat earnings, could yield solid returns [3][5] Notable Stocks to Watch - Five large-cap stocks identified for potential investment ahead of earnings results include Cardinal Health Inc. (CAH), Logitech International S.A. (LOGI), ServiceNow Inc. (NOW), Corning Inc. (GLW), and Automatic Data Processing Inc. (ADP) [4][5] Cardinal Health Inc. Insights - Cardinal Health anticipates a 4-6% revenue decline in its Pharmaceutical segment due to a $39 billion revenue headwind from the OptumRx contract expiration in June 2024, but segment profit is expected to increase by 4-6% [7] - The company is expanding its medical distribution centers and investing in specialty care, with an Earnings ESP of +0.42% [8] Logitech International S.A. Insights - Logitech's strong quarterly results indicate recovery from the post-pandemic downturn, with increasing demand for video collaboration tools due to hybrid work trends [10] - The company has an Earnings ESP of +2.83% and is expected to benefit from partnerships with cloud providers [11] ServiceNow Inc. Insights - ServiceNow is experiencing growth from digital transformation initiatives, with a 14% year-over-year increase in customers with over $1 million in annual contract value [15] - The company has an Earnings ESP of +0.91% and is set to report strong revenue growth of 21.2% year over year [17] Corning Inc. Insights - Corning is benefiting from the increasing demand for fiber optics and mobile devices, with expected revenue growth of 14.9% year over year [18][19] - The company has an Earnings ESP of +2.05% and is positioned well for growth in AI applications [19] Automatic Data Processing Inc. Insights - ADP aims to grow through a three-tier business strategy and acquisitions, appealing to dividend-seeking investors [22] - The company has an Earnings ESP of +1.15% and is expected to report a revenue increase of 6.4% year over year [24]

Automatic Data Processing, Inc. (ADP) is scheduled to release its second-quarter fiscal 2025 results on Jan. 29, before market open.See Zacks Earnings Calendar to stay ahead of market-making news.ADP has a decent earnings surprise history, surpassing the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 3.2%.Automatic Data Processing’s Q2 ExpectationsThe Zacks Consensus Estimate for the top line is pegged at $5 billion, implying a 6.4% increase on a year-over-year basis. We ...

Earnings Expectations - Wall Street expects Automatic Data Processing (ADP) to report a year-over-year increase in earnings and revenues for the quarter ended December 2024 [1] - The stock price may move higher if the actual results exceed expectations, or lower if they miss, with the earnings report expected on January 29 [2] - The sustainability of the stock price change will depend on management's discussion of business conditions during the earnings call [2] Financial Estimates - ADP is expected to post quarterly earnings of $2.27 per share, representing a year-over-year increase of 6.6% [3] - Revenues are expected to be $4.97 billion, up 6.4% from the year-ago quarter [3] - The consensus EPS estimate has remained unchanged over the last 30 days, reflecting analysts' reassessment of initial estimates [4] Earnings Surprise Prediction - The Zacks Earnings ESP (Expected Surprise Prediction) model compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the former being a more recent version [6] - A positive Earnings ESP indicates a likely deviation of actual earnings from the consensus estimate, with predictive power significant for positive readings only [7] - Stocks with a positive Earnings ESP and a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) produce a positive surprise nearly 70% of the time [8] ADP's Earnings Outlook - For ADP, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +1.15% [10] - The stock currently carries a Zacks Rank of 2, indicating a high likelihood of beating the consensus EPS estimate [11] - ADP has beaten consensus EPS estimates in each of the last four quarters, with a surprise of +5.91% in the last reported quarter [12][13] Investment Considerations - An earnings beat or miss may not be the sole basis for a stock's movement, as other factors can influence investor sentiment [14] - Betting on stocks expected to beat earnings expectations increases the odds of success, making it important to check a company's Earnings ESP and Zacks Rank ahead of its quarterly release [15] - ADP appears to be a compelling earnings-beat candidate, but investors should also consider other factors before making investment decisions [16]

Pre-market futures are down pretty heavily this morning on fresh economic data. The Dow shot down -350 points, if just temporarily, while the S&P 500 was -60 and the Nasdaq -250 points. We’re now in negative territory trading for the week.BLS Jobs Reach 256K, Unemployment Rate 4.1%The long-awaited Employment Situation report from the U.S. Bureau of Labor Statistics (BLS) is out this morning, and it’s a classic good news/bad news situation. The good news? We see a much stronger labor market than expected. Th ...

Stock markets will suspend trading this Thursday, taking a traditional pause for the funeral of a former head of state. James Earl Carter, Jr., known as Jimmy even during his years in the White House (1977-80), was the 39th President of the U.S. He lived to be 100 — the first ex-president in 235 years of presidents to do so.Carter was also a highly visible altruist following his tenure in office, helping build houses for the poor via his connection with Habitat for Humanity, among other things. The former G ...

Thursday, January 9, 2025Stock markets will suspend trading this Thursday, taking a traditional pause for the funeral of a former head of state. James Earl Carter, Jr., known as Jimmy even during his years in the White House (1977-80), was the 39th President of the U.S. He lived to be 100 — the first ex-president in 235 years of presidents to do so.Carter was also a highly visible altruist following his tenure in office, helping build houses for the poor via his connection with Habitat for Humanity, among o ...