ADP(US:ADP)2024-10-30 10:55Financial Performance - Revenues increased 7% year-over-year to $4.8 billion, with 7% organic constant currency growth[1] - Net earnings rose 11% to $956 million, with adjusted net earnings also increasing 11% to $956 million[2] - Adjusted EBIT increased 13% to $1.2 billion, resulting in an adjusted EBIT margin of 25.5%, up 130 basis points[1] - Diluted EPS increased 13% to $2.34, while adjusted diluted EPS rose 12% to $2.33[2] - Total revenues for the three months ended September 30, 2024, increased by 7% to $4,832.7 million compared to $4,512.4 million in the same period of 2023[23] - Total pretax earnings rose by 13% to $1,236.2 million, with Employer Services segment earnings increasing by 15% to $1,164.3 million[23] - Net earnings for the quarter were $956.3 million, reflecting an 11% increase from $859.4 million in the prior year[35] - Basic earnings per share increased by 12% to $2.34, while diluted earnings per share rose by 13% to $2.34[23] Revenue Guidance - Full year consolidated revenue growth guidance updated to 6% to 7%, with adjusted diluted EPS growth guidance revised to 7% to 9%[1] - Employer Services revenue growth projected at 6% to 7% for fiscal 2025, with new business bookings growth of 4% to 7%[10] - PEO Services revenue growth expected at 5% to 6%, with average worksite employees paid increasing by 2% to 3%[10] Investments and Acquisitions - The acquisition of WorkForce Software for approximately $1.2 billion in cash is expected to enhance ADP's workforce management solutions[7] - The company reported a net cash used in investing activities of $1,644.4 million for Q3 2024, compared to $216.1 million in Q3 2023, indicating a substantial increase in investment outflows[21] Client Funds and Interest Income - Interest on funds held for clients increased 26% to $253 million, with average client funds balances rising 5% to $32.8 billion[6] - Average investment balances held for clients increased by 5% to $32.8 billion, with corporate extended balances rising significantly by 56% to $8.6 billion[25] - Interest income from funds held for clients increased by 26% to $253.3 million, contributing to the overall financial performance[27] - Interest on funds held for clients forecasted between $1.115 billion and $1.135 billion, based on anticipated growth in client funds balances[11] Assets and Liabilities - Total current assets decreased to $39,911.2 million as of September 30, 2024, from $45,542.5 million as of June 30, 2024, representing a decline of approximately 12.4%[20] - Total liabilities decreased to $44,162.8 million as of September 30, 2024, from $49,815.1 million as of June 30, 2024, reflecting a reduction of approximately 11.3%[20] - Stockholders' equity increased to $5,348.6 million as of September 30, 2024, up from $4,547.6 million as of June 30, 2024, representing an increase of about 17.6%[20] Cash Flow - Net cash flows provided by operating activities were $824.4 million for Q3 2024, significantly higher than $326.5 million in Q3 2023[21] - The company reported a net change in cash and cash equivalents of $(7,294.5) million for Q3 2024, compared to $(1,809.6) million for Q3 2023, indicating a significant increase in cash outflows[21] - Cash and cash equivalents at the end of the period were $2,791.5 million, down from $6,961.9 million at the end of Q3 2023[21] Future Outlook - The effective tax rate (GAAP) is expected to remain at 23.0% for both Fiscal 2024 and 2025[40] - Transformation initiatives for FY24 included consulting costs, with no specific financial impact projected for FY25[40] - Workforce optimization in FY24 is expected to contribute $42.0 million, with a margin impact of 20 basis points[40] - Legal settlements in FY24 are projected to have a negative impact of $(4.0) million[40] - Future outlook for Fiscal 2025 includes an adjusted EBIT margin guidance of 30 to 50 basis points improvement[40] - The company emphasizes the importance of new solutions and technology adaptation in its forward-looking statements[42]