ADP(ADP) - 2025 Q2 - Quarterly Results

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]