Automatic Data Processing, Inc.
CEO : Ms. Maria Black
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 7.3% YoY | 12.8% | 18.8% | 2023-01-25 |
Maria Black says,
Strong Q2 Results
- 10% organic constant currency revenue growth
- 120 basis points of adjusted EBIT margin expansion
- 19% adjusted EPS growth
Sales Results and Guidance
- Robust demand across downmarket portfolio and ES HRO offerings
- International sales performance, especially GlobalView platform, was much stronger in Q2
- Full year guidance has been taken up slightly
ES Retention and PEO Growth
- ES retention was a source of outperformance with modest year-on-year improvement in Q2
- Pays per control metric was 5% for the quarter, decelerating slightly from Q1
- Growth in average worksite employees for PEO was solid at 8%
Modernization Journey
- ADP is modernizing all aspects of the client relationship, starting with product and extending to go-to-market approach and advisory support
- Removing friction and enhancing the client experience through digital onboarding, self-service capabilities, and chatbots
- Investing in robust partner ecosystem and using extensive data to deliver insights
ADP Retirement Services
- ADP retirement services help employers establish and administer retirement plans
- Robust 401(k) solution with thousands of different investment options
- Developed platform called Advisor Access to better serve mutual clients and their employees
- Tax credit team helps clients apply for and obtain appropriate legislative incentives
Don McGuire says,
ES Segment Revenue
- Revenue increased 8% on a reported basis and 10% on an organic constant currency basis
ES Segment Retention
- First-half retention results up year-on-year
- Retention expected to be down only 20 to 30 basis points for the full year
Pays Per Control
- Assuming 3% to 4% pays per control growth for the year
PEO Segment Revenue
- Lowering PEO revenue outlook to 8% to 9%
- Growth in average worksite employees of about 6% to 7%
Consolidated Revenue Growth
- Expecting consolidated revenue growth of 8% to 9% in fiscal ’23
Q & A sessions,
Softness in Bookings and Retention
- Booking and retention came in softer than expectations in the first half of the year.
- Decelerating growth rate of pays per control in the PEO expected to contribute to the softer performance in the second half as well.
Pandemic’s Lingering Effect on PEO
- PEO had the most impact among all businesses due to the pandemic.
- Factors like average wages, worker mix, paid unemployment, lines of insurance, workers’ compensation, and health benefits affected the PEO business.
- Lingering effect of the pandemic is still impacting the PEO business.
Long-Term Growth Outlook for PEO
- Despite the softness in the first half, the PEO business still has strong demand from a long-term outlook perspective.
- PEO had a year-on-year growth in bookings, albeit softer than expectations and ES.
Strong Demand for Employment
- Macroeconomic environment is still very favorable despite the layoffs announced by large companies.
- Unemployment rate remains low, and unemployment applications are still in record lows.
- BLS reports and JOLTS reports suggest that strong demand for employment is still present.
- Pays per control assumption for the back half has been taken up based on the strong demand for employment.
No bad stock 