Automatic Data Processing (ADP) Q1 2025 earnings summary

Executive summary

• Revenue grew 7% year-over-year to $4.83 billion, with adjusted EBIT up 13% and adjusted EPS up 12% to $2.33, driven by new business, client retention, and pricing increases.

• Record first-quarter new business bookings and strong client satisfaction, with broad-based performance across segments.

• Acquired WorkForce Software for $1.2 billion in October 2024, expanding global workforce management capabilities.

• Launched ADP Lyric, a next-gen global HCM platform with integrated generative AI and broad payroll support.

• Continued investment in generative AI and intelligent automation to enhance service and client experience.

Financial highlights

• Total revenues rose to $4.83 billion in Q1 FY25, up 7% year-over-year.

• Adjusted EBIT increased 13% to $1.24 billion; adjusted EBIT margin up 130 bps to 25.5%.

• Adjusted diluted EPS grew 12% to $2.33; diluted EPS up 13% to $2.34.

• Employer Services revenue up 7% to $3.26 billion; margin expanded 260 bps to 35.7%.

• PEO Services revenue up 7% to $1.57 billion; margin declined 80 bps to 14.3% due to higher workers' comp costs and pass-throughs.

Outlook and guidance

• Fiscal 2025 consolidated revenue growth forecast raised to 6%-7%.

• Adjusted EBIT margin expansion forecasted at 30-50 bps; adjusted EPS growth guidance raised to 7%-9%.

• ES revenue growth guidance increased to 6%-7%; PEO revenue growth expected at 5%-6%.

• PEO average worksite employee growth expected at 2%-3% for fiscal 2025.

• Effective tax rate expected to remain around 23%.