Automatic Data Processing (ADP) Q4 2024 earnings summary

Executive summary

• Achieved strong FY24 results with 7% revenue growth to $19.2B, 70 bps Adjusted EBIT margin expansion, and 12% Adjusted EPS growth; Q4 revenue grew 6%, Adjusted EBIT margin expanded 80 bps, and Adjusted EPS rose 11%.

• Employer Services (ES) new business bookings grew 7% to $2.0B, with ES retention at 92% and record client satisfaction.

• U.S. pays per control increased 2% for Q4 and FY24, reflecting a resilient labor market.

• Launched ADP Assist, a generative AI-powered solution, and expanded Next-Gen HCM and payroll offerings, driving significant client wins and product adoption.

• International expansion included acquisitions, platform growth, and now serving clients in 141 countries.

Financial highlights

• FY24 total revenues grew 7% to $19.2B; Q4 revenues increased 6% to $4.8B; organic constant currency growth was 6%-7%.

• Adjusted EBIT rose 9% to $4.9B, margin up 70 bps to 25.5%; Adjusted diluted EPS up 12% to $9.18.

• ES segment Q4 revenue increased 7% (reported and organic); ES margin expanded 220 bps in Q4 and 210 bps for the year.

• PEO segment Q4 revenue grew 6%, with average worksite employees up 3% to 742,000; PEO margin contracted 240 bps in Q4 and 150 bps for the year.

• Client funds interest revenue was $1.02B in FY24; average client funds balances at $35.4B, yield at 2.9%.

Outlook and guidance

• Fiscal 2025 consolidated revenue expected to grow 5%-6%; Adjusted EBIT margin to expand 60-80 bps; Adjusted EPS growth expected at 8%-10%.

• ES revenue growth forecast at 5%-6%, with new business bookings growth of 4%-7% and retention expected at 92%.

• PEO revenue expected to grow 4%-6%, with margin to decrease 90-110 bps due to higher pass-throughs and costs.

• Client funds interest revenue projected at $1.13-$1.15B; average yield to rise to 3.1%.

• Effective tax rate expected to be around 23% in fiscal 2025.