Revenue and Earnings Growth - Revenue growth of 8% to $9,881.1 million for the six months ended December 31, 2024, with 7% organic constant currency growth[86] - Adjusted diluted earnings per share (EPS) grew by 12% to $4.69 for the six months ended December 31, 2024[86] - For the three months ended December 31, 2024, EBIT increased to $1,261.3 million, reflecting a 10% year-over-year growth from $1,143.8 million[99] - Adjusted EBIT for the same period was $1,272.0 million, an 11% increase compared to $1,147.1 million in the prior year[99] - Net earnings for the three months ended December 31, 2024, were $963.2 million, a 10% increase from $878.4 million in 2023[106] - Diluted EPS rose to $2.35 for the three months ended December 31, 2024, marking a 10% increase from $2.13 in the previous year[106] Shareholder Returns - Cash returned via shareholder-friendly actions totaled $1,790 million, including $1,145 million in dividends and $645 million in share repurchases[86] - The company achieved a milestone by increasing its dividend for the 50th consecutive year[84] - The company repurchased approximately 0.9 million shares during the three months ended December 31, 2024, contributing to the increase in diluted EPS[107] - The company repurchased approximately 2.4 million shares at an average price of $274.42 during the six months ended December 31, 2024[133] Operating Performance - Operating expenses increased by 7% to $4,661.9 million for the six months ended December 31, 2024, compared to $4,370.9 million in 2023[91] - Employer Services revenues increased by 7% to $3,388.5 million for the three months ended December 31, 2024, compared to $3,125.2 million in 2023[109] - PEO Services revenues reached $1,663.3 million, an 8% increase from $1,546.1 million in the same period last year[114] - Employer Services' earnings before income taxes increased by 11% for the three months ended December 31, 2024, due to client funds interest revenues and operational efficiencies[111] - PEO Services' earnings before income taxes decreased by 1% for the three months ended December 31, 2024, due to increased costs[115] Cash Flow and Investments - Cash provided by operating activities for the six months ended December 31, 2024, was $1,974.7 million, an increase of $615.8 million from $1,358.9 million in 2023[130] - Net cash flows used in investing activities were $(2,902.3) million, a significant increase of $2,824.5 million compared to $(77.8) million in 2023, primarily due to the acquisition of Workforce Software for $1,160.6 million[131] - Net cash flows from financing activities increased to $7,482.5 million, up $3,666.4 million from $3,816.1 million in 2023, driven by a net increase in cash flow from client funds obligations[132] Acquisitions and Integration - The integration of WorkForce Software into the global HCM ecosystem has commenced following its acquisition in October[84] - The company acquired Workforce Software for $1,160.6 million, impacting investing activities significantly[131] Tax and Effective Rates - The effective tax rate for the three months ended December 31, 2024, was 23.6%, up from 23.2% in 2023[102] - The adjusted effective tax rate for the six months ended December 31, 2024, was 23.1%, compared to 22.3% in the same period of 2023[122] Capital Expenditures and Debt - Capital expenditures for the six months ended December 31, 2024, were $98.2 million, up from $94.0 million in the same period of 2023, a 2.3% increase[138] - The company expects capital expenditures in fiscal 2025 to be between $180 million and $200 million, down from $211.7 million in fiscal 2024[138] - The company has $4.0 billion in senior unsecured notes maturing in 2025, 2028, 2030, and 2034, and may refinance existing debt or finance acquisitions[134] Investment Portfolio and Market Risk - The investment portfolio is structured to maximize interest income while ensuring safety of principal and liquidity, with no exposure to sub-prime or non-investment grade securities[137] - The company limits credit risk by investing primarily in AAA-rated and AA-rated securities, ensuring a focus on investment-grade securities[147] - The company is exposed to market risk from changes in foreign currency exchange rates, which could impact consolidated results of operations and cash flows[148] Accounting and Compliance - Management continually evaluates accounting policies and estimates used in preparing the Consolidated Financial Statements, which are based on historical experience and reasonable assumptions[149] - Recent accounting pronouncements are discussed in Note 2 of the Consolidated Financial Statements, indicating ongoing compliance with new standards[150]

Core Viewpoint - Several companies are showcasing strong quarterly results, particularly three top-rated stocks that have exceeded earnings expectations, indicating potential investment opportunities in the tech and apparel sectors [1]. Group 1: V.F. Corporation (VFC) - V.F. Corporation reported an EPS surprise of 82.35%, with earnings of $0.62 per share compared to estimates of $0.34 [2]. - The company's Q3 earnings increased from $0.54 per share in the same quarter last year, benefiting from its niche in skateboard and surf-related footwear [3]. - Earnings estimate revisions for fiscal 2025 have recently increased, with FY26 EPS revisions rising by 9% over the last 30 days [3]. Group 2: Flex (FLEX) - Flex posted a 20.31% EPS surprise, achieving Q3 EPS of $0.77 against estimates of $0.64 [4]. - The company operates in 30 countries and has exceeded the Zacks EPS Consensus for 22 consecutive quarters, indicating consistent performance [5]. Group 3: Automatic Data Processing (ADP) - ADP achieved a 3.52% EPS surprise, with Q2 EPS of $2.35, which is a 10% increase from the previous year and above estimates of $2.27 [7]. - The company is forecasted to have 8% EPS growth in FY25 and FY26, contributing to its stock reaching new 52-week highs [8]. - ADP has a strong dividend history, being a "Dividend King" with 50 consecutive years of payout increases [8].

Core Insights - Automatic Data Processing, Inc. (ADP) reported strong second-quarter fiscal 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate [1][2] Financial Performance - Earnings per share reached $2.4, beating the consensus estimate by 3.5% and increasing 10.3% year-over-year [2] - Total revenues amounted to $5 billion, surpassing the consensus estimate by 1.6% and growing 8.2% year-over-year [2] - Adjusted EBIT increased 11% year-over-year to $1.3 billion, with an adjusted EBIT margin rising 60 basis points to 25.2% [7] Segment Performance - Employer Services generated revenues of $3.4 billion, an 8% increase on a reported basis, meeting estimates [5] - PEO Services revenues grew 8% year-over-year to $1.7 billion, slightly missing projections [5] - Interest on funds held for clients rose 21% year-over-year to $273 million, exceeding estimates [6] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the quarter were $2.2 billion, up from $2.1 billion in the previous quarter [8] - Long-term debt remained flat at $3 billion, with cash generated from operating activities totaling $1.2 billion [8] Future Outlook - For fiscal 2025, ADP anticipates revenue growth of 6-7% and adjusted EPS growth of 7-9% [9] - The company expects Employer Services revenue to grow 6-7% and PEO Services revenue to grow 5-6% [9]

Group 1 - ADP has been recognized as one of the "World's Most Admired Companies" by FORTUNE magazine for 2025, marking its 19th consecutive year on the list [1] - The recognition is based on performance and reputation in areas such as product and service quality, global business effectiveness, and innovation [1] - Maria Black, CEO of ADP, emphasized the company's commitment to innovation and empowering employers to engage their workers effectively [1] Group 2 - FORTUNE collaborates with Korn Ferry to evaluate approximately 1,500 companies, including the largest U.S. companies and non-U.S. companies with revenues of $10 billion or more [1] - The evaluation process involves ratings from executives, directors, and analysts on various criteria, including investment value, management quality, and social responsibility [1] - A company must rank in the top half of its industry survey to be included in the list [1]

Core Insights - Automatic Data Processing (ADP) exceeded analyst expectations in fiscal 2025's second quarter, reporting earnings per share (EPS) of $2.35 against an estimate of $2.29 and revenue of $5.05 billion compared to expectations of $4.97 billion [1][2]. Financial Performance - The second quarter of fiscal 2025 showed strong new business bookings and increased interest revenue, contributing to robust financial performance [2]. - Key metrics for Q2 2025 include: - EPS (diluted) of $2.35, a 10.3% increase from $2.13 in Q2 2024 [3] - Revenue of $5.05 billion, an 8% increase from $4.67 billion in Q2 2024 [3] - Net earnings of $963 million, up 9.7% from $878 million in Q2 2024 [3] - Adjusted EBIT Margin of 25.2%, an increase of 60 basis points from 24.6% in Q2 2024 [3]. Company Overview - ADP is a leading provider of HR software solutions and payroll services, focusing on technological innovation, global scale, and outsourcing solutions [4]. - The company emphasizes AI-driven products and expanding its global footprint to enhance customer experience and operational efficiency [4][5]. Segment Performance - The Employer Services segment drove revenue growth of 8% in Q2 2025, supported by the new AI-powered platform, ADP Lyric [6]. - The PEO Services segment experienced a margin contraction of 140 basis points due to higher benefit pass-through costs, but revenue still grew by 8% [7]. - Average worksite employees in the PEO Services segment increased by 3% to 746,000, indicating stable demand [7]. Interest Revenue and Strategic Moves - Interest revenue from client funds rose by 21% year over year to $273 million, benefiting from higher balances and improved interest rates [8]. - The acquisition of WorkForce Software is a strategic move to strengthen ADP's Workforce Management Solutions, aligning with long-term growth objectives [8]. Financial Outlook - ADP maintains a positive financial outlook, projecting revenue growth between 6% and 7% and adjusted EPS growth of 7% to 9% [9]. - The company anticipates margin expansion of 30 to 50 basis points, focusing on leveraging technology and global market reach [9]. Potential Challenges - There are concerns regarding margin pressures in the PEO Services segment, necessitating close attention to cost management [10]. - Client revenue retention rates may see minor reductions, indicating slight challenges in maintaining client engagement [10][11].

Adjusted EBIT, adjusted EBIT margin, adjusted diluted earnings per share, adjusted effective tax rate, and organic constant currency are all non-GAAP financial measures. Please refer to the Q2 fiscal 2025 earnings release available at investors.adp.com for a discussion of why ADP believes these measures are important and for a reconciliation of non-GAAP financial measures to their closest comparable GAAP financial measures. ADP Earnings Call & Webcast Q2 Fiscal 2025 January 29, 2025 Copyright © 2025 ADP, In ...

Core Viewpoint - Automatic Data Processing (ADP) reported quarterly earnings of $2.35 per share, exceeding the Zacks Consensus Estimate of $2.27 per share, and showing an increase from $2.13 per share a year ago, indicating a positive earnings surprise of 3.52% [1][2] Financial Performance - ADP's revenues for the quarter ended December 2024 were $5.05 billion, surpassing the Zacks Consensus Estimate by 1.64%, and up from $4.67 billion year-over-year [2] - The company has consistently outperformed consensus EPS estimates over the last four quarters [2] Stock Performance and Outlook - ADP shares have increased approximately 1.9% year-to-date, while the S&P 500 has gained 3.2% [3] - The company's earnings outlook is crucial for future stock performance, with current consensus EPS estimates at $3.05 for the next quarter and $9.94 for the current fiscal year [4][7] Industry Context - The Outsourcing industry, to which ADP belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and earnings estimate revisions, which can be tracked by investors [5]

Core Insights - ADP announced its second quarter fiscal 2025 financial results and revised fiscal 2025 outlook [1] - A conference call for financial analysts is scheduled for January 29, 2025, at 8:30 a.m. ET [2] Company Overview - ADP is a leading global technology company specializing in human capital management (HCM) solutions [1][3] - The company focuses on designing better ways to work through innovative products and exceptional services [3] Investor Relations - ADP has provided contact information for investor relations and media inquiries [4]

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]

Earnings Season Overview - The fourth-quarter 2024 earnings season is in its initial stage, with results aligning with expectations. As of January 24, 78 S&P 500 companies reported total earnings up 17.4% year over year on 6.2% higher revenues, with 83.3% beating EPS estimates and 66.7% beating revenue estimates [1] Third Quarter Earnings Expectations - For the third quarter, total earnings for the S&P 500 Index are expected to rise 9.2% year over year on 4.8% higher revenues, following an 8.4% EPS growth on 5.5% higher revenues in the previous quarter [2] Upcoming Earnings Reports - Four "Magnificent 7" companies will report earnings this week, along with several other major firms. Investing in these companies, which are expected to beat earnings, could yield solid returns [3][5] Notable Stocks to Watch - Five large-cap stocks identified for potential investment ahead of earnings results include Cardinal Health Inc. (CAH), Logitech International S.A. (LOGI), ServiceNow Inc. (NOW), Corning Inc. (GLW), and Automatic Data Processing Inc. (ADP) [4][5] Cardinal Health Inc. Insights - Cardinal Health anticipates a 4-6% revenue decline in its Pharmaceutical segment due to a $39 billion revenue headwind from the OptumRx contract expiration in June 2024, but segment profit is expected to increase by 4-6% [7] - The company is expanding its medical distribution centers and investing in specialty care, with an Earnings ESP of +0.42% [8] Logitech International S.A. Insights - Logitech's strong quarterly results indicate recovery from the post-pandemic downturn, with increasing demand for video collaboration tools due to hybrid work trends [10] - The company has an Earnings ESP of +2.83% and is expected to benefit from partnerships with cloud providers [11] ServiceNow Inc. Insights - ServiceNow is experiencing growth from digital transformation initiatives, with a 14% year-over-year increase in customers with over $1 million in annual contract value [15] - The company has an Earnings ESP of +0.91% and is set to report strong revenue growth of 21.2% year over year [17] Corning Inc. Insights - Corning is benefiting from the increasing demand for fiber optics and mobile devices, with expected revenue growth of 14.9% year over year [18][19] - The company has an Earnings ESP of +2.05% and is positioned well for growth in AI applications [19] Automatic Data Processing Inc. Insights - ADP aims to grow through a three-tier business strategy and acquisitions, appealing to dividend-seeking investors [22] - The company has an Earnings ESP of +1.15% and is expected to report a revenue increase of 6.4% year over year [24]