Automatic Data Processing 2025 Q3 Earnings Beats Expectations as Net Income Increases 5.5%

Automatic Data Processing (ADP), ranking 104th by market capitalization, reported its fiscal 2025 Q3 earnings on Apr 30th, 2025.

ADP's third-quarter fiscal 2025 results surpassed expectations, with revenue and EPS both exceeding forecasts. The company revised its guidance upward, projecting consolidated revenue growth between 6% and 7%, and adjusted EPS growth of 8% to 9%. This optimistic outlook reflects ADP's continued robust performance, driven by strong client retention and strategic initiatives in human capital management technology. The sustained growth in Employer Services and peo services further bolsters investor confidence. While international bookings faced challenges due to macroeconomic uncertainties, ADP's strategic priorities remain firm, positioning the company for future success.

Revenue
Automatic Data Processing's total revenue for 2025 Q3 reached $5.55 billion, marking a 5.7% increase from the previous year's $5.25 billion. The Employer Services segment led the growth, contributing $3.77 billion, while PEO Services added $1.79 billion to the total. The Other segment saw a slight decline, resulting in a negative revenue of $3.40 million. Overall, adp demonstrated solid revenue performance across its primary business areas.

Earnings/Net Income
Automatic Data Processing's earnings per share (EPS) increased by 6.2% to $3.07 in 2025 Q3, rising from $2.89 in 2024 Q3, reflecting ongoing earnings growth. The company's profitability was also strengthened with net income reaching $1.25 billion, a 5.5% growth compared to $1.18 billion in the previous year. ADP's EPS growth indicates a favorable earnings performance, showcasing a positive trend in profitability.

Price Action
The stock price of automatic data processing rose by 3.39% during the latest trading day, increased by 2.41% over the past trading week, and slightly declined by 0.08% month-to-date.

Post-Earnings Price Action Review
The earnings report had a generally positive impact on Automatic Data Processing's stock price, with the company showing higher win rates for longer-term horizons. Revenue performance in the short term was promising, with a 3-Day win rate of 56.42%, a 10-Day win rate of 57.94%, and a 30-Day win rate of 58.42%. Net income news fared even better, especially in the longer term, as evidenced by its 3-Day win rate of 56.28%, 10-Day win rate of 58.12%, and 30-Day win rate of 59.46%. Similarly, EPS news impressed the market in the medium to long term, with a 3-Day win rate of 55.14%, 10-Day win rate of 57.62%, and 30-Day win rate of 59.18%. Overall, ADP's stock tends to perform well following earnings releases, with positive investor reactions across all three metrics. It is crucial, however, to remember that past performance does not guarantee future results, and other market factors may influence stock prices.

CEO Commentary
Maria Black, President and CEO, noted ADP's solid third-quarter results, with 6% revenue growth and 6% adjusted EPS growth driven by strong U.S. Employer Services performance and high retention rates. She acknowledged international booking challenges due to macroeconomic uncertainties but emphasized the company's strong client satisfaction and retention scores. Black reaffirmed ADP's strategic focus on leading HCM technology and enhancing global payroll capabilities, expressing optimism about the company's momentum in the enterprise market.

Guidance
ADP raised its full-year guidance for consolidated revenue growth to 6% to 7%, with adjusted EPS growth expected between 8% and 9%. Employer Services revenue growth is projected at 4% to 7%, with retention levels anticipated to decline by 20 basis points to remain flat for the year. The effective tax rate is expected to be around 23%. PEO revenue growth is forecasted to increase to 6% to 7%, reflecting benefits from higher wages and strong retention.

Additional News
In recent weeks, Automatic Data Processing (ADP) has announced a CFO transition, appointing Peter Hadley, the company's Treasurer, as the new Chief Financial Officer. This appointment reflects ADP's commitment to strengthening its leadership team as it navigates future opportunities. Additionally, ADP declared a regular quarterly dividend of $1.54 per share, payable on July 1, 2025, to shareholders of record on June 13, 2025. The dividend announcement underscores ADP's commitment to returning value to its shareholders. Furthermore, ADP's National Employment Report highlighted a private sector employment increase of 62,000 jobs in April, with annual pay up by 4

Ask Aime: What impact will ADP's Q3 earnings have on the stock price?