Automatic Data Processing (ADP) Q2 2025 earnings summary

Executive summary

• Achieved 8% revenue growth and 10% adjusted EPS growth in Q2 FY25, with strong performance in both Employer Services (ES) and PEO segments, and record new business bookings in ES.

• Client satisfaction reached all-time highs, and the board approved a dividend increase for the 50th consecutive year.

• Strategic partnership with Fiserv and the acquisition of WorkForce Software are progressing, enhancing product integration and market reach.

• $1.79B was returned to shareholders via dividends and share repurchases in the six months ended December 31, 2024.

• Executive leadership change announced, with John C. Ayala to depart March 31, 2025.

Financial highlights

• Q2 FY25 total revenues reached $5.05B, up 8% year-over-year, with adjusted EBIT up 11% to $1.27B and margin up 60 bps to 25.2%.

• Adjusted diluted EPS rose 10% to $2.35; net earnings for the six months ended December 31, 2024, were $1.92B, up 10%.

• Employer Services revenue up 8% (7% organic constant currency), margin up 90 bps; PEO revenue up 8%, margin down 140 bps.

• Interest on funds held for clients rose 21% to $273M, with average client funds balances up 8% to $35.3B and yield at 3.1%.

• Net cash provided by operating activities for six months ended December 31, 2024, was $1.97B.

Outlook and guidance

• Fiscal 2025 revenue growth expected at 6%-7%, with adjusted EBIT margin expansion of 30-50 bps and adjusted EPS growth of 7%-9%.

• ES revenue growth guidance at 6%-7%, margin up 40-60 bps, new business bookings up 4%-7%.

• PEO revenue growth guidance at 5%-6%, margin contraction of 70-140 bps, average worksite employees up 2%-3%.

• Client funds interest revenue projected at $1.14B–$1.16B for FY25, with average yield at 3.1%.

• Q3 expected to see deceleration in revenue and margin growth due to FX headwinds and integration expenses, with reacceleration in Q4.