Automatic Data Processing (ADP) Q3 2025 earnings summary

Executive summary

• Q3 FY25 revenue grew 6% year-over-year to $5.6B, with adjusted EPS up 6% to $3.06 and adjusted EBIT margin expanding by 10 bps; nine-month revenue reached $15.43B, up 7%, and adjusted EPS rose 9% to $7.75.

• Employer Services and PEO segments delivered solid growth, with ES revenue up 5% and PEO up 7% in Q3; client satisfaction reached record highs and new business bookings were strong, especially in the U.S.

• Major acquisitions included WorkForce Software and PEI in Mexico, enhancing global HCM capabilities and expanding in Latin America.

• CFO transition announced, with Peter Hadley to succeed Don McGuire effective July 1.

• $2.8B returned to shareholders in nine months via $1.8B in dividends and $1.0B in share repurchases; dividend increased for the 50th consecutive year.

Financial highlights

• Q3 FY25 total revenues were $5.55B–$5.6B, up 6% year-over-year; nine-month revenues were $15.43B, up 7%.

• Adjusted EBIT for Q3 was $1.6B–$1.63B, up 6%, with margin up 10 bps to 29.3%; nine-month adjusted EBIT was $4.12B, up 9%.

• Adjusted diluted EPS for Q3 was $3.06, up 6%; nine-month adjusted EPS was $7.75, up 9%.

• Cash and cash equivalents at March 31, 2025, were $2.68B–$2.7B; operating cash flow for nine months was $3.5B.

• Client funds interest revenue and average client funds balances outperformed expectations, with average balances up 6.6%–7% to $37.5B–$44.5B and yield rising to 3.1%–3.2%.

Outlook and guidance

• Fiscal 2025 consolidated revenue growth guidance is 6%–7%, with adjusted EBIT margin expansion of 40–80 bps and adjusted EPS growth of 8%–10%.

• Employer Services revenue growth expected at 6%–7%, margin up 50–60 bps, and new business bookings up 4%–7%.

• PEO Services revenue growth forecast at 6%–7%, with margin expected to be flat to down 60–80 bps and average worksite employee count up 2%–3%.

• Capital expenditures for fiscal 2025 projected at $180M–$200M; sufficient liquidity anticipated for all needs.

• Anticipate continued below-normal Pays Per Control growth in fiscal 2026 due to macro uncertainty.