ADP Reports 8% Revenue Growth to $5.05 Billion in Q2 Fiscal 2025

Automatic Data Processing, Inc. (ADP) reported strong financial performance for the second quarter of fiscal 2025, with total revenues reaching $5,048.4 million, an increase of 8% compared to $4,668.0 million in the same period last year. For the six months ended December 31, 2024, revenues totaled $9,881.1 million, up from $9,180.3 million in the prior year, reflecting a similar growth rate of 8%. The company's net earnings for the quarter were $963.2 million, a 10% increase from $878.4 million in the previous year, while diluted earnings per share rose to $2.35 from $2.13.

The growth in revenue was attributed to several factors, including new business bookings, strong client retention, and an increase in pricing. Additionally, the acquisition of WorkForce Software, completed in October 2024, contributed to the revenue increase. The Professional Employer Organization (PEO) revenues also saw a rise, with PEO revenues for the quarter at $1,660.8 million, compared to $1,544.1 million in the prior year. The company reported a 3% increase in average worksite employees for the PEO segment.

In terms of operational metrics, ADP's pays per control, which measures the number of employees on clients' payrolls, grew by 2% for the six months ended December 31, 2024. The company also reported a significant increase in interest earned on funds held for clients, which rose to $272.8 million for the quarter, up from $225.3 million a year earlier, driven by higher average interest rates and increased client fund balances.

ADP's total expenses for the quarter increased to $3,878.2 million from $3,589.0 million, primarily due to higher operating expenses and interest expenses. The company reported a notable increase in selling, general, and administrative expenses, which rose to $1,006.1 million, reflecting investments in sales and marketing. Despite the increase in expenses, the company achieved an earnings before income taxes margin of 25.0%, up from 24.5% in the previous year.

Looking ahead, ADP remains optimistic about its growth trajectory, supported by its strategic priorities, including enhancing its Human Capital Management technology and expanding its global reach. The company plans to continue investing in research and development and expects to maintain strong cash flows to support shareholder returns through dividends and share repurchases. The financial outlook remains positive, with management confident in the company's ability to navigate market conditions and capitalize on growth opportunities.