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Automatic Data Processing (ADP) Q2 Earnings & Revenues Beat

Automatic Data Processing, Inc. ADP reported better-than-expected second-quarter fiscal 2021 results.

Adjusted earnings per share of $1.52 beat the Zacks Consensus Estimate by 17.8% but were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and improved 0.7% year over year on a reported basis as well as on an organic constant-currency basis.

Let’s check out the numbers in detail.

Segments in Detail

Employer Services revenues of $2.51 billion decreased 1% year over year on a reported and 2% on an organic constant-currency basis. Pays per control decreased 6% year over year. New business bookings decreased 7%.

PEO Services revenues were up 5% year over year to $1.18 billion. Average worksite employees paid by PEO Services were 571,000, down 2% from the prior-year quarter.

Interest on funds held for clients decreased 23% to $105 million. The company’s average client funds balances remained flat at $25.1 billion. Average interest yield on client funds declined 50 basis points to 1.7%.


Adjusted EBIT decreased 1% year over year to $848 million. Adjusted EBIT margin declined 30 basis points to 22.9%.

Balance Sheet and Cash Flow

ADP exited second-quarter fiscal 2021 with cash and cash equivalents of $1.60 billion compared with $1.61 billion in the prior quarter. Long-term debt of $1.99 billion was flat sequentially.

The company generated $706.4 million of cash from operating activities in the quarter. Capital expenditures were $37.5 million. The company paid out dividends worth $390.7 million and repurchased shares worth $261.5 million.

Fiscal 2021 Outlook

ADP expects fiscal 2021 revenues to be up 1% to 3%. It had earlier expected revenues to be down 1% to up 1%. Adjusted earnings per share are anticipated to be down 2% to up 2% compared with the prior guidance of a decline of 3-7%.

Currently, ADP carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Zacks Business Services sector are keenly awaiting fourth-quarter 2020 earnings reports of key players like Waste Connections WCN, Waste Management WM and Republic Services RSG. While Waste Connections will release earnings on Feb 17, Waste Management and Republic Services will report the same on Feb 18 and Feb 22, respectively.

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