ADP Earnings: HR Services Continue Growth Spree
ADP (NASDAQ:ADP) announced its Q3 FY 2016 results, reporting 7% annual growth in revenue to $3.2 billion. [1] Correspondingly, its cash operating expenses were up by about 8% y-o-y to just under $2.4 billion for the quarter. As a result, the company’s adjusted EBITDA margin for the quarter was roughly flat over the prior year quarter at 26.1%. A resulting higher net income led diluted EPS to increase by 14% y-o-y to $1.14 for the quarter ended March.
Similar to the previous 6-8 quarters, much of the growth was attributable to HR outsourcing and other services, which grew at 16% for the quarter. Core payroll processing revenues were up by a steady 5% to just under $2.3 billion for Q3’16.
Below are a few key growth metrics for the company through the quarter. A flat interest yield on client assets meant that client funds interest revenue remained flat over the comparable prior year period.
In the table below you can see our revenue forecast for ADP’s fiscal year ended June. In the long run, ADP is likely to witness the most revenue growth from its HR outsourcing and services, as compared to client funds interest or payroll processing business. ADP’s primary strength lies in its ability to offer customized solutions to larger clients.
Have more questions about ADP (NASDAQ:ADP)? See the links below:
- What’s ADP’s Fundamental Value Based On Expected 2016 Results?
- What’s ADP’s Revenue & EBITDA Breakdown By Segment?
- How Has ADP’s Revenue & EBITDA Composition Changed In The Last Five Years?
- Where Will ADP’s Revenue Growth Come From In The Next Five Years?
- ADP Earnings: Top Line Growth From HCM Demand, New Bookings
- Why ADP’s Payroll Processing Business Can Be Key To Its Long Term Growth?
Notes:
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- ADP Reports Third Quarter Fiscal 2016 Results, ADP Press Release, April 2016 [↩]