Automatic Data Processing Inc
Q3 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +6.88%.
Did ADP Beat Earnings? Q3 2025 Results
Automatic Data Processing posted a clean beat to open its fiscal third quarter of 2025, with earnings per share of $3.06 clearing the $2.97 consensus estimate by 2.93% and revenue of $5.55 billion topping expectations by 1.10% on 5.7% year-over-year growth. The quarter's strength was broad-based, with Employer Services delivering 5% revenue growth and margin expanding 20 basis points to 39.8%, while PEO Services accelerated to 7% top-line growth as average worksite employees climbed 2% to roughly 748,000. A meaningful tailwind came from ADP's client funds strategy, where interest on funds held for clients rose 11% to $355.20 million, supported by higher balances and improved yields. Management responded to the momentum by lifting its full-year adjusted EBIT margin expansion guidance to 40 to 50 basis points and narrowing adjusted diluted EPS growth to 8% to 9%, while maintaining its 6% to 7% revenue growth outlook. The quarter also brought a notable leadership transition, with ADP's longtime treasurer named to succeed the outgoing CFO effective July 1.
- Employer Services organic constant currency revenue growth of 5%
- PEO Services revenues excluding zero-margin benefits pass-throughs increased 8%
- Interest on funds held for clients increased 11% to $355 million
- Average client funds balances increased 7% to $44.5 billion
- Average interest yield on client funds increased 10 basis points to 3.2%
- U.S. pays per control increased 1%
- Average PEO worksite employees grew 2% to about 748,000
- Record-high client satisfaction this fiscal year
- Employer Services segment margin expanded 20 basis points to 39.8%
“Our solid third quarter results reflect the strength and consistency of our business and the dedication of our associates who helped drive new record highs in client satisfaction this fiscal year.”
ADP CEO, on the earnings call
Forward Guidance & Outlook
ADP raised its fiscal 2025 guidance: revenue growth of 6% to 7% (maintained); adjusted EBIT margin expansion of 40 to 50 basis points (raised from 30 to 50 bps); adjusted diluted EPS growth of 8% to 9% (raised from 7% to 9%); diluted EPS growth of 9% to 10%; adjusted effective tax rate of ~23%. Employer Services revenue growth of 6% to 7% with margin up 50 to 60 basis points (raised from 40 to 60 bps), new business bookings growth of 4% to 7%, and client revenue retention decrease of 20 bps to flat. PEO Services revenue growth of 6% to 7% with margin down 60 to 80 basis points and average worksite employee growth of 2% to 3%. Interest on funds held for clients expected at $1.160 to $1.170 billion based on anticipated 5% to 6% growth in client funds balances and average yield of ~3.1%.
ADP YoY Financials
ADP Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.