Automatic Data Processing Beats On Q4 Earnings, Issues Robust Q1 Guidance

Automatic Data Processing Inc ADP reported fourth-quarter FY21 revenue growth of 11% year-on-year to $3.74 billion, beating the analyst consensus of $3.68 billion. The revenue rose 9% Y/Y on an organic constant currency basis.
Employer Services revenues increased 10% Y/Y to $2.5 billion, aided by new business bookings. The segment margin contracted 90 basis points to 24.7%.
PEO Services revenues grew 12% Y/Y to $1.2 billion. The segment margin expanded 340 basis points 10 14.3%.
Interest on funds held for clients decreased 10% to $103 million.
Adjusted EBIT margin contracted 120 basis points to 18.1% as higher costs and expenses offset the revenue growth.
Non-GAAP net earnings rose 4% Y/Y to $512 million, translating to Non-GAAP EPS of $1.20, which beat the analyst consensus of $1.14.
ADP generated $3.1 billion in operating cash flow during FY21 and held $2.6 billion in cash and equivalents.
Outlook: ADP sees FY22 revenue growth of $15.9 billion - $16.1 billion above the analyst consensus of $15.9 billion.
It sees non-GAAP EPS between $6.56-$6.68 above the analyst consensus of $6.54.
Price action: ADP shares traded lower by 0.95% at $205.91 on the last check Wednesday.

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