ADP’s Earnings Call Reveals Strong Growth and Strategic Wins

Automatic Data Processing ((ADP)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Automatic Data Processing (ADP) was marked by a generally positive sentiment, underscoring the company’s solid financial performance and strategic advancements. Despite facing challenges in international bookings due to macroeconomic uncertainties, ADP’s domestic segments demonstrated robust performance. Strategic initiatives, such as technology integration and global expansion, also yielded promising results.

Solid Revenue and Earnings Growth

ADP reported a commendable 6% revenue growth, alongside a 10 basis points expansion in adjusted EBIT margin and a 6% increase in adjusted EPS for the third quarter of 2025. These figures highlight the company’s ability to maintain strong financial health and operational efficiency.

Strong Performance in Employer Services

The Employer Services segment showed impressive growth, particularly in the U.S. market. New business bookings in small business, mid-market, and enterprise offerings contributed significantly to this success, reflecting ADP’s strong market position and customer appeal in these areas.

PEO Revenue Exceeds Expectations

ADP’s Professional Employer Organization (PEO) segment outperformed expectations with a 7% revenue growth. This was driven by strong client retention and growth in zero-margin pass-throughs, showcasing the segment’s resilience and value proposition.

Successful Integration and Expansion Efforts

The company made significant strides in global payroll capabilities through its integration with Workforce Software and the acquisition of PEI in Mexico. These strategic moves are expected to enhance ADP’s service offerings and competitive edge in the global market.

Recognition and Awards

ADP’s technological prowess was recognized with several awards, including RUN being named the number one software product for small businesses on G2’s Best Software Products list. This recognition underscores the company’s commitment to innovation and excellence in technology.

Soft International Bookings

International bookings experienced a softer quarter, attributed to macroeconomic uncertainty in key markets. This challenge highlights the impact of global economic conditions on ADP’s international operations.

Challenges in Large Deal Closures

The company faced difficulties in closing large international deals, which were affected by macroeconomic factors and elongated sales cycles. This reflects the broader challenges in the international business landscape.

Forward-Looking Guidance

Looking ahead, ADP has adjusted its fiscal 2025 guidance, expecting consolidated revenue growth towards the high end of the 6% to 7% range. The company also updated its adjusted EBIT margin expansion guidance to 40-50 basis points. For fiscal 2026, ADP anticipates continued growth in client funds and investment yield, despite potential macroeconomic challenges affecting pay per control growth.

In conclusion, ADP’s earnings call highlighted a generally positive outlook, with strong financial performance and strategic advancements. Despite challenges in international markets, the company’s domestic success and strategic initiatives position it well for future growth. Investors and stakeholders can remain optimistic about ADP’s trajectory, given its robust performance and forward-looking strategies.