"Overall, we reported a solid third quarter with our consolidated revenue growth and adjusted EBIT margin coming in above our expectations." - Don McGuire, CFO
— Don McGuire
03Detailed Report
ADP
Automatic Data Processing Inc
Period
Q3 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 13, 2026
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Executive Summary
In Q3 2025, Automatic Data Processing Inc (ADP) reported robust financial results with a revenue increase of 6% year-over-year, reaching $5.553 billion. The company's net income stood at $1.249 billion, resulting in diluted EPS of $3.06, reflecting a 6% growth compared to the prior year. Despite facing macroeconomic headwinds, particularly in international markets, ADP demonstrated resilience through strong client retention and new business bookings growth, particularly in its Employer Services segment. Management attributed their solid performance to strategic initiatives and enhancements in human capital management technology, specifically through their ADP Lyric HCM platform. However, concerns remain around international bookings softness due to macroeconomic uncertainty. Looking forward, ADP is poised to maintain its growth trajectory while focusing on operational efficiencies and navigating potential market challenges.
Key Performance Indicators
Revenue
Increasing
5.55B
QoQ: 10.00% | YoY: 5.69%
Gross Profit
Increasing
2.65B
47.70% margin
QoQ: 14.87% | YoY: 6.57%
Operating Income
Decreasing
114.10M
QoQ: -88.89% | YoY: -92.65%
Net Income
Increasing
1.25B
QoQ: 29.72% | YoY: 5.45%
EPS
Increasing
3.07
QoQ: 30.08% | YoY: 6.23%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue Performance:
- Total Revenue: $5.553 billion (YoY growth: 6%, QoQ growth: 10%)
- Net Income: $1.249 billion (YoY growth: 5.5%, QoQ growth: 29.7%)
- Gross Profit Margin: 47.7%
- Operating Income: $114 million (YoY decline: 92.7%, QoQ decline: 88.9%)
- Net Income Margin: 22.5%
Operational Metrics:
- Pay Per Control Growth: 1%
- PEO Revenue Growth: 7%
- Client Retention Rate: Slight decrease but exceeded expectations, bolstered by record-high client satisfaction.
Management noted, "We reported solid third quarter results that included 6% revenue growth... and our small business mid-market and enterprise segments performed well."
Future Guidance:
- Consolidated revenue growth forecast maintained at 6-7% for fiscal 2025, with EPS growth expected at 8-9%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
5.55B
5.69%
10.00%
Gross Profit
2.65B
6.57%
14.87%
Operating Income
114.10M
-92.65%
-88.89%
Net Income
1.25B
5.45%
29.72%
EPS
3.07
6.23%
30.08%
Key Financial Ratios
Gross Profit Margin
Good
47.70%
Gross profit margin is healthy and competitive within industry standards
Operating Profit Margin
Weak
2.05%
Operating margin is below industry norms, profitability concerns
Net Profit Margin
Excellent
22.50%
Net profit margin is exceptional, indicating strong pricing power and operational efficiency
Return on Assets
Weak
2.21%
Return on assets suggests inefficient capital allocation
Return on Equity
Strong
21.30%
Return on equity demonstrates excellent capital efficiency and value creation
Current Ratio
Adequate
1.02
Current ratio meets minimum requirements but limited cushion