Automatic Data Processing Beats Revenue Estimates, Driven by Small Business Demand
Automatic Data Processing (ADP) outperformed second-quarter revenue expectations, fueled by increased demand for employee management and payroll services from small and medium-sized businesses. ADP's strong performance was supported by stable employment activity and low layoff rates in the U.S. labor market.
ADP's PEO segment, offering administration outsourcing services, reported revenue of $1.66 billion for the quarter ending December 31st, surpassing analyst estimates of $1.64 billion. To enhance its competitive edge, ADP acquired WorkForce Software for $1.2 billion in cash in October, aligning with the industry's shift towards mobile-friendly, cloud-based applications.
Overall, ADP's second-quarter revenue increased by 8% to $5.05 billion, exceeding expectations of $4.97 billion. Adjusted earnings per share reached $2.35, outpacing estimates of $2.29. Shares of ADP climbed 1.2% in pre-market trading.