# Automatic Data Processing Inc. (ADP) — Financial Analysis

**Exchange:** NASDAQ  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-13  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/ADP/thesis · /stocks/ADP/memo

## Financial Snapshot

---
ticker: ADP
step: 04
generated: 2026-05-12
source: quick-research
---

### Automatic Data Processing Inc. (ADP) — Financial Snapshot

#### Income Statement Summary

| Metric | FY2022 | FY2023 | FY2024 | YoY |
|--------|--------|--------|--------|-----|
| Revenue | $16.50B | $18.01B | $19.20B | +7% |
| Gross Margin | ~43% | ~44% | ~45% | +1pp |
| Operating Margin | ~23% | ~25% | ~26% | +1pp |
| Net Income | ~$3.15B | ~$3.69B | ~$3.96B | +7% |
| EPS (diluted) | ~$7.25 | ~$8.57 | $9.14 | +7% |

*Note: ADP fiscal year ends June 30 (FY2024 = July 2023–June 2024). FY2025 (July 2024–June 2025): revenue $20.56B (+7%), EPS $10.02 (+10%). Revenue includes significant client funds float income (~$1.5–2B/yr), which is sensitive to interest rates.*

#### Cash Flow & Balance Sheet (FY2024)

| Metric | Value |
|--------|-------|
| Operating Cash Flow | ~$4.8B |
| Free Cash Flow | $3.98B |
| Cash & Equivalents | ~$3.0B (excl. client funds) |
| Total Debt | ~$3.5B |

#### Key Ratios (approximate)
- P/E: ~27x (FY2025) | EV/EBITDA: ~22x | FCF Yield: ~3.5%
- Revenue Growth (FY2025): +7% | Net Margin: ~20%
- ROIC: ~35%+ | Dividend Yield: ~2.2%

#### Growth Profile
ADP has delivered steady 6–9% annual revenue growth for years, driven by net new client wins, higher pays-per-control (employer headcount growth), and pricing. The interest rate tailwind — ADP earns ~$1.5–2B/year on ~$30B+ in client funds held in custody — significantly boosted earnings from 2022–2024 as rates rose. As rates decline, this reverses to a headwind. The WorkForce Software acquisition ($1.2B, Oct 2024) adds specialized workforce management capabilities for global enterprises, extending ADP's platform beyond core payroll. New Lyric HCM platform targets enterprise migration from legacy ADP systems.

#### Forward Estimates
- FY2026E: Revenue ~$21.6B (+5%), EPS ~$10.70–$11.00
- Float income headwind: each 25bps rate cut reduces annual earnings by ~$75–100M
- Bull case ($332 target): Lyric HCM reaches critical enterprise mass; EBITDA margins expand to 29%+
- Bear case ($214 target): Pays-per-control stays flat; PEO worksite employee growth stalls

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/ADP/fundamental

## Navigation

- Overview: /stocks/ADP
- Financials (this page): /stocks/ADP/financials
- Thesis: /stocks/ADP/thesis
- Investment Memo: /stocks/ADP/memo
- Coverage universe: /stocks