Stock Analysis on Net
Stock Analysis on Net

Automatic Data Processing Inc. (NASDAQ:ADP)

This company has been moved to the archive! The financial data has not been updated since April 29, 2022.

Common-Size Income Statement
Quarterly Data

Automatic Data Processing Inc., common-size consolidated income statement (quarterly data)

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3 months ended: Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015
Revenues, other than interest on funds held for clients and PEO revenues 63.87 63.64 64.39 64.83 65.12 65.08 65.39 64.60 65.52 65.36 65.97 65.47 66.20 66.17 66.76 66.97 67.50 67.65 67.59 67.66 68.31 69.54 69.85 70.29 70.30 70.69 71.06
Interest on funds held for clients 2.61 2.63 2.64 2.76 2.62 2.85 3.07 3.40 3.93 3.75 3.83 4.20 4.35 3.68 3.57 3.78 3.65 3.30 3.23 3.42 3.27 3.07 3.06 3.36 3.16 3.18 3.24
Professional Employer Organization (PEO) revenues 33.52 33.73 32.97 32.41 32.26 32.07 31.54 32.00 30.55 30.89 30.20 30.33 29.45 30.15 29.67 29.24 28.85 29.05 29.18 28.93 28.42 27.39 27.09 26.35 26.53 26.12 25.70
Revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Operating expenses -49.03 -50.70 -50.38 -51.15 -48.74 -50.00 -50.77 -53.49 -48.77 -50.03 -51.14 -50.75 -48.72 -50.94 -51.45 -52.04 -49.95 -53.14 -53.49 -52.95 -49.89 -52.23 -52.50 -51.56 -49.61 -52.70 -53.05
Systems development and programming costs -4.37 -4.96 -4.93 -5.21 -4.35 -4.72 -4.86 -4.89 -4.25 -4.60 -4.81 -4.63 -4.16 -4.45 -4.75 -4.60 -4.40 -4.89 -5.10 -5.44 -4.49 -5.10 -5.31 -5.20 -4.53 -5.33 -5.75
Depreciation and amortization -2.27 -2.50 -2.69 -2.66 -2.44 -2.71 -2.98 -2.83 -2.30 -2.44 -2.54 -2.37 -2.01 -2.05 -2.18 -2.18 -1.90 -2.14 -2.03 -1.89 -1.65 -1.84 -1.96 -1.85 -1.66 -1.91 -1.86
Costs of revenues -55.67% -58.16% -58.00% -59.02% -55.54% -57.43% -58.61% -61.21% -55.32% -57.07% -58.49% -57.75% -54.89% -57.44% -58.39% -58.82% -56.25% -60.17% -60.62% -60.28% -56.03% -59.18% -59.78% -58.61% -55.80% -59.94% -60.67%
Gross profit 44.33% 41.84% 42.00% 40.98% 44.46% 42.57% 41.39% 38.79% 44.68% 42.93% 41.51% 42.25% 45.11% 42.56% 41.61% 41.18% 43.75% 39.83% 39.38% 39.72% 43.97% 40.82% 40.22% 41.39% 44.20% 40.06% 39.33%
Selling, general, and administrative expenses -18.11 -19.43 -18.77 -22.50 -18.60 -20.45 -19.62 -22.67 -18.69 -20.56 -20.78 -24.43 -19.50 -21.26 -21.48 -25.22 -20.45 -22.17 -21.51 -27.07 -19.50 -21.45 -22.21 -26.57 -19.53 -22.34 -22.30
Operating income 26.22% 22.41% 23.24% 18.49% 25.86% 22.12% 21.77% 16.11% 25.99% 22.38% 20.72% 17.82% 25.61% 21.31% 20.13% 15.96% 23.30% 17.66% 17.86% 12.65% 24.48% 19.37% 18.02% 14.82% 24.67% 17.72% 17.03%
Interest expense -0.41 -0.46 -0.48 -0.46 -0.33 -0.38 -0.44 -0.46 -0.49 -0.86 -1.14 -0.96 -0.56 -1.10 -1.08 -0.86 -0.50 -0.85 -0.91 -0.74 -0.49 -0.69 -0.68 -0.63 -0.50 -0.60 -0.18
Other income (expense), net 0.55 0.66 0.75 0.63 0.46 0.78 0.72 0.08 1.10 1.25 1.56 1.25 0.55 0.93 0.42 -8.93 0.29 0.67 0.85 0.76 0.29 7.63 0.79 0.54 0.30 0.98 1.76
Earnings from continuing operations before income taxes 26.37% 22.61% 23.51% 18.66% 25.99% 22.53% 22.05% 15.73% 26.60% 22.77% 21.14% 18.10% 25.59% 21.14% 19.46% 6.17% 23.09% 17.48% 17.81% 12.67% 24.27% 26.32% 18.13% 14.73% 24.47% 18.09% 18.61%
Provision for income taxes -5.79 -5.36 -5.23 -4.25 -6.23 -5.01 -4.70 -3.54 -6.32 -5.01 -4.48 -4.51 -6.00 -5.21 -4.25 -2.89 -5.67 -3.04 -4.76 -3.99 -7.04 -9.22 -5.49 -5.00 -8.07 -5.93 -6.17
Net earnings from continuing operations 20.57% 17.25% 18.28% 14.40% 19.76% 17.52% 17.35% 12.19% 20.28% 17.76% 16.66% 13.59% 19.59% 15.92% 15.21% 3.28% 17.41% 14.45% 13.04% 8.68% 17.24% 17.10% 12.64% 9.73% 16.39% 12.16% 12.44%
Net loss from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.03
Net earnings 20.57% 17.25% 18.28% 14.40% 19.76% 17.52% 17.35% 12.19% 20.28% 17.76% 16.66% 13.59% 19.59% 15.92% 15.21% 3.28% 17.41% 14.45% 13.04% 8.68% 17.24% 17.10% 12.64% 9.73% 16.39% 12.16% 12.40%

Based on: 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-K (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-K (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30).

The financial performance of the organization over the period from September 2015 to March 2022 is characterized by a strategic shift in revenue composition and a general trend toward improved net profitability, despite significant quarterly volatility.

Revenue Mix Evolution
A clear transition in the revenue stream is observable. Revenues from Professional Employer Organization (PEO) services have grown steadily from 25.70% of total revenues in September 2015 to 33.52% by March 2022. Conversely, revenues other than interest and PEO have seen a consistent decline, falling from 71.06% to 63.87% over the same period. Interest on funds held for clients exhibited more volatility, peaking at 4.35% in March 2019 before retreating to 2.61% by March 2022.
Cost Structure and Gross Margin
Costs of revenues have fluctuated between 54.89% and 61.21%, with a general trend toward efficiency in the later periods, reaching 55.67% in March 2022. This has resulted in a gross profit margin that typically ranges between 39% and 45%. A recurring cyclical pattern is evident, where gross profit margins tend to peak in the March quarters, suggesting seasonal operational efficiencies or pricing dynamics.
Operating Expense Management
Operating expenses have remained relatively stable as a percentage of revenue, generally hovering between 48% and 53%. Selling, general, and administrative (SG&A) expenses show a downward trajectory in their troughs, moving from lows of approximately 19.5% in 2016 to 18.11% in March 2022. Systems development and programming costs have remained consistent, typically ranging between 4% and 6% of total revenues.
Operating and Net Profitability
Operating income exhibits significant seasonality, with consistent peaks in the first quarter of the calendar year. Operating margins reached a high of 26.22% in March 2022, compared to 17.03% in September 2015. Net earnings follow a similar pattern, though they were occasionally impacted by non-operating items, most notably a significant negative swing in other income/expense in June 2018 (-8.93%), which suppressed net earnings to 3.28% for that quarter. Excluding such anomalies, the net earnings margin has improved from 12.40% in September 2015 to 20.57% in March 2022.

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