Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

Automatic Data Processing Inc., consolidated income statement

US$ in thousands

12 months ended:	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Revenues, other than interest on funds held for clients and PEO revenues	9,768,600)	9,538,100)	9,375,800)	8,985,200)	8,518,100)	8,234,000)
Interest on funds held for clients	422,400)	545,200)	561,900)	466,500)	397,400)	377,300)
Professional Employer Organization (PEO) revenues	4,814,400)	4,506,500)	4,237,500)	3,874,100)	3,464,300)	3,056,500)
Revenues	15,005,400)	14,589,800)	14,175,200)	13,325,800)	12,379,800)	11,667,800)
Operating expenses	(7,520,700)	(7,404,100)	(7,145,900)	(6,937,900)	(6,416,100)	(6,025,000)
Systems development and programming costs	(716,600)	(674,100)	(636,300)	(630,200)	(627,500)	(603,700)
Depreciation and amortization	(403,000)	(366,900)	(304,400)	(274,500)	(226,200)	(211,600)
Costs of revenues	(8,640,300)	(8,445,100)	(8,086,600)	(7,842,600)	(7,269,800)	(6,840,300)
Gross profit	6,365,100)	6,144,700)	6,088,600)	5,483,200)	5,110,000)	4,827,500)
Selling, general, and administrative expenses	(3,040,500)	(3,003,000)	(3,064,200)	(2,971,500)	(2,783,200)	(2,637,000)
Operating income	3,324,600)	3,141,700)	3,024,400)	2,511,700)	2,326,800)	2,190,500)
Interest expense	(59,700)	(107,100)	(129,900)	(102,700)	(80,000)	(56,200)
Interest income on corporate funds	36,500)	84,500)	97,600)	83,500)	76,700)	62,400)
Realized gains (losses) on available-for-sale securities, net	11,300)	12,900)	(900)	(2,500)	2,200)	(5,000)
Impairment of assets	(19,900)	(29,900)	(12,100)	—)	—)	—)
Gain on sale of assets	8,100)	5,800)	4,100)	700)	—)	13,900)
Gain on sale of investment	1,700)	200)	15,700)	—)	—)	—)
Gain on sale of business	—)	—)	—)	—)	205,400)	29,100)
Non-service components of pension income (expense), net	58,600)	74,500)	6,700)	(319,600)	—)	—)
Other income (expense), net	96,300)	148,000)	111,100)	(237,900)	284,300)	100,400)
Earnings from continuing operations before income taxes	3,361,200)	3,182,600)	3,005,600)	2,171,100)	2,531,100)	2,234,700)
Provision for income taxes	(762,700)	(716,100)	(712,800)	(550,300)	(797,700)	(741,300)
Net earnings from continuing operations	2,598,500)	2,466,500)	2,292,800)	1,620,800)	1,733,400)	1,493,400)
Net loss from discontinued operations	—)	—)	—)	—)	—)	(900)
Net earnings	2,598,500)	2,466,500)	2,292,800)	1,620,800)	1,733,400)	1,492,500)

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

The financial results show a consistent upward trend in total revenues over the six-year period, increasing from approximately $11.67 billion in 2016 to $15.01 billion in 2021. This growth is largely driven by steady increases in all three revenue components: revenues other than interest and PEO revenues, interest on funds held for clients, and PEO revenues. Notably, PEO revenues exhibit strong growth, rising from $3.06 billion in 2016 to $4.81 billion in 2021. Interest on funds held for clients peaks around 2019 before declining significantly by 2021.

Operating expenses increased from $6.03 billion in 2016 to $7.52 billion in 2021. Within this category, systems development and programming costs, as well as depreciation and amortization, have shown consistent rises, indicating increased investment in technology and asset utilization. Costs of revenues similarly exhibit a steady increase over time, consistent with revenue growth. Despite rising expenses, gross profit expanded from $4.83 billion to $6.37 billion, reflecting effective cost management relative to sales growth.

Selling, general, and administrative expenses have grown moderately but remain relatively stable as a proportion of revenues, increasing from $2.64 billion in 2016 to $3.04 billion in 2021. Correspondingly, operating income improved steadily, demonstrating enhanced operational efficiency and profitability, increasing from $2.19 billion in 2016 to $3.32 billion in 2021.

Interest expense peaked in 2019 and then decreased markedly by 2021, which could imply improved debt management or refinancing activities. Interest income on corporate funds also peaked mid-period before declining by 2021. Gains and losses on various transactions and assets reveal some volatility, with a substantial gain on the sale of a business in 2017. Impairments of assets have appeared in the later years, suggesting periodic write-downs affecting net income components.

Other income and expense have shown variability, with notable negative income in 2018 but recovery thereafter. Earnings from continuing operations before income taxes increased consistently, reflecting profitable core business activities. The provision for income taxes also rose but at a more moderate pace compared to income before taxes.

Net earnings from continuing operations increased from $1.49 billion in 2016 to $2.60 billion in 2021, indicating sustained profitability growth. Discontinued operations had a minor negative effect in 2016 but were not present in later years. Overall, net earnings mirror the trend of continuing operations and show robust expansion over the six-year span.

Revenue Trends: Consistent growth driven by all revenue components; PEO revenues exhibit strong and steady increase; interest income on client funds peaks then declines.
Expense Patterns: Operating expenses rise steadily; increased investment in technology and asset usage shown by systems development costs and depreciation; cost control reflected in gross profit expansion.
Profitability: Operating income and net earnings increase substantially, indicating effective operational management and growing profit margins.
Financial Income and Expenses: Interest expense peaks mid-period then declines significantly; interest income follows a similar but less pronounced pattern; gains on asset sales and impairments demonstrate some volatility.
Taxation: Provision for income taxes increases in line with pre-tax earnings but at a lower growth rate, supporting improved net profitability.
Overall Financial Health: Strong upward trends in revenues and earnings suggest solid financial health and operational effectiveness, with cautious management of assets and liabilities reflected in impairments and interest expense reductions.

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Automatic Data Processing Inc. (NASDAQ:ADP)

Income Statement