2023-10-25 08:26:13 ET
Automatic Data Processing ( NASDAQ: ADP ) shares fell over 2% premarket on Wednesday after the technology company delivered a mixed bag of fiscal first quarter results and a revised fiscal 2024 outlook.
The Roseland, New Jersey-based company generated 12% higher adjusted diluted EPS compared to last year’s first quarter, thus beating analysts estimates. However, revenue of $4.5B, which grew 7% Y/Y, fell short of Wall Street estimates.
By segment, Employer Services revenues grew 9% on a reported basis, driven by solid new business bookings, strong retention, pays per control growth, and higher client funds interest revenue. PEO Services revenues increased 3%, with new business bookings growth remaining solid.
However, the company had larger expenses this quarter, with total expenses up 7.4% Y/Y to $3.48B.
CFO Don McGuire said, "Our first quarter revenue growth and margin performance exceeded our expectations, as we benefited from solid new business bookings growth, strong client revenue retention, and higher client funds interest revenue. We remain focused on delivering against our profitability commitments while at the same time investing in our business to drive sustainable long-term growth."
For fiscal 2024, the company maintained its outlook for revenue growth of 6% to 7%, adjusted EBIT margin expansion of 60 to 80 basis points, and adjusted diluted EPS growth of 10% to 12%.
By segment, Employer Services revenue is expected to grow 7% to 8%, with margin up 150 to 170 basis points compared to 130 to 150 bps previously. However, the company now sees PEO Services revenue growth of 3% to 4% vs. 3% to 5% previously, with margin down (50) to (100) basis points vs. (40) to (20) bps previously.
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ADP stock dips after mixed Q1 numbers, revised outlook