Automatic Data Processing (ADP) Financials

Automatic Data Processing (ADP) has demonstrated consistent revenue growth over the past four years, with total revenue increasing from approximately $4.1 billion in Q4 2022 to $5.13 billion in Q4 2025. This steady expansion reflects the company's ability to grow its core business in the human capital management and payroll services industry.

Profitability has generally improved during this period. Net income attributable to common shareholders rose from $625.5 million in Q4 2022 to $910.7 million in Q4 2025. Correspondingly, diluted earnings per share increased from $1.49 to $2.23, indicating effective management of share count and costs.

Operating expenses, including Selling, General & Administrative (SG&A) and Research & Development (R&D), have risen in line with revenue growth. SG&A expenses increased from about $914 million in Q4 2022 to $1.10 billion in Q4 2025, while R&D expenses fluctuated around $220-$270 million per quarter. The balance between expense growth and revenue gain has allowed for expansion in operating income, which nearly doubled from about $745.6 million in Q4 2022 to $1.21 billion in Q4 2025.

Cash flow from operations has remained strong and growing, with net cash from continuing operating activities increasing from $912.9 million in Q4 2022 to $1.44 billion in Q4 2025. This robust cash generation supports ongoing investments in the business and shareholder returns.

Investing activities show significant purchases of investments, often exceeding sales, reflecting a strategy of portfolio management and growth through acquisitions. Despite substantial outflows in investing activities, the company has maintained healthy cash equivalents balance and liquidity.

Financing activities feature large issuance and repayment of debt, substantial repurchases of common equity, and consistent dividend payments. Net cash used in financing activities was notably negative in recent quarters (e.g., -$5.06 billion in Q4 2025), indicative of aggressive capital return strategies including share buybacks.

The balance sheet remains solid with total assets growing from about $63 billion in Q4 2022 to approximately $56.4 billion in Q3 2025, and total equity rising from $3.2 billion to $5.8 billion in the same period. However, liabilities remain a significant portion of the structure, with long-term debt stable around $2.9-3.0 billion.

• Consistent revenue growth over the last four years, increasing from approximately $4.1 billion to $5.13 billion quarterly.
• Rising net income and EPS, with diluted EPS growing from $1.49 to $2.23, demonstrating improving profitability.
• Strong and increasing operating cash flows, reaching $1.44 billion in Q4 2025, supporting business and shareholder activities.
• Operating income increased significantly, nearly doubling over four years, indicating efficient expense management relative to revenue growth.
• Aggressive capital return through equity buybacks and dividends, showing confidence in cash flow stability.
• Elevated and fluctuating R&D spending, indicating ongoing investment in innovation but also sustained costs.
• Significant purchases and sales of investments in cash flow statements, implying active portfolio and acquisition management.
• Total liabilities remain high relative to equity, with stable long-term debt around $3 billion.
• Net cash used in financing activities is significantly negative in the recent period, reflecting heavy debt issuance, repayments, and share repurchases which could impact leverage and liquidity.
• Some volatility in changes in operating assets and liabilities impacting operating cash flow, suggesting working capital management challenges.

Overall, ADP shows a strong financial progression with increasing revenues, profits, and strong cash flow generation. Investors should watch the company's strategy on debt management and continued investments in innovation and acquisitions. The capital return policies indicate management's confidence, but the large cash used in financing activities warrants monitoring for potential impacts on balance sheet health over time.