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

Automatic Data Processing Inc., common-size consolidated income statement

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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 65.10 65.38 66.14 67.43 68.81 70.57
Interest on funds held for clients 2.81 3.74 3.96 3.50 3.21 3.23
Professional Employer Organization (PEO) revenues 32.08 30.89 29.89 29.07 27.98 26.20
Revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Operating expenses -50.12 -50.75 -50.41 -52.06 -51.83 -51.64
Systems development and programming costs -4.78 -4.62 -4.49 -4.73 -5.07 -5.17
Depreciation and amortization -2.69 -2.51 -2.15 -2.06 -1.83 -1.81
Costs of revenues -57.58% -57.88% -57.05% -58.85% -58.72% -58.63%
Gross profit 42.42% 42.12% 42.95% 41.15% 41.28% 41.37%
Selling, general, and administrative expenses -20.26 -20.58 -21.62 -22.30 -22.48 -22.60
Operating income 22.16% 21.53% 21.34% 18.85% 18.80% 18.77%
Interest expense -0.40 -0.73 -0.92 -0.77 -0.65 -0.48
Interest income on corporate funds 0.24 0.58 0.69 0.63 0.62 0.53
Realized gains (losses) on available-for-sale securities, net 0.08 0.09 -0.01 -0.02 0.02 -0.04
Impairment of assets -0.13 -0.20 -0.09 0.00 0.00 0.00
Gain on sale of assets 0.05 0.04 0.03 0.01 0.00 0.12
Gain on sale of investment 0.01 0.00 0.11 0.00 0.00 0.00
Gain on sale of business 0.00 0.00 0.00 0.00 1.66 0.25
Non-service components of pension income (expense), net 0.39 0.51 0.05 -2.40 0.00 0.00
Other income (expense), net 0.64% 1.01% 0.78% -1.79% 2.30% 0.86%
Earnings from continuing operations before income taxes 22.40% 21.81% 21.20% 16.29% 20.45% 19.15%
Provision for income taxes -5.08 -4.91 -5.03 -4.13 -6.44 -6.35
Net earnings from continuing operations 17.32% 16.91% 16.17% 12.16% 14.00% 12.80%
Net loss from discontinued operations 0.00 0.00 0.00 0.00 0.00 -0.01
Net earnings 17.32% 16.91% 16.17% 12.16% 14.00% 12.79%

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).

Revenue Composition Trends
Over the observed period, the share of revenues from sources other than client funds interest and PEO activities decreased gradually from 70.57% in mid-2016 to 65.1% in mid-2021. Concurrently, the proportion of Professional Employer Organization (PEO) revenues showed a consistent increase, rising from 26.2% to 32.08%, indicating an expanding emphasis on PEO-related services. Interest on funds held for clients exhibited some fluctuation, peaking at 3.96% in mid-2019 before declining to 2.81% by mid-2021.
Operating Expenses and Cost Structure
Operating expenses as a percentage of revenues remained relatively stable, fluctuating slightly around the 50-51% range and ending at 50.12% in the latest period. Systems development and programming costs demonstrated a slight downward trend from 5.17% to 4.78%, reflecting possibly improved efficiencies or cost management in technology-related expenditures. Depreciation and amortization expenses increased steadily from 1.81% to 2.69%, suggesting either asset base growth or changes in capitalization policies. Total costs of revenues declined modestly from 58.63% to 57.58%, contributing positively to profitability.
Profitability Indicators
Gross profit margins exhibited an overall upward trend, moving from 41.37% to 42.42%, with a notable peak at 42.95% in mid-2019. Selling, general, and administrative expenses consistently decreased from 22.6% to 20.26%, implying enhanced operational efficiency. Operating income improved significantly from 18.77% to 22.16%, demonstrating strong operational leverage and improved cost control.
Financial and Other Income Charges
Interest expense peaked in mid-2019 at 0.92% but subsequently declined sharply to 0.4%, indicating reduced borrowing costs or debt levels. Interest income from corporate funds declined notably from 0.53% to 0.24%, which might reflect a lower yield environment or changes in cash management strategies. Realized gains or losses on securities remained near zero, showing minimal impact. Non-service components of pension income shifted from a substantial expense of -2.4% in mid-2018 to positive contributions around 0.39%, reflecting improved pension fund performance or accounting adjustments. Impairment charges were minor but present in 2019-2021, suggesting occasional asset revaluations.
Earnings Performance
Earnings from continuing operations before taxes showed recovery and growth from a dip at 16.29% in mid-2018 to 22.4% by mid-2021. The provision for income taxes remained relatively steady between 4% and 6%, indicating consistent effective tax rates. Net earnings from continuing operations rose markedly from 12.8% to 17.32%, signifying enhanced profitability and effective operational management. Net loss from discontinued operations was negligible and limited to early periods.