Q4 2025 Automatic Data Processing Inc Earnings Call Transcript
Key Points
- Automatic Data Processing Inc (ADP) reported strong financial results for fiscal 2025, with 8% revenue growth in Q4 and 7% for the full year.
- Employer Services retention exceeded expectations, increasing to 92.1%, approaching a record high.
- ADP's strategic investments in technology, such as ADP Lyric HCM and AI-driven capabilities, have shown significant market momentum and client engagement.
- The company expanded its global payroll capabilities, entering new markets like Japan and Saudi Arabia, and acquiring businesses like PEI in Mexico.
- ADP's PEO segment saw accelerated new business bookings growth in Q4, contributing to a 7% revenue growth for fiscal 2025.
- Employer Services new business bookings grew by only 3%, which was below expectations, partly due to a softer finish in the HR Outsourcing business.
- International bookings improved in Q4 but were insufficient to offset earlier fiscal year softness.
- ADP anticipates a 10 to 30 basis point decline in Employer Services retention in fiscal 2026 due to potential macroeconomic pressures.
- PEO margins contracted by 20 basis points in Q4 and 60 basis points for the full year, influenced by higher zero-margin pass-through benefits revenues and increased state unemployment insurance costs.
- The company expects some contraction in adjusted EBIT margin in the first quarter of fiscal 2026 due to the timing of investments and the WorkForce Software acquisition.
Good morning. My name is Michelle, and I'll be your conference operator. At this time, I would like to welcome everyone to ADP's fourth-quarter fiscal 2025 earnings call. I would like to inform you that this conference is being recorded. (Operator Instructions).
I will now turn the conference over to Matt Keating, Vice President, Investor Relations. Please go ahead.
Thank you, Michelle, and welcome everyone to ADP's fourth-quarter fiscal 2025 earnings call. Participating today are Maria Black, our President and CEO; and Peter Hadley, our CFO. Earlier this morning, we released our results for the quarter. Our earnings materials are available on the SEC's website and our Investor Relations website at investors.adp.com where you also find the investor presentation that accompanies today's call.
During our call, we will reference non-GAAP financial measures, which we believe to be useful to investors and that exclude the impact of certain items. A description of
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