Automatic Data Processing In — Income Statement, Cash Flows & Balance Sheet
Is ADP profitable?
ADP has grown revenue and earnings consistently, with net income up nearly 20% over two years.
| Metric | FY2023 | FY2024 | FY2025 | Change (FY23–25) |
|---|---|---|---|---|
| Total Revenues ($M) | $18,012.2 | $19,202.6 | $20,560.9 | +14.2% |
| Net Earnings ($M) | $3,412.0 | $3,752.0 | $4,079.7 | +19.6% |
| Diluted EPS | $8.21 | $9.10 | $9.98 | +21.6% |
| Net Margin | 18.9% | 19.5% | 19.8% | +0.9 pts |
ADP has delivered steady, double-digit revenue growth while modestly expanding its net margin each year. Earnings per share grew even faster than net income, helped by an ongoing share buyback program that reduces the share count over time.
Interest income on client funds is a meaningful — and growing — revenue boost that depends on interest rates staying elevated.
| Revenue Line ($M) | FY2023 | FY2024 | FY2025 | Change |
|---|---|---|---|---|
| Interest on funds held for clients | $813.4 | $1,024.7 | $1,189.1 | +46.2% |
| Corporate fund interest income | $149.5 | $241.3 | $319.5 | +113.7% |
ADP holds billions of dollars in client payroll funds between collection and remittance, and earns investment income on that float. This line has grown rapidly as interest rates rose, but it is rate-sensitive — a rate-cutting environment would reduce this tailwind.
Where does ADP's revenue come from?
Employer Services is the core engine, but PEO Services is a large and growing complement.
| Segment Revenue ($M) | FY2023 | FY2024 | FY2025 | Change |
|---|---|---|---|---|
| Employer Services | $12,042.6 | $12,980.8 | $13,883.1 | +15.3% |
| PEO Services | $5,984.2 | $6,233.6 | $6,690.4 | +11.8% |
Employer Services — which includes payroll processing, HR software, and related tools — generates the majority of revenue and is growing at a healthy clip. PEO Services (Professional Employer Organization, essentially a co-employment arrangement where ADP handles HR functions for client workforces) is a large, fast-growing second leg.
HCM (payroll and HR software fees) is the single biggest revenue category and growing solidly.
| Revenue Type ($M) | FY2023 | FY2024 | FY2025 | Change |
|---|---|---|---|---|
| HCM | $7,716.1 | $8,155.7 | $8,674.5 | +12.4% |
| Global Solutions | $2,295.8 | $2,502.1 | $2,626.0 | +14.4% |
HCM — the fees charged for payroll processing, benefits, talent management, and HR tools — is the largest and most recurring piece of ADP's business. International (Global Solutions) is also growing well, though it remains a smaller slice of the overall pie.
Does ADP generate cash?
ADP generates strong and growing operating cash flow that comfortably funds dividends and buybacks.
| Cash Flow Metric ($M) | FY2023 | FY2024 | FY2025 | Change |
|---|---|---|---|---|
| Operating Cash Flow | $4,207.6 | $4,157.6 | $4,939.7 | +17.4% |
| Capital Expenditures + Intangibles | $571.6 | $563.4 | $547.0 | -4.3% |
| Dividends Paid | $1,903.6 | $2,183.1 | $2,398.9 | +26.0% |
| Share Repurchases | $1,121.4 | $1,231.7 | $1,280.5 | +14.2% |
Operating cash flow jumped meaningfully in fiscal 2025, and capital spending held relatively flat, meaning ADP generated ample free cash flow (operating cash minus capex). The company returned essentially all of it to shareholders through a combination of rising dividends and consistent buybacks.
How strong is ADP's balance sheet?
ADP raised $2 billion in new long-term debt in fiscal 2025, but its debt load remains manageable relative to its earnings power.
| Debt Metric ($M) | FY2024 | FY2025 | Change |
|---|---|---|---|
| Long-term Debt (gross) | $3,004.1 | $4,002.9 | +33.2% |
| Interest Expense | $361.4 | $455.9 | +26.1% |
| Net Earnings | $3,752.0 | $4,079.7 | +8.7% |
ADP issued two new tranches of senior notes totaling $2 billion (at 4.45% and 4.75%) while redeeming $1 billion of older notes, resulting in a net debt increase. Even so, net earnings cover total interest expense by a wide margin, so leverage is not a concern at current levels.
ADP's balance sheet is intentionally large due to its client funds business, but underlying corporate liquidity improved significantly.
| Liquidity Metric ($M) | FY2024 | FY2025 | Change |
|---|---|---|---|
| Cash & Cash Equivalents | $2,913.4 | $3,347.8 | +14.9% |
| Short-term Marketable Securities | $384.0 | $4,498.8 | +1,071% |
| Total Corporate Investments | $3,297.4 | $7,846.6 | +137.9% |
ADP's total assets look enormous — over $53 billion — but roughly $31 billion of that is client payroll funds held temporarily, matched by an equal liability. Stripping that out, corporate liquidity surged during fiscal 2025 as ADP shifted from holding restricted client cash into short-term marketable securities. The company also has over $10 billion in untapped credit facilities, giving it substantial financial flexibility.