Automatic Data Processing Inc. (ADP - Analyst Report) reported first-quarter fiscal 2016 earnings from continuing operations of 68 cents per share, beating the Zacks Consensus Estimate of 65 cents. Earnings also increased 10% year over year. 

Automatic Data Processing Inc. – Earnings Surprise | FindTheBest

Operational Details

Quarterly revenues of $2,714 million fell short of the Zacks Consensus Estimate of $2,723 million but grew 6% year over year.

Employer Services revenues in the quarter increased 3% year over year to $2,130.8 million. PEO Services revenues rose 18% year over year to $701.5 million.

In the quarter, combined worldwide new business bookings for the company grew 13% year over year. New business bookings represent annualized recurring revenues expected from new orders.

Interest on funds held for clients in the quarter declined 3% to $88 million. The company’s average client funds balance increased 3% year over year to $19.4 billion in the quarter while average interest yield was 1.8%.

Total expenses in the reported quarter increased 5.6% year over year to $2.26 billion, attributable to higher selling, general & administrative expense, operating expenses and systems development & programming costs.

Balance Sheet

Automatic Data Processing exited the quarter with cash and cash equivalents (including short-term marketable securities) of approximately $3.2 billion compared with $1.7 billion as on Jun 30, 2015. Long-term debt was approximately $2 billion compared with $9.2 million as on Jun 30, 2015.

Guidance

For fiscal 2016, the company now expects revenues to grow in the range of 7% to 8% over fiscal 2015, compared with the earlier projection of 7% to 9%. The upper-end of the guidance has been trimmed owing to the divesture of the AdvancedMD business. The company expects revenue growth in the first and second quarters to be lower than the second half of the fiscal.

ADP continues to expect earnings per share to grow 12% to 14% in fiscal 2016 from $2.89 per share in fiscal 2015.