ADP (ADP) Tops Q1 EPS by 16c

ADP (NASDAQ: ADP) reported Q1 EPS of $1.65, $0.16 better than the analyst estimate of $1.49. Revenue for the quarter came in at $3.8 billion versus the consensus estimate of $3.75 billion.

• Fiscal 2021 pre-tax charges of $3 million related to transformation initiatives and pre-tax gains of approximately $31 million related to legal settlements • Fiscal 2022 expected pre-tax charges of approximately $10 million related to transformation initiatives Consolidated Fiscal 2022 Outlook • Revenue growth of 7% to 8% • Adjusted EBIT margin expansion of 50 to 75 basis points • Adjusted effective tax rate of approximately 22.5% • Diluted EPS growth of 10% to 12% • Adjusted diluted EPS growth of 11% to 13% Employer Services Segment Fiscal 2022 Outlook • Employer Services revenue growth of 5% to 6% • Employer Services margin expansion of 75 to 100 basis points • Employer Services new business bookings growth of 12% to 16% • Employer Services client revenue retention decrease of approximately 50 basis points • Increase in U.S. pays per control of 4% to 5% PEO Services Segment Fiscal 2022 Outlook • PEO Services revenue growth of 11% to 13% • PEO Services revenue, excluding zero-margin benefits pass-throughs, growth of 12% to 14% • PEO Services margin decrease of 50 basis points to flat • PEO Services average worksite employee count growth of 11% to 13% Client Funds Extended Investment Strategy Fiscal 2022 Outlook The interest assumptions in our outlook are based on Fed Funds futures contracts and various forward yield curves as of October 26, 2021. The Fed Funds futures contracts are used in the client short and corporate cash interest income outlook. A combination of various forward yield curves that reflect our investment mix, resulting in a blended rate of 1.3%, was used to forecast new purchase rates across the client and corporate extended and client long portfolios over the remainder of the fiscal year

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