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Payroll and HR services provider Automatic Data Processing (NASDAQ:ADP) reported Q1 CY2025 results topping the market’s revenue expectations , with sales up 5.7% year on year to $5.55 billion. Its non-GAAP profit of $3.06 per share was 2.9% above analysts’ consensus estimates.

Is now the time to buy ADP? Find out in our full research report.

ADP (ADP) Q1 CY2025 Highlights:

• Revenue: $5.55 billion vs analyst estimates of $5.49 billion (5.7% year-on-year growth, 1.1% beat)

• Adjusted EPS: $3.06 vs analyst estimates of $2.97 (2.9% beat)

• Raising full year guidance for adjusted EBIT margin and adjusted diluted EPS growth

• Operating Margin: 29.4%, in line with the same quarter last year

• Market Capitalization: $120.3 billion

Company Overview

Processing one out of every six paychecks in the United States, ADP (NASDAQ:ADP) provides cloud-based human capital management solutions that help businesses manage payroll, benefits, talent acquisition, and HR administration.

Sales Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $20.2 billion in revenue over the past 12 months, ADP is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.

As you can see below, ADP’s sales grew at a decent 6.6% compounded annual growth rate over the last five years. This shows its offerings generated slightly more demand than the average business services company, a helpful starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. ADP’s annualized revenue growth of 7% over the last two years aligns with its five-year trend, suggesting its demand was stable.

This quarter, ADP reported year-on-year revenue growth of 5.7%, and its $5.55 billion of revenue exceeded Wall Street’s estimates by 1.1%.

Looking ahead, sell-side analysts expect revenue to grow 5.5% over the next 12 months, similar to its two-year rate. We still think its growth trajectory is satisfactory given its scale and suggests the market is forecasting success for its products and services.

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