ADP Poised for Another Quarter of Growth

Human resources software company ADP Inc. (ADP) will probably say profits and revenue climbed for the company’s second quarter FY 2023 amid a strong labor market.

ADP will likely report net income of $805.1 million when it announces earnings after markets close on Jan. 25. Adjusted earnings per share (EPS) probably increased roughly 18% year-over-year to $1.94. Revenue is expected to have improved 9% to $4.4 billion, according to estimates from Visible Alpha.

Source: Visible Alpha

ADP’s business thrived in recent quarters as nonfarm payrolls increased faster than expected and unemployment remained low. The performance of the job market has coincided with healthy demand for ADP’s HR products and services despite headwinds including a series of interest rate hikes by the Federal Reserve, inflation, and the threat of a cooling economy.

The firm has also expanded its international business through in-country software offerings as well as cloud-based services covering broader regions globally. The worldwide labor market has experienced an uneven recovery following the pandemic, as the war in Ukraine and tightening monetary policies have slowed job growth in some areas.

ADP recently increased its dividend by 20% for a 48th consecutive year and announced in November a $5-billion stock repurchase program.

Shares of ADP have outperformed the market in the last year, rising about 8% compared with an 18% fall for the benchmark S&P 500 Information Technology Index.