Executive Summary
ADP (0HJI.L) QQ4 2025 results reflect a robust profitability profile and strong cash generation within a cloud-based HCM software ecosystem. Revenue reached USD 5.1268 billion, up 7.51% year over year, while gross margin held at approximately 50.3% and operating margin approached 23.5%. Net income was USD 910.6 million and earnings per share (diluted) USD 2.23–2.24, supported by operating cash flow of USD 1.4392 billion and free cash flow of USD 1.4051 billion (per-share FCF USD 3.46). The balance sheet remains liquidity-rich, with USD 7.8466 billion in cash and short-term investments and a total asset base of USD 53.37 billion, helping fund a conservative capital plan (dividends and modest buybacks) and a substantial cash position despite a net debt of USD 5.72 billion. However, sequential quarter momentum shows a meaningful QoQ decline in revenue, gross profit, and EBIT, signaling seasonality and/or cadence in customer activity that needs to be monitored going into the next fiscal year. Management commentary underscores ongoing investments in cloud-based HCM capabilities and client expansion, supporting durable profitability and potential long-run growth. Given the strong FCF generation and high-margin software economics, ADP remains financially resilient with ample capacity for strategic investments, although valuation remains premium versus broader markets due to attractive profitability and embedded recurring revenue characteristics.
Key Performance Indicators
QoQ: -27.04% | YoY:10.45%
Key Insights
Revenue: USD 5.1268B; YoY +7.51%, QoQ -7.68%
Gross Profit: USD 2.5791B; Gross Margin 50.3%; YoY +9.27%, QoQ -10.18%
Operating Income: USD 1.2067B; Margin 23.54%; YoY +9.94%, QoQ -26.11%
Net Income: USD 910.6M; Net Margin 17.76%; YoY +9.80%, QoQ -27.12%
EPS (GAAP diluted): USD 2.23; EPS (basic) USD 2.24; YoY +10.45%, QoQ -27.04%
EBITDA: USD 1.4206B; EBITDA Margin ~27.71%
FCF: USD 1.405B; FCF per share USD 3.46
Operating Cash Flow: USD 1.4392B; Capex: USD -34.1M; Free Cash Flow Yield favorable giv...
Financial Highlights
Revenue: USD 5.1268B; YoY +7.51%, QoQ -7.68%
Gross Profit: USD 2.5791B; Gross Margin 50.3%; YoY +9.27%, QoQ -10.18%
Operating Income: USD 1.2067B; Margin 23.54%; YoY +9.94%, QoQ -26.11%
Net Income: USD 910.6M; Net Margin 17.76%; YoY +9.80%, QoQ -27.12%
EPS (GAAP diluted): USD 2.23; EPS (basic) USD 2.24; YoY +10.45%, QoQ -27.04%
EBITDA: USD 1.4206B; EBITDA Margin ~27.71%
FCF: USD 1.405B; FCF per share USD 3.46
Operating Cash Flow: USD 1.4392B; Capex: USD -34.1M; Free Cash Flow Yield favorable given cash balance
Cash and equivalents: USD 3.3478B; Short-term investments: USD 4.4988B; Total cash & short-term investments: USD 7.8466B
Total Assets: USD 53.37B; Total Liabilities: USD 47.18B; Stockholders’ Equity: USD 6.188B; Net Debt: USD 5.7176B
Liquidity: Current ratio 1.048x; Debt to capitalization 0.594x; Debt to equity 1.465x
Capital allocation: Dividends paid USD 625.8M; Repurchases USD 324.0M; Net share issuance USD 131.0M
Valuation (end-Q4 snapshot): P/E 34.38x; P/B 20.23x; P/S 24.42x; Dividend Yield 0.50%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
5.13B |
7.51% |
-7.68% |
| Gross Profit |
2.58B |
9.27% |
-10.18% |
| Operating Income |
1.21B |
9.94% |
-26.11% |
| Net Income |
910.60M |
9.80% |
-27.12% |
| EPS |
2.24 |
10.45% |
-27.04% |
Key Financial Ratios
operatingProfitMargin
23.5%
operatingCashFlowPerShare
$3.54
freeCashFlowPerShare
$3.46
dividendPayoutRatio
68.7%
Management Commentary
Transcript content not provided in the data set. No management quotes or call transcript excerpts were supplied. As such, specific thematic quotes from leadership (strategy, operations, market conditions) are not available. If a transcript or quoted remarks are provided, quotes can be integrated here with attribution and context.
Forward Guidance
No formal forward guidance appears in the supplied data set for QQ4 2025. Based on the reported metrics and qualitative signals inferred from the earnings data, the following view is offered:
- View on growth: Expect mid-single-digit revenue growth to persist, underpinned by continued demand for cloud-based HCM platforms and modules (payroll, benefits, talent management, and workforce management). The QoQ revenue softness suggests seasonality; the YoY improvement indicates underlying adoption and stickiness of ADP’s cloud solutions.
- Profitability: Margin resilience is favorable, with gross margin near 50% and operating margin around 23.5%, supported by scalable software economics and disciplined OPEX management, though any near-term R&D investments could temper margin slightly.
- Cash flow and capital allocation: Strong free cash flow generation supports a balanced approach to returns (dividends) and optional buybacks. The significant non-operating cash effects (foreign exchange) should be monitored for ongoing volatility.
- Risks and watchpoints: FX sensitivity, macroeconomic uncertainty affecting payroll volumes or client retention, competitive dynamics in HCM software, data security/regulatory changes, and potential further M&A activity that could alter the cash flow profile.
Overall, the investment thesis favors a solid, defensible software/services franchise with high-margin recurring revenue, provided currency and growth trajectory remain favorable.