Automatic Data Processing, Inc. stock research
FY2023 Q3
Automatic Data Processing (ADP) Gross Margin — Quarter Ended Mar 31, 2023
Revenue and gross profit were higher relative to both the prior quarter and the same quarter a year ago. Cost of revenue increased marginally compared to the prior quarter, but the growth in gross profit outpaced that of cost, leading to an improved gross margin.
Gross margin takeaway
Quarter ended Mar 31, 2023 · FY2023 Q3
Revenue and gross profit were higher relative to both the prior quarter and the same quarter a year ago. Cost of revenue increased marginally compared to the prior quarter, but the growth in gross profit outpaced that of cost, leading to an improved gross margin.
- The relationship between revenue and gross profit strengthened, as gross profit grew faster than revenue did. This indicates that the cost structure absorbed a smaller share of revenue, which was the primary observable driver of margin improvement.
- Compared to the immediately preceding quarter, gross margin improved by more than two percentage points. Versus the same quarter one year earlier, gross margin also strengthened by a comparable magnitude.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
46.8%
Gross profit
$2.3B
Revenue
$4.9B
Cost of revenue
$2.6B
Quarter-over-quarter change
n/a
Year-over-year change
+2.4 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2023 | $4.9B | $2.3B | $2.6B | 46.8% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Previous quarter unavailable
n/a
Year-over-year change
Mar 31, 2022
+2.4 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The relationship between revenue and gross profit strengthened, as gross profit grew faster than revenue did. This indicates that the cost structure absorbed a smaller share of revenue, which was the primary observable driver of margin improvement.
Compared to the immediately preceding quarter, gross margin improved by more than two percentage points. Versus the same quarter one year earlier, gross margin also strengthened by a comparable magnitude.
Monitor whether cost of revenue continues to increase at a slower pace than revenue, as this dynamic directly supports gross margin.