Automatic Data Processing, Inc. stock research
FY2024 Q3
Automatic Data Processing (ADP) Gross Margin — Quarter Ended Mar 31, 2024
Revenue, gross profit, and cost of revenue were all higher compared to the prior quarter and the same quarter one year earlier. Gross margin also improved relative to both periods, as gross profit increased faster than revenue.
Gross margin takeaway
Quarter ended Mar 31, 2024 · FY2024 Q3
Revenue, gross profit, and cost of revenue were all higher compared to the prior quarter and the same quarter one year earlier. Gross margin also improved relative to both periods, as gross profit increased faster than revenue.
- The strongest observable factor driving the higher gross margin is that gross profit grew at a faster pace than revenue, causing the margin to expand. This relationship held when comparing to both the prior quarter and the year-ago quarter.
- Compared to the prior quarter, revenue, gross profit, and cost of revenue all increased, with gross margin rising. Versus the same quarter a year ago, revenue and gross profit were higher, cost of revenue was higher, and gross margin was also higher.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
47.3%
Gross profit
$2.5B
Revenue
$5.3B
Cost of revenue
$2.8B
Quarter-over-quarter change
+2.2 pts
Year-over-year change
+0.6 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 |
|---|---|---|---|---|
| Jun 30, 2023 | $4.5B | $2.0B | $2.5B | 44.5% |
| Sep 30, 2023 | $4.5B | $2.0B | $2.5B | 44.3% |
| Dec 31, 2023 | $4.7B | $2.1B | $2.6B | 45.1% |
| Mar 31, 2024 | $5.3B | $2.5B | $2.8B | 47.3% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Dec 31, 2023
+2.2 pts
Year-over-year change
Mar 31, 2023
+0.6 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable factor driving the higher gross margin is that gross profit grew at a faster pace than revenue, causing the margin to expand. This relationship held when comparing to both the prior quarter and the year-ago quarter.
Compared to the prior quarter, revenue, gross profit, and cost of revenue all increased, with gross margin rising. Versus the same quarter a year ago, revenue and gross profit were higher, cost of revenue was higher, and gross margin was also higher.
Monitor whether the growth rate of cost of revenue continues to lag behind revenue growth, as this pattern supports the current margin level.