Automatic Data Processing, Inc. stock research
FY2025 Q1
Automatic Data Processing (ADP) Gross Margin — Quarter Ended Sep 30, 2024
Revenue and gross profit both increased compared to the immediately preceding quarter and the same quarter one year earlier, while cost of revenue was higher year over year but stable sequentially. Gross margin improved relative to both prior periods, reflecting a stronger relationship between revenue growth and gross profit expansion.
Gross margin takeaway
Quarter ended Sep 30, 2024 · FY2025 Q1
Revenue and gross profit both increased compared to the immediately preceding quarter and the same quarter one year earlier, while cost of revenue was higher year over year but stable sequentially. Gross margin improved relative to both prior periods, reflecting a stronger relationship between revenue growth and gross profit expansion.
- The strongest observable margin driver is the improvement in gross margin from the prior quarter and the year-ago quarter, supported by revenue growth that outpaced the increase in cost of revenue.
- Compared to the immediately preceding quarter, revenue was stable while gross profit was higher, leading to an improved gross margin. Versus the same quarter one year earlier, revenue, gross profit, and gross margin were all higher, with cost of revenue also higher.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
45.5%
Gross profit
$2.2B
Revenue
$4.8B
Cost of revenue
$2.6B
Quarter-over-quarter change
+0.7 pts
Year-over-year change
+1.2 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 |
|---|---|---|---|---|
| Dec 31, 2023 | $4.7B | $2.1B | $2.6B | 45.1% |
| Mar 31, 2024 | $5.3B | $2.5B | $2.8B | 47.3% |
| Jun 30, 2024 | $4.8B | $2.1B | $2.6B | 44.8% |
| Sep 30, 2024 | $4.8B | $2.2B | $2.6B | 45.5% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2024
+0.7 pts
Year-over-year change
Sep 30, 2023
+1.2 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the improvement in gross margin from the prior quarter and the year-ago quarter, supported by revenue growth that outpaced the increase in cost of revenue.
Compared to the immediately preceding quarter, revenue was stable while gross profit was higher, leading to an improved gross margin. Versus the same quarter one year earlier, revenue, gross profit, and gross margin were all higher, with cost of revenue also higher.
Monitor the trend in cost of revenue relative to revenue, as it increased year over year and remained stable sequentially.