Automatic Data Processing, Inc. stock research
FY2025 Q2
Automatic Data Processing (ADP) Gross Margin — Quarter Ended Dec 31, 2024
Revenue increased compared to both the preceding quarter and the same quarter last year. Gross profit rose as well, and cost of revenue was higher, but gross margin improved versus both periods.
Gross margin takeaway
Quarter ended Dec 31, 2024 · FY2025 Q2
Revenue increased compared to both the preceding quarter and the same quarter last year. Gross profit rose as well, and cost of revenue was higher, but gross margin improved versus both periods.
- The gross margin improvement was driven by gross profit increasing at a higher rate than cost of revenue relative to the prior quarter and the year-ago quarter.
- Compared to the preceding quarter, revenue and gross profit were higher, while cost of revenue also increased. Gross margin improved from the prior quarter. Compared to the same quarter one year earlier, revenue and gross profit were higher, cost of revenue increased, and gross margin strengthened.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
45.7%
Gross profit
$2.3B
Revenue
$5.0B
Cost of revenue
$2.7B
Quarter-over-quarter change
+0.2 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 |
|---|---|---|---|---|
| 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% |
| Dec 31, 2024 | $5.0B | $2.3B | $2.7B | 45.7% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Sep 30, 2024
+0.2 pts
Year-over-year change
Dec 31, 2023
+0.6 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The gross margin improvement was driven by gross profit increasing at a higher rate than cost of revenue relative to the prior quarter and the year-ago quarter.
Compared to the preceding quarter, revenue and gross profit were higher, while cost of revenue also increased. Gross margin improved from the prior quarter. Compared to the same quarter one year earlier, revenue and gross profit were higher, cost of revenue increased, and gross margin strengthened.
Monitor the trend in operating expenses within cost of revenues, as they represent the largest component of cost of revenues according to the filing.