The original outsourcer, Automatic Data Processing (ADP) has still got it. ADP is one of the largest payroll and tax filing processors in the world, serving about 620,000 clients. Employer services (payroll processing, tax and benefits administration services) account for the majority of the company's sales, and its PEO (professional employer organization) services are provided through ADP TotalSource. ADP also provides inventory and other computing and data services to auto, motorcycle, truck, and recreational vehicle dealers. Other offerings include accounting, auto collision estimates for insurers, employment background checks, desktop support, and business development training services.
The company provides services in more than 130 countries spread across the Americas, Europe, the Middle East, Africa, and the Asia Pacific region.
ADP's revenues and profits have been trending upward year-over-year for several consecutive fiscal periods. Revenue increased 6% while net income increased 1% in fiscal 2013 compared with fiscal 2012. Net cash inflow decreased by $8 million in fiscal 2013 compared with the prior fiscal year.
The increase in total revenue during fiscal 2013 was attributed to the increase in revenue from the company’s reportable segments. Compared to fiscal 2012 Employer Services, PEO Services, and Dealer Services revenues increased 7%, 11%, and 9% respectively. The increase in revenue from all the segments was attributed to new business started during the year from new business bookings growth.
Over the years, the data processing giant has been fortifying its core employer services and PEO operations while restructuring and working to cut costs in its dealer services division. Across all segments, ADP has been expanding internationally and extending its services through acquisitions. It also continues to boost its Web-based software offerings and small-business services.
During the fiscal years 2013, 2012, and 2011, ADP invested approximately $757 million, $699 million, and $667 million, respectively, from continuing operations, in systems development and programming, migration to new computing technologies, the development of new products, and maintenance of its existing technologies, including purchases of new software and software licenses.
Mergers and Acquisitions
The company acquired two businesses during fiscal 2013 for approximately $40.4 million while it acquired seven businesses in fiscal 2012 for an aggregate purchase price of approximately $292.3 million.
In 2012 ADP acquired the human resource solutions subsidiary of SHPS, Inc., a provider of benefits administration services. SHPS’ Human Resource Solutions (HRS) includes benefits administration eligibility and enrollment, spending accounts, COBRA, absence management solutions, benefits advocacy, and print and fulfillment. The acquisition is strategic fit with ADP’s already strong benefits solutions and services helps ADP to broaden its benefits portfolio.
During fiscal 2012 the company also acquired the Indian payroll business of Randstad, from its Indian subsidiary Ma Foi Randstad. Ma Foi Consulting Solutions Ltd., the Indian company acquired by ADP from Ma Foi Randstad, offers managed payroll services and social benefits administration to clients across India through a fully customized payroll engine. The acquisition supports ADP’s broader strategy to expand its global footprint in human resources business process outsourcing (HR BPO) across large and developing markets.
In 2011 ADP enhanced its position in cloud computing when it purchased AdvancedMD Software from private equity firm Francisco Partners. AdvancedMD's offerings give 10,000 physicians in 4,100 practices access to cloud-based practice management, electronic health records, and revenue cycle management services.