Payroll and tax services provider Automatic Data Processing raised its full-year profit and revenue forecasts as the company expects to benefit from the U.S. corporate tax reform.
The company said it expects revenue growth of 7 percent to 8 percent in fiscal 2018, compared with its earlier forecast of 6 percent to 8 percent.
U.S. companies are rushing to reassess their tax accounting after President Donald Trump enacted sweeping changes to the tax code, benefiting tax services providers like ADP. The company will also gain from a lower tax bill.
“Based on the performance in the first half of the year, and the ongoing benefit we expect from corporate tax reform, we are raising our full-year adjusted EPS guidance,” Chief Financial Officer Jan Siegmund said in a statement.
ADP expects adjusted profit growth of 12 percent to 13 percent for 2018, up from its prior forecast 5 percent to 7 percent growth.
Revenue from its professional employer organization services unit, which caters to small and medium-sized businesses and is a major contributor to its revenue, rose 15 percent to $945.3 million in the second quarter.
The company’s net income fell to $467.5 million, or $1.05 per share, in the second quarter ended Dec. 31 from $510.9 million, or $1.13 per share, a year earlier.
Excluding one-time items the company earned 99 cents per share. Total revenue rose to $3.24 billion from $2.99 billion.
Analysts on average were expecting the company to report a profit of 90 cents per share on a revenue of $3.18 billion, according to Thomson Reuters I/B/E/S.
ADP shares were up 1.2 percent at $122.28 in premarket trading.
Source: Tech CNBC
ADP boosts forecast as new tax law spurs demand