With client retention improving, Automatic Data Processing has raised its revenue outlook for fiscal 2011 as it reported first quarter results that included a drop in earnings but a 6-percent rise in net revenue. Originally, the payroll services client had forecast revenue growth of 1 percent to 3 percent for the year ending June 30. But it has raised the expectation of growth of 3 percent to 5 percent for revenue.CEO Gary Butler noted there was an unanticipated rise in client revenue retention during the quarter ended September 30, an "increase of 1.7 percentage points [that] clearly exceeds our expectations". He said that is the largest increase in that metric the company had seen in about five years. The results included a 2-percent year-over-year increase in payroll and payroll tax filings.
Revenue for the most recently ended period was $2.23 billion, up 6 percent from $2.1 billion in last year's corresponding period. However, net income dropped to $278.5 million, down just under 2 percent from $284.1 million a year earlier because of a 10 percent increase in expenses.
