ADP beats second quarter revenue estimates on strong demand for payroll services

(Reuters) - Automatic Data Processing beat second-quarter revenue estimates on Wednesday due to increased demand for its employee management and payroll services, driven by strong spending from small and medium-sized businesses.

ADP, which is one of the world's largest payroll processors globally, benefited from stable employment activity and low layoff rates in the U.S. labor market.

Revenue at its PEO segment, which provides administration outsourcing services, was $1.66 billion in the quarter ended Dec. 31, compared with expectations of $1.64 billion, according to data compiled by LSEG.

The Roseland, New Jersey-based company acquired WorkForce Software in October for around $1.2 billion in cash, in a bid to stay ahead of competitors, as the industry shifts towards mobile-friendly, cloud-based applications.

ADP reported a second-quarter revenue increase of 8% to $5.05 billion, compared with estimates of $4.97 billion.

On an adjusted basis, it earned $2.35 per share in the second quarter, compared with estimates of $2.29.

Shares of the payroll and human capital management company rose 1.2% before the bell.

(Reporting by Kritika Lamba in Bengaluru; Editing by Tasim Zahid)

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