2020 Outlook Assessment – ADP
With ADP’s large number of small and midsized customers, its short-term growth will be limited as SMB’s are hit disproportionately hard by the downturn. The vendor’s mid-term prospects for payroll remain stronger as the payroll vendor market consolidates, and it offers lower price points than the competition. However, based on customer interviews, market opportunity scrutiny, and ROI analysis, Nucleus believes that ADP’s HCM business will struggle moving forward, limiting overall growth as revenue declines. While ADP’s large market share and the benefits from investment by Pershing Capital have helped it perform well over the past several years, the vendor’s high customer churn and large size leave it with little opportunity for growth, particularly as it faces increased levels of competition in the enterprise and international markets.