Automatic Data Processing, Inc.
ADP · Nasdaq
Next quarter
Expected to report Jan 27, 2027 — estimated from last year’s reporting date.
Consensus is $2.90 EPS for Dec 2026 across 4 estimates, ranging $2.84 to $2.96.
ADP Sep 2026
- 1.44%
- $2.78
- $2.82
- —
- $5.49B
Reported results
- $5.49B
- 46.00%
- $1.13B
- $2.83
Highlights
- Earnings beat Revenue rose 6% year over year to $5.49 billion; adjusted diluted EPS of $2.82 was 1.44% above the $2.78 consensus, while GAAP diluted EPS was $2.83.
- Profitability improved Net earnings increased 11% to $1.13 billion; adjusted EBIT grew 12% to $1.47 billion and adjusted EBIT margin expanded 130 basis points to 26.8%.
- Guidance moved higher ADP raised fiscal 2027 revenue growth to about 6% from a 5%–6% range and adjusted EPS growth to 10%–12% from 9%–11%; its 70–90 basis-point adjusted margin expansion outlook was unchanged.
- Client-funds income strengthened Interest on funds held for clients rose 15% to $329 million as average balances grew 6% to $36.9 billion and yield increased 30 basis points to 3.6%.
- Employer Services delivered Revenue grew 6%, segment margin expanded 130 basis points to 36.5%, and U.S. pays per control increased 2%; ADP described bookings as a first-quarter record and held its 4%–7% full-year bookings growth outlook.
- PEO growth continued Revenue increased 7%, or 4% excluding zero-margin benefits pass-throughs; average paid worksite employees rose 2% to 771,000, while segment margin remained 13%.
- AI tools are expanding ADP Assist added 100,000 clients since Q4 FY2026; its recruiting interviewer completed more than 4,400 interviews since September, cutting interview-related time by 75%.
- Service productivity improved The Zone reached 60% of service employees, up from 48% at FY2026 year-end; in the fully deployed down-market core HR and payroll team, contacts handled per client fell 7% year over year.
Analysis
ADP began fiscal 2027 with 6% revenue growth to $5.49 billion and adjusted diluted EPS of $2.82, modestly above the supplied $2.78 consensus. Versus the year-ago quarter, net earnings rose 11% to $1.13 billion, GAAP diluted EPS advanced 14% to $2.83, and adjusted EPS grew 13% from $2.49. Management said revenue, adjusted margin expansion and adjusted EPS growth all exceeded its expectations. The supplied materials do not include Q4 FY2026 actual results, so a direct sequential comparison is not available.
The defining development was stronger operating performance alongside an improved outlook. ADP raised its full-year revenue-growth outlook to about 6% and adjusted EPS growth to 10%–12%, while keeping adjusted margin expansion at 70–90 basis points. Higher expected client-funds balances and reinvestment yields lifted the full-year client-funds interest forecast by $50 million to $1.59–$1.61 billion. Employer Services showed steady demand, including 2% U.S. pays-per-control growth, while PEO grew 4% excluding pass-throughs. The call also emphasized scaling AI across products and service operations, with early evidence in lower service contacts and faster recruiting workflows, although management did not quantify a separate AI revenue contribution.
Earnings and margins
Revenue increased 6% year over year to $5.49 billion, also up 6% on an organic constant-currency basis. Net earnings rose 11% to $1.13 billion. Adjusted EBIT increased 12% to $1.47 billion and adjusted EBIT margin reached 26.8%, 130 basis points above the year-ago quarter. GAAP diluted EPS was $2.83, up 14%; adjusted diluted EPS was $2.82, up 13%, and exceeded the supplied $2.78 consensus by 1.44%. The adjusted figure excludes a small gain on ADP Ventures investments.
Fiscal 2027 outlook
- Revenue and EPS ADP raised expected full-year revenue growth to about 6%, from 5%–6%, and adjusted diluted EPS growth to 10%–12%, from 9%–11%. The GAAP diluted EPS growth outlook is 12%–14%.
- Margins and investment The company maintained its 70–90 basis-point adjusted EBIT margin expansion outlook and approximately 23% adjusted tax-rate assumption. Management said it plans to balance margin delivery with investment in AI, products, cloud infrastructure, and upmarket and global offerings.
- Client funds The outlook for average client-funds balances increased to 4%–5% growth from 3%–4%, and the expected average yield rose to about 3.8% from about 3.7%. Full-year client-funds interest revenue is now projected at $1.59–$1.61 billion, a $50 million increase; the expected net impact from the extended investment strategy rose $45 million to the same range.
Employer Services
Employer Services revenue grew 6% to $3.69 billion, both reported and organic constant currency. Segment earnings rose 9% to $1.34 billion, lifting margin to 36.5% from 35.2%. U.S. pays per control grew 2%, which management said exceeded expectations but benefited from an easier year-ago comparison; it raised the full-year assumption to about 1% from a prior 0%–1% range. ADP reported record first-quarter new business bookings, with strength in retirement, insurance, HR outsourcing and compliance offerings. It maintained 4%–7% full-year bookings growth and expects client revenue retention to decline 10–30 basis points for the year. Management noted that some large enterprise wins are expected to contribute revenue later in FY2027 or in FY2028, while faster-to-revenue offerings are supporting current growth.
AI and service productivity
- Product adoption ADP Assist added 100,000 clients since Q4 FY2026. The recruiting interviewer agent in Lyric completed more than 4,400 interviews since early September, reduced interview-related time by 75%, and handled more than half of those interviews after hours. ADP said 50 agents were generally available.
- Internal deployment The Zone, ADP’s AI-enabled service platform, expanded to 60% of the service population from 48% at FY2026 year-end. In down-market core HR and payroll, the fully deployed service team reduced contacts per client 7% year over year in Q1, following an 8% reduction across FY2026.
- Commercial approach Management described AI pricing as situation-dependent and value-based: new functionality may be sold as an add-on, while improvements to existing services may be reflected in general price increases. It did not quantify a distinct AI-related revenue contribution for the year.
PEO Services
PEO Services revenue increased 7% to $1.81 billion, while revenue excluding zero-margin benefits pass-throughs grew 4%. Average paid worksite employees rose 2% year over year to 771,000. Segment earnings increased 7% to $234 million, but the segment margin remained flat at 13% as lower operating expenses offset the effect of higher pass-through growth. ADP maintained its full-year outlook for 5%–7% total PEO revenue growth, 3%–5% growth excluding zero-margin pass-throughs, and about 2% growth in average worksite employees. Management cited timing differences in state-related items as affecting year-over-year comparisons and said it would wait for later visibility on state unemployment tax tables before changing guidance.
