Automatic Data Processing Inc
Q1 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: −1.04%.
Did ADP Beat Earnings? Q1 2026 Results
Automatic Data Processing kicked off fiscal 2026 on firm footing, posting first-quarter revenue of $5.18 billion, up 7.1% year-over-year and ahead of the $5.13 billion consensus estimate by 0.81%, while diluted EPS of $2.49 edged past the $2.44 analyst forecast by 1.94%. The headline beat was underpinned by a standout performance in the client funds extended investment strategy, where interest on funds held for clients surged 13% to $286.80 million as average client fund balances climbed to $34.9 billion and yields improved to 3.3%, meaningfully lifting earnings quality. Both the Employer Services and PEO Services segments contributed equally at the top line, each growing 7%, though margin pressure from rising benefits pass-through costs in PEO was a notable offset. CFO Peter Hadley noted results exceeded internal expectations across revenue and margin, and management held its full-year outlook steady, targeting consolidated revenue growth of 5% to 6% and adjusted diluted EPS growth of 8% to 10%, even as one analyst firm cut its price target following the print.
- Solid new business bookings growth
- Strong client revenue retention and record client satisfaction levels
- Higher client funds interest revenue, up 13% driven by 7% growth in average client fund balances and 20 bps yield improvement
- Net impact from client funds extended strategy increased 29% to $263.7 million
- Average worksite employees paid by PEO Services increased 2% to about 754,000
“Fiscal 2026 started off with solid financial performance and meaningful progress across our strategic priorities. We continue to drive strong outcomes for clients, as exemplified by our record client satisfaction levels and continued robust retention results. We also continue to infuse AI into our products and across our operations to solve real-world HR problems and fundamentally shift how work gets done.”
ADP CEO, on the earnings call
Forward Guidance & Outlook
ADP is maintaining its fiscal 2026 consolidated outlook: revenue growth of 5% to 6%, adjusted EBIT margin expansion of 50 to 70 basis points, adjusted effective tax rate of approximately 23%, and adjusted diluted EPS growth of 8% to 10%. Employer Services revenue growth is expected at 5% to 6%, with new business bookings growth of 4% to 7%, client revenue retention decrease of 10 to 30 basis points, and approximately flat U.S. pays per control. PEO Services revenue growth is forecast at 5% to 7%, with average worksite employee count growth of 2% to 3%. Interest on funds held for clients is expected at $1.300 to $1.320 billion, with total contribution from the client funds extended investment strategy of $1.260 to $1.280 billion.
ADP YoY Financials
ADP Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.