Automatic Data Processing Stock Earnings Reports

ADP reported a solid start to Fiscal 2026 with 7% revenue growth and 7% adjusted EPS growth. Key operational highlights include record Employer Services sales volume for Q1, stabilized HCM demand with particular momentum in ADP Lyric HCM and Workforce Now Next‑Gen adoption (80% of new mid‑market deals in the 50–150 employee range). Small business embedded payroll initiatives and new product enhancements (benefits recommendation tool, RUN marketplace ICRA flows) are early but strategic growth levers. ADP continues to invest in AI (ADP Assist, seller copilot tools) to improve client experience, service productivity, and implementation efficiency. PEO revenue grew 7% with average worksite employee growth of ~2%; PEO margins were pressured by selling expenses, timing of SUI costs and 0‑margin pass‑through growth. ADP reiterated full‑year guidance: consolidated revenue growth of 5%–6%, adjusted EBIT margin expansion of 50–70 bps, and adjusted EPS growth of 8%–10%. Management raised client funds interest revenue and extended investment strategy forecasts by $10M each based on stronger client funds balance growth and maintained an expected average yield of ~3.4%. Pays‑per‑control (PPC) growth rounded to ~0% in Q1 and is now guided to be roughly flat for the full year. Integration and acquisition-related costs from the WorkForce Software deal modestly pressured margins in Q1. Overall tone: confident execution, continued product/AI investments, and disciplined financial guidance with modest near‑term PPC headwinds offset by higher client funds income.