Automatic Data Processing Inc. (NASDAQ:ADP) reported fourth-quarter fiscal 2026 results on Wednesday.
The company reported quarterly revenues of $5.47 billion, beating the analyst consensus estimate of $5.44 billion. Revenues increased 7% year-over-year.
The human resources management software company reported quarterly adjusted EPS of $2.64, beating the analyst consensus estimate of $2.60.
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Segment Performance
ADP primarily earns revenue by charging service fees in its Employer Services and PEO segments, with pricing based on the scope of services each client uses.
Employer Services revenues increased 7% to $3.7 billion. PEO Services revenues rose 7% to $1.8 billion.
Interest on funds held for clients increased by 15% to $355 million. Average client funds balances increased 8% to $41 billion, and the average interest yield on client funds increased 20 basis points to 3.5%.
Profits and Margins
Adjusted EBIT increased 13% to $1.4 billion, and adjusted EBIT margin rose 140 bps to 25.1%.
Net earnings increased 7% Y/Y to $1 billion. ADP held $4.23 billion in cash and equivalents as of June 30.
The company generated $1.43 billion in operating cash flow during the quarter.
ADP executives said the company enters fiscal 2027 with stronger bookings, high retention, AI-enabled productivity tools and global HCM demand supporting continued revenue and earnings growth.
AI, Lyric and Global Scale Drive Outlook
CEO Maria Black said employers are turning to ADP as they navigate compliance, workforce redesign and AI adoption. She said ADP’s data shows AI is reshaping work at the task level rather than eliminating jobs at scale, while increasing the need for trusted payroll, HR and compliance support.
She said ADP saw broad-based bookings growth across small business, HR outsourcing, enterprise and international businesses, while Employer Services retention remained strong at 92.1%.
Black said ADP Assist has expanded across payroll, benefits, human resources and compliance, with HCM agents now available to nearly all of ADP’s more than 1.1 million clients. She also said Lyric HCM is gaining traction, with live clients up 94% from a year ago and its pipeline up 50%, supported by enterprise and international demand.
On deals and partnerships, Black pointed to ADP’s Workforce Software acquisition, now integrated as Workforce Suite, and said ADP remains open to acquisitions that fit strategically, culturally and financially. She also highlighted ADP’s research partnership with the Stanford Digital Economy Lab, which uses ADP payroll data to study how AI is changing work.
Outlook
ADP now expects a revenue growth outlook of 5%-6%, translating to a range of $23.044 billion to $23.264 billion, versus the analyst consensus estimate of $23.190 billion.
The company now expects an adjusted diluted EPS growth of 9%-11%, translating to $12.12 to $12.34, versus the analyst consensus estimate of $12.20.
ADP Price Action: Automatic Data Processing shares were up 6.13% at $280.37 at the time of publication on Wednesday, according to Benzinga Pro data.
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