Automatic Data Processing Inc. (NASDAQ:ADP) reported better-than-expected fiscal first-quarter 2027 results Wednesday, but its shares fell in premarket trading.
The company reported quarterly revenue of $5.491 billion, topping the analyst consensus estimate of $5.475 billion. Revenue rose 6% from a year earlier.
The human resources management software company posted adjusted earnings of $2.82 per share, beating analysts’ expectations of $2.77 per share.
Segment Performance
ADP generates most of its revenue through service fees in its Employer Services and Professional Employer Organization (PEO) Services segments, with pricing based on the services clients use.
Employer Services revenue rose 6% to $3.69 billion, while PEO Services revenue increased 7% to $1.81 billion.
Interest earned on funds held for clients climbed 15% to $329 million. Average client funds balances rose 6% to $36.9 billion, while the average interest yield increased 30 basis points to 3.6%.
Profit and Margins
Adjusted earnings before interest and taxes rose 12% to $1.5 billion, while the adjusted operating margin expanded 130 basis points to 26.8%.
Net earnings increased 11% from a year earlier to $1.1 billion.
ADP ended Sept. 30 with $3.28 billion in cash and cash equivalents. The company generated $651 million in operating cash flow during the quarter.
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Executives Point to Resilient Demand, AI Investments
CEO Maria Black said ADP began fiscal 2027 with strong results, supported by its resilient business model and continued client trust.
Black said increasing workplace complexity is driving employers to rely more on ADP’s expertise and solutions to transform workforce management. She said the company enters the remainder of fiscal 2027 with strong momentum.
Chief Financial Officer Peter Hadley said ADP exceeded its expectations for revenue growth, adjusted operating margin expansion and adjusted earnings-per-share growth during the quarter.
Hadley said disciplined investments are supporting the company’s artificial intelligence transformation while allowing it to maintain strong financial performance.
Fiscal 2027 Outlook
ADP now expects revenue growth of nearly 6% for fiscal 2027, compared with its previous forecast of 5% to 6%.
That implies revenue of approximately $23.264 billion, above the analyst consensus estimate of $23.228 billion.
The company also raised its adjusted diluted earnings-per-share growth forecast to 10% to 12%, from its previous outlook of 9% to 11%.
The revised forecast implies adjusted earnings of $12.23 to $12.45 per share, compared with the analyst consensus estimate of $12.26 per share.
ADP Price Action: Automatic Data Processing shares were down 2.08% at $287.01 during premarket trading on Wednesday, according to Benzinga Pro data.
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