Results
ADP Reports First Quarter Fiscal 2027 Results
1Revenues increased 6% compared to last year's first quarter to $5.5 billion; 6% organic constant currency
8Net earnings increased 11% to $1.1 billion, and adjusted net earnings increased 11% to $1.1 billion
Adjusted EBIT increased 12% to $1.5 billion, and adjusted EBIT margin increased 130 basis points to 26.8%
5Diluted earnings per share ("EPS") increased 14% to $2.83; adjusted diluted EPS increased 13% to $2.82
Raising full year guidance for revenue and adjusted diluted EPS growth
ROSELAND, N.J. – October 28, 2026 – ADP (Nasdaq: ADP), a global leader in HR and payroll solutions, today announced its first quarter fiscal 2027 financial results and updated its fiscal 2027 outlook.
First Quarter Fiscal 2027 Consolidated Results
7Compared to last year’s first quarter, revenues increased 6% to $5.5 billion and 6% on an organic constant currency basis.
Net earnings increased 11% to $1.1 billion, and adjusted net earnings increased 11% to $1.1 billion.
Adjusted EBIT increased 12% to $1.5 billion, and adjusted EBIT margin increased 130 basis points to 26.8%.
ADP’s effective tax rate for the quarter was 22.7% on both a reported basis and an adjusted basis.
Diluted EPS increased 14% to $2.83, and adjusted diluted EPS increased 13% to $2.82.
4"ADP is off to a strong start in fiscal 2027 with first quarter results that reflect the resilience of our business model and the trust our clients continue to place in us,” said Maria Black, President and Chief Executive Officer, ADP.
“The complexity of work is growing faster than employers can manage alone and our clients are turning to us and our deep domain expertise to fundamentally change how work gets done inside their organizations.
2We enter the rest of fiscal 2027 well positioned to build on our current momentum."
“Our first quarter results exceeded our expectations across revenue growth, adjusted EBIT margin expansion, and adjusted EPS growth," said Peter Hadley, Chief Financial Officer, ADP.
“Our ongoing commitment to a disciplined investment approach is enabling us to drive our AI transformation forward, and at the same time deliver strong financial results."
Adjusted EBIT, adjusted EBIT margin, adjusted net earnings, adjusted diluted earnings per share, adjusted effective tax rate and organic constant currency are all non-GAAP financial measures.
Please refer to the accompanying financial tables at the end of this release for a discussion of why ADP believes these measures are important and for a reconciliation of non-GAAP financial measures to their closest comparable GAAP financial measures.
First Quarter Segment Results
Employer Services – Employer Services offers a comprehensive range of global HCM and Human Resources Outsourcing solutions.
Compared to last year's first quarter:
Employer Services revenues increased 6% on a reported basis and 6% on an organic constant currency basis
U.S. pays per control increased 2%
Employer Services segment margin increased 130 basis points
PEO Services – PEO Services provides comprehensive employment administration outsourcing solutions.
Compared to last year's first quarter:
PEO Services revenues increased 7%
PEO Services revenues excluding zero-margin benefits pass-throughs increased 4%
Average worksite employees paid by PEO Services increased 2% to about 771,000
PEO Services segment margin was flat
Included within the results of our segments above:
Interest on Funds Held for Clients – The safety, liquidity, and diversification of ADP clients’ funds are the foremost objectives of the Company’s investment strategy.
Client funds are invested in accordance with ADP’s prudent and conservative investment guidelines, and most of the investment portfolio is rated AAA/AA.
Compared to last year's first quarter:
Interest on funds held for clients increased 15% to $329 million
Average client funds balances increased 6% to $36.9 billion
The average interest yield on client funds increased 30 basis points to 3.6%
Fiscal 2027 Outlook
Certain components of ADP’s fiscal 2027 outlook and related growth comparisons exclude the impact of the following items and are discussed on an adjusted basis where applicable.
Please refer to the accompanying financial tables for a reconciliation of these adjusted amounts to their closest comparable GAAP measure.
Fiscal 2026 pre-tax gain of about $5 million related to a partial reversal of the workforce optimization initiatives from fiscal 2025 and 2024
Fiscal 2026 pre-tax charges of about $91 million related to a business alignment program
Fiscal 2026 pre-tax gain of about $8 million related to gains on ADP Ventures' investments
Fiscal 2026 pre-tax net charges of about $18 million related to the settlement of a legal matter
Fiscal 2027 pre-tax gain of about $3 million related to gains on ADP Ventures' investments
Consolidated Fiscal 2027 Outlook
3Revenue growth of about 6%
Adjusted EBIT margin expansion of 70 to 90 basis points
Adjusted effective tax rate of approximately 23%
Diluted EPS growth of 12% to 14%
Adjusted diluted EPS growth of 10% to 12%
Employer Services Segment Fiscal 2027 Outlook
6Employer Services revenue growth of about 6%
Employer Services new business bookings growth of 4% to 7%
Employer Services client revenue retention decrease of 10 to 30 basis points
Increase in U.S. pays per control of about 1%
PEO Services Segment Fiscal 2027 Outlook
PEO Services revenue growth of 5% to 7%
PEO Services revenue, excluding zero-margin benefits pass-throughs, growth of 3% to 5%
PEO Services average worksite employee count growth of about 2%
Client Funds Extended Investment Strategy Fiscal 2027 Outlook
The interest assumptions in our outlook are based on Fed Funds futures contracts and various forward yield curves as of October 27, 2026.
The Fed Funds futures contracts are used in the client short and corporate cash interest income outlook.
A combination of various forward yield curves that reflect our investment mix, resulting in a blended rate of 5.3%, was used to forecast new purchase rates across the client and corporate extended and client long portfolios over the remainder of the fiscal year.
Interest on funds held for clients of $1.59 to $1.61 billion; this is based on anticipated growth in client funds balances of 4% to 5% and an average yield that is anticipated to increase to approximately 3.8%
Total contribution from the client funds extended investment strategy of $1.59 to $1.61 billion
Fiscal 2027 Outlook
(a) Outlook contemplates the anticipated impact of foreign currency in revenue and operating results.
ADP news releases, current financial information, SEC filings, and Investor Relations presentations are posted to ADP’s website at investors.adp.com .
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(a) Professional Em ployer Organization (“PEO”) revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes of $18,991.0 million and $18,534.4 million for the three months ended September 30, 2026 and 2025, respectively.
(b) PEO revenues and operating expenses include zero-margin benefits pass-through costs of $1,228.6 million and $1,131.0 million for the three months ended September 30, 2026 and 2025, respectively.
(c) PEO revenues and operating expenses include costs related t o workers' compensation coverage and state unemployment taxes fo r worksite employee s of $145.1 million and $134.9 million for the three months ended September 30, 2026 and 2025, respectively.
(a) As of September 30, 2026, $195.2 million of long-term marketable securities, and $3.1 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements.
As of June 30, 2026, $138.6 million of long-term marketable securities, and $0.7 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements.
(a) U.S. pays per control represents the approximate growth in the number of employees on ADP clients' processed payrolls in the United States when measured on a same-store-sales basis for a subset of Employer Services clients ranging from small to large businesses.
(a) We utilize a strategy by which we extend the maturities of our investment portfolio for funds held for clients and employ short-term financing arrangements to satisfy our short-term funding requirements related to client funds obligations.
As part of our client funds investment strategy, we use daily collection of funds from our clients to satisfy other unrelated client funds obligations, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities.
(b) While “Corporate extended interest income” and “Short-term financing to support Client Funds Strategy,” related to our client funds investment strategy, are non-GAAP measures, management believes this information is beneficial to reviewing the financial statements of ADP.
Management believes this information is beneficial as it allows the reader to understand the extended investment strategy for ADP's client funds assets, corporate investments, and short-term borrowings.
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