ADP's fiscal 2026 revenue rose 7% to $21.9B and diluted EPS 10% to $10.94. The growth came from pricing, new sales, buybacks and higher client-funds interest, since client hiring grew only 1%. PEO margins fell 110 bps.
Revenue
$21.9B
+6.7% YoY
Net income
$4.4B
+8.2% YoY
Diluted EPS
$10.94
+9.6% YoY
Operating margin
26.1%
Overview
Automatic Data Processing (ADP) runs payroll, HR and benefits administration for more than 1.1 million employer clients. Its fiscal year ends June 30, so "fiscal 2026" covers July 2025 through June 2026. Revenue rose 7% to $21.95 billion (6% on an organic constant currency basis, meaning excluding acquisitions and currency swings). Diluted EPS rose 10% to $10.94.
That growth did not come from clients hiring more people. U.S. pays per control, ADP's same-store count of employees on its clients' payrolls, grew only 1%. The growth came from new business sales, price increases, a 1-point currency tailwind, and a $165.7 million rise in interest ADP earns on client payroll money it holds before paying it out. EPS grew faster than profit because ADP bought back 8.6 million shares, almost twice the 4.4 million it bought in fiscal 2025.
Key figures
Metric
FY2026
FY2025
YoY Change
Total revenue
$21,947.4M
$20,560.9M
+6.7%
Earnings before income taxes (EBIT)
$5,730.3M
$5,310.1M
+7.9%
Pre-tax (EBIT) margin
26.1%
25.8%
+30 bps
Adjusted EBIT margin (non-GAAP)
26.8%
26.0%
+80 bps
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ADP doesn't report a separate operating-income line. The margin shown is pre-tax earnings divided by revenue, which ADP calls EBIT. bps = basis points; 100 bps = 1 percentage point.
Two segments that moved in opposite directions
Segment
Revenue FY2026
Revenue FY2025
Growth (reported / organic cc)
Pre-tax margin FY2026
FY2025
Employer Services (ES)
$14,831.4M
$13,883.1M
+7% / +5%
36.7%
36.1%
PEO Services
$7,128.1M
$6,690.4M
+7% / +7%
13.1%
14.2%
Employer Services is ADP's core payroll and HR software and outsourcing business. Its pre-tax earnings rose 9% to $5,436.8 million and its margin widened 60 bps. The 10-K attributes the margin gain to client funds interest revenue, efficiencies in servicing and implementing clients, and lower amortization of acquired client contracts. Higher selling and marketing costs ($188.6 million more in the segment) and the WorkForce Software acquisition from October 2024 partly offset those gains. Reported growth of 7% was 2 points above organic constant currency growth. Some of that gap is the 1-point currency tailwind, and some is WorkForce Software, which was in the results for all of fiscal 2026 but only part of fiscal 2025. New business bookings grew 6% to $2.2 billion, and client revenue retention held at 92.1%.
PEO Services is ADP TotalSource, where ADP becomes the co-employer of a client's staff (called "worksite employees") and handles their benefits, workers' compensation and payroll taxes. Its headline 7% revenue growth overstates the business's momentum. $318.3 million of the $437.7 million increase was zero-margin benefits pass-throughs: health-insurance and similar costs ADP bills to clients and pays out at cost, which add revenue but no profit. Excluding them, PEO revenue grew 5% to $2,520.8 million, driven by 2% worksite employee growth plus higher average wages and state unemployment taxes per employee. PEO pre-tax earnings fell 2% to $936.1 million and margin dropped 110 bps. The 10-K cites higher selling and marketing spend ($52.8 million), $37.1 million more in workers' compensation and state unemployment costs, and a smaller actuarial gain at ADP Indemnity, its in-house workers' comp insurer ($2.8 million versus $8.8 million a year earlier).
Takeaway: ADP grew earnings about 10% in a year when employment at its clients barely grew (pays per control +1%). It did that through pricing, new sales, share buybacks and $166 million more in client-funds interest, not through hiring at its clients. The profit growth is concentrated in Employer Services. PEO now adds revenue mostly through pass-through benefit costs while its margin shrinks.
The client-funds "float"
Between collecting payroll money from employers and paying it out to employees and tax authorities, ADP invests the balance. Average client fund balances rose 7.4% to $40.4 billion, and the average yield rose to 3.4% from 3.2%. Together that produced $1,354.8 million in interest revenue, about 6% of total revenue. This income has almost no associated cost, which is why the 10-K lists it first among the reasons margins expanded at both the company and Employer Services level. It also depends on interest rates, so it can fall when rates fall even if the underlying business is growing.
One-off items and GAAP vs. adjusted
GAAP EPS (+10%) and adjusted EPS (+11%) diverge mainly because of a $91.1 million fourth-quarter "business alignment program" charge. It consisted of $89.1 million in severance and $2.0 million in advisory costs, and ADP says it is meant to streamline the organization. ADP excludes it from adjusted results, along with an $18.0 million net legal settlement, an $8.4 million gain on ADP Ventures investments, and a $4.5 million reversal of earlier restructuring charges. Selling, general and administrative expenses rose 9% to $4,408.2 million, faster than revenue. That included $241.4 million more in sales and marketing, $67.2 million in non-recurring company-wide initiatives, and the legal settlement. The effective tax rate edged down to 23.0% from 23.2%.
Cash and capital returns
Operating cash flow rose to $5,441.2 million. ADP returned $4.7 billion to shareholders: $2.6 billion in dividends and $2.1 billion in buybacks, with shares bought at an average of $242.92 versus $289.11 a year earlier. Capital expenditures were $195.7 million, and ADP expects $200–225 million in fiscal 2027.
Outlook for fiscal 2027
The 10-K gives no revenue or EPS guidance. The guidance below comes from ADP's July 29, 2026 earnings release (Form 8-K Exhibit 99.1):
Revenue growth of 5% to 6%, with adjusted EBIT margin expanding 70–90 bps
Diluted EPS growth of 11% to 13%, and adjusted diluted EPS growth of 9% to 11%. GAAP growth is guided higher because fiscal 2026's one-off charges won't repeat
Employer Services: revenue +5% to 6%, bookings +4% to 7%, retention down 10–30 bps, U.S. pays per control +0% to 1%
PEO: revenue +5% to 7%, or +3% to 5% excluding pass-throughs, with worksite employees up about 2%
Client funds interest of $1.540–1.560 billion, based on 3–4% balance growth and a yield rising to about 3.7%
Our read: The guidance implies another year where client hiring adds almost nothing. Client-funds interest is guided up roughly $185–205 million, from $1,354.8 million, and that accounts for a meaningful share of the planned margin expansion. The main things to watch are whether ADP can hold retention near 92% (it expects a slight decline) and whether the severance program lowers the cost base enough to offset slower PEO pass-through-driven growth. If rates fall faster than the forward curve ADP used, the client-funds line is where the guidance is most exposed.