Automatic Data Processing, Inc. (ADP) 8-K
PositiveEarningsNew guidanceRestructuring
Higher client-funds balances supported interest growth; FY2027 outlook pairs slower revenue growth with further margin expansion.
Filed 2026-07-29 06:57 ET
- 2.02 Results of Operations
- 9.01 Financial Statements and Exhibits
Summary
ADP reported Q4 and FY2026 results and provided FY2027 outlook. FY2026 revenue grew 7% and diluted EPS grew 10%; management said Q4 finished at the high end of its FY2026 guidance ranges for revenue growth, margin expansion and adjusted EPS growth. FY2027 outlook calls for 5%-6% revenue growth and 9%-11% adjusted diluted EPS growth.
Key Figures
| Metric | Q4 2026 | Q4 2025 | Y/Y |
|---|---|---|---|
| Revenue | $5.47B | $5.13B | 7% |
| Earnings before income taxes (GAAP) | $1.26B | $1.19B | 6% |
| Adjusted EBIT (non-GAAP) | $1.37B | $1.21B | 13% |
| Net earnings | $979M | $911M | 7% |
| Adjusted net earnings (non-GAAP) | $1.05B | $923M | 14% |
| Diluted EPS | $2.45 | $2.23 | 10% |
| Adjusted diluted EPS (non-GAAP) | $2.64 | $2.26 | 17% |
| Metric | FY2026 | FY2025 | Y/Y |
|---|---|---|---|
| Revenue | $21.9B | $20.6B | 7% |
| Earnings before income taxes (GAAP) | $5.73B | $5.31B | 8% |
| Adjusted EBIT (non-GAAP) | $5.87B | $5.35B | 10% |
| Net earnings | $4.41B | $4.08B | 8% |
| Adjusted net earnings (non-GAAP) | $4.49B | $4.09B | 10% |
| Diluted EPS | $10.94 | $9.98 | 10% |
| Adjusted diluted EPS (non-GAAP) | $11.12 | $10.01 | 11% |
| Operating cash flow | $5.44B | $4.94B | 10% |
- Adjusted EBIT margin expanded 140 bp to 25.1% in Q4 and 80 bp to 26.8% for FY2026. FY2026 Employer Services revenue grew 7%, while PEO Services revenue grew 7% and its segment margin fell 110 bp.
- Client-funds interest revenue rose 15% to $355M in Q4 and 14% to $1.35B for FY2026; average client-funds balances grew 8% to $41.0B in Q4 and 7% to $40.4B for the year.
- FY2026 share repurchases were $2.08B vs $1.28B; shares outstanding declined 2% to 397.8M from 405.3M. Cash and cash equivalents were $4.23B and long-term debt was $4.96B at 6/30/2026. Q4 included a $91.1M business-alignment charge, including $89.1M of severance costs.
Guidance
| Metric | Period | Guidance | Prior | Direction |
|---|---|---|---|---|
| Revenue growth | FY2027 | 5%-6% | — | — |
| Adjusted EBIT margin expansion (non-GAAP) | FY2027 | 70-90 bp | — | — |
| Effective tax rate (GAAP) | FY2027 | 23.0% | — | — |
| Adjusted effective tax rate (non-GAAP) | FY2027 | ≈23% | — | — |
| Diluted EPS growth (GAAP) | FY2027 | 11%-13% | — | — |
| Adjusted diluted EPS growth (non-GAAP) | FY2027 | 9%-11% | — | — |
| Employer Services revenue growth | FY2027 | 5%-6% | — | — |
| Employer Services new business bookings growth | FY2027 | 4%-7% | — | — |
| Employer Services client revenue retention | FY2027 | decrease of 10-30 bp | — | — |
| U.S. pays per control growth | FY2027 | 0%-1% | — | — |
| PEO Services revenue growth | FY2027 | 5%-7% | — | — |
| PEO Services revenue growth excluding zero-margin benefits pass-throughs | FY2027 | 3%-5% | — | — |
| Average PEO worksite employee count growth | FY2027 | ≈2% | — | — |
| Average client-funds balance growth | FY2027 | 3%-4% | — | — |
| Yield on client-funds portfolio | FY2027 | ≈3.7% | — | — |
| Interest on funds held for clients | FY2027 | $1.54B-$1.56B | — | — |
| Net impact from client-funds extended investment strategy | FY2027 | $1.545B-$1.565B | — | — |
Investor Takeaways
- FY2027 revenue growth, adjusted margin expansion and adjusted diluted EPS growth will show whether ADP delivers within its outlook ranges.
- Client-funds balances, portfolio yield and interest revenue are key figures to track against the FY2027 assumptions.
The summary is written by an AI model reading the filing.
Model 005 · prompt 01d34d48e3