Automatic Data Proc — Income Statement, Cash Flows & Balance Sheet
Is ADP profitable?
ADP is growing steadily and converting more of each revenue dollar into profit.
| Metric | FY2024 | FY2025 | FY2026 | Change (FY25→FY26) |
|---|---|---|---|---|
| Total revenues ($M) | $19,202.6 | $20,560.9 | $21,947.4 | +6.7% |
| Net earnings ($M) | $3,752.0 | $4,079.7 | $4,413.5 | +8.2% |
| Net margin | 19.5% | 19.8% | 20.1% | +0.3 pp |
| Diluted EPS | $9.10 | $9.98 | $10.94 | +9.6% |
ADP has delivered three consecutive years of revenue and earnings growth, with the net margin ticking up each year. Diluted earnings per share grew faster than net income, partly because the share count has been shrinking through buybacks.
Interest income from client funds is a meaningful — and growing — profit contributor.
| Revenue line ($M) | FY2024 | FY2025 | FY2026 | Change |
|---|---|---|---|---|
| Interest on funds held for clients | $1,024.7 | $1,189.1 | $1,354.8 | +13.9% |
| As % of total revenues | 5.3% | 5.8% | 6.2% | +0.4 pp |
ADP holds billions in client payroll funds between collection and remittance, and earns investment income on that float. This line grew double-digits again in fiscal 2026, boosted by the higher interest-rate environment and a larger client funds balance.
Where does ADP's revenue come from?
Employer Services is the core engine, but PEO Services adds meaningful scale.
| Segment revenues ($M) | FY2025 | FY2026 | Change |
|---|---|---|---|
| Employer Services | $13,883.1 | $14,831.4 | +6.8% |
| PEO Services | $6,690.4 | $7,128.1 | +6.5% |
| Total | $20,573.5 | $21,959.5 | +6.7% |
Both segments grew at nearly identical rates. Employer Services — which includes HCM software and Global — drives the higher-margin work, while PEO Services (co-employment outsourcing) runs at a structurally thinner margin because it passes through large benefit and payroll costs.
HCM and Global solutions are the fastest-growing product lines by dollar volume.
| Revenue type ($M) | FY2025 | FY2026 | Change |
|---|---|---|---|
| HCM | $8,674.5 | $9,110.6 | +5.0% |
| HRO (ex. pass-throughs) | $3,782.3 | $3,973.5 | +5.1% |
| Global | $2,626.0 | $2,901.2 | +10.5% |
| PEO zero-margin pass-throughs | $4,289.0 | $4,607.3 | +7.4% |
Global solutions — ADP's international and multinational payroll offerings — grew the fastest at over 10%, suggesting healthy demand outside North America.
Does ADP generate cash?
ADP is a strong cash generator, and free cash flow (operating cash minus capex and intangible additions) keeps rising.
| Cash flow metric ($M) | FY2024 | FY2025 | FY2026 | Change (FY25→FY26) |
|---|---|---|---|---|
| Operating cash flow | $4,157.6 | $4,939.7 | $5,441.2 | +10.1% |
| Capital expenditures | ($208.4) | ($168.7) | ($196.6) | — |
| Additions to intangibles | ($355.0) | ($378.3) | ($468.5) | — |
| Approximate free cash flow | $3,594.2 | $4,392.7 | $4,776.1 | +8.7% |
Operating cash flow comfortably exceeded net income in every year shown, a sign of high earnings quality. Capital needs are modest relative to the cash being generated.
ADP returns substantial cash to shareholders through dividends and buybacks.
| Capital return ($M) | FY2025 | FY2026 | Change |
|---|---|---|---|
| Dividends paid | $2,398.9 | $2,626.3 | +9.5% |
| Share repurchases | $1,280.5 | $2,083.3 | +62.7% |
| Total returned | $3,679.4 | $4,709.6 | +28.0% |
ADP nearly doubled its buyback spend in fiscal 2026, repurchasing 8.6 million shares versus 4.4 million the prior year. Combined with a growing dividend — now $6.64 per share — the company returned more cash than it earned in net income.
How strong is ADP's balance sheet?
ADP carries a manageable debt load of $5 billion in fixed-rate notes, with no near-term maturities.
| Debt item | Amount |
|---|---|
| Fixed-rate notes outstanding | $5,000.0M |
| Nearest maturity | May 2028 ($1.0B at 1.70%) |
| Long-term debt, net of issuance costs | $4,964.1M |
| FY2026 interest expense | $459.3M |
The five note series carry staggered 7- and 10-year maturities, so there is no wall of debt coming due soon. Interest expense is well covered by operating earnings.
The balance sheet is dominated by client funds — a large but matched asset-liability pair that investors should understand.
| Item ($B) | FY2025 | FY2026 |
|---|---|---|
| Funds held for clients (asset) | $31.0 | $44.0 |
| Client funds obligations (liability) | $31.3 | $44.4 |
| Net difference | ($0.4) | ($0.5) |
The bulk of ADP's reported assets and liabilities relate to payroll funds it holds temporarily on behalf of clients. These offset almost exactly and are not available for general corporate use — stripping them out, ADP's underlying corporate asset base is much smaller and the equity position of roughly $6 billion looks more meaningful in context.