Automatic Data Proc — Financial Results
Revenue Grew 7% to Nearly $22 Billion, Driven by New Clients and Higher Interest Income
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Total Revenue | $21,947.4M | $20,560.9M | +7% |
| Interest on Funds Held for Clients | $1,354.8M | $1,189.1M | +$165.7M |
| Average Client Funds Balance | $40.4B | $37.6B | +7.4% |
ADP's top-line growth came from a combination of new business wins, strong client retention (92.1%), and price increases. A notable contributor was the interest ADP earns on client payroll funds it holds temporarily before paying out — this pool grew to $40.4 billion on average, and the rate earned ticked up from 3.2% to 3.4%.
Profit Margins Expanded, With Adjusted Earnings Per Share Up 11%
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Adjusted EBIT Margin | 26.8% | 26.0% | +80 bps |
| Adjusted Diluted EPS | $11.12 | $10.01 | +11% |
| Net Earnings | $4,413.5M | $4,079.7M | +8% |
The core business became more profitable, with the adjusted EBIT margin (earnings before interest and taxes, stripped of one-time items) improving by 0.8 percentage points. Earnings per share grew faster than net income partly because ADP bought back 8.6 million shares during the year, reducing the total share count.
ADP Returned $4.7 Billion to Shareholders via Dividends and Buybacks
ADP paid out $2.6 billion in dividends and repurchased $2.1 billion worth of its own stock in fiscal 2026, totaling $4.7 billion returned to shareholders. The buybacks were executed at an average price of $242.92 per share — notably lower than the $289.11 average paid in fiscal 2025, meaning ADP got more shares for less money.
A $91 Million Restructuring Charge Signals an Internal Reorganization
In the fourth quarter of fiscal 2026, ADP recorded a business alignment program charge of $91.1 million, mostly severance costs ($89.1 million), as it restructured to better align its organization with strategic priorities. This is excluded from adjusted results to show the underlying business more clearly, but it signals meaningful workforce changes were underway at year-end.
PEO Services Margin Compressed Despite Solid Revenue Growth
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| PEO Revenue (ex. pass-throughs) | $2,520.8M | $2,401.4M | +5% |
| PEO Earnings Before Tax | $936.1M | $950.5M | -2% |
| PEO Margin | 13.1% | 14.2% | -110 bps |
ADP's PEO Services segment (where ADP co-employs workers on behalf of clients) saw profits dip despite growing revenue, because costs rose faster. Higher workers' compensation costs, increased selling expenses, and less favorable insurance reserve developments all squeezed margins by 1.1 percentage points — worth watching in future periods.