Automatic Data Processing (ADP) reported $5.36 billion in revenue for the quarter ended December 2025, representing a year-over-year increase of 6.2%. EPS of $2.62 for the same period compares to $2.35 a year ago.The reported revenue represents a surprise of -0.47% over the Zacks Consensus Estimate of $5.38 billion. With the consensus EPS estimate being $2.58, the EPS surprise was +1.62%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare ...

Core Insights - ADP has introduced new ADP Assist agents that leverage advanced intelligence to address real workforce challenges, enhancing creativity and connection in the workplace [1][2] - The company emphasizes a human-centric approach in its AI solutions, aiming to keep people at the center of work processes while improving efficiency and decision-making [2][5] AI Innovation - ADP Assist agents are designed to think, plan, and take action with human oversight, driving productivity and reducing manual effort in payroll and HR functions [5] - These agents are tailored for specific roles such as employees, managers, HR, and payroll practitioners, utilizing over 75 years of workforce data and expertise [5][3] Data-Driven Foundation - The agents are built on ADP's global data platform, which encompasses 1.1 million clients across 140 countries and territories, serving 42 million wage earners worldwide [5][8] - This extensive dataset allows for higher-quality insights and stronger predictive capabilities compared to generic AI solutions [8] Human-Centric Approach - The design principles of ADP Assist agents focus on amplifying culture, creativity, and meaningful connections at work [5] - The agents aim to simplify HR and payroll processes, allowing practitioners to concentrate on supporting their workforce [4][6] Key Functionalities - ADP Assist payroll agents automatically audit for payroll variances and suggest remediations under human oversight [6] - HR agents provide personalized answers to frequently asked questions based on specific employee handbooks, reducing the burden on help desks [6] - The analytics agents can create and analyze custom reports and dashboards, enhancing decision-making capabilities [6][7] Talent Management - HR agents can initiate talent actions through simple natural language commands, significantly reducing the time spent on HR workflows [7] - This functionality allows for real-time responses and guided next steps, improving overall efficiency in talent management [7]

Financial Data and Key Metrics Changes - The company reported a 6% revenue growth for the second quarter, with an 80 basis points expansion in Adjusted EBIT margin and an 11% growth in Adjusted EPS [4][17] - Client funds interest revenue increased more than anticipated, leading to an increase in the forecast for average client funds balance growth to 4%-5% for fiscal 2026 [18][22] - The overall fiscal 2026 consolidated revenue outlook has been increased to about 6% growth, with Adjusted EPS growth forecast raised to 9%-10% [22] Business Line Data and Key Metrics Changes - Employer Services (ES) segment revenue increased by 6% on a reported basis and 5% on an organic constant currency basis, with solid new business bookings growth [17][18] - Professional Employer Organization (PEO) revenue growth was 6%, while excluding zero-margin pass-throughs, it was 3% [21] - PEO average worksite employee growth is now expected to be about 2% for fiscal 2026, with PEO revenue growth forecasted at 5%-7% [21] Market Data and Key Metrics Changes - The company serves over 70,000 clients outside the United States, paying more than 16 million wage earners across over 140 countries [14][15] - The international business is showing strong performance, with a notable win from a large European bank with over 75,000 employees [15][26] Company Strategy and Development Direction - The company is focused on leading with best-in-class HCM technology, with strong traction in its Workforce Now Next Gen and ADP Lyric HCM platforms [7][8] - The introduction of a pooled employer plan (PEP) within retirement services aims to provide clients with robust retirement plan benefits while reducing administrative burdens [13][14] - The company continues to invest in AI and automation to enhance its offerings and improve client experiences [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the business environment and high levels of client satisfaction, noting that the overall client satisfaction results represented the best quarter in ADP history [6][16] - The management team remains optimistic about the demand environment for PEO and other outsourcing services, despite some moderation in growth metrics [6][21] Other Important Information - The company was recognized by Fortune Magazine as one of the world's most admired companies in 2026, marking its twentieth year on this annual ranking [16] - The board authorized the purchase of $6 billion of common stock, signaling a commitment to driving shareholder value [22] Q&A Session Summary Question: International opportunity and profitability comparison - Management highlighted the strength of their international offerings and the potential for growth, noting that while international operations have lower margins, they have high retention rates comparable to U.S. businesses [26][30] Question: PEO growth outlook and contributing factors - Management acknowledged solid bookings in the PEO segment but noted that growth has been slightly below expectations, with continued investment in distribution and product capabilities [32][35] Question: Margin cadence and pricing environment - Management expressed confidence in achieving margin expansion in the second half of the year, with pricing expected to contribute around 100 basis points to fiscal 2026 [43][75] Question: AI impacts on employment and sales productivity - Management indicated that while AI has made salespeople more efficient, there has been no change in headcount strategy, and they continue to invest in sales personnel and tools [94][95]

Financial Data and Key Metrics Changes - The company reported a 6% revenue growth for the second quarter, with an 80 basis points adjusted EBIT margin expansion and an 11% adjusted EPS growth [4][17] - Adjusted EBIT margin increased by 50 basis points in Q2, driven by operating leverage and client funds interest revenue growth [19] - Client funds interest revenue forecast was increased by $10 million to a range of $1.31-$1.33 billion due to higher average client funds balance growth [18] Business Line Data and Key Metrics Changes - Employer Services (ES) segment revenue increased by 6% on a reported basis and 5% on an organic constant currency basis [17] - PEO revenue growth was 6% in Q2, while excluding zero-margin pass-throughs, it was 3% [19] - PEO new business bookings growth was solid but slightly below expectations, impacting average worksite employees growth [20] Market Data and Key Metrics Changes - The company serves over 70,000 clients outside the U.S., paying more than 16 million wage earners across over 140 countries [14] - The international business is showing strong performance, with a significant win from a large European bank with over 75,000 employees [15][26] Company Strategy and Development Direction - The company is focused on leading with best-in-class HCM technology, with strong traction in Workforce Now Next Gen and ADP Lyric HCM platforms [7][8] - The introduction of a pooled employer plan (PEP) within the retirement services business aims to reduce administrative burdens for employers [13][14] - The company continues to invest in AI and automation to enhance client offerings and streamline processes [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the business environment and high levels of client satisfaction, noting the best client satisfaction results in ADP history [6][16] - The demand environment for PEO and other outsourcing services remains healthy, with expectations for continued growth in new business bookings [6][18] - The company raised its fiscal 2026 consolidated revenue outlook to about 6% growth and adjusted EPS growth forecast to 9%-10% [22] Other Important Information - The company was recognized by Fortune Magazine as one of the world's most admired companies in 2026, marking its twentieth year on the list [16] - The board authorized the purchase of $6 billion of common stock, signaling a commitment to returning excess cash to shareholders [22] Q&A Session Summary Question: International opportunity and profitability comparison - Management highlighted the strong performance in international markets and the potential for growth, noting that while international operations have lower margins, they have high retention rates [30][31] Question: PEO growth outlook - Management acknowledged slower growth in PEO but emphasized the ongoing investment in distribution and product capabilities, indicating a strong long-term opportunity [32][36] Question: Margin cadence and pricing environment - Management expressed confidence in achieving margin expansion in the second half of the year, with a consistent pricing environment expected to contribute around 100 basis points to revenue [74][75] Question: Impact of AI on employment - Management noted that while there are headlines about layoffs, the empirical data does not indicate significant job losses in the sectors they monitor, and hiring levels remain stable [55][56]

Financial Data and Key Metrics Changes - The company reported a 6% revenue growth for Q2 2026, with an 80 basis points adjusted EBIT margin expansion and an 11% adjusted EPS growth [4][17] - Client funds interest revenue increased more than anticipated, leading to an updated forecast for average client funds balance growth to 4%-5% for fiscal 2026 [18] - The overall consolidated revenue outlook for fiscal 2026 has been increased to about 6% growth, with adjusted EPS growth forecast raised to 9%-10% [21] Business Line Data and Key Metrics Changes - Employer Services (ES) segment revenue increased by 6% on a reported basis and 5% on an organic constant currency basis [17] - PEO revenue growth was 6% in Q2, while excluding zero-margin pass-throughs, it was 3% [20] - The average worksite employee growth for PEO is now expected to be about 2% for fiscal 2026 [20] Market Data and Key Metrics Changes - The company achieved solid new business bookings growth across various segments, with broad-based strength noted in international, U.S., enterprise, and compliance businesses [4][5] - The international business is expected to contribute positively to overall margins, although it operates at slightly lower margins compared to domestic businesses [29] Company Strategy and Development Direction - The company is focused on leading with best-in-class HCM technology, with strong traction in its Workforce Now Next Gen and ADP Lyric HCM platforms [6][8] - The introduction of a pooled employer plan (PEP) within retirement services aims to reduce compliance burdens for employers [12][13] - The company continues to invest in AI and automation to enhance client offerings and improve operational efficiency [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the business environment and high levels of client satisfaction, noting a record high in client satisfaction results [5][16] - The demand environment for PEO and other outsourcing services remains healthy, with expectations for continued growth in new business bookings [5][20] - Management acknowledged the complexity of the employment landscape but emphasized the strong value proposition of their PEO offerings [38] Other Important Information - The company was recognized by Fortune Magazine as one of the world's most admired companies in 2026, marking its twentieth year on this annual ranking [16] - A new stock repurchase authorization of $6 billion was announced, replacing the previous $5 billion authorization, indicating a commitment to returning excess cash to shareholders [21] Q&A Session Summary Question: Can you discuss the international opportunity and profitability compared to the U.S.? - Management highlighted that international operations are a strategic priority, with strong performance and high retention rates, although they operate at lower margins compared to domestic businesses [26][29] Question: What is contributing to slower growth in PEO? - Management noted solid bookings in PEO but acknowledged slight moderation in growth metrics, emphasizing ongoing investment in distribution and product capabilities [31][34] Question: How is the overall bookings environment trending? - Management reported solid performance in Q2 with broad-based contributions across all business segments, indicating healthy pipelines moving into the second half of the fiscal year [50] Question: What is the pricing environment like? - Management indicated confidence in their pricing strategy, expecting around 100 basis points of contribution from price in fiscal 2026, consistent with previous years [72]

Core Insights - Automatic Data Processing (ADP) reported quarterly earnings of $2.62 per share, exceeding the Zacks Consensus Estimate of $2.58 per share, and up from $2.35 per share a year ago, representing an earnings surprise of +1.62% [1] - The company posted revenues of $5.36 billion for the quarter ended December 2025, which was slightly below the Zacks Consensus Estimate by 0.47%, but an increase from $5.05 billion year-over-year [2] - ADP has surpassed consensus EPS estimates in all four of the last quarters and has topped revenue estimates three times during the same period [2] Earnings Outlook - The future performance of ADP's stock will largely depend on management's commentary during the earnings call and the sustainability of the stock's price movement based on the recent earnings numbers and future expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $3.31 on revenues of $5.84 billion, and for the current fiscal year, it is $10.93 on revenues of $21.8 billion [7] Industry Context - The Internet - Software industry, to which ADP belongs, is currently ranked in the top 32% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Core Insights - Automatic Data Processing (ADP) raised its annual revenue forecast and exceeded quarterly profit estimates due to consistent demand for its payroll and human resources services [1] Company Performance - ADP's quarterly profit surpassed expectations, indicating strong operational performance [1] - The company benefited from steady demand in its core service areas, which contributed to the positive financial results [1] Revenue Forecast - ADP lifted its annual revenue forecast, reflecting confidence in continued growth and market demand [1]

NON-GAAP MEASURES Adjusted EBIT, adjusted EBIT margin, adjusted diluted earnings per share, adjusted effective tax rate, and organic constant currency are all non-GAAP financial measures. Please refer to the Q2 fiscal 2026 earnings release available at investors.adp.com 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. ADP Earnings Call & Webcast Q2 Fiscal 2026 January 28, 2026 Copyri ...

While reporting financial results for the second quarter on Wednesday, company Automatic Data Processing Inc. (ADP) boosts its adjusted earnings and revenue growth guidance for the full-year 2026.For fiscal 2025, ADP now projects earnings per share and adjusted earnings per share growth in a range of 9 to 10 percent on revenue growth of about 6 percent.On average, analysts polled expect the company to report earnings of $10.92 per share on revenue growth of 5.82 percent to $21.76 billion for the year. Anal ...

ROSELAND, N.J., Jan. 28, 2026 /PRNewswire/ -- ADP (Nasdaq: ADP), a global leader in HR and payroll solutions, today announced its second quarter fiscal 2026 financial results along with its revised fiscal 2026 outlook through an earnings release available on the company's website at investors.adp.com/events-and- presentations. This earnings release will also be furnished to the Securities and Exchange Commission (SEC) on a Current Report on Form 8-K and available at sec.gov. ADP, the ADP logo, and Always De ...