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]

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 ...

Core Insights - Automatic Data Processing Inc (ADP) is recognized as a Dividend King, having maintained a 51-year streak of dividend increases, with a recent quarterly cash dividend increase of $0.16, bringing the annual rate to $6.80 per share [2][5] - In the first quarter of fiscal year 2026, ADP exceeded earnings expectations, showing year-over-year growth in both revenue and earnings per share (EPS), while reaffirming its full-year guidance despite market concerns regarding artificial intelligence disruptions [3][5] - ADP's current stock price is $253.09, reflecting a decrease of approximately 0.60% or $1.52, with a market capitalization of approximately $102.36 billion [4][5] Financial Performance - ADP's recent financial performance includes exceeding earnings expectations in Q1 FY2026, with both revenue and EPS demonstrating year-over-year growth [3][5] - The company has reaffirmed its full-year guidance, indicating confidence in its financial stability and growth prospects [3] Stock Information - The current stock price of ADP is $253.09, with a trading range today between $251.22 and $255.72 [4] - Over the past year, ADP's stock has reached a high of $329.93 and a low of $249.68, with a market capitalization of approximately $102.36 billion [4]

Financial Data and Key Metrics Changes - The company reported a 7% revenue growth and a 7% adjusted EPS growth for the first quarter of fiscal 2026 [5][16] - Employer Services segment revenue increased by 7% on a reported basis and 5% on an organic constant currency basis [16] - Client funds interest revenue increased more than anticipated, leading to an increase in the full-year forecast for client funds interest revenue by $10 million to a range of $1.30 billion to $1.32 billion [17][19] Business Line Data and Key Metrics Changes - Employer Services new business bookings showed solid growth, resulting in record sales volume for a first quarter [5] - PEO revenue growth of 7% exceeded expectations, driven by growth in zero margin pass-throughs and higher wages [7][18] - Employer Services pays per control growth rounded down to 0% for the first quarter, reflecting client caution around adding headcount [6][16] Market Data and Key Metrics Changes - Overall client satisfaction score reached a new all-time high for a first quarter, indicating improvements across business units [6] - The company experienced specific strength in ADP Lyric HCM, with new business bookings exceeding expectations [9][10] - International market performance was described as "lumpy," with a solid pipeline but some softness in the first quarter [68] Company Strategy and Development Direction - The company is focused on leading with best-in-class HCM technology, including the scaling of Embedded Payroll Solutions for small businesses [8][11] - Continued investment in AI initiatives aims to enhance operational efficiency and client engagement [12][14] - The acquisition of Pequity is expected to broaden the company's capabilities in compensation management, aligning with its strategic priorities [10][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the relatively stable HCM demand backdrop and maintained full-year growth guidance of 4%-7% for Employer Services [16][24] - The company anticipates a slight decline in Employer Services retention but remains optimistic about achieving its growth targets [16][18] - Management highlighted the importance of ongoing investments in technology and client services to drive future growth [14][19] Other Important Information - The company announced the acquisition of Pequity, which is expected to enhance its compensation management offerings [10][62] - The company was recognized as a leader in multi-country payroll solutions, underscoring its global capabilities [15] Q&A Session Summary Question: Update on deal cycles and time to close - Management indicated that the demand backdrop remains stable, with no significant changes observed in deal cycles during Q1 [24] Question: Confidence in Employer Services guidance amid slight downticks - Management expressed confidence in the guidance, noting that movements in pays per control and retention are relatively small and offsetting [26][28] Question: Surprising areas of new bookings growth - Management highlighted strong growth in small business services, particularly in retirement services and HR outsourcing [32] Question: Performance of PEO enrollment period - Management reported the highest participation rates in four years, indicating strong demand for health benefits among targeted industries [57] Question: Insights on the recent acquisition - Management emphasized the strategic importance of the acquisition for enhancing compensation management capabilities, although its financial impact is currently minimal [62][64] Question: Differences between U.S. and international markets - Management described international performance as "lumpy," with solid execution expected to drive growth in the future [68] Question: Impact of recent layoffs in the market - Management stated that recent layoffs are not expected to significantly impact guidance, as hiring levels remain static [99]

Financial Data and Key Metrics Changes - The company reported a 7% revenue growth and a 7% adjusted EPS growth for the first quarter of fiscal 2026 [5][16] - Employer Services segment revenue increased by 7% on a reported basis and 5% on an organic constant currency basis [16] - Client funds interest revenue increased more than anticipated, leading to an increase in the full-year forecast by $10 million to a range of $1.30 to $1.32 billion [17][19] Business Line Data and Key Metrics Changes - Employer Services new business bookings showed solid growth, resulting in record sales volume for a first quarter [5] - PEO revenue growth of 7% exceeded expectations, driven by growth in zero margin pass-throughs and higher wages [7][18] - Employer Services pays per control growth rounded down to 0% for the first quarter, reflecting client caution around adding headcount [6][16] Market Data and Key Metrics Changes - Overall client satisfaction score reached a new all-time high for a first quarter, indicating improvements across business units [6] - The company experienced specific strength in ADP® Lyric HCM, with new business bookings exceeding expectations [9][10] Company Strategy and Development Direction - The company is focused on leading with best-in-class HCM technology, including scaling embedded payroll solutions for small businesses [7][8] - The acquisition of Pequity aims to enhance capabilities in compensation management, supporting complex planning needs for clients [11][62] - The company continues to advance AI initiatives to improve operational efficiency and client engagement [12][13] Management's Comments on Operating Environment and Future Outlook - Management described the HCM demand backdrop as relatively stable, with no significant changes observed in deal cycles [24][25] - The company maintains its full-year growth guidance for Employer Services at 4% to 7% and PEO revenue growth at 5% to 7% [16][18] - Management expressed confidence in achieving strategic goals and delivering strong financial results despite slight declines in retention rates [15][19] Other Important Information - The company announced the acquisition of Pequity, which is expected to enhance its compensation management offerings [11][62] - The company was recognized as a leader in multi-country payroll solutions by industry analysts [15] Q&A Session Summary Question: Update on deal cycles and time to close - Management indicated that the HCM demand backdrop remains stable, with no meaningful changes in deal cycles observed in Q1 [24][25] Question: Confidence in Employer Services guidance amid slight downticks - Management expressed confidence in the guidance, noting that movements are relatively small and offsetting each other [26][28] Question: Surprising areas of new bookings growth - Management highlighted growth in small business services, particularly in retirement services and HR outsourcing [32] Question: Performance of PEO during enrollment period - Management reported the highest participation rates in four years, indicating strong demand for health benefits among targeted industries [57][58] Question: Insights on international market performance - Management described the international market as "lumpy," with solid execution expected to drive growth in the future [68] Question: Impact of processing days on revenue growth - Management noted a modest impact of around $10 million due to one less processing day compared to the previous year [85][89]

Financial Data and Key Metrics Changes - The company reported a 7% revenue growth and a 7% adjusted EPS growth for Q1 2026 [4][14] - Employer Services segment revenue increased by 7% on a reported basis and 5% on an organic constant currency basis [14][15] - Client funds interest revenue increased more than anticipated, leading to an increase in the full-year forecast by $10 million to a range of $1.30 to $1.32 billion [16][18] Business Line Data and Key Metrics Changes - Employer Services new business bookings showed solid growth, resulting in record sales volume for a first quarter [4][5] - PEO revenue growth of 7% exceeded expectations, driven by growth in zero margin pass-throughs and higher wages [5][17] - Employer Services pays per control growth rounded down to 0% for the first quarter, reflecting client caution in adding headcount [5][15] Market Data and Key Metrics Changes - Overall client satisfaction score reached a new all-time high for a first quarter, indicating improvements across business units [5] - The company experienced specific strength in ADP® Lyric HCM, with new business bookings exceeding expectations [8][9] - International markets showed a bit of softness in Q1, attributed to the lumpy nature of large, complex deals [87] Company Strategy and Development Direction - The company is focused on leading with best-in-class HCM technology, including the deployment of ADP Workforce Now® NextGen [7][10] - The acquisition of Pequody aims to enhance capabilities in compensation management, supporting complex planning needs [10][78] - AI initiatives are being advanced to improve client engagement and operational efficiency, with a focus on generative AI [11][12] Management's Comments on Operating Environment and Future Outlook - Management described the HCM demand backdrop as relatively stable, with no significant changes observed in deal cycles [23][24] - The company maintains its full-year growth guidance for Employer Services at 4% to 7% and PEO revenue growth at 5% to 7% [15][17] - Management expressed confidence in achieving the fiscal 2026 consolidated revenue outlook of 5% to 6% growth [18] Other Important Information - The company announced the acquisition of Pequody, which will broaden its capabilities in compensation management [10][78] - The company is committed to expanding its global capabilities, having recently gone live with its first GlobalView client in Costa Rica [13] Q&A Session Summary Question: Update on deal cycles and time to close - Management indicated that the HCM demand backdrop remains stable, with no meaningful changes in deal cycles observed in Q1 [23][24] Question: Confidence in Employer Services guidance amid slight downticks - Management expressed confidence in the guidance, noting that movements are relatively small and offsetting each other [25][27] Question: Surprising areas of new bookings growth - Management highlighted growth in small business services, particularly in retirement services and insurance, as well as continued interest in ADP® Lyric HCM [34] Question: Performance of the PEO and participation rates - Management reported the highest participation rates in four years during the recent enrollment period, indicating strong demand for health benefits [71] Question: Impact of recent layoffs in the market - Management stated that the hiring situation is static, with reduced layoff levels, and these factors are contemplated in their guidance [120]

Core Insights - ADP has introduced new AI-powered features aimed at addressing operational challenges in HR, particularly focusing on payroll errors, analytics, and administrative burdens [1][2][3] Group 1: AI Features and Benefits - The new features utilize ADP Assist to enhance efficiency in HR by tackling time-consuming tasks and improving accuracy in payroll processing [2][4] - Key functionalities include anomaly detection in payroll data, instant responses to HR inquiries, real-time visibility into workforce trends, compliance monitoring, and personalized employee development recommendations [6][7] Group 2: Client-Centered Approach - ADP's AI development is client-focused, with features tested rigorously based on client feedback, ensuring solutions are grounded in real-world complexities [5][6] - The company emphasizes a commitment to solving actual HR challenges rather than merely following industry trends, showcasing the practical application of AI to deliver measurable value [7] Group 3: Data and Market Reach - ADP's AI capabilities draw from extensive payroll and HR data insights, covering over 1.1 million companies across more than 140 countries, enabling informed decision-making for HR leaders [6][8] - The integration of AI across various HR functions provides a unified experience that evolves with user interactions while maintaining user control over critical decisions [7]

Corporate Leadership and Performance - The shift towards gender-diverse leadership is transforming corporate cultures and enhancing business performance across various sectors, including technology and healthcare [2][4] - Women-led firms are setting new benchmarks for strategic growth and operational excellence, often outperforming their industry peers [2][4] Case Studies of Women-Led Companies - American Water Works' Cheryl Norton has advanced infrastructure resilience and innovation, earning multiple leadership awards [3] - Apple's Deirdre O'Brien has significantly shaped the company's global retail presence and internal culture, overseeing flagship store expansions and community engagement programs [3] Financial Market Recognition - ESG-focused funds are increasingly prioritizing companies with women in executive roles, recognizing the value of gender-diverse leadership [4] - Women entrepreneurs own 42% of U.S. businesses, employing 9.4 million workers and generating $1.9 trillion in annual revenues [4] Funding Challenges for Women Entrepreneurs - Women-led startups receive only about 2% of venture capital funding in the U.S. and Europe, partly due to biases in the investment community [5] - Women entrepreneurs are less likely to seek financing, with only 25% pursuing loans compared to 33% of male business owners [5] Investment Opportunities in Women-Led Companies - Companies like Newmont Corporation, Ralph Lauren Corporation, Automatic Data Processing, Inc., and Casey's General Stores exemplify strong leadership and strategic vision, making them attractive investment opportunities [6] - Newmont's recent performance includes adjusted earnings per share of $1.43 and revenue of approximately $5.32 billion, with a record $1.7 billion in quarterly free cash flow [9][10] - Ralph Lauren reported a 14% year-over-year revenue increase, with an 8% uptick in North America, indicating growth potential under new leadership [13][14] - Automatic Data Processing achieved 7% revenue growth and 9% adjusted EPS growth in fiscal 2025, supported by a people-centric strategy [15][17] - Casey's reported $15.9 billion in revenues and $546.5 million in net income for fiscal 2025, reflecting strong operational execution [19][20]