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ADP's Q1 adjusted EPS rose 14% to $2.83, while revenues grew 6% to $5.49B, beating estimates.
Employer Services revenues rose 6%, PEO revenues grew 7% and the adjusted EBIT margin expanded 130 bps.
ADP raises its FY27 revenue growth outlook to 6% and adjusted EPS growth forecast to 10-12%.
ADP (ADP - Free Report) has reported impressive first-quarter fiscal 2027 results with earnings and revenues beating the Zacks Consensus Estimate.
ADP’s adjusted earnings of $2.83 per share beat the Zacks Consensus Estimate of $2.78 by 1.8%. The figure increased 14% from the year-ago quarter’s actual.
Revenues of $5.49 billion surpassed the consensus mark of $5.47 billion by 0.4% and rose 6% year over year.
Results benefited from broad-based segment growth, stronger client funds interest income and operating productivity. U.S. pays per control increased 2%, reflecting higher employment levels across existing payroll clients.
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
Employer Services revenues increased 6% year over year to $3.69 billion in the quarter. Organic constant-currency growth was also 6%, while U.S. pays per control increased 2% compared with flat growth in the prior-year period.
The segment benefited from a 6% increase in average client funds balances. The average yield on those balances rose to 3.6% from 3.3% in the prior-year quarter, supporting higher interest-related revenues.
Automatic Data Processing Expands Employer Margin
Employer Services margin expanded 130 basis points (bps) year over year to 36.5% from 35.2%. Management attributed the improvement to operating productivity gains and the contribution from higher client funds interest revenues.
ADP continued expanding its technology offerings, including ADP Lyric HCM and ADP Assist. The latter added 100,000 clients since the fourth quarter. The company also launched a Recruiting AI Interviewer Agent and expanded ADP Lyric HCM availability across key European markets.
ADP's PEO Revenues Rise as Margin Holds Steady
PEO Services revenues advanced 7% year over year to $1.81 billion. Revenues, excluding zero-margin benefits pass-throughs, increased 4%, while average worksite employees rose 2% to approximately 771,000.
The segment margin remained unchanged at 13%. Lower operating expenses offset the impacts of faster growth in zero-margin benefits pass-through revenues, allowing the business to maintain profitability despite changes in its revenue mix.
Automatic Data Processing Delivers Higher Profitability
Adjusted EBIT increased 12% year over year to $1.47 billion from $1.32 billion. The adjusted EBIT margin expanded 130 basis points (bps) to 26.8% from 25.5%, reflecting improved operating efficiency.
Adjusted net earnings rose 11% to $1.12 billion. Adjusted earnings per share increased 13% to $2.82 from $2.49. On a GAAP basis, net earnings increased 11% to $1.13 billion, while the effective tax rate rose to 22.7% from 22.5%.
ADP Sees Stronger Client Fund Contribution
Interest on funds held for clients increased 15% year over year to $329.3 million from $286.8 million. The net impacts of the client funds investment strategy rose 26% to $332.9 million, benefiting from higher investment income.
Corporate extended interest income increased to $106.1 million from $78.7 million. Meanwhile, average corporate extended investment balances grew 19% to $10.7 billion, and the average yield improved to 4% from 3.5%.
Automatic Data Processing Generates Positive Cash Flow
ADP generated $651 million in operating cash flow during the quarter compared with $642.3 million a year earlier. The company repurchased $758.8 million worth of shares and paid out $677 million in dividends.
Cash and cash equivalents totaled $3.28 billion as of Sept. 30, 2026, compared with $4.23 billion as of June 30, 2026. Long-term debt stood at $4.97 billion, while funds held for clients were $44.73 billion against client funds obligations of $46.04 billion.
ADP Raises FY27 Growth Outlook
ADP expects consolidated revenue growth of 6% for fiscal 2027 compared with its previous guidance of 5-6%. Adjusted earnings per share are projected to grow 10-12%, up from the earlier mentioned 9-11%. The adjusted EBIT margin expansion guidance remains unchanged at 70-90 basis points (bps).
Employer Services revenues are forecast to increase 6%, with business bookings growth of 4-7%. PEO Services revenues are expected to rise 5-7%, while average worksite employees are projected to increase 2%.
The company raised its fiscal 2027 client funds interest revenue outlook to $1.59-$1.61 billion from $1.54-$1.56 billion. The revised forecast assumes 4-5% growth in average client fund balances and an average portfolio yield of 3.8%. The expected contribution from the client funds extended investment strategy was also raised to $1.59-$1.61 billion.
ManpowerGroup (MAN - Free Report) reported mixed third-quarter 2026 results, with adjusted earnings meeting the Zacks Consensus Estimate and revenues missing expectations.
MAN's adjusted earnings of $1.01 per share were in line with the consensus estimate and increased 22% year over year. Revenues of $4.84 billion lagged the consensus estimate of $4.91 billion by 1.4% but increased 4% year over year (5% in constant currency).
FactSet Research Systems (FDS - Free Report) posted impressive results for fourth-quarter fiscal 2026.
FDS’s adjusted earnings were $4.52 per share, beating the Zacks Consensus Estimate of $4.32 by 4.6%. The figure jumped 11.6% from the year-ago quarter.
Revenues of $634.7 million topped the consensus mark of $628.2 million by 1% and rose 6.3% year over year.
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ADP Q1 Earnings Beat Estimates, Revenues Increase Marginally Y/Y
Key Takeaways
ADP (ADP - Free Report) has reported impressive first-quarter fiscal 2027 results with earnings and revenues beating the Zacks Consensus Estimate.
ADP’s adjusted earnings of $2.83 per share beat the Zacks Consensus Estimate of $2.78 by 1.8%. The figure increased 14% from the year-ago quarter’s actual.
Revenues of $5.49 billion surpassed the consensus mark of $5.47 billion by 0.4% and rose 6% year over year.
Results benefited from broad-based segment growth, stronger client funds interest income and operating productivity. U.S. pays per control increased 2%, reflecting higher employment levels across existing payroll clients.
Automatic Data Processing, Inc. Price, Consensus and EPS Surprise
Automatic Data Processing, Inc. price-consensus-eps-surprise-chart | Automatic Data Processing, Inc. Quote
ADP Posts Solid Employer Services Revenue Growth
Employer Services revenues increased 6% year over year to $3.69 billion in the quarter. Organic constant-currency growth was also 6%, while U.S. pays per control increased 2% compared with flat growth in the prior-year period.
The segment benefited from a 6% increase in average client funds balances. The average yield on those balances rose to 3.6% from 3.3% in the prior-year quarter, supporting higher interest-related revenues.
Automatic Data Processing Expands Employer Margin
Employer Services margin expanded 130 basis points (bps) year over year to 36.5% from 35.2%. Management attributed the improvement to operating productivity gains and the contribution from higher client funds interest revenues.
ADP continued expanding its technology offerings, including ADP Lyric HCM and ADP Assist. The latter added 100,000 clients since the fourth quarter. The company also launched a Recruiting AI Interviewer Agent and expanded ADP Lyric HCM availability across key European markets.
ADP's PEO Revenues Rise as Margin Holds Steady
PEO Services revenues advanced 7% year over year to $1.81 billion. Revenues, excluding zero-margin benefits pass-throughs, increased 4%, while average worksite employees rose 2% to approximately 771,000.
The segment margin remained unchanged at 13%. Lower operating expenses offset the impacts of faster growth in zero-margin benefits pass-through revenues, allowing the business to maintain profitability despite changes in its revenue mix.
Automatic Data Processing Delivers Higher Profitability
Adjusted EBIT increased 12% year over year to $1.47 billion from $1.32 billion. The adjusted EBIT margin expanded 130 basis points (bps) to 26.8% from 25.5%, reflecting improved operating efficiency.
Adjusted net earnings rose 11% to $1.12 billion. Adjusted earnings per share increased 13% to $2.82 from $2.49. On a GAAP basis, net earnings increased 11% to $1.13 billion, while the effective tax rate rose to 22.7% from 22.5%.
ADP Sees Stronger Client Fund Contribution
Interest on funds held for clients increased 15% year over year to $329.3 million from $286.8 million. The net impacts of the client funds investment strategy rose 26% to $332.9 million, benefiting from higher investment income.
Corporate extended interest income increased to $106.1 million from $78.7 million. Meanwhile, average corporate extended investment balances grew 19% to $10.7 billion, and the average yield improved to 4% from 3.5%.
Automatic Data Processing Generates Positive Cash Flow
ADP generated $651 million in operating cash flow during the quarter compared with $642.3 million a year earlier. The company repurchased $758.8 million worth of shares and paid out $677 million in dividends.
Cash and cash equivalents totaled $3.28 billion as of Sept. 30, 2026, compared with $4.23 billion as of June 30, 2026. Long-term debt stood at $4.97 billion, while funds held for clients were $44.73 billion against client funds obligations of $46.04 billion.
ADP Raises FY27 Growth Outlook
ADP expects consolidated revenue growth of 6% for fiscal 2027 compared with its previous guidance of 5-6%. Adjusted earnings per share are projected to grow 10-12%, up from the earlier mentioned 9-11%. The adjusted EBIT margin expansion guidance remains unchanged at 70-90 basis points (bps).
Employer Services revenues are forecast to increase 6%, with business bookings growth of 4-7%. PEO Services revenues are expected to rise 5-7%, while average worksite employees are projected to increase 2%.
The company raised its fiscal 2027 client funds interest revenue outlook to $1.59-$1.61 billion from $1.54-$1.56 billion. The revised forecast assumes 4-5% growth in average client fund balances and an average portfolio yield of 3.8%. The expected contribution from the client funds extended investment strategy was also raised to $1.59-$1.61 billion.
ADP carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Snapshot
ManpowerGroup (MAN - Free Report) reported mixed third-quarter 2026 results, with adjusted earnings meeting the Zacks Consensus Estimate and revenues missing expectations.
MAN's adjusted earnings of $1.01 per share were in line with the consensus estimate and increased 22% year over year. Revenues of $4.84 billion lagged the consensus estimate of $4.91 billion by 1.4% but increased 4% year over year (5% in constant currency).
FactSet Research Systems (FDS - Free Report) posted impressive results for fourth-quarter fiscal 2026.
FDS’s adjusted earnings were $4.52 per share, beating the Zacks Consensus Estimate of $4.32 by 4.6%. The figure jumped 11.6% from the year-ago quarter.
Revenues of $634.7 million topped the consensus mark of $628.2 million by 1% and rose 6.3% year over year.