Key Highlights

  • ADP guided on July 29, 2026 for fiscal 2027 Revenue growth of 5% to 6% and adjusted diluted EPS growth of 9% to 11%.
  • Fiscal fourth-quarter revenue rose 7% to $5.5 billion and adjusted diluted EPS jumped 17% to $2.64 on a 25.1% adjusted EBIT margin.
  • Client funds interest is guided to $1.540 billion to $1.560 billion, while U.S. pays per control growth is expected at just 0% to 1%.
  • ADP shares rose about 3.5% to $273.37 on July 29 and closed at $269.64 on September 22, up about 5% year to date.

Automatic Data Processing (NASDAQ:ADP) is aiming for adjusted Diluted Earnings per Share growth of 9% to 11% in fiscal 2027, a target built on steady mid-single-digit revenue growth, a further step up in margins and higher interest income on the tens of billions of dollars in client funds it holds before paying them out as wages and taxes. The Payroll and Human Capital management (HCM) giant set out that outlook on July 29, 2026, alongside results for its fourth quarter and fiscal year ended June 30, 2026.

The arithmetic behind the target is simple. ADP expects revenue to rise 5% to 6% in fiscal 2027 and adjusted Earnings before interest and taxes (EBIT) Margin to expand by 70 to 90 basis points. That margin gain turns mid-single-digit sales growth into high-single-digit to low-double-digit profit growth. On a reported basis, the company guided for diluted EPS growth of 11% to 13%.

Investors initially welcomed the outlook: ADP shares rose about 3.5% to $273.37 on July 29. They closed at $269.64 on September 22, up about 5% year to date. With no major company-specific announcement since, the fiscal 2027 framework remains the main reference point. The outlook is also more measured than fiscal 2026, when revenue grew 7% and adjusted EPS rose 11%.

Inside a Strong Fiscal Fourth Quarter

ADP closed fiscal 2026 on a firm note. Fourth-quarter revenue rose 7% to $5.5 billion, or 6% on an organic constant-currency basis, according to the company's earnings release filed with the SEC. Net earnings grew 7% to $1.0 billion and diluted EPS rose 10% to $2.45. Adjusted diluted EPS climbed 17% to $2.64, helped by an adjusted EBIT margin of 25.1%, up 140 basis points from a year earlier.

For the full year, revenue increased 7% to $21.9 billion, again 6% organic constant currency. Net earnings grew 8% to $4.4 billion, adjusted diluted EPS rose 11% to $11.12 and the adjusted EBIT margin widened 80 basis points to 26.8%. ADP returned substantial cash to shareholders over the year, paying $2.6 billion in dividends and spending $2.1 billion on share repurchases.

"ADP's strong fiscal 2026 performance is grounded in trust," President and CEO Maria Black said in the release, adding that "AI is reshaping how work gets done, and HCM is more critical than ever." Chief Financial Officer Peter Hadley said the company enters fiscal 2027 "in a strong position to drive growth."

Where the Fiscal 2027 Growth Is Expected to Come From

ADP's guidance breaks down across its two operating segments and its client funds portfolio.

  • Employer Services: revenue growth of 5% to 6%, new Business bookings growth of 4% to 7%, client revenue retention down 10 to 30 basis points and U.S. pays per control growth of 0% to 1%.
  • PEO Services: revenue growth of 5% to 7%, or 3% to 5% excluding zero-margin benefits pass-throughs, with average worksite employees growing about 2%.
  • Client funds: interest revenue of $1.540 billion to $1.560 billion, average client fund balances up 3% to 4% and an anticipated average Yield of about 3.7%.

The client funds line is a meaningful contributor. ADP earned about $1.4 billion of client funds interest in fiscal 2026, up 14%, on an average balance of $40.4 billion at a 3.4% yield. The fiscal 2027 range implies roughly 10% to 11% growth in that income, driven mainly by the higher expected yield. Because this revenue carries very high margins, it does much of the work in lifting profitability.

The company also expects an adjusted effective tax rate of about 23%, while ongoing Buybacks add to per-share growth.

Segment Trends Beneath the Headline Numbers

Employer Services, ADP's core payroll, HR, benefits and compliance business, grew revenue 7% on a reported basis and 5% organic constant currency in fiscal 2026, according to the release. New business bookings rose 6% to $2.2 billion and client revenue retention held flat at 92.1%.

The softer indicator is pays per control, which measures the number of employees on ADP client payrolls in the United States on a same-store basis. It rose just 1% in fiscal 2026, and the fiscal 2027 guide of 0% to 1% suggests ADP is not counting on much help from employment growth at its existing clients. That makes new sales, pricing and product attach more important.

PEO Services, which acts as a co-employer for small and midsized businesses, grew revenue 7%, or 5% excluding zero-margin pass-throughs. Average worksite employees rose 2% to about 762,000, but segment margin fell 110 basis points.

How ADP Stacks Up in a Crowded HCM Market

ADP is the largest U.S. payroll processor and competes with Paychex (NASDAQ:PAYX) in the small and midsized business market, with Workday (NASDAQ:WDAY) in the enterprise HCM software segment and with cloud-native rivals such as Paycom (NYSE:PAYC), Paylocity (NASDAQ:PCTY), Rippling and Gusto. Its scale, compliance expertise and client funds float are long-standing advantages.

Peer results may offer a read-across. Paychex was scheduled to report its fiscal first-quarter results on September 23, 2026, and its commentary on small-business hiring, retention and interest income is likely to be compared with ADP's own assumptions.

Black's comment on AI also reflects a wider sector debate over whether automation could reduce the seats HCM vendors sell or instead deepen client relationships. ADP presents AI as an opportunity, but that case will need to show up in bookings and retention.

Risks to the 9% to 11% Target

Several factors could push results outside the guided range. A weaker U.S. labor market would pressure pays per control, PEO worksite employee growth and new bookings, particularly among small businesses. The client funds outlook depends on interest rates; a faster-than-expected fall in yields would reduce the $1.54 billion to $1.56 billion forecast.

The guided decline of 10 to 30 basis points in client retention signals some expected churn, and competitive pricing from newer platforms could intensify. PEO margins also bear watching after last year's contraction. On the upside, better-than-expected hiring, stronger bookings or higher reinvestment yields could support results near the top of the range.

Markers for Fiscal 2027's First Quarter

The next major checkpoint is ADP's fiscal 2027 first-quarter report, expected on October 28, 2026. Investors will look for early progress on the 4% to 7% bookings target, the trend in pays per control and any update to the client funds interest forecast.

Other near-term markers include Paychex's September 23 results, the monthly ADP National Employment Report due in early October, which offers a read on private-sector hiring, and ADP's annual Dividend decision, historically announced in November. The current annualized dividend stands at $6.80 per share.