Key Highlights

● Fiscal 2026 revenue was $21,947.4 million, up 7%.

● Interest on client funds reached $1,354.8 million for the year, up 14%.

● Fiscal 2026 adjusted diluted earnings per share were $11.12, up 11%.

● ADP guides fiscal 2027 revenue growth of 5% to 6%.

A fiscal year closes with a fresh outlook

Automatic Data Processing, Inc. (NASDAQ:ADP) reported fourth-quarter and full-year fiscal 2026 results on 29 July 2026, covering the year ended 30 June. Fiscal 2026 revenue was $21,947.4 million, up 7%, or 6% on an organic constant-currency basis. With the results the company set its fiscal 2027 outlook, which includes consolidated revenue growth of 5% to 6% and a further rise in adjusted operating margin. Interest on funds held for clients remains an important part of earnings. Fiscal 2027 diluted earnings per share growth is guided at 11% to 13%, which sets the benchmark for the year ahead.

Business and sector position

ADP provides cloud-based human capital management software and outsourcing services, including payroll, benefits administration, time and attendance, talent management and human resources support. Its Employer Services segment serves employers of all sizes, and its results are linked to employment levels because fees are often charged per employee paid. The company also holds funds on behalf of clients between collecting and paying payroll and taxes, earning interest on them. Rivals include other payroll providers and large enterprise software groups. Because the company combines software, outsourcing and interest income, its results reflect labour markets, interest rates and demand for workforce technology at the same time.

What the latest report showed

Fourth-quarter revenue was $5,473.8 million, up 7%, or 6% organic at constant currency. United States pays per control, a measure of employees on client payrolls, rose 1% in the quarter and for the full year. Employer Services new business bookings for fiscal 2026 were $2.2 billion, up 6%. Interest on client funds was $355.4 million in the fourth quarter, up 15%, and $1,354.8 million for the year, up 14%. Chief executive Maria Black said the performance is grounded in the value of trust to clients. Fourth-quarter revenue growth matched the full-year rate of 7%, and client funds interest grew faster than revenue in both periods. Total client funds extended strategy contribution for fiscal 2027 is guided at $1.545 billion to $1.565 billion.

Financial performance and context

Adjusted EBIT margin was 25.1% in the fourth quarter, up 140 basis points, and 26.8% for the year, up 80 basis points. Fourth-quarter diluted earnings per share were $2.45, up 10%, and adjusted diluted earnings per share were $2.64, up 17%. For fiscal 2026, diluted earnings per share were $10.94, up 10%, and adjusted diluted earnings per share were $11.12, up 11%. Adjusted measures are non-GAAP, so the company's reconciliation to GAAP results is relevant when comparing the figures. Fiscal 2026 interest on client funds of $1,354.8 million is equivalent to roughly 6% of fiscal 2026 revenue, which shows how much of the company's income depends on that line.

Risks and uncertainties

ADP's earnings are sensitive to interest rates and to the volume of client funds, so the outlook for client funds interest, at $1.540 billion to $1.560 billion, may change if rates move. Weaker hiring would reduce pays per control growth, which the company guides at 0% to 1% for fiscal 2027. Competition in payroll and human capital software, cybersecurity risks involving sensitive employee data and regulatory changes are further uncertainties. Falling rates would reduce the interest line, while a weaker labour market affects the volume of employees processed.

Fiscal 2027 markers for payroll

For fiscal 2027 ADP guides to adjusted EBIT margin expansion of 70 to 90 basis points, diluted earnings per share growth of 11% to 13%, adjusted diluted earnings per share growth of 9% to 11% and an adjusted effective tax rate of about 23%. It expects Employer Services new business bookings to grow 4% to 7%. Developments to follow include the first-quarter fiscal 2027 report, labour market trends, and the interest earned on client funds.