10-Q · April 30, 2026
ADP reported strong Q3 FY2026 results with revenues of $5.94 billion, reflecting a 7% increase year-over-year, and EPS of $3.38, which is a 10% growth compared to the same quarter last year. The company also highlighted…
Earnings analysis · 10-Q
ADP earnings analysis
Filed October 30, 2026 · Our reading of the company's report
The latest report
ADP delivered solid first-quarter execution, with revenue up 6% to $5,490.7 million, GAAP EBIT margin expanding 120 basis points to 26.5%, and diluted EPS rising 14% to $2.83. Employer Services showed the strongest…
Read full summary
ADP delivered solid first-quarter execution, with revenue up 6% to $5,490.7 million, GAAP EBIT margin expanding 120 basis points to 26.5%, and diluted EPS rising 14% to $2.83. Employer Services showed the strongest profit performance, while PEO Services grew but remained constrained by higher zero-margin benefits pass-through costs. Operating cash flow was $651.0 million, liquidity remained strong with $3.3 billion of cash and $11.7 billion of committed credit facilities, and management expects fiscal 2027 capital expenditures of $200.0 million to $225.0 million. Key sensitivities include interest rates, portfolio valuation losses, and PEO cost pressure.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $2.83
- Operating margin
- 26.5%
What stood out
-
Revenue growth remained broad-based
Revenue increased 6% year over year to $5,490.7 million, including 6% organic constant-currency growth, versus $5,175.2 million in the prior-year quarter.
-
Margins expanded materially
GAAP EBIT rose 11% to $1,454.9 million, and EBIT margin expanded 120 basis points to 26.5% from 25.3%. Adjusted EBIT margin increased 130 basis points to 26.8%.
-
EPS growth outpaced revenue
Diluted EPS increased 14% to $2.83 from $2.49, while adjusted diluted EPS rose 13% to $2.82. The EPS improvement benefited from repurchases of 2.9 million shares during the quarter.
-
Employer Services led profit growth
Employer Services revenue grew 6% to $3,685.4 million and EBIT increased 9% to $1,343.5 million, with margin expanding to 36.5% from 35.2%.
-
Cash generation remained strong
Operating cash flow increased to $651.0 million from $642.3 million. Capital expenditures were $54.7 million, or approximately 8.4% of operating cash flow, and management expects fiscal 2027 capital spending of $200.0 million to $225.0 million.
-
Client-funds income supported results
Client-funds interest revenue increased to $329.3 million from $286.8 million, supported by average client-funds balances of $36.9 billion, up 5.7%, and an average interest rate of 3.6% versus 3.3%.
What to watch
-
PEO pass-through costs pressure margins
PEO Services margin remained 13.0% despite 7% revenue growth, as zero-margin benefits pass-through costs increased $97.6 million to $1,228.6 million. Worker compensation and state unemployment-related operating costs also increased by a net $10.2 million.
-
Interest-rate and portfolio sensitivity
The investment portfolio had net unrealized pre-tax losses of $1,312.8 million at September 30, 2026, compared with losses of $459.2 million at June 30, 2026. Management estimates that a 25-basis-point change in both short- and intermediate-term rates would affect pre-tax earnings by approximately $20.0 million over the ensuing 12 months.
-
Debt-market access remains a liquidity risk
ADP had $5.0 billion of senior unsecured notes outstanding and $198.3 million of reverse-repurchase obligations at September 30, 2026. Management notes that volatility in global capital and credit markets could impair access to debt markets on acceptable terms.
-
No material risk-factor changes
There were no material changes to the risk factors disclosed in the fiscal 2026 Form 10-K, as stated in Item 1A of the filing.
Management's outlook
The 10-Q does not provide quantitative fiscal 2027 revenue or EPS guidance; the previously disclosed outlook was addressed in the October 28, 2026 earnings release. Management expects fiscal 2027 capital expenditures of $200.0 million to $225.0 million versus $195.7 million in fiscal 2026.
Earlier filings 4
10-K · August 6, 2025
ADP emphasizes scale, data advantage, and an AI-first product roadmap, highlighting over 1.1 million clients, ADP Lyric launch (Sept 2024), and rollout of ADP Assist (generative AI). The company reported a Q4 revenue…
10-Q · May 2, 2024
ADP reported quarterly revenue of $5,253.8 million (up $326.0 million versus $4,927.8 million a year ago) and diluted EPS of $2.88 (versus $2.51 prior year). Operating margin remained strong at 29.4% (operating income…
10-Q · February 1, 2024
ADP reported strong Q2 results with total revenue of $4.67B, up 6.3% from $4.39B a year ago, and diluted EPS of $2.13, reflecting an increase of 9.2% from the prior year's $1.95. Gross and operating margins improved to…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.