$ADP · AUTOMATIC DATA PROCESSING INC
ADP reported Q1 FY2027 results with revenue of $5.49B (+6% YoY), adjusted diluted EPS of $2.82 (+13% YoY), and adjusted EBIT margin expansion of 130 bps to 26.8%. The company raised its full-year FY2027 outlook, now guiding for ~6% revenue growth and adjusted diluted EPS growth of 10-12%, up from the prior 9-11% range. Client funds interest revenue guidance was lifted to $1.59-$1.61B, reflecting higher expected average balances and a yield of ~3.8%.
- Revenue of $5.49B grew 6% YoY, with Employer Services up 6% and PEO Services up 7%.
- Adjusted diluted EPS of $2.82 rose 13% YoY; GAAP diluted EPS of $2.83 rose 14% YoY.
- Adjusted EBIT margin expanded 130 bps to 26.8%, driven by Employer Services margin up 130 bps to 36.5%.
- Interest on funds held for clients jumped 15% to $329M on average balances of $36.9B and yield of 3.6%.
- Full-year guidance raised: revenue growth ~6%, adjusted diluted EPS growth 10-12% (up from 9-11%), client funds interest $1.59-$1.61B.
Extended-hours trading shows ADP at $283.00, down 3.45% from the regular close of $293.11. The selloff despite a beat-and-raise quarter suggests the market may have priced in even stronger results or is reacting to the modest 2% U.S. pays-per-control growth and flat PEO margin.
ADP delivered a beat-and-raise quarter with 130 bps of margin expansion, but extended-hours traders sold the stock down 3.45%, signaling expectations may have run ahead of results.
ADP's 6% organic constant currency revenue growth and 130 bps margin expansion reinforce its position as the bellwether for payroll/HCM peers like PAYX. The 15% jump in client funds interest revenue highlights how elevated rates continue to benefit payroll processors with large float balances.
Client revenue retention expected to decline 10-30 bps in FY2027; U.S. pays per control growth guided to only ~1%, signaling softening employment trends among ADP's client base.