ADP (NASDAQ: ADP) Posts Q4 FY2026 Adjusted EPS of $2.64, Beats Estimates; Issues FY2027 Guidance

Automatic Data Processing (NASDAQ: ADP) closed fiscal year 2026 with fourth-quarter adjusted EPS of $2.64, topping the $2.62 consensus estimate, while quarterly revenue rose 7% year-over-year to $5.5 billion. Adjusted EBIT grew 13% to $1.4 billion in the quarter, with adjusted EBIT margin expanding 140 basis points to 25.1%, outpacing the 7% revenue gain.

Q4 and Full-Year FY2026 Results

• Q4 revenue: $5.5 billion, up 7% year-over-year (6% organic constant currency)
• Q4 adjusted EPS: $2.64, up 16.8% from $2.26 in the prior-year quarter, versus the $2.62 consensus; GAAP EPS was $2.45, up 10% from $2.23
• Q4 adjusted EBIT: $1.4 billion, up 13%, with adjusted EBIT margin of 25.1%, a 140-basis-point improvement
• Full-year revenue: $21.9 billion, up 7% (6% organic constant currency); full-year adjusted EBIT increased 10% to $5.9 billion, with adjusted EBIT margin expanding 80 basis points to 26.8%; full-year adjusted diluted EPS of $11.12, up 11%
• Employer Services new business bookings: $2.2 billion for fiscal 2026, up 6% year-over-year; client revenue retention held flat at 92.1%
• PEO Services average worksite employees: approximately 762,000 for the fiscal year, up 2%; interest on funds held for clients rose 14% to $1.4 billion for the full year

What Drove the Results

Adjusted EPS of $2.64 beat the $2.62 consensus by $0.02, or approximately 0.7%. The more notable dynamic was margin: adjusted EBIT expanding 140 basis points to 25.1% in Q4, with adjusted net income rising 14% to $1.1 billion against a 7% revenue gain, reflects meaningful operating leverage. For the full year, adjusted EBIT margin expanded a more modest 80 basis points to 26.8%, indicating the fourth quarter carried a disproportionate share of the year's margin gain. GAAP net income of $1.0 billion was $100 million below the adjusted figure, a divergence attributable in part to approximately $91 million in pre-tax charges related to a business alignment program recorded in fiscal 2026.

Within the two segments, Employer Services margin expanded 90 basis points in the quarter while PEO Services margin contracted 100 basis points, partially offsetting the consolidated improvement. U.S. pays per control, a key indicator of underlying employment activity among ADP's client base, grew 1% for both the fourth quarter and the full fiscal year.

CEO Maria Black said the results reflect client trust, noting record client satisfaction scores and strong Employer Services retention. CFO Peter Hadley said AI tools are now embedded across product, service, and sales teams in ways that are improving quality and productivity, positioning the company to enter fiscal 2027 with what he described as a strong foundation.

Fiscal 2027 Outlook

ADP issued fiscal 2027 guidance calling for consolidated revenue growth of 5% to 6%, adjusted EBIT margin expansion of 70 to 90 basis points, and adjusted diluted EPS growth of 9% to 11% off the $11.12 fiscal 2026 base. GAAP diluted EPS growth is guided at 11% to 13%. Employer Services new business bookings growth is projected at 4% to 7%, while client revenue retention is expected to decline modestly by 10 to 30 basis points. Interest on funds held for clients is forecast at $1.540 to $1.560 billion for fiscal 2027, based on anticipated client funds balance growth of 3% to 4% and an average yield rising to approximately 3.7%.

Wall Street View

Analyst sentiment on ADP heading into the report leaned cautious, with the most recent consensus (as of July 1, 2026) showing 13 Hold ratings alongside 8 Buy or Strong Buy recommendations and 2 Sell or Strong Sell ratings. The fiscal 2027 guidance range for adjusted diluted EPS growth of 9% to 11% and the 70-to-90-basis-point margin expansion target will be the primary metrics analysts use to calibrate whether the current valuation is supported.

Investor Takeaway

The Q4 result finished fiscal 2026 at the high end of ADP's own guidance range on revenue growth, margin expansion, and adjusted EPS growth, according to CFO Peter Hadley. The fiscal 2027 guidance implies a modest deceleration in revenue growth to 5%-6% from the 7% posted in fiscal 2026, which investors will weigh against the continued margin expansion trajectory. The projected slight decline in Employer Services client revenue retention of 10 to 30 basis points is a metric worth monitoring, as retention has been a structural support for ADP's recurring revenue model.