Automatic Data Processing (ADP) investor relations material

Executive summary

• Achieved 7% revenue growth and 10% adjusted diluted EPS growth year-over-year in Q3 FY26, exceeding expectations through strategic execution and AI-powered innovation.

• Employer Services new business bookings grew, with record-high retention and client satisfaction for the third consecutive quarter, and notable strength in international and compliance solutions.

• Advanced AI initiatives, including deployment of ADP Assist agents and expansion of the agentic AI ecosystem, are deeply integrated into operations, enhancing efficiency and client outcomes.

• Lyric HCM platform is gaining traction, expanding addressable markets, especially in large enterprise and global payroll.

• Full-year guidance raised for revenue, adjusted EBIT margin, and adjusted diluted EPS growth.

Financial highlights

• Q3 FY26 total revenues reached $5.94 billion, up 7% year-over-year, with adjusted EBIT up 10% to $1.8 billion and margin up 80 basis points.

• Employer Services revenues up 7% (5% organic constant currency), with segment margin up 130 basis points to 39.8%.

• PEO Services revenues up 7% to $1.91 billion; excluding zero-margin pass-throughs, up 5%. Segment margin decreased 120 basis points to 14.2%.

• Interest on funds held for clients increased 14% to $404 million; average client funds balances up 9% to $48.3 billion, with yield at 3.3%.

• Adjusted diluted EPS rose 10% to $3.37.

Outlook and guidance

• Fiscal 2026 revenue growth outlook raised to 6–7%, with adjusted EBIT margin expansion of 70–80 basis points and adjusted EPS growth guidance increased to 10–11%.

• Employer Services and PEO Services revenue both expected to grow 6–7%; average worksite employee count growth of about 2%.

• Client funds interest revenue projected at $1.34–$1.35 billion, with average yield anticipated at ~3.4%.

• Full-year effective tax rate guidance remains at ~23%.

• Anticipate continued margin expansion and productivity gains from AI transformation into fiscal 2027.