Automatic Data Processing (ADP) Citi’s 2026 Global TMT Conference summary

Macro environment and business drivers

• Employment trends remain stable with low layoffs and modest hiring, supporting a consistent business environment.

• Pays per control growth was 1% last year and is expected to remain flat to 1% in fiscal 2027.

• Medical inflation in the PEO business is high, impacting renewals and retention.

• High yields in the client funds portfolio continue to benefit financial performance.

• Demand for services remains healthy, supported by ongoing compliance and regulatory requirements.

AI strategy and technology platforms

• AI is viewed as an opportunity, not a threat, with investments focused on automation, client interaction, and internal efficiency.

• Proprietary platform Zone, leveraging Salesforce, is deployed to about 50% of relevant employees, aiming for full deployment by FY 2027.

• Zone enhances sales productivity, operational efficiency, and reduces cost to serve.

• ADP Assist, the AI program, proactively surfaces insights and automates client issue resolution.

• AI benefits are still in early stages, with both direct and indirect revenue and cost impacts expected to grow.

Segment and product performance

• Global business grew 10% in FY 2026, driven mainly by Global Payroll, with FX providing a lift.

• Lyric, a modern AI-enabled HCM platform, saw live clients grow 94% and pipeline up 50%, with strong demand especially in larger enterprises.

• HRO and HCM portfolios are healthy, with PEO revenue growth at 7% (5% ex pass-throughs), though hiring headwinds persist.

• Pays per control growth in PEO is now 0%-1%, down from higher levels in prior years, impacting revenue growth.