Automatic Data Processing (ADP) Q2 2026 earnings summary

Executive summary

• Achieved 6% revenue growth and 11% adjusted diluted EPS growth year-over-year in Q2 fiscal 2026, with net earnings up 10% and adjusted EBIT up 10% to $1.4 billion; client satisfaction reached record levels and new business bookings were broad-based.

• Employer Services and PEO Services both posted 6% revenue growth, with PEO average worksite employees up 2% to about 758,000; PEO bookings were slightly below expectations.

• Strategic initiatives advanced, including launches of ADP WorkForce Suite and enhancements to AI-driven services; Lyric platform saw strong new business bookings and won the 2026 BIG Innovation Award.

• Board authorized a $6 billion share repurchase, replacing the previous $5 billion authorization, and announced a 10% dividend increase.

• Cash returned to shareholders totaled $2.1 billion in the first half of fiscal 2026, including $1.3 billion in dividends and $0.9 billion in share repurchases.

Financial highlights

• Q2 revenues were $5.4 billion, up 6% year-over-year; six-month revenues reached $10.53 billion, up 7%.

• Adjusted EBIT margin expanded by 80 basis points to 26.0%; adjusted EBIT increased 10% to $1.4 billion.

• Adjusted diluted EPS grew 11% to $2.62 in Q2; six-month diluted EPS was $5.12, up 9%.

• Interest on funds held for clients increased to $309 million for the quarter, with average client funds balances up 6% to $37.6 billion and yield up to 3.3%.

• Operating expenses rose 6% year-over-year, mainly due to higher PEO pass-through costs and service investments.

Outlook and guidance

• Fiscal 2026 consolidated revenue growth outlook raised to about 6%, with adjusted EBIT margin expansion of 50–70 basis points.

• Adjusted EPS growth forecast raised to 9–10%, supported by share repurchases; adjusted effective tax rate projected at approximately 23%.

• Employer Services revenue growth outlook increased to about 6% for the full year; PEO Services revenue growth expected at 5–7%.

• Client funds interest revenue expected to reach $1.31–$1.33 billion, with 4–5% growth in client funds balances and average yield of ~3.4%.

• Capital expenditures for fiscal 2026 projected between $225 million and $250 million.