Automatic Data Processing, Inc. (ADP)

Business

From the fiscal 2026 Annual Report on Form 10-K (year ended June 30, 2026), SEC accession 0000008670-26-000030.

ADP sells human capital management ("HCM") software and outsourced HR services to employers. It serves over 1.1 million clients and pays over 42 million workers in more than 140 countries and territories. In the United States it pays approximately 26 million workers, roughly one in six, and in fiscal 2026 it moved more than $3.5 trillion in client funds to clients' employees, tax authorities and other payees, and processed and delivered more than 79 million employee year-end tax statements. Revenue is recurring and contract-based: clients pay for payroll processing, benefits and HR administration, workforce management, compliance and co-employment services, typically under long-term relationships. A third, structurally important revenue stream is interest ADP earns on client funds it holds between collecting them from employers and remitting them to employees and tax authorities. Client retention in fiscal 2026 implies an average relationship of approximately 13 years in Employer Services and approximately 6 years in PEO. No single client or affiliated group accounted for more than 2% of consolidated revenues. ADP had approximately 67,000 associates at June 30, 2026 and is incorporated in Delaware with headquarters in Roseland, New Jersey.

Two reportable segments.

• Employer Services serves clients from single-employee businesses to global enterprises with cloud-based HCM platforms and HR outsourcing (other than PEO): payroll, benefits administration, talent management, workforce management, compliance, HR management, retirement services and insurance services. Fiscal 2026 revenues were $14,831.4 million.
• Professional Employer Organization (PEO), branded ADP TotalSource, is a full-service PEO operating under a co-employment model in which a client's employees ("worksite employees") are co-employed by the client and ADP. It serves more than 19,000 clients and more than 770,000 worksite employees across all 50 states, and is the largest PEO certified by the IRS as a Certified Professional Employer Organization. Fiscal 2026 revenues were $7,128.1 million, of which $4,607.3 million were zero-margin benefits pass-throughs.

Principal platforms and offerings. RUN Powered by ADP serves over 980,000 small businesses. ADP Workforce Now is used by over 90,000 mid-sized and large businesses in North America. ADP Lyric HCM is the global enterprise platform, unifying HR, payroll, workforce management, talent and analytics. Workforce Management solutions reach over 160,000 employers and support compliance requirements in over 100 countries. ADP SmartCompliance covers employment tax, W-2 management, business tax credits, ACA compliance, I-9 management, employment verification, wage garnishment and the Wisely by ADP paycard. ADP Retirement Services administers plans for over 210,000 U.S. employers, and the Insurance Services agency facilitates workers' compensation and group health access for over 280,000 small and mid-sized clients. ADP Comprehensive Services and ADP Comprehensive Outsourcing Services (ADP COS) provide managed HR and large-enterprise payroll outsourcing; HR Outsourcing solutions in aggregate serve over three million client employees. Global Solutions serve over 70,000 clients, and ADP pays over 16 million workers outside the United States through offerings such as ADP Global Payroll and ADP iHCM.

Strategy. Management frames three strategic priorities: lead with best-in-class HCM technology; provide unmatched expertise and outsourcing solutions; and benefit clients with ADP's global scale. The technology priority is now explicitly an AI strategy, ADP describes its global data platform, spanning 1.1 million clients and 42 million workers, as the industry's largest workforce dataset and the foundation of its AI advantage, with persona-based ADP Assist agents grounded in ADP's institutional knowledge. The scale priority rests on direct integration with tens of thousands of government entities, tax authorities and banking institutions, a "final mile" ecosystem management argues is hard to replicate, and one that becomes more valuable as AI accelerates regulatory fragmentation. Governance of AI runs through an AI & Data Ethics Council and an interdisciplinary working group.

Research and development. ADP invested approximately $1.405 billion in fiscal 2026, $1.388 billion in fiscal 2025 and $1.276 billion in fiscal 2024, covering new product development, maintenance of existing technologies, generative and agentic AI investment, software purchases and licenses, and software additions from business combinations.

Markets and sales. Solutions are sold across North America, Latin America, Europe, Asia and Africa; the most material markets are the United States, Canada and Europe. Wage and tax collection and remittance services are offered in the United States, Canada, the United Kingdom, Australia, India, China, Hong Kong, Macau, Malaysia and Taiwan. The PEO business serves U.S.-based employees only. Distribution runs through a direct sales force, digital sales, and indirect channels including marketing relationships with CPAs and banks.

Competition. The industries ADP operates in are highly competitive, and ADP is one of the largest HCM providers in the world. HCM, Global and HRO solutions compete with business outsourcing companies, ERP service providers, cloud-based HCM providers and financial institutions; the PEO competes with other PEOs alongside those same categories. ADP also competes against clients' in-house systems. Competition is primarily on product and service quality, reputation, ease of use and accessibility of technology, breadth of offerings, and price.

Regulation. ADP's regulatory surface is unusually broad for a software company. It is subject to GDPR (as both controller and processor), the California Privacy Rights Act, the DOJ Data Security Program under Executive Order 14117, and the EU Artificial Intelligence Act; it is one of the few companies globally to have implemented Binding Corporate Rules, which it treats as a competitive differentiator. Since 2019 ADP has operated ADP Trust Company, National Association under a national trust bank charter from the OCC; it is sole trustee of the ADP Client Trust holding U.S. client funds and is subject to comprehensive OCC oversight and to the Bank Secrecy Act. Prepaid access offerings fall under the Electronic Funds Transfer Act and Regulation E. ADP Canada Co. is registered with FINTRAC and with the Bank of Canada as a Payment Service Provider. Other regulated entities include ADP Strategic Plan Services, LLC (SEC-registered investment adviser), ADP Broker-Dealer, Inc. (SEC/FINRA), and ADP Retirement Trust Services, LLC (New Hampshire state-chartered trust company, overseen by the DOL and the New Hampshire Banking Department). The background screening business is subject to the Fair Credit Reporting Act, and TotalSource carries state PEO licensing requirements and IRS certification.

Risk factors

From the fiscal 2026 Form 10-K, accession 0000008670-26-000030 (condensed from Item 1A).

Legal and compliance.

• Regulatory change directly moves revenue. A change in regulations decreasing amounts of tax withheld or shortening remittance timelines would reduce average client balances and therefore interest income on funds held for clients. Changes to tax-credit laws would hurt the Tax Credit Services business; changes in how PEO co-employment or PEO-sponsored health and welfare plans are regulated could force changes to the PEO model or reduce demand for it.
• PEO co-employment liabilities. As a co-employer and Certified PEO, ADP may bear employer obligations for worksite employee wages, taxes and benefits even where clients are contractually responsible for remitting them. That risk is magnified by bank failures or wider stress in the U.S. banking system. Separately, the PEO must qualify as employer of worksite employees under the Internal Revenue Code and ERISA to sponsor many of its benefit plans, and the definition of "employer" in the PEO context has no definitive judicial or legislative interpretation.
• Money movement failures. Failure to properly or timely remit taxes on clients' behalf could produce fines, penalties and interest borne by ADP.
• Anti-corruption, sanctions and AML. ADP operates in developing economies and is exposed to the FCPA, the U.K. Bribery Act, OFAC sanctions programs and the BSA. Banks increasingly treat money services businesses and third-party senders as higher-risk customers, which could reduce the number of banking partners willing to process ADP's money movement.
• Privacy, data protection and AI law. Compliance with GDPR, BCRs, U.S. state privacy laws and the EU AI Act carries significant cost. ADP's own use of generative and agentic AI introduces accuracy, bias, discrimination, transparency, security and privacy risks that could draw regulatory investigations, enforcement, litigation and reputational damage, including if training data or model output is inaccurate or biased, or alleged to be.
• Intellectual property. ADP relies on patent, copyright, trade secret and trademark protection; source code could be wrongfully acquired by cyber-attack or through increased use of AI tools, and expanding AI use creates uncertainty over ownership and license rights in AI algorithms and AI-generated content, exposing ADP to infringement claims.

Security and technology.

• Breach of personal data or client funds. ADP holds payroll, healthcare, financial, Social Security and bank account data for clients, their employees and its own workforce, and collects and transmits client funds. It states it has been and expects to continue to be the subject of cybersecurity attacks, unauthorized intrusion, malware, network disruption, denial of service, data corruption, ransomware, insider threats and theft of sensitive information, and that none identified to date has materially affected it. Attackers increasingly use AI to raise the sophistication, scale and speed of attacks, and new computing technologies including quantum computing could compromise encryption algorithms ADP or its third parties have used. Acquired businesses may have invested less in security, making ADP more vulnerable. Insurance coverage, subject to a significant self-insured retention, may be insufficient.
• System and data center disruption. ADP depends on daily processing of large volumes of complicated transactions; its systems have failed or become disabled in the past. It hosts applications both in its own data centers and with third-party cloud and technology vendors whose services have failed or been disrupted before, and exposure grows as reliance on third-party cloud platforms increases.

Business and industry.

• Rapid technological change, including AI. Generative and agentic AI may be disruptive to the HCM industry, could enable competing products, and could place ADP at a competitive disadvantage or render its technology obsolete. Product development involves long return-on-investment cycles, and failure to realize the economic benefit of an investment could cause goodwill or intangible impairment.
• Employment levels and macro conditions. Contracts blend base fees with per-employee fees, so employment levels across the client base drive results directly, and ADP names AI itself as a potential cause of falling employment levels. Tariffs and trade restrictions, monetary and fiscal policy, interest rates and inflation all bear on the business; ADP may be unable to offset rising operating costs with price increases.
• Client funds investment and liquidity. Funds held for clients are invested in liquid investment-grade securities subject to market, interest rate, credit and liquidity risk. ADP extends portfolio maturities and relies on short-term financing (commercial paper, reverse repurchase agreements, committed credit facilities, corporate cash) to meet client funds obligations; reduced availability of that financing would raise borrowing costs or force sales of available-for-sale securities at a loss. Where ADP has not impounded client funds before paying client obligations, it is at risk of not recovering them. A systemic banking shutdown would impede ADP's ability to process payments.
• Operational error in money movement. Collection, custody and transmission of large volumes of funds in short time frames exposes ADP to processing, technological, fraud-related and human error, settlement failures and timing mismatches.
• Foreign currency. A significant portion of revenues and operating income is earned outside the United States.
• Credit ratings. Downgrades of long-term or commercial paper ratings would raise borrowing costs and could reduce ADP's ability to obtain the short-term borrowing its client funds strategy requires.
• Reputation and stakeholder expectations. Negative publicity about the brand, solutions, data, culture, partners, vendors or employees, accurate or not, could hurt results; evolving and inconsistent corporate-responsibility reporting standards add compliance cost.
• Activist stockholders. ADP has been subject to activist actions and may be again; responding is costly, diverts the Board and management, and can create perceived uncertainty about strategy.
• Talent. Competition for skilled employees in outsourcing and adjacent markets is increasingly intense and expensive.

Management's discussion and analysis, fiscal 2026

From the fiscal 2026 Form 10-K, accession 0000008670-26-000030 (Item 7; comparisons are fiscal 2026 versus fiscal 2025).

Headline results. Revenues grew 7% to $21,947.4 million from $20,560.9 million, and 6% on an organic constant currency basis. Earnings before income taxes rose 8% to $5,730.3 million, with EBIT margin up 30 basis points to 26.1%. Adjusted EBIT rose 10% to $5,874.6 million and adjusted EBIT margin expanded 80 basis points to 26.8%. Net earnings rose 8% to $4,413.5 million and diluted EPS rose 10% to $10.94; adjusted net earnings rose 10% to $4,485.4 million and adjusted diluted EPS rose 11% to $11.12. ADP returned $4.7 billion to shareholders, comprising $2.6 billion of dividends and $2.1 billion of share repurchases.

Operating metrics. U.S. pays per control, the approximate growth in employees on ADP clients' processed U.S. payrolls on a same-store-sales basis, grew 1%. PEO average worksite employees increased 2%. Employer Services new business bookings grew 6%, and Employer Services client revenue retention was 92.1%.

Revenue drivers. Growth came from new business started from bookings, strong client revenue retention, a $318.3 million increase in zero-margin benefits pass-throughs, higher pricing, a 1% year-over-year growth contribution from foreign currency, and a $165.7 million increase in interest on funds held for clients. Interest on funds held for clients was $1,354.8 million versus $1,189.1 million, as average client funds balances rose 7.4% to $40.4 billion and the average interest rate earned rose to 3.4% from 3.2%.

Expenses. Total expenses rose 7% to $16,627.7 million. Operating expenses rose 6% to $10,240.6 million, driven by the $318.3 million increase in PEO zero-margin benefits pass-through costs (to $4,607.3 million from $4,289.0 million), $188.9 million of higher service and implementation costs supporting revenue growth, $74.4 million of higher hosting, cloud service and software license costs, and $37.1 million more in workers' compensation coverage and state unemployment taxes for worksite employees. Research and development rose 4% to $1,028.8 million, including WorkForce Software integration costs. Depreciation and amortization rose 1% to $490.8 million on amortization of internally developed software, WorkForce Software intangibles and purchased software, partly offset by lower amortization of customer contracts and lists. Selling, general and administrative expenses rose 9% to $4,408.2 million, chiefly $241.4 million more selling and marketing spend on the sales organization, $67.2 million of costs for non-recurring company-wide initiatives, and an $18.0 million non-recurring net legal settlement. Interest expense rose 1% to $459.3 million: $25.3 million more on senior notes issued in fiscal 2026 and 2025 (net of a fiscal 2025 note redemption), offset by $22.8 million less on commercial paper and reverse repurchase borrowings as average rates fell 80 and 70 basis points respectively.

Other income. Other income, net was $410.6 million versus $354.1 million. Interest income on corporate funds rose to $371.0 million from $319.5 million on higher average investment balances of $10.4 billion versus $9.2 billion and a 10 basis point increase in average rates. ADP recognized an $8.4 million net gain on investments made through ADP Ventures, its corporate venture capital arm.

Taxes. The effective tax rate was 23.0% versus 23.2%, down on lower uncertain tax positions and higher tax credits, partly offset by a lower benefit from prior-year tax liability adjustments and a lower excess tax benefit on stock-based compensation. The adjusted effective tax rate was also 23.0% versus 23.2%.

Segments.

• Employer Services revenues rose 7% as reported and 5% organic constant currency to $14,831.4 million, on new business from bookings, retention, pricing, a 1% foreign currency contribution, $164.1 million more interest earned on funds held for clients, and 1% pays per control growth. Earnings before income taxes rose 9% to $5,436.8 million, and margin expanded 60 basis points to 36.7% on client funds interest, servicing and implementation efficiencies and lower amortization of client contracts and lists, partly offset by higher selling and marketing expense and the impact of the WorkForce Software acquisition completed in October 2024.
• PEO Services revenues rose 7% to $7,128.1 million; excluding zero-margin benefits pass-throughs, revenues rose 5% to $2,520.8 million from $2,401.4 million. Growth came from the $318.3 million pass-through increase, 2% growth in average worksite employees, and higher average wages and state unemployment taxes per worksite employee. Earnings before income taxes fell 2% to $936.1 million and margin contracted 110 basis points to 13.1%, on higher selling and marketing expense ($52.8 million), pass-through costs, a larger pre-tax loss from ADP Indemnity, and $37.1 million of operating costs for workers' compensation coverage and state unemployment insurance.

ADP Indemnity. ADP Indemnity provides workers' compensation deductible reimbursement insurance for PEO worksite employees up to $1 million per occurrence, and since fiscal 2013 has ceded substantially all of those losses to ACE American Insurance Company, a Chubb subsidiary, under annual reinsurance arrangements. It recorded a pre-tax actuarial gain of $2.8 million in fiscal 2026 versus $8.8 million in fiscal 2025, on less favorable loss development in workers' compensation reserves. At June 30, 2026 it held total assets of $824.4 million against actuarially estimated unpaid losses of $774.3 million for policy years since July 1, 2003, and it paid claims of $8.3 million net of insurance recoveries in fiscal 2026 versus $6.3 million in fiscal 2025.

Non-GAAP adjustments. Adjusted EBIT includes interest income and expense tied to the client funds extended investment strategy but excludes other interest income and expense, and excludes: partial reversals of fiscal 2025 and 2024 workforce optimization initiatives; a fourth-quarter fiscal 2026 charge of $91.1 million for a corporate-led business alignment program designed to align the organization with the Strategic Priorities and streamline structure (comprising $89.1 million of severance and $2.0 million of strategic project costs, primarily external advisory); gains and losses on ADP Ventures investments; and, in fiscal 2026, a net charge from a legal matter settled during the year (establishment of a legal reserve, net of insurance recovery).

Cash flow and liquidity. Operating cash flow rose $501.5 million to $5,441.2 million on business growth and favorable timing of collections and payments. Investing activities used $4,713.8 million versus $3,035.0 million, on $2,696.2 million of timing differences in corporate and client funds marketable securities, offset by the absence of acquisition spending ($1,165.1 million in fiscal 2025, primarily WorkForce Software). Financing activities provided $4,881.0 million versus a $6,973.4 million use, driven by a $21,516.6 million net increase in client funds obligations cash flow and a $576.2 million decrease in cash distributed to clients received from the IRS, partly offset by repayment of $4,769.5 million of commercial paper outstanding at June 30, 2025 and $802.8 million more in share repurchases. ADP repurchased approximately 8.6 million shares at an average $242.92 per share, versus 4.4 million at $289.11 in fiscal 2025. The liquidity discussion puts capital expenditures at $195.7 million versus $176.8 million, while the consolidated statement of cash flows reports $196.6 million for fiscal 2026 and $168.7 million for fiscal 2025; fiscal 2027 capital expenditures are expected between $200.0 million and $225.0 million.

Cash and cash equivalents were $4.2 billion at June 30, 2026, primarily in time deposits and money market funds. ADP has $11.7 billion of committed credit facilities and an $11.7 billion commercial paper program rated A-1+ / P-1 / F1+; it had no commercial paper outstanding at June 30, 2026, against $4.8 billion at June 30, 2025 (repaid in early July 2025), with average daily borrowings of $4.2 billion in fiscal 2026 versus $4.1 billion. Reverse repurchase obligations were $139.3 million versus $38.4 million, with $7.5 billion available on a committed basis in the U.S. Long-term debt consists of $5.0 billion of senior unsecured notes maturing in 2028, 2030, 2032, 2034 and 2036; during the fourth quarter of fiscal 2026 ADP issued $1.0 billion of 5.00% senior notes due 2036 and terminated several hedging derivative contracts in connection with the issuance. Client funds obligations at June 30, 2026 totaled $44,415.5 million against $43,957.8 million of cash, cash equivalents and marketable securities in funds held for clients.

Credit facilities. Facility maturities are deliberately staggered: a $5.7 billion 364-day credit agreement maturing June 2027 with a one-year term-out option, plus five-year facilities of $2.5 billion and $3.5 billion maturing June 2030 and June 2031, each with a $500 million accordion feature. There were no borrowings under the credit facilities through June 30, 2026.

Interest rate sensitivity. The annualized rate earned on the entire portfolio rose from 3.2% in fiscal 2025 to 3.4% in fiscal 2026. A hypothetical 25 basis point change in both short-term and intermediate-term rates would affect earnings before income taxes by approximately $21.0 million over the twelve months ending June 30, 2027; a 25 basis point change in short-term rates alone would have an approximately $10.0 million impact. The client funds portfolio ladders maturities out to five years in the extended portfolio and ten years in the long portfolio, holds no sub-prime, CDO, CLO, credit default swap, auction rate or non-investment-grade exposure, and carries minimum purchase ratings of BBB for corporate and Canadian government/provincial bonds, AAA for asset-backed securities and A for municipals.

Critical accounting estimates. The three named estimates are deferred costs to obtain and fulfill contracts (amortized over an expected client relationship period of three to eight years, with no impairment losses in fiscal 2026, 2025 or 2024), goodwill (annual quantitative assessment as of June 30, 2026 found no impairment; a one percentage point increase in the weighted-average cost of capital would not produce an impairment, and fair values substantially exceeded carrying values), and income taxes (liabilities for unrecognized tax benefits, including interest and penalties, of $152.5 million at June 30, 2026 versus $163.0 million at June 30, 2025).

Commitments and contingencies. Purchase commitments at June 30, 2026 were approximately $2,850.5 million, including a reinsurance premium with Chubb for the fiscal 2026 policy year plus software license, third-party software services and maintenance obligations; $604.6 million falls in fiscal 2027, $1,095.9 million in fiscal 2028–2029 and $694.1 million in fiscal 2030–2031. ADP reached a settlement of all outstanding claims for $48 million in the putative ERISA class action filed in May 2020 in the U.S. District Court for the District of New Jersey against ADP, TotalSource and related defendants over the ADP TotalSource Retirement Savings Plan's fiduciary administrative and investment decision-making; the settlement is subject to court approval. ADP recorded a $48 million accrual at June 30, 2026 and $30 million of insurance receivables representing recoveries considered probable from purchased insurance.

Current period: fourth quarter fiscal 2026 and the fiscal 2027 outlook

Fourth-quarter results and the fiscal 2027 outlook are from the earnings release furnished as Exhibit 99 to the Current Report on Form 8-K dated July 29, 2026, SEC accession 0000008670-26-000025. Third-quarter figures are from the Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, SEC accession 0000008670-26-000022.

Fourth quarter (three months ended June 30, 2026). Revenues increased 7% to $5,473.8 million, and 6% on an organic constant currency basis. Net earnings increased 7% to $978.6 million and diluted EPS was $2.45 versus $2.23; adjusted net earnings increased 14%. Earnings before income taxes were $1,257.8 million versus $1,190.6 million. Employer Services revenues grew 7% reported and 6% organic constant currency, with segment margin up 90 basis points. PEO Services revenues grew 7% (5% excluding zero-margin benefits pass-throughs), average worksite employees rose 2% to about 775,000, and segment margin fell 100 basis points. Interest on funds held for clients rose 15% to $355.4 million on an 8% increase in average client funds balances to $41.0 billion and a 20 basis point increase in average yield to 3.5%. Chief Financial Officer Peter Hadley said ADP finished the year at the high end of its guidance range for revenue growth, margin expansion and adjusted EPS growth.

Third quarter and nine months (ended March 31, 2026). Third-quarter revenues were $5,939.2 million, up 7% (6% organic constant currency), with interest on funds held for clients of $403.9 million versus $355.2 million and average client funds balances up 8.5% to $48.3 billion, the seasonal peak, against $41.0 billion in the fourth quarter. For the nine months, revenues grew 7% to $16,473.6 million (6% organic constant currency), earnings before income taxes margin expanded 50 basis points and adjusted EBIT margin expanded 50 basis points, diluted EPS grew 10% to $8.49 and adjusted diluted EPS grew 9% to $8.48, and ADP returned $3.4 billion to shareholders including $1.9 billion of dividends and $1.5 billion of repurchases. The 10-Q reported no material changes to the risk factors disclosed in the prior annual report.

Fiscal 2027 outlook (as issued July 29, 2026). Consolidated: revenue growth of 5% to 6%; adjusted EBIT margin expansion of 70 to 90 basis points; adjusted effective tax rate of approximately 23%; diluted EPS growth of 11% to 13% and adjusted diluted EPS growth of 9% to 11%. Employer Services: revenue growth of 5% to 6%, new business bookings growth of 4% to 7% (off a fiscal 2026 base of $2.2 billion), client revenue retention down 10 to 30 basis points from 92.1%, and U.S. pays per control growth of 0% to 1%. PEO Services: revenue growth of 5% to 7%, growth excluding zero-margin benefits pass-throughs of 3% to 5%, and average worksite employee growth of about 2%. Client funds: interest on funds held for clients of $1.540 billion to $1.560 billion on anticipated client funds balance growth of 3% to 4% and an average yield rising to approximately 3.7%, with total contribution from the client funds extended investment strategy of $1.545 billion to $1.565 billion. Interest assumptions are based on Fed Funds futures contracts and forward yield curves as of July 28, 2026, and the outlook contemplates the anticipated impact of foreign currency.

The fiscal 2027 growth comparisons are drawn against a fiscal 2026 base adjusted for four items: a pre-tax gain of about $5 million from partial reversal of the fiscal 2025 and 2024 workforce optimization initiatives, pre-tax charges of about $91 million for the business alignment program, a pre-tax gain of about $8 million on ADP Ventures investments, and pre-tax net charges of about $18 million from the settlement of a legal matter.

Subsequent events

From the fiscal 2026 Form 10-K, accession 0000008670-26-000030, and the Current Report on Form 8-K dated July 29, 2026, accession 0000008670-26-000025.

ADP's fiscal 2026 Form 10-K contains no separate subsequent events note. Two post-period items are disclosed within it and in the accompanying earnings release:

• Chubb reinsurance renewal. ADP Indemnity paid a premium of $327.8 million in July 2026 to enter into a reinsurance agreement with Chubb covering substantially all losses incurred by ADP Indemnity for the fiscal 2027 policy year, on terms substantially similar to the fiscal 2026 reinsurance policy. This is the annual renewal of the arrangement in place since fiscal 2013.
• Fiscal 2027 outlook. On July 29, 2026 ADP issued its fourth quarter and fiscal 2026 results and provided the fiscal 2027 outlook set out in the section above.

No acquisition, divestiture, financing or litigation resolution was disclosed as occurring after June 30, 2026 and before the Form 10-K was filed on August 5, 2026. The $1.0 billion 5.00% senior notes due 2036 were issued on May 7, 2026 and the $5.7 billion 364-day and $3.5 billion five-year credit agreements were entered into on June 26, 2026, both within fiscal 2026, not after it.

Filings that contain financial statements

• Form 8-K filed July 29, 2026 (accession 0000008670-26-000025), Exhibit 99: fourth-quarter and full fiscal-year 2026 (ended June 30, 2026) results, with income-statement highlights, segment results and a fiscal 2027 outlook table.
• Form 8-K filed April 29, 2026 (accession 0000008670-26-000016), Exhibit 99: third-quarter fiscal 2026 (ended March 31, 2026) results and an updated fiscal 2026 outlook.
• Form 8-K filed January 28, 2026 (accession 0000008670-26-000006), Exhibit 99: second-quarter fiscal 2026 (ended December 31, 2025) results and an updated fiscal 2026 outlook.
• Form 8-K filed October 29, 2025 (accession 0000008670-25-000042), Exhibit 99: first-quarter fiscal 2026 (ended September 30, 2025) results and an updated fiscal 2026 outlook.
• Form 8-K filed July 30, 2025 (accession 0000008670-25-000026), Exhibit 99: fourth-quarter and full fiscal-year 2025 (ended June 30, 2025) results, with a fiscal 2026 outlook table.
• Form 8-K filed April 30, 2025 (accession 0000008670-25-000012), Exhibit 99: third-quarter fiscal 2025 (ended March 31, 2025) results and an updated fiscal 2025 outlook.
• Form 8-K filed January 29, 2025 (accession 0000008670-25-000003), Exhibit 99: second-quarter fiscal 2025 (ended December 31, 2024) results and an updated fiscal 2025 outlook, including the note that the Board raised the quarterly dividend for the 50th consecutive year.
• The full fiscal 2026 results (Form 10-K, accession 0000008670-26-000030, period ended June 30, 2026) and the fiscal third-quarter 2026 results (Form 10-Q, accession 0000008670-26-000022, period ended March 31, 2026) contain the complete audited/unaudited consolidated financial statements, including the note disclosing the WorkForce Software acquisition discussed below.

Earnings and guidance

Fiscal 2026 (ended June 30, 2026). ADP reported fourth-quarter and full-year fiscal 2026 results on July 29, 2026 (accession 0000008670-26-000025). Full-year revenue rose 7% to $21.9 billion (6% organic constant currency); net earnings rose 8% to $4.4 billion and adjusted net earnings rose 10% to $4.5 billion; adjusted EBIT rose 10% to $5.9 billion with adjusted EBIT margin up 80 basis points to 26.8%; diluted EPS rose 10% to $10.94 and adjusted diluted EPS rose 11% to $11.12. Fourth-quarter revenue was $5.5 billion, up 7%. The company issued a fiscal 2027 outlook calling for revenue growth of 5%-6%, adjusted EBIT margin expansion of 70-90 basis points, and adjusted diluted EPS growth of 9%-11%.

Guidance was raised during the year: at third-quarter results on April 29, 2026 (accession 0000008670-26-000016), ADP raised its full-year fiscal 2026 outlook for revenue, adjusted EBIT margin and adjusted diluted EPS growth, reporting third-quarter revenue up 7% to $5.9 billion, net earnings up 9% to $1.4 billion, and diluted EPS up 10% to $3.38. At second-quarter results on January 28, 2026 (accession 0000008670-26-000006), the company again raised full-year revenue and adjusted diluted EPS guidance, reporting second-quarter revenue up 6% to $5.4 billion and diluted EPS up 11% to $2.62. First-quarter fiscal 2026 results, reported October 29, 2025 (accession 0000008670-25-000042), showed revenue up 7% to $5.2 billion and diluted EPS up 6% to $2.49, with fiscal 2026 guidance maintained at the levels set the prior quarter.

Fiscal 2025 (ended June 30, 2025). Fourth-quarter and full-year fiscal 2025 results, reported July 30, 2025 (accession 0000008670-25-000026), showed full-year revenue up 7% to $20.6 billion, net earnings up 9% to $4.1 billion, adjusted EBIT up 9% to $5.3 billion (margin up 50 basis points to 26.0%), and diluted EPS up 10% to $9.98 (adjusted diluted EPS up 9% to $10.01). The release set the initial fiscal 2026 outlook (5%-6% revenue growth, 50-70 basis points of adjusted EBIT margin expansion, 8%-10% adjusted diluted EPS growth). Third-quarter fiscal 2025 results, reported April 30, 2025 (accession 0000008670-25-000012), showed revenue up 6% to $5.6 billion and diluted EPS up 6% to $3.06, with the company raising its fiscal 2025 outlook for adjusted EBIT margin and adjusted diluted EPS growth. Second-quarter fiscal 2025 results, reported January 29, 2025 (accession 0000008670-25-000003), showed revenue up 8% to $5.0 billion and diluted EPS up 10% to $2.35, maintaining the prior fiscal 2025 outlook; the release also noted that ADP's board had raised the quarterly dividend in November 2024 for the 50th consecutive year.

Investor Day and medium-term targets

On June 12, 2025, ADP held its 2025 Investor Day and furnished the presentation as Exhibit 99 to a Form 8-K (accession 0000008670-25-000023). Management set medium-term financial objectives of 6%-7% revenue growth, 8%-10% adjusted EBIT growth (supported by roughly 50-75 basis points of annual margin expansion), 9%-11% adjusted EPS growth, and 11%-13% total shareholder return (assuming a roughly 2% dividend yield), while noting these objectives assume no significant impact from M&A or material macroeconomic shifts.

Capital structure and financing

• Credit facilities. On June 26, 2026, ADP entered into a new $5.7 billion 364-day credit facility and a new $3.5 billion five-year credit facility (with an accordion feature allowing the five-year facility to grow by $500 million), replacing and terminating its prior $4.55 billion 364-day facility and $3.5 billion five-year facility (Form 8-K, accession 0000950142-26-001884). A year earlier, on June 27, 2025, ADP had similarly refinanced into a $4.55 billion 364-day facility and a $2.5 billion five-year facility, replacing facilities entered into in 2023 and 2024 (Form 8-K, accession 0000950142-25-001700).
• Senior notes. On May 4, 2026, ADP priced $1.0 billion of 5.000% senior notes due 2036, issued May 7, 2026 (Form 8-K, accession 0001193125-26-212131). On May 5, 2025, ADP priced $1.0 billion of 4.750% senior notes due 2032, issued May 8, 2025 (Form 8-K, accession 0001193125-25-116011).

Management changes

On April 28, 2025, ADP's board appointed Peter Hadley, then the company's Treasurer, Chief Financial Officer effective July 1, 2025, succeeding Don McGuire, who stepped down as CFO on June 30, 2025 and remained available through September 30, 2025 to support the transition; the appointment was announced in a press release dated April 30, 2025 (Form 8-K, accession 0000950142-25-001211).

Acquisition

ADP's Form 10-K for fiscal 2026 (accession 0000008670-26-000030) and Form 10-Q for the quarter ended March 31, 2026 (accession 0000008670-26-000022) disclose that in October 2024 the company completed the acquisition of WorkForce Software, a workforce management solutions provider, for cash consideration of approximately $1.158 billion, net of cash acquired, using cash on hand. WorkForce Software's results are reported within ADP's Employer Services segment; the company has stated the transaction was not material to its consolidated financial results and did not present pro forma financial information. This acquisition is not the subject of a standalone Form 8-K in ADP's recent filing history; it is disclosed only in the annual and quarterly financial-statement notes.

ADP's Form 10-K for fiscal 2026 also states, in its description of Talent Management solutions, that its compensation management offerings "expanded in 2025 with the acquisition of Pequity, which supports the complex compensation planning needs of mid-size, enterprise and multinational companies." The filings do not disclose a purchase price or closing date for this transaction, it is not the subject of a standalone Form 8-K, and it is not covered in the Acquisitions note to the financial statements, which addresses only WorkForce Software.

Corporate governance

ADP's annual stockholder meetings on November 6, 2024 and November 12, 2025 resulted in the election of all director nominees and the ratification of Deloitte & Touche LLP as independent auditor, with no proposal failing to pass (Forms 8-K, accessions 0000950142-24-002721 and 0000950142-25-003006).

About this file

ADP annual income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

ADP quarterly income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

ADP year-to-date income statement and cash flow

Taken from the SEC filings and normalized to actual dollars.

Adjustments

Notes

• Automatic Data Processing's fiscal year ends June 30. These figures cover fiscal 2026, the year ended June 30, 2026.
• Figures are taken from the fiscal 2026 Form 10-K (accession 0000008670-26-000030, filed August 5, 2026), the fiscal 2026 third-quarter Form 10-Q (accession 0000008670-26-000022, filed April 30, 2026) and the quarterly earnings releases ADP furnished as Exhibit 99 to its Forms 8-K of October 29, 2025 (accession 0000008670-25-000042), January 28, 2026 (accession 0000008670-26-000006) and July 29, 2026 (accession 0000008670-26-000025). The releases supply the discrete first, second and fourth quarters of fiscal 2026 and the fourth quarter of fiscal 2025, and the January 28, 2026 release also supplies the six-month columns used to derive the third-quarter cash flows. The 10-K is the newer of the two periodic reports, so the 10-Q covers a quarter inside the fiscal year the 10-K reports.
• Every statement used here is presented in millions of dollars: in the 10-K and the 10-Q, 'In millions, except per share amounts' on the earnings statement and balance sheet and 'In millions' on the cash flow statement; in the earnings releases, the same notes on those statements and 'Dollars in millions, except per share amounts' on the Other Selected Financial Data tables. All dollar figures here have been converted to actual dollars, and share counts, also printed in millions, to actual shares.
• Annual coverage follows what the 10-K prints: three years of the Statements of Consolidated Earnings and Statements of Consolidated Cash Flows (fiscal 2026, 2025 and 2024) but only two years of the Consolidated Balance Sheets (June 30, 2026 and 2025). Fiscal 2024 therefore carries no balance sheet.
• ADP presents revenue in three lines - revenues other than interest on funds held for clients and PEO revenues, interest on funds held for clients, and PEO revenues - which sum to total revenues. It does not present a gross profit subtotal, so none is shown here; total costs of revenues is the cost line the company reports.
• 'Other (income)/expense, net' is presented by ADP as a deduction from total expenses. It is recorded here with ADP's own sign convention, so a negative figure means net other income. In fiscal 2026 the line was net income of $410.6 million.
• PEO revenues are reported net of direct pass-through costs, primarily worksite-employee payroll wages and payroll taxes, of $81.1 billion in fiscal 2026, $75.2 billion in fiscal 2025 and $69.9 billion in fiscal 2024. Those pass-through amounts are excluded from reported revenue.
• Total debt is stated as long-term debt plus the current portion of long-term debt plus commercial paper borrowings. At June 30, 2026 that is $4,964.1 million of long-term debt, $1.0 million of current portion (carried within accrued expenses and other current liabilities) and no commercial paper, for $4,965.1 million. At June 30, 2025 it is $3,974.7 million, $1.0 million and $4,769.5 million of commercial paper, for $8,745.2 million. Obligations under reverse repurchase agreements are shown as a separate balance-sheet line and are not included in total debt.
• The balance sheet carries client funds that ADP holds on behalf of employers pending remittance: funds held for clients of $43,957.8 million at June 30, 2026 against client funds obligations of $44,415.5 million. These flow through the statements but are not ADP's own capital, and they are the main reason total assets swing sharply between dates.
• Free cash flow is shown as net cash provided by operating activities less capital expenditures. ADP does not present a free cash flow subtotal in the 10-K; additions to intangibles are reported separately and are not deducted here.
• The fourth quarter of fiscal 2026 and of fiscal 2025 are discrete three-month periods printed on the face of the fiscal 2026 fourth-quarter and full-year earnings release furnished as Exhibit 99 to the Form 8-K of July 29, 2026 (accession 0000008670-26-000025). Those quarterly income statements are unaudited press-release figures. Each line was checked against the audited fiscal-year column in the 10-K less the corresponding nine-month column in the 10-Q: total revenues of $5,473.8 million for the fourth quarter of fiscal 2026 equals $21,947.4 million less $16,473.6 million, and net earnings of $978.6 million equals $4,413.5 million less $3,434.9 million. A handful of subtotals differ from that subtraction by $0.1 million, which is the rounding inherent in statements presented to one decimal place in millions; the figures recorded here are the ones ADP printed for the quarter.
• The first and second quarters of fiscal 2026 are likewise taken from ADP's quarterly earnings releases, which print them as discrete three-month periods: the first quarter from Exhibit 99 to the Form 8-K of October 29, 2025 (accession 0000008670-25-000042), three months ended September 30, 2025, and the second quarter from Exhibit 99 to the Form 8-K of January 28, 2026 (accession 0000008670-26-000006), three months ended December 31, 2025. Both are unaudited press-release figures. Those two entries carry an income statement and segment results only; the balance sheets and cash flow statements printed alongside them are as of, or cumulative to, those dates and are not reproduced here.
• The fourth-quarter cash flow figures are derived, not printed: the earnings release and the 10-K both present cash flows only for the twelve months, so each fourth-quarter line is the 10-K's fiscal-year column less the 10-Q's nine-month column. Fourth-quarter fiscal 2026 operating cash flow of $1,428.0 million is $5,441.2 million less $4,013.2 million, and capital expenditures of $72.8 million are $196.6 million less $123.8 million.
• Weighted-average share counts for the fourth quarter of fiscal 2026 and of fiscal 2025 are the discrete three-month figures ADP prints in the 'Earnings per share information' table of 'Other Selected Financial Data' in the fourth-quarter and full-year earnings release (accession 0000008670-26-000025): 398.8 million basic and 399.7 million diluted for the fourth quarter of fiscal 2026, against 406.0 million and 407.7 million a year earlier. They tie to the earnings per share printed for those quarters.
• The balance sheet attached to the fourth-quarter fiscal 2026 and fiscal 2025 entries is the June 30 balance sheet from the 10-K, which is the same statement as the corresponding fiscal year's.
• The third-quarter cash flow figures for fiscal 2026 and fiscal 2025 are derived, not printed: each line is the nine-month column of the third-quarter 10-Q (accession 0000008670-26-000022) less the six-month column of the second-quarter earnings release furnished as Exhibit 99 to the Form 8-K of January 28, 2026 (accession 0000008670-26-000006). Third-quarter fiscal 2026 operating cash flow of $2,238.0 million is $4,013.2 million less $1,775.2 million, and capital expenditures of $50.6 million are $123.8 million less $73.2 million.
• Segment figures are ADP's two reportable segments, Employer Services and PEO Services, from Note 15 of the 10-K and Note 17 of the 10-Q for the annual, third-quarter and nine-month periods, and from the 'Other Selected Financial Data' table of the corresponding quarterly earnings release for the first, second and fourth quarters of fiscal 2026 and the fourth quarter of fiscal 2025. In the releases the segment line labelled 'Other' within segment revenues is the intercompany elimination and is recorded here as such; it is the same item as the $12.1 million and $12.6 million eliminations in Note 15 of the 10-K for fiscal 2026 and fiscal 2025. Segment revenues include intercompany revenues and so exceed consolidated revenues before eliminations, and segment earnings before income taxes exclude unallocated corporate overhead, shown here as 'unallocated corporate other'. Neither sums to the consolidated line without those reconciling items.
• Dividends declared per share are taken from the Statements of Consolidated Stockholders' Equity in the 10-K: $6.64 in fiscal 2026, $6.02 in fiscal 2025 and $5.45 in fiscal 2024. These are amounts declared, which differ from the dividends paid shown in the cash flow statement.
• The full-year fiscal 2026 and fiscal 2025 figures in the July 29, 2026 earnings release agree line for line with the audited columns in the 10-K, so the release was not revised by the later annual report.
• There were no stock splits in the periods covered and ADP is a U.S. domestic filer reporting in U.S. dollars, so no split, currency or depositary-ratio adjustments were applied.
• Capital expenditures recorded here are the Statements of Consolidated Cash Flows line in the fiscal 2026 10-K - $196.6 million in fiscal 2026 and $168.7 million in fiscal 2025 - which is the cash-flow basis. The Management's Discussion and Analysis in the same filing states capital expenditures of $195.7 million for fiscal 2026 and $176.8 million for fiscal 2025, discussing them on a different basis; the two are not a contradiction.

Uncertainties

• The third-quarter cash flow lines for fiscal 2026 and fiscal 2025 are arithmetic differences - the 10-Q's nine-month column less the six-month column of the second-quarter earnings release - rather than figures ADP printed for a quarter. The six-month figures are unaudited press-release figures, and no three-month cash flow statement exists against which to check the result.
• The fourth-quarter cash flow lines for fiscal 2026 and fiscal 2025 are arithmetic differences between the 10-K's fiscal-year column and the 10-Q's nine-month column rather than figures ADP printed. The subtraction is exact, but the company has not published a fourth-quarter cash flow statement against which to check it.
• The first- and second-quarter fiscal 2026 income statements and segment results, like the fourth-quarter ones, come from earnings releases furnished under Item 2.02 rather than from a periodic report, and the releases label them unaudited. Those two entries carry an income statement and segment results only, with no balance sheet or cash flow figures.
• Fiscal 2024 has no balance sheet because the 10-K presents only two balance sheet dates, June 30, 2026 and June 30, 2025.
• The fourth-quarter income statements come from an earnings release furnished under Item 2.02 rather than from an audited statement, and the release labels them unaudited. They were checked against the 10-K and 10-Q columns and agree, except that six subtotals - total expenses and selling, general and administrative expenses in the fourth quarter of fiscal 2026, and total costs of revenues, total expenses, earnings before income taxes and net earnings in the fourth quarter of fiscal 2025 - come out $0.1 million away from the subtraction. That is one-decimal rounding rather than a disagreement, but it is recorded here because it means those six lines are not reproducible to the dollar from the annual and nine-month columns.

Company details

Fiscal period

Source filings