ADP Staffing & Employment Services
Automatic Data Processing, Inc.
Automatic Data Processing (ADP) is a Roseland, New Jersey-based provider of payroll, HR, benefits, time, and talent software and outsourcing — human capital management (HCM). It pays about 26 million U.S. workers, roughly one in six, and serves clients in over 140 countries with about 67,000 associates. It reports two segments: Employer Services (68% of FY2026 revenue), which sells cloud HCM platforms such as RUN for small businesses and Workforce Now for mid-sized and large ones, and PEO Services (32%), which co-employs clients' workers. FY2026 revenue was $21.9 billion, up 7%, including $1.35 billion of interest earned on client funds it holds before paying wages and taxes.
Last updated
Analysis last edited: October 4, 2026 · Financial data fetched: October 3, 2026 15:13 (SEC EDGAR) · Source 10-K filed: August 5, 2026
Next update expectedAfter FY2027’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
01
Company profile
- Legal name
- AUTOMATIC DATA PROCESSING INC
- Headquarters
- ROSELAND, NJ
- Incorporated in
- Delaware
- Fiscal year end
- 06/30
- Exchange & ticker
- NASDAQ: ADP
- Industry
- Staffing & Employment Services
- CIK
- 8670
- Website
- https://www.adp.com/ ↗
- IR page
- https://investors.adp.com/ ↗
Workforce (as of FY2026 year-end)
Employees
67,000
Source: Form 10-K (FY2026) cover page and business description
02
Earnings calendar
When the company reports each quarter: the quarter-end date, the day results were released, and when the 10-Q or 10-K was filed.
Next report
Q1 FY2027
Quarter end: September 2026. In past years, Q1 results were released 25–30 days after quarter end (Oct 29, 2025; Oct 30, 2024; Oct 25, 2023). No date has been announced in the sources this site uses.
Reporting pattern
- Fiscal year ends around June 30.
- Reports four times a year: three quarterly reports (10-Q) and an annual report (10-K) for Q4.
- Earnings releases came 25–31 days after quarter end over the last 12 quarters.
| Quarter | Quarter ended | Earnings release (8-K) | Report filed (10-Q / 10-K) |
|---|---|---|---|
| Q4 FY2026 | Jun 30, 2026 | Jul 29, 2026 (+29 days) | Aug 5, 2026 10-K (+36 days) |
| Q3 FY2026 | Mar 31, 2026 | Apr 29, 2026 (+29 days) | Apr 30, 2026 10-Q (+30 days) |
| Q2 FY2026 | Dec 31, 2025 | Jan 28, 2026 (+28 days) | Jan 29, 2026 10-Q (+29 days) |
| Q1 FY2026 | Sep 30, 2025 | Oct 29, 2025 (+29 days) | Oct 31, 2025 10-Q (+31 days) |
| Q4 FY2025 | Jun 30, 2025 | Jul 30, 2025 (+30 days) | Aug 6, 2025 10-K (+37 days) |
| Q3 FY2025 | Mar 31, 2025 | Apr 30, 2025 (+30 days) | May 1, 2025 10-Q (+31 days) |
| Q2 FY2025 | Dec 31, 2024 | Jan 29, 2025 (+29 days) | Jan 30, 2025 10-Q (+30 days) |
| Q1 FY2025 | Sep 30, 2024 | Oct 30, 2024 (+30 days) | Nov 1, 2024 10-Q (+32 days) |
| Q4 FY2024 | Jun 30, 2024 | Jul 31, 2024 (+31 days) | Aug 7, 2024 10-K (+38 days) |
| Q3 FY2024 | Mar 31, 2024 | May 1, 2024 (+31 days) | May 2, 2024 10-Q (+32 days) |
| Q2 FY2024 | Dec 31, 2023 | Jan 31, 2024 (+31 days) | Feb 1, 2024 10-Q (+32 days) |
| Q1 FY2024 | Sep 30, 2023 | Oct 25, 2023 (+25 days) | Nov 2, 2023 10-Q (+33 days) |
Source: SEC EDGAR filing history. Release dates are the dates the earnings release was furnished to the SEC on Form 8-K (Item 2.02), which is normally the day results are announced. Fiscal years are labeled by the calendar year in which they end.
03
Flagship products & services
Employer Services
RUN Powered by ADP
Examples: Payroll, HR, and compliance for small businesses
Used by over 980,000 small businesses.
Employer Services
ADP Workforce Now
Examples: Payroll, HR, time, benefits, compliance
Used by over 90,000 mid-sized and large businesses in North America.
Employer Services
ADP Lyric HCM and Workforce Management
Examples: Global enterprise HCM; time and attendance, scheduling
Workforce Management serves over 160,000 employers; WorkForce Software was acquired in October 2024.
PEO Services
ADP TotalSource
Examples: Co-employment, benefits, workers' compensation
More than 19,000 clients and 770,000 worksite employees.
Products and client counts are from the FY2026 Form 10-K's Item 1.
04
Recent strategic focus
FY2026 results and strategy, from the 10-K.
AI agents in HCM
ADP Assist became embedded in clients' workflows during FY2026, with agents launched in January 2026 and expanded across platforms.
Source: Form 10-K (FY2026) MD&A
Margin expansion
Earnings before income taxes margin expanded 30 basis points in FY2026. ADP attributes the rise in its EBIT margin to client-funds interest, higher interest income on corporate funds, lower amortization of acquired client contracts, and lower borrowing costs, partly offset by higher selling and marketing expenses.
Source: Form 10-K (FY2026) MD&A
Capex ÷ D&A (FY2026)
0.34x
Below depreciation — investment is being pared back
formulacapital expenditures ÷ depreciation & amortization
e.g.$197M ÷ $586M = 0.34x
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
R&D-to-revenue ratio (FY2026)
4.7%
formularesearch & development expense ÷ revenue × 100
e.g.$1,029M ÷ $21,947M × 100 = 4.7%
M&A spend (5-year total)
$1.27B
Latest year: $23M
Cash-flow-statement spending on acquisitions, net of cash acquired
Where the money goes, over time
Unit: $M. Capex went from $174M in FY2022 to $197M in FY2026
- Capex
- R&D
- M&A spend
formulacapital expenditures ÷ depreciation & amortization
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-08-05
05
Key figures at a glance
FY2022–FY2026, 5 years.
Revenue (FY2026)
$21.95B
As reported in the 10-K
Revenue CAGR (4 years)
+7.4%▲favorable
formula(last-period revenue ÷ first-period revenue) ^ (1 ÷ years) − 1
e.g.($21,947M ÷ $16,498M) ^ (1÷4) − 1 = 7.4%
termsCAGR · ^ (exponent) · Revenue (net sales)
Operating margin (FY2026)
—
formulaoperating income ÷ revenue × 100
ROE (FY2026)
72.2%▲favorable
5-year average: 86.8%
As reported in the 10-K
P/B (FY2026 end)
14.77x
formulaP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share)
e.g.20.5x × $10.94 ÷ $15.16 = 14.77x
Period-end (fiscal year-end) value, not today's P/B
EV/EBITDA (FY2026 end)
—
formula(market cap + interest-bearing debt − cash and equivalents) ÷ (operating income + depreciation & amortization)
termsEV/EBITDA · Market capitalization · Interest-bearing debt · EBITDA · Depreciation & amortization (D&A)
Period-end (fiscal year-end) value, not today's multiple
- ▲
Revenue grew +7.4% a year over 4 years (strong growth)
From $16.5B in FY2022 to $21.95B in FY2026. The annualized rate (CAGR) makes it possible to compare growth pace across companies of different sizes.
- ▼
Equity ratio is 9.5% (relatively heavy reliance on debt)
The share of total assets funded by equity rather than debt. 50%+ is often read as low bankruptcy risk, though the right level varies by industry (real estate and leasing run lower, for instance).
- ▲
Free cash flow was positive in 5 of 5 years
Operating cash flow minus capital expenditures: the cash left over after funding the business’s own investment, available for dividends, buybacks, acquisitions, or debt paydown. A negative year can mean heavy investment, or weak core earnings — worth distinguishing.
- ▲
ROE averaged 86.8% over 5 years (latest: 72.2%)
How much profit was generated on shareholders’ equity. Roughly 10%+ is often cited as solid for a U.S. company, though this varies a lot by industry and capital intensity.
06
Business model
Employer Services
Cloud HCM platforms and HR outsourcing (other than PEO) for businesses from single-employee shops to multinationals: payroll, tax filing, benefits administration, time and attendance, talent management, and compliance. ADP collects client payroll and tax funds before paying them out and earns interest on the balances.
01 what it draws on
Inputs & resources
- Cloud platforms: RUN (980,000+ small businesses), Workforce Now (90,000+ mid-sized and large businesses in North America), Lyric (global enterprises)
- Direct integrations with tens of thousands of government entities, tax authorities, and banks
- R&D of $1.0B in FY2026
02 what it does
Activities
- Processing payroll and remitting taxes
- Benefits, time, and talent administration
- AI assistants and agents (ADP Assist)
03 who it serves
Customers
- Employers of every size, in over 140 countries and territories
04 how money comes in
How it earns
- Recurring service fees
- Interest on client funds held between collection and payment
Employer Services: how it makes money
- Revenue was $14.8B in FY2026 (+7%) with $5.4B of earnings before income taxes (+9%).
- Client revenue retention was 92.1% and new business bookings grew 6%.
- U.S. pays per control — a same-store measure of employees on clients' payrolls — grew 1%.
PEO Services (ADP TotalSource)
A professional employer organization: ADP co-employs clients' workers ("worksite employees"), providing payroll, employee benefits, workers' compensation, and risk management under a co-employment arrangement.
01 what it draws on
Inputs & resources
- Status as a Certified PEO with the IRS
- Benefit plans sponsored as co-employer
02 what it does
Activities
- Co-employment of worksite employees
- Sponsoring health and other benefit plans
03 who it serves
Customers
- More than 19,000 clients with more than 770,000 worksite employees in all 50 states
04 how money comes in
How it earns
- PEO service fees
- Benefits costs passed through at zero margin ($4.6B in FY2026)
PEO Services (ADP TotalSource): how it makes money
- Revenue was $7.1B in FY2026 (+7%), but earnings before income taxes fell 2% to $936M.
- Average worksite employees grew 2%.
- Much of the revenue is zero-margin benefits pass-through, so PEO margins are far lower than Employer Services'.
Revenue by segment (FY2026)
Unit: $M — bar length = revenue, (%) = share of total company revenue, margin = segment profit ÷ segment revenue × 100
Employer Services
14,831 (68%)profit 5,437 · margin 36.7%
PEO Services
7,128 (32%)profit 936 · margin 13.1%
Source: Form 10-K (FY2026) — MD&A, segment results Profit is segment earnings before income taxes. ADP's income statement has no operating income line, so the ROIC section can't be computed.
07
Where it earns
Many U.S.-listed companies earn most of their revenue outside the U.S. — this breaks down revenue by country/region so it's clear where the business actually makes its money.
Largest market (FY2026)
United States — 88% of revenue
Revenue by country / region (FY2026)
Unit: $M — bar length = revenue, (%) = share of total company revenue
United States
19,280 (88%)EMEA
1,733 (8%)Canada
524 (2%)Other
411 (2%)
Source: Form 10-K (FY2026) — Note 15, revenues by geographic area Based on the location of the billing entity. The U.S. was 88% of FY2026 revenue.
08
Contract structure
Short-term or spot sales carry different earnings quality than long-term or auto-renewing contracts — this shows how the company actually contracts with its customers.
Clients pay recurring fees to run payroll and HR each pay period; retention, not long contracts, keeps revenue recurring — Employer Services retained 92.1% of client revenue in FY2026. ADP also earns interest on client funds (average balance $40.4B in FY2026) between collecting them and paying wages and taxes, so revenue rises with both employment and interest rates.
- Multi-year / recurring
Recurring HCM fees (Employer Services)
68% of FY2026 revenue ($14.8B), including most client-funds interest
Typical term: Ongoing payroll and HR services
92.1% client revenue retention in FY2026.
- Multi-year / recurring
PEO fees and benefits pass-through
32% of FY2026 revenue ($7.1B)
Typical term: Co-employment arrangement
Includes $4.6B of zero-margin benefits pass-through costs.
- Short-term contract
Interest on client funds
$1.35B in FY2026 (about 6% of revenue, included in the segment revenue above)
Typical term: Earned on an average $40.4B of client funds at an average 3.4% yield
Moves with interest rates and client fund balances.
Source: Form 10-K (FY2026) — MD&A
09
Customers & suppliers
Who the company sells to and buys from. Companies rarely name either, so named counterparties come only from the company's own filings and press releases; otherwise this lists the concentration figures the 10-K discloses.
Customers
Employers of every size, from single-employee businesses to large enterprises, in over 140 countries and territories.
Named by the company
None named. In FY2026 no single client or group of affiliated clients exceeded 2% of revenue.
What the filings disclose
- No one client, industry, or industry group is material to overall revenues. (Form 10-K (FY2026), Item 1)
- RUN serves over 980,000 small businesses; Workforce Now over 90,000 mid-sized and large businesses; PEO over 19,000 clients. (Form 10-K (FY2026), Item 1)
Suppliers
ADP relies on integrations with tens of thousands of government entities, tax authorities, and banks to move client funds, and on hosting and cloud providers. The 10-K doesn't name suppliers.
Named by the company
None named in the 10-K or the company’s press releases.
What the filings disclose
- Operating expenses rose in FY2026 partly from higher hosting and cloud-based costs. (Form 10-K (FY2026), MD&A)
10
Competitors & peers
Competitors the 10-K names, and the peer group the company itself chose in its proxy statement. Nothing here is this site's own pick.
ADP's 10-K says its HCM, Global, and HRO businesses compete with other business outsourcing companies, ERP providers, cloud-based HCM providers, and financial institutions, and its PEO with other PEOs; companies' in-house systems also compete. No company is named.
Competitors named in the 10-K
ADP's 10-K doesn't name competitors.
Peer group the company chose
Fiscal 2026 compensation peer group, from the proxy statement. Peers are companies the board considers comparable — for example when setting executive pay — not necessarily direct competitors.
Built on comparable business model, company size, executive talent sources, competition for investor capital, and companies investors consider ADP's peers.
- Accenturesite ↗
- eBaysite ↗
- Mastercardsite ↗
- Adobesite ↗
- FIS (Fidelity National Information Services)site ↗
- PayPalsite ↗
- Aonsite ↗
- Fiservsite ↗
- Salesforcesite ↗
- CGIsite ↗
- Intuitsite ↗
- TE Connectivitysite ↗
- Cognizantsite ↗
- Leidossite ↗
- Visasite ↗
- Discover Financial Servicessite ↗
- Marsh & McLennan Companiessite ↗
Discover Financial Services was removed for fiscal 2027 after Capital One acquired it in May 2025.
Source: Proxy statement (DEF 14A, filed 2026-09-24) — Compensation Discussion and Analysis, peer groupCompany names link to this site’s analysis where one exists; “site ↗” opens the company’s own website.
11
M&A history
Companies acquired over the last five years, plus older large acquisitions that still anchor a current business — what each was bought to do, and what happened afterward. From the 10-K, 8-Ks, and the company's press releases.
ADP's acquisitions are occasional and small relative to its size. The largest in the last five years was WorkForce Software in October 2024.
Cash spent on acquisitions, FY2022–FY2026: $1.27B
Oct 2024 (FY2025)
WorkForce Software
About $1.2B of cash paid for acquisitions in FY2025 (cash flow statement)
A workforce management solutions provider specializing in large, global enterprises.
- Stated purpose (company)
- Described in the 10-K as "a premier workforce management solutions provider that specializes in supporting large, global enterprises," acquired with cash on hand.
Since then: Its integration added to R&D and amortization in FY2026, and weighed on Employer Services' margin.
ADP's fiscal year ends June 30.
12
Five years of financials
Each chart's axis holds a single unit (never mixing dollars, %, and $/share). The table's per-period header links to the filing the numbers came from.
Revenue over time
Unit: $M
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-08-05
Profit over time (operating → net)
Unit: $M
- Pretax income
- Net income
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-08-05
Margins over time
Unit: %
- Operating margin
- Net margin
formulaoperating income ÷ revenue × 100
formulanet income attributable to the company ÷ revenue × 100
Cash flow over time
Unit: $M (below zero = cash went out)
- Operating CF
- Investing CF
- Free CF
formulacash flow from operations − capital expenditures
termsFree cash flow (FCF) · Cash flow from operations (operating CF) · Capital expenditures (capex)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-08-05
Financial stability & capital efficiency
Unit: %
- Equity ratio
- ROE
formulatotal equity ÷ total assets × 100 (as reported in the 10-K)
termsStockholders’ equity · Total assets
formulanet income ÷ average equity (beginning + ending, ÷2) × 100 (as reported in the 10-K)
termsNet income (attributable to the company) · Stockholders’ equity
Earnings per share (EPS) and dividend per share
Unit: $
- EPS
- Dividend per share
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-08-05
| Line item | FY202210-K on EDGAR ↗ | FY202310-K on EDGAR ↗ | FY202410-K on EDGAR ↗ | FY202510-K on EDGAR ↗ | FY202610-K on EDGAR ↗ |
|---|---|---|---|---|---|
| Income statement ($M) | |||||
| Revenue | 16,498 | 18,012 | 19,203 | 20,561 | 21,947 |
| Pretax income | 3,804 | 4,438 | 4,872 | 5,310 | 5,730 |
| Net income (attributable) | 2,949 | 3,412 | 3,752 | 4,080 | 4,414 |
| Revenue growthcalc(this year’s revenue − last year’s revenue) ÷ last year’s revenue × 100 | — | 9.2% | 6.6% | 7.1% | 6.7% |
| Net margincalcnet income attributable to the company ÷ revenue × 100 | 17.9% | 18.9% | 19.5% | 19.8% | 20.1% |
| Balance sheet ($M) | |||||
| Total assets | 63,068 | 50,971 | 54,363 | 53,369 | 63,193 |
| Total equity | 3,225 | 3,509 | 4,548 | 6,188 | 6,031 |
| Interest-bearing debtSum of short- and long-term borrowings, notes/bonds payable | 2,987 | 2,989 | 2,991 | 8,744 | 4,964 |
| Equity ratio | 5.1% | 6.9% | 8.4% | 11.6% | 9.5% |
| ROE | 91.4% | 101.3% | 93.1% | 76.0% | 72.2% |
| Cash flow ($M) | |||||
| Operating CF | 3,100 | 4,208 | 4,158 | 4,940 | 5,441 |
| Investing CF | -7,014 | -2,517 | -1,389 | -3,035 | -4,714 |
| Financing CF | 13,653 | -15,681 | -1,432 | -6,973 | 4,881 |
| Free cash flowcalccash flow from operations − capital expenditures | 2,925 | 4,001 | 3,949 | 4,771 | 5,245 |
| Cash and equivalents | 1,436 | 2,084 | 2,913 | 3,348 | 4,230 |
| Per share & other | |||||
| EPS ($) | 7.00 | 8.21 | 9.10 | 9.98 | 10.94 |
| BVPS ($) | 7.75 | 8.52 | 11.14 | 15.27 | 15.16 |
| Dividend per share ($) | 4.05 | 4.79 | 5.45 | 6.02 | 6.64 |
| Payout ratiocalcdividend per share ÷ diluted EPS × 100 | 57.9% | 58.3% | 59.9% | 60.3% | 60.7% |
| P/E (x) | 30.0 | 26.8 | 26.2 | 30.9 | 20.5 |
| P/B (x)calcP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share) | 27.10 | 25.81 | 21.42 | 20.20 | 14.77 |
P/B and EV/EBITDA use each period’s period-end (fiscal year-end) figures, not the current share price. Figures without a "calc" tag are as reported in the Form 10-K (five-year selected financial data and the consolidated financial statements), pulled automatically from SEC EDGAR. Where a later filing restated a prior period, the restated figure is used.
13
Is ROIC above WACC?
ROIC (the return on money invested in the business) above WACC (the cost of raising that money) means the company is creating value. WACC is an estimate, so its assumptions can be adjusted below.
Not enough data (operating income, equity, etc.) to compute ROIC/WACC.
14
What the price implies (DCF)
A company's value can be written as its free cash flow divided by (cost of capital − perpetual growth). Working that backwards from the market's valuation shows how much growth the share price assumed — compared here with the company's actual past growth.
Growth the price implies (FY2026)
1.8%
Perpetual FCF growth: g = r − FCF ÷ EV = 7.5% − 5.8%
Past FCF growth (FY2022–FY2026)
+15.7%
Compound annual rate, 4 years
Past revenue growth (FY2022–FY2026)
+7.4%
Compound annual rate, 4 years
Inputs (FY2026): free cash flow $5.24B (operating CF − capex); enterprise value $91.08B = market cap $90.34B + debt $4.96B − cash and short-term investments $4.23B; r = WACC of 7.5% using this page’s default assumptions (β 0.64, risk-free 4.0%, market premium 5.5%).
Try your own assumptions
V = FCF ÷ (r − g). It starts at the implied growth rate, where the theoretical value equals today’s enterprise value.
Theoretical enterprise value
$92.01B
FCF $5.24B ÷ (7.5% − 1.8%)
Theoretical ÷ actual enterprise value
1.01x
Above 1x: these assumptions value the business above the market did
How sensitive the answer is
Theoretical ÷ actual enterprise value for each combination of r and g.
| g \ r | 5.5% | 6.5% | 7.5% | 8.5% | 9.5% |
|---|---|---|---|---|---|
| 0% | 1.05x | 0.89x | 0.77x | 0.68x | 0.61x |
| 2% | 1.65x | 1.28x | 1.05x | 0.89x | 0.77x |
| 4% | 3.84x | 2.30x | 1.65x | 1.28x | 1.05x |
| 6% | — | 11.52x | 3.84x | 2.30x | 1.65x |
| 8% | — | — | — | 11.52x | 3.84x |
A simplified model for seeing what the market price assumes, not a forecast or a target price. It treats free cash flow as growing at one constant rate forever; the result swings widely with small changes in r and g, and is undefined when g reaches r. Free cash flow here is operating cash flow minus capex, which is after interest — a full DCF of enterprise value would use cash flow before interest. Market cap and enterprise value use the fiscal year-end price, not today’s.
15
Earnings quality
The same reported profit can mean different things depending on whether it's backed by cash, driven by the core business, or the result of a one-off item. Four checks below.
- ✓
Operating CF ÷ net income: averages 1.17x
Profit is backed by cash coming in.
- ✓
Accrual ratio (latest): -1.8%
A small share of profit rests on accounting estimates.
- ✓
Days sales outstanding: 70 → 59 days
No major slowdown in collecting on sales.
Operating CF vs. net income
Unit: $M — operating CF above net income means profit is backed by cash
- Operating CF
- Net income
formulacash flow from operations ÷ net income attributable to the company
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formula(net income − operating CF) ÷ average total assets × 100
termsNet income (attributable to the company) · Cash flow from operations (operating CF) · Total assets
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-08-05
Receivables & inventory days
Unit: days — days grow when receivables or inventory build up faster than sales
- Days sales outstanding
formulaperiod-end receivables ÷ revenue × 365
formulaperiod-end inventory ÷ revenue × 365
termsInventory · Revenue (net sales)
Worked examples (latest period)
formulacash flow from operations ÷ net income attributable to the company
e.g.$5,441M ÷ $4,414M = 1.23x
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formulaoperating income ÷ income before income taxes × 100
termsOperating income · Income before income taxes (pretax income)
formulaperiod-end receivables ÷ revenue × 365
e.g.$3,521M ÷ $21,947M × 365 = 59 days
16
Strengths & weaknesses
Strengths
1. Scale and stickiness
ADP pays about one in six U.S. workers, and Employer Services retained 92.1% of client revenue in FY2026; no single client or affiliated group exceeded 2% of revenue.
Evidence: Form 10-K (FY2026) Item 1 and MD&A
2. Interest income on client funds
Interest on funds held for clients rose to $1.35B in FY2026 as the average balance grew 7.4% to $40.4B and the average yield rose to 3.4%.
Evidence: Form 10-K (FY2026) MD&A
3. Long record of dividend growth
The dividend per share rose every year from $4.05 (FY2022) to $6.64 (FY2026), and dividends paid were $2.6B in FY2026 against $5.4B of operating cash flow.
Evidence: SEC EDGAR XBRL
Weaknesses
1. Growth tied to employment
U.S. pays per control grew only 1% in FY2026, so revenue growth relies mostly on new clients, pricing, and retention rather than client hiring.
Evidence: Form 10-K (FY2026) MD&A
2. Low-margin PEO business
PEO earnings before income taxes fell 2% in FY2026 despite 7% revenue growth; much of PEO revenue is zero-margin benefits pass-through.
Evidence: Form 10-K (FY2026) MD&A
3. Concentrated in the U.S.
88% of FY2026 revenue came from U.S. billing entities.
Evidence: Form 10-K (FY2026) Note 15
17
What draws investors to it
Why the stock can look attractive to investors — each point paired with what has to hold for it to stay true, and the opposing view. This is this site's analysis, not a recommendation to buy or sell.
P/E (FY2026)
20.5x
Price at fiscal year-end ÷ diluted EPS
Dividend yield (FY2026)
2.97%
Dividends per share ÷ fiscal year-end price
Payout ratio (FY2026)
61%
Dividends per share ÷ diluted EPS
FCF yield (FY2026)
5.8%
(Operating CF − capex) ÷ market cap
1. Recurring, cash-generating business
Revenue grew 7% in FY2026 with 92.1% client revenue retention, and operating cash flow was $5.4B against capex of $0.2B.
- What has to hold
- Retention stays above 90% and clients keep growing headcount.
- The other side
- U.S. pays per control grew only 1%, so growth depends on winning new clients and raising prices.
Evidence: Form 10-K (FY2026) MD&A; SEC EDGAR XBRL
2. Dividend growth
Dividends per share rose from $4.05 (FY2022) to $6.64 (FY2026), about 13% a year.
- What has to hold
- Earnings keep growing near recent rates.
- The other side
- The payout ratio is about 61% of FY2026 EPS ($6.64 vs. $10.94), leaving less room if earnings stall.
Evidence: SEC EDGAR XBRL
3. Leverage to interest rates
Interest on client funds rose $166M in FY2026 to $1.35B on higher average balances ($40.4B) and yields (3.4%).
- What has to hold
- Rates don't fall sharply.
- The other side
- The same exposure works in reverse if interest rates fall.
Evidence: Form 10-K (FY2026) MD&A
Dividend yield, payout ratio, P/E, and FCF yield above use the fiscal year-end share price, not today's price.
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Resilience
How well the company could absorb a bad year: its financial buffer, how its revenue and profit held up in the worst year on record, and what the 10-K says about the business's exposure to shocks. Figures and filing statements only — no overall rating.
1. Financial buffer (FY2026)
Cash & short-term investments ÷ debt due within a year
100x+
$4.23B vs. $1M
Interest coverage (operating income ÷ interest expense)
Not disclosed
The income statement has no operating income line.
Free cash flow ÷ dividends paid
2.0x
$5.24B vs. $2.63B (FCF = operating CF − capex)
2. Worst year in the record, and the recovery
| Figure | Worst year-over-year change | Back to the prior level? |
|---|---|---|
| Revenue | No decline in the record | — |
Covers only the 5 fiscal years on record (FY2022–FY2026), which may not include a full recession — the worst year here isn’t necessarily how the company would fare in a severe downturn.
3. Business resilience (from the 10-K)
Liquidity
A commercial paper program of up to $11.7B supports funding needs, including temporary financing of client funds; at FY2026 year-end no commercial paper was outstanding (it was $4.8B a year earlier).
Source: Form 10-K (FY2026), balance sheet and MD&A
Recurring revenue
Employer Services retained 92.1% of client revenue, and payroll is a function businesses must run every pay period.
Source: Form 10-K (FY2026), MD&A · See Contract structure
Client spread
No single client or affiliated group exceeded 2% of revenue in FY2026.
Source: Form 10-K (FY2026), Item 1 · See Customers & suppliers
Client funds on the balance sheet
Client funds obligations of $44.4B make total assets ($63.2B) far larger than ADP's own equity ($6.0B), which is why its equity ratio looks low; these funds are held for clients' payroll and taxes.
Source: Form 10-K (FY2026), balance sheet
Rate sensitivity
Client-funds interest ($1.35B) would fall with interest rates, a direct hit to earnings.
Source: Form 10-K (FY2026), MD&A
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Risks (including geopolitical)
Starting from the 10-K's Risk Factors section, organized by category — geopolitical, currency, raw materials, regulatory, disaster, and more — with impact and likelihood assessed by this site.
Risk map
Vertical = impact on results, horizontal = likelihood. Upper right = most severe. Numbers match the list below (placement is this site’s own assessment).
Likelihood →
"Company disclosure" vs. "this site’s assessment"
The description and mitigation for each risk are this site’s summary of the 10-K’s "Risk Factors" section. Impact and likelihood are this site’s own assessment, not the company’s — where the company discloses its own likelihood assessment, that is noted in the summary.
Impact is judged from how large the affected business is relative to total revenue/profit, and from the risk’s track record of moving results in the past. Likelihood is judged from the filing’s wording and the current business environment (already occurring, or recurring).
- 1Law & regulation
Regulation of payroll, tax, PEO, and payments
- Company disclosure (summarized from the 10-K)
- The 10-K says changes in laws — for example, to tax withholding amounts or remittance timing — could reduce client fund balances, and the PEO depends on its status as an employer under the tax code and ERISA. Failing to remit client taxes on time could make ADP liable for penalties.
- Company’s stated mitigation
- Compliance programs; ADP is an IRS Certified PEO.
- This site’s assessment
- Impact High / Likelihood Low
- 2Governance & quality
Cybersecurity and data privacy
- Company disclosure (summarized from the 10-K)
- ADP handles personal data and client funds and says it has been, and continues to be, the subject of cybersecurity attacks; it also faces privacy, data protection, and AI regulation (GDPR, CPRA, EU AI Act).
- Company’s stated mitigation
- Security programs and binding corporate rules, as described in the 10-K.
- This site’s assessment
- Impact High / Likelihood Med
- 3FX & interest rates
Interest rates on client funds
- Company disclosure (summarized from the 10-K)
- Client-funds interest of $1.35B depends on average balances and yields (3.4% in FY2026); lower rates would reduce it.
- Company’s stated mitigation
- Not stated in the 10-K.
- This site’s assessment
- Impact Med / Likelihood Med
- 4Demand & macro
Employment levels
- Company disclosure (summarized from the 10-K)
- Revenue depends partly on the number of employees on clients' payrolls; U.S. pays per control grew 1% in FY2026.
- Company’s stated mitigation
- A client base spread across sizes and industries; no client exceeded 2% of revenue.
- This site’s assessment
- Impact Med / Likelihood Med
- 5Competition & technology shift
Competition and AI
- Company disclosure (summarized from the 10-K)
- Competitors include other business outsourcing companies, ERP providers, cloud HCM providers, and financial institutions; the 10-K also flags uncertainty around AI and intellectual property.
- Company’s stated mitigation
- Investment in AI capabilities (ADP Assist) and its platforms.
- This site’s assessment
- Impact Med / Likelihood Med
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What to watch going forward
- Client revenue retention and new business bookings in Employer Services.
- Interest rates and client fund balances, which drive client-funds interest.
- PEO margins and worksite employee growth.
- Integration of WorkForce Software into its workforce management business.
- U.S. employment growth as measured by pays per control.
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Source documents
This page's financial figures come from the Form 10-Ks listed below. Check the original filings for full detail.
Last updated
Analysis last edited: October 4, 2026 · Financial data fetched: October 3, 2026 15:13 (SEC EDGAR) · Source 10-K filed: August 5, 2026
Next update expectedAfter FY2027’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
This page is this site’s own analysis based on public information, and does not represent Automatic Data Processing, Inc.’s views. It is not a recommendation to buy or sell any security, and this site does not guarantee the accuracy of any figure or statement here. Always verify against the original source documents before making an investment decision.