ADP reported strong Q3 Fiscal 2026 results, with revenue increasing 7% to $5.9 billion and adjusted diluted EPS rising 10% to $3.37. The company also raised its full-year guidance, now expecting revenue growth of 6–7% and EPS growth of 10–11%. Growth was driven by solid Employer Services performance, improved client retention, and expanding client funds interest revenue.

ADP (Nasdaq: ADP), a global leader in HR and payroll solutions, today announced its financial results for the third quarter of fiscal 2026 and updated its full-year outlook. The company delivered solid growth across revenue and earnings, supported by strong performance in its Employer Services segment, continued expansion in client funds interest income, and ongoing investments in artificial intelligence capabilities.

Strong Quarterly Performance

For the third quarter of fiscal 2026, ADP reported total revenue of $5.9 billion, representing a 7% increase compared to the prior year period, or 6% growth on an organic constant currency basis. Net earnings rose 9% to $1.4 billion. Adjusted EBIT increased 10% to $1.8 billion, and the adjusted EBIT margin expanded by 80 basis points to 30.2%. Diluted earnings per share reached $3.38, while adjusted diluted EPS increased 10% to $3.37.

These results reflect a combination of steady demand for ADP’s core HR and payroll solutions, improved operating efficiency, and favorable contributions from client funds interest income.

Executive Commentary

Maria Black, President and Chief Executive Officer of ADP, stated that the company delivered a strong quarter by executing consistently for its clients while continuing to invest in the future of human capital management. She emphasized that organizations rely on ADP’s data and expertise to navigate a rapidly changing world of work, and that artificial intelligence is introducing new layers of complexity that ADP is actively addressing through continued innovation.

Peter Hadley, Chief Financial Officer, noted that results exceeded expectations across revenue growth, adjusted EBIT margin, and adjusted EPS. He highlighted ADP’s financial strength and scale, which allow the company to invest confidently in AI across products, service delivery, and sales operations while maintaining strong financial performance.

Employer Services Segment Performance

Employer Services, ADP’s largest business segment, continued to drive overall growth during the quarter. Revenue increased 7% year over year, or 5% on an organic constant currency basis. U.S. pays per control rose 1%, indicating stable underlying employment trends across ADP’s client base. Segment margin improved by 130 basis points, reflecting operational productivity gains and the contribution of higher-margin revenue streams.

The strength of this segment underscores ADP’s ability to retain and expand relationships with employers, supported by its integrated HR, payroll, and compliance solutions.

PEO Services Segment Performance

ADP’s Professional Employer Organization (PEO) Services segment also delivered revenue growth of 7% during the quarter. Revenue excluding zero-margin pass-throughs increased 5%, and average worksite employees grew approximately 2% to about 762,000.

However, segment margin declined by 120 basis points, primarily due to higher state unemployment insurance costs and increased selling expenses. Despite this pressure, the segment continues to provide scale and recurring revenue stability within ADP’s overall business model.

Client Funds and Interest Income

Client funds-related income remained a significant contributor to profitability. Interest on funds held for clients increased 14% to $404 million, driven by a 9% increase in average client funds balances, which reached $48.3 billion. The average yield on these funds improved to 3.3%.

ADP continues to manage client funds under a conservative investment strategy that prioritizes safety, liquidity, and diversification, with most assets rated AAA or AA.

Updated Fiscal 2026 Outlook

Following its strong third-quarter performance, ADP raised its full-year fiscal 2026 guidance. The company now expects revenue growth in the range of 6% to 7% and adjusted EBIT margin expansion of 70 to 80 basis points. The adjusted effective tax rate is projected to remain approximately 23%, while adjusted diluted EPS is expected to grow between 10% and 11%.

Within its segments, Employer Services is projected to achieve revenue growth of 6% to 7%, with new business bookings growth of 4% to 7%. Client revenue retention is expected to range from a decline of 20 basis points to flat, and U.S. pays per control is anticipated to increase approximately 1%.

For PEO Services, revenue growth is also expected to be between 6% and 7%, with revenue excluding pass-throughs increasing 4% to 5% and average worksite employee growth of approximately 2%.

Client funds interest revenue is projected to reach between $1.34 billion and $1.35 billion for the full fiscal year, supported by anticipated growth in balances and a stable yield environment.

Strategic Progress and AI Initiatives

ADP continues to advance its strategic initiatives, particularly in the area of artificial intelligence. The company is leveraging its extensive data assets, deep domain expertise, and strong brand trust to lead the transformation of the HCM industry through AI.

Key initiatives include the ongoing deployment of ADP Assist agents to address workforce challenges across payroll and HR, the expansion of an agentic AI ecosystem within the ADP Marketplace, and the scaling of generative AI capabilities across service operations through an internal platform known as “The Zone.”

These efforts reflect ADP’s broader shift toward embedding AI directly into workflows and service delivery, positioning the company to enhance efficiency, improve client outcomes, and support long-term growth.

About ADP

For more than 75 years, ADP has been shaping the world of work with innovative HR and payroll solutions. The company serves more than 1.1 million clients across over 140 countries, offering a comprehensive suite of services including HR, payroll, talent management, time and attendance, benefits administration, and compliance solutions.

ADP remains committed to using data-driven insights and advanced technologies to help organizations and their employees succeed in an evolving global workforce environment.

Forward-Looking Statements

This document contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially due to factors such as economic conditions, regulatory changes, technology developments including artificial intelligence, and fluctuations in interest rates or employment levels. ADP undertakes no obligation to update these statements except as required by law.

Non-GAAP Measures

This release includes certain non-GAAP financial measures, including adjusted EBIT, adjusted EBIT margin, adjusted diluted EPS, and organic constant currency growth. These measures are provided to enhance understanding of the company’s underlying operating performance and should be considered alongside, not as a substitute for, GAAP results.

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