ADP Reports Second Quarter Fiscal 2026 Results
•Revenues increased 6% compared to last year's second quarter to $5.4 billion; 5% organic constant currency
•Net earnings increased 10% to $1.1 billion, and adjusted net earnings increased 10% to $1.1 billion
•Adjusted EBIT increased 10% to $1.4 billion, and adjusted EBIT margin increased 80 basis points to 26.0%
•Diluted earnings per share ("EPS") increased 11% to $2.62; adjusted diluted EPS increased 11% to $2.62
•Raising full year guidance for revenue and adjusted diluted EPS growth
ROSELAND, N.J. – January 28, 2026 – ADP (Nasdaq: ADP), a global leader in HR and payroll solutions, today announced its second quarter fiscal 2026 financial results and updated its fiscal 2026 outlook.
Second Quarter Fiscal 2026 Consolidated Results
Compared to last year’s second quarter, revenues increased 6% to $5.4 billion and 5% on an organic constant currency basis. Net earnings increased 10% to $1.1 billion, and adjusted net earnings increased 10% to $1.1 billion. Adjusted EBIT increased 10% to $1.4 billion, and adjusted EBIT margin increased 80 basis points to 26.0%. ADP’s effective tax rate for the quarter was 23.2% on both a reported basis and an adjusted basis. Diluted EPS increased 11% to $2.62, and adjusted diluted EPS increased 11% to $2.62.
“ADP's strong second quarter results reflect the breadth of our innovative products, differentiated service, and exceptional experiences that we deliver for clients every day," said Maria Black, President and Chief Executive Officer, ADP. “Powered by the industry's largest and deepest HCM dataset, we combine our proprietary workforce insights with advanced automation to solve real workforce challenges and to ultimately build an easier, smarter and more human world of work.”
“A continued focus on execution and driving new business bookings growth has enabled us to deliver strong revenue and earnings growth in the second quarter,” said Peter Hadley, Chief Financial Officer, ADP. “Our updated guidance demonstrates our confidence in our ability to deliver on our financial commitments, while continuing to make strategic investments to support sustainable long-term growth.”
Adjusted EBIT, adjusted EBIT margin, adjusted net earnings, adjusted diluted earnings per share, adjusted effective tax rate and organic constant currency are all non-GAAP financial measures. Please refer to the accompanying financial tables at the end of this release for a discussion of why ADP believes these measures are important and for a reconciliation of non-GAAP financial measures to their closest comparable GAAP financial measures.
Second Quarter Segment Results
Employer Services – Employer Services offers a comprehensive range of global HCM and Human Resources Outsourcing solutions. Compared to last year's second quarter:
•Employer Services revenues increased 6% on a reported basis and 5% on an organic constant currency basis
•U.S. pays per control increased 1%
•Employer Services segment margin increased 50 basis points
PEO Services – PEO Services provides comprehensive employment administration outsourcing solutions. Compared to last year's second quarter:
•PEO Services revenues increased 6%
•PEO Services revenues excluding zero-margin benefits pass-throughs increased 3%
•Average worksite employees paid by PEO Services increased 2% to about 758,000
•PEO Services segment margin decreased 70 basis points
Included within the results of our segments above:
Interest on Funds Held for Clients – The safety, liquidity, and diversification of ADP clients’ funds are the foremost objectives of the Company’s investment strategy. Client funds are invested in accordance with ADP’s prudent and conservative investment guidelines, and most of the investment portfolio is rated AAA/AA. Compared to last year's second quarter:
•Interest on funds held for clients increased 13% to $309 million
•Average client funds balances increased 6% to $37.6 billion
•The average interest yield on client funds increased 20 basis points to 3.3%
Fiscal 2026 Outlook
Certain components of ADP’s fiscal 2026 outlook and related growth comparisons exclude the impact of the following items and are discussed on an adjusted basis where applicable. Please refer to the accompanying financial tables for a reconciliation of these adjusted amounts to their closest comparable GAAP measure.
•Fiscal 2025 pre-tax gain of about $3 million related to the sale of assets
•Fiscal 2025 pre-tax charges of about $19 million related to optimization initiatives
Consolidated Fiscal 2026 Outlook
•Revenue growth of about 6%
•Adjusted EBIT margin expansion of 50 to 70 basis points
•Adjusted effective tax rate of approximately 23%
•Diluted EPS growth of 9% to 10%
•Adjusted diluted EPS growth of 9% to 10%
Employer Services Segment Fiscal 2026 Outlook
•Employer Services revenue growth of about 6%
•Employer Services new business bookings growth of 4% to 7%
•Employer Services client revenue retention decrease of 10 to 30 basis points
•U.S. pays per control of approximately flat
PEO Services Segment Fiscal 2026 Outlook
•PEO Services revenue growth of 5% to 7%
•PEO Services revenue, excluding zero-margin benefits pass-throughs, growth of 3% to 5%
•PEO Services average worksite employee count growth of about 2%
Client Funds Extended Investment Strategy Fiscal 2026 Outlook
The interest assumptions in our outlook are based on Fed Funds futures contracts and various forward yield curves as of January 27, 2026. The Fed Funds futures contracts are used in the client short and corporate cash interest income outlook. A combination of various forward yield curves that reflect our investment mix, resulting in a blended rate of 3.8%, was used to forecast new purchase rates across the client and corporate extended and client long portfolios over the remainder of the fiscal year.
•Interest on funds held for clients of $1.310 to $1.330 billion; this is based on anticipated growth in client funds balances of 4% to 5% and an average yield that is anticipated to increase approximately 3.4%
•Total contribution from the client funds extended investment strategy of $1.270 to $1.290 billion
About ADP (Nasdaq: ADP)
ADP has been shaping the world of work with innovation and expertise for more than 75 years. As a global leader in HR and payroll solutions, ADP continuously works to solve business challenges for our clients and their workers, from simple, easy-to-use tools for small businesses to fully integrated platforms for global enterprises – and everything in between. Always Designing for People means we're focused on just that – people. We use our unmatched AI-driven insights and proven expertise to design innovative solutions that help people achieve greater success at work. More than 1.1 million clients across 140+ countries rely on ADP's exceptional service to support their people and drive their business forward. HR, Talent, Time Management, Benefits, Compliance, and Payroll. Learn more at ADP.com
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