revenue growth
5–6 pct
FY 2027
official guidance
| Revenue | $21.6B |
|---|---|
| Operating income | $5.7B |
| Net income | $4.3B |
| Operating margin | 26.2% |
| Net margin | 20.1% |
| Return on equity | 68.4% |
| Period | TTM 2026-03-31 |
OpenFilings analyst
Agentic read of the latest earnings call — recommendation updates when we process a new transcript. Research synthesis, not investment advice.
Strong execution, durable retention and credible margin upside outweigh moderate-growth and monetization risks.
Latest call · Q4 2026Buy: ADP exited FY26 with 7% revenue growth, 17% adjusted EPS growth, 92.1% Employer Services retention and $2.2 billion of bookings, while FY27 guidance calls for 5%-6% revenue growth, 70-90 bps of adjusted EBIT margin expansion and 9%-11% adjusted EPS growth. The key tension is that underlying ES growth excluding float and FX appears closer to 4%-5%, PEO margins are still contracting, and AI monetization remains largely indirect rather than a clearly incremental revenue stream.
FY27 bookings growth is guided to 4%-7%; large Lyric, Workforce Suite and global payroll deals could determine whether ADP reaches the top end.
Client funds interest revenue is expected to rise to $1.54-$1.56 billion from $1.35 billion, but the outlook depends on higher forward rates and 3%-4% balance growth.
The Zone rollout toward broad sales and U.S. service deployment should provide a near-term test of the promised productivity and margin benefits.
PEO margins are expected to contract further as zero-margin pass-through revenue grows faster than total PEO revenue and healthcare costs remain elevated.
Lyric live clients rose 94% year over year and its pipeline increased 50%, with 70% of opportunities representing new logos; sustained enterprise conversion would improve ADP's growth profile.
ADP's combination of payroll data, compliance expertise, distribution and client trust remains a meaningful moat against generic AI and software competitors, particularly in complex multinational workflows.
AI-driven efficiency could support accelerated margin expansion: service contacts per client fell 4%, headcount was broadly flat in FY26, and management expects targeted hiring offset by operational efficiencies.
International, global payroll, time and HRO are becoming more important growth vectors, with international contributing significantly to bookings in four of the last five quarters.
Management did not quantify Lyric win rates, AI-driven revenue, incremental pricing or the financial contribution from ADP Assist; claims that AI is improving bookings, retention and EBIT remain difficult to verify.
FY27 ES growth is lower quality than FY26 on the face of the guide: FX turns from roughly a one-point tailwind to a slight headwind, the Workforce Software acquisition anniversary removes about 30 bps of contribution, and underlying growth is roughly 4%-5%.
The outlook assumes a broadly stable macro environment and 25-50 basis points of Fed rate hikes; weaker employment, wages or rates would pressure both payroll-linked growth and float income.
Analyst questioning highlighted software-pricing and AI-displacement concerns, but management primarily answered with structural-moat assertions rather than quantified competitive win-rate or pricing evidence.
revenue growth
5–6 pct
FY 2027
official guidance
revenue growth
5–6 pct
FY 2027
official guidance
revenue growth
5–7 pct
FY 2027
official guidance
operating margin
0.7–0.9 pct
FY 2027
official guidance
adjusted eps
9–11 pct
FY 2027
official guidance
OpenFilings analyst view from primary-source filings and earnings calls — not investment advice.
AUTOMATIC DATA PROCESSING, INC.
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AUTOMATIC DATA PROCESSING, INC.
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