ADP reports 7% revenue growth for fiscal 2026
The human capital management provider expects adjusted diluted EPS to grow between 9% and 11% in fiscal 2027.
Automatic Data Processing (ADP) reported that full-year fiscal 2026 revenues increased 7% to $21.9 billion. The provider of cloud-based human capital management solutions saw organic constant currency growth of 6% for the period.
For the fourth quarter, revenues rose 7% year-over-year to $5.5 billion. The company's full-year adjusted EBIT margin expanded 80 basis points to 26.8%, while the fourth-quarter adjusted EBIT margin grew 140 basis points to 25.1%.
Growth in the Employer Services segment drove results, with new business bookings increasing 6% for the fiscal year to $2.2 billion. The segment's margin increased 60 basis points for the full year and 90 basis points in the fourth quarter. U.S. pays per control increased 1% for both the fourth quarter and the full fiscal year.
Conversely, the PEO Services segment margin decreased 110 basis points for the full fiscal year and 100 basis points in the fourth quarter.
Interest on funds held for clients provided a significant lift, increasing 14% to $1.4 billion for the fiscal year. The average interest yield on client funds rose 20 basis points to 3.4% for the year and reached 3.5% in the fourth quarter.
ADP provided guidance for fiscal 2027 that includes revenue growth of 5% to 6% and adjusted diluted EPS growth of 9% to 11%. The company expects adjusted EBIT margin expansion of 70 to 90 basis points.
Employer Services client revenue retention remained flat at 92.1% for the fiscal year, though the company projects this figure will decrease by 10 to 30 basis points in fiscal 2027. The company also disclosed a $91 million pre-tax charge related to a business alignment program in fiscal 2026.