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ADP

ADP · Nasdaq

Interest on client float equals 22.6% of pre-tax earnings

Interest on client funds, $329.3M, is 6.0% of revenue but equals 22.6% of pre-tax earnings, and it grew fastest of any line, 14.8%.

Q1 FY2027, the quarter to Sep 30, 2026 (ADP's fiscal 2027 ends in June 2027) · 10-Q filed Oct 30, 2026

Q1 FY2027 · revenue
$5.5B+6.1% on the year
Operating margin
—
Net income
$1.1B
Free cash flow, quarter
—

Largest source of revenue: HCM, 41.1% of the total.

Follow the money

Where ADP's money goes

Tap the picture to explore the flow: levels, scale, every line and its figures.
Key insights · Q1 FY2027
  1. 01

    Interest on client float equals 22.6% of pre-tax earnings

    Interest on client funds, $329.3M, is 6.0% of revenue but equals 22.6% of pre-tax earnings, and it grew fastest of any line, 14.8%.

    Why it matters

    Interest on funds held for clients rose to $329.3M from $286.8M, up 14.8%, against total revenue growth of 6.1%. The filing gives two causes: average client funds balances up 5.7% to $36.9B, and the average rate earned up to 3.6% from 3.3%. The line gained 0.46 points of revenue share, to 6.0%.1

    Set against pre-tax earnings of $1.45B, the line equals 22.6%, up from 21.9% a year earlier, when it was $286.8M against $1.31B. ADP's own cash adds more: other income, mostly interest on corporate funds, was $140.3M against $110.1M, equal to 9.6% of pre-tax earnings.1

    AnalysisAnalysis: this compares a revenue line with a profit line, so it is not the share of profit the float earns; the borrowing and running costs behind it are not split out here. The point is sensitivity. A line this small in sales terms moves pre-tax earnings far more than its share of revenue suggests.

  2. 02

    22.4% of revenue is benefits passed through at cost

    PEO benefits pass-throughs, $1.23B, grew 8.6% against 2% more worksite employees, lifting reported revenue growth while the fee lines grew 4.6% to 4.9%.

    Why it matters

    In the PEO, ADP is co-employer of a client's staff. Wages and payroll taxes are netted out of revenue, but the benefits bought for worksite employees are not: $1.23B of the $1.81B in PEO revenues, or 68.1%, are zero-margin benefits pass-throughs. They are 22.4% of total revenue, up 0.52 points.1

    Pass-throughs grew 8.6% while HCM grew 4.6%, HRO excluding pass-throughs 4.6% and Global 4.9%, each losing revenue share. The filing names increased zero-margin pass-through costs as the offset to this quarter's pre-tax margin gain, and credits PEO revenue growth to the pass-throughs and a 2% rise in average worksite employees.1

    AnalysisAnalysis: because these dollars carry no margin, revenue growth of 6.1% overstates how fast the fee business grew, and margins computed on total revenue understate the margin on the services ADP charges for. Pass-throughs growing faster than covered workers points to rising benefit costs per worker, an inference from the two figures rather than a cause the filing states.

  3. 03

    Pre-tax earnings grew 11.3% on 6.1% revenue growth

    Costs of revenues grew 4.55% and research spending was flat, so pre-tax earnings rose to 26.5% of revenue from 25.3%.

    Why it matters

    Total costs of revenues grew 4.55% to $2.97B and fell 0.8 points to 54.0% of revenue. The filing credits "operating efficiencies for costs of servicing and implementing our clients on growing revenue". Selling, general and administrative expenses grew 5.61%, which the filing ties to investments in its sales organization.1

    Research and development was $251.3M against $251.2M, 4.6% of revenue against 4.9%. The filing attributes the flat line to more capitalizable spend on internally developed software, while depreciation and amortization rose to $129.0M from $123.3M, partly from amortizing that software.1

    Not all of the gain is operating. The filing also names higher interest on corporate funds and client funds interest among the reasons pre-tax margin rose. Fewer shares added a further step: diluted shares fell to 397.6M from 406.5M, and diluted EPS rose to $2.83 from $2.49, on net earnings of $1.13B against $1.01B.1

    AnalysisAnalysis: capitalizing software moves cost from today's research line to later amortization, so part of the flat research figure is timing. Read research and amortization together for a cleaner view of what product development costs.

  4. 04

    First-quarter operating cash was 57.9% of net earnings

    Operating cash of $651.0M against $1.13B of net earnings is seasonal: the prior first quarter was 63.4%, and FY2026 closed at 123.3%.

    Why it matters

    Net cash from operating activities was $651.0M, against $642.3M a year earlier, while net earnings rose to $1.13B from $1.01B. The filing attributes the gap to growth offset by "a net unfavorable change in the components of operating assets and liabilities primarily due to timing of collections and payments".1

    Over full years the relationship reverses. Operating cash flow was $5.44B against net earnings of $4.41B in FY2026, or 123.3%, and $4.94B against net earnings of $4.08B in FY2025, again more cash than earnings.1

    AnalysisAnalysis: cash trailing earnings in the first fiscal quarter is ADP's normal pattern, so this quarter's ratio says little on its own. The test is the full year: a fiscal year in which operating cash flow fell short of net earnings would be the change worth understanding. Quarterly free cash flow is not available here, because the filing reports cash flow year to date.

Sources

  1. 1.ADP 10-Q for the period to 2026-09-30 (the filing), Oct 30, 2026, read Nov 2, 2026

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Business performance

Growth, profit and margin

Revenue went from $8.7B in FY2008 to $21.9B in FY2026, over 18 years.

  • Revenue$21.9B
  • Operating income—
  • Operating margin—
Period
Q1 FY2027
Revenue
$5.5B
Operating income
—
Operating margin
—
Net income
$1.1B
Free cash flow
—
Business performance

Does the profit turn into cash?

  • Operating cash flow$5.4B
  • Capital expenditure—
  • Free cash flow—
  • Net income$4.4B

Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.

Financial data and sources

How the revenue mix has shifted

Each breakdown the filing reports, as shares of revenue, for every period it restates.

Revenue - Schedule of Disaggregation of Revenue (Details). The filing restates this breakdown for 1 period.

Click a member to isolate it across the years shown.

The figures

Margins, cash and growth for the period, each with what it was computed from.

Gross margin
46.0%
Source10-Q, Derived from Revenues and Total costs of revenues in the 10-Q filed 2026-10-30
Operating margin
Not reported
no operating income line is reported
Net margin
20.5%
Source10-Q, Derived from Net earnings and Revenues in the 10-Q filed 2026-10-30
Free cash flow, quarter
Not reported
the quarter's cash flow is year to date in the filing and could not be differenced from the history
Free cash flow margin, quarter
Not reported
the quarter's cash flow is year to date in the filing and could not be differenced from the history
Cash conversion, quarter
0.58x
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-30
Capital spending, quarter
Not reported
the quarter's cash flow is year to date in the filing and could not be differenced from the history
Revenue growth
+6.1%
From the record's own history, against the prior year.

Not reported, or not derivable

  • operating margin: no operating income line is reported
  • free cash flow: the quarter's cash flow is year to date in the filing and could not be differenced from the history
  • fcf margin: the quarter's cash flow is year to date in the filing and could not be differenced from the history
  • capex to revenue: the quarter's cash flow is year to date in the filing and could not be differenced from the history

Where revenue comes from

Every breakdown the filing reports for the period, with each item's share.

Revenue streams

HCM$2.3B41.1%
PEO zero-margin benefits pass-throughs$1.2B22.4%
HRO, excluding PEO zero-margin benefits pass-throughs$953.1M17.4%
Global$724.3M13.2%
Interest on funds held for clients$329.3M6.0%

Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-30

Segments

Employer Services$3.7B67.1%
PEO$1.8B32.9%

Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-30

ConsolidationItems

Operating Segments$5.5B100.1%
Intercompany eliminations-$2.8M-0.1%

Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-30

What it costs

The cost lines beneath operating income, each as a share of revenue, then the operating result.

Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.

Cost lineQ1 FY2027Of revenueSource
Total expenses$4.2B76.1%Source10-Q, us-gaap:CostsAndExpenses, as reported in the 10-Q filed 2026-10-30

Operating figures the company states

From the text of the filing rather than its statements, each with the sentence that states it.

ADP Assist clients added in the quarter (more than)
100,000 clients
As of Sep 30, 2026
View source
adding more than 100,000 clients during the quarter
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Oct 30, 2026
Average client funds balance
$36.9B
As of Sep 30, 2026
View source
an increase in our average client funds balances of 5.7% to $36.9 billion
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Oct 30, 2026
Average client funds balance growth, year over year
5.7%
As of Sep 30, 2026
View source
an increase in our average client funds balances of 5.7% to $36.9 billion
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Oct 30, 2026
Average interest rate earned on client funds
3.6%
As of Sep 30, 2026
View source
coupled with an increase in our average interest rate earned to 3.6% for the three months ended September 30, 2026, as compared to 3.3% for the three months ended September 30, 2025
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Oct 30, 2026
PEO average worksite employees growth, year over year
2.0%
As of Sep 30, 2026
View source
PEO average worksite employees increased 2% for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Oct 30, 2026
U.S. pays per control growth, year over year
2.0%
As of Sep 30, 2026
View source
an increase in our pays per control when measured on a same-store-sales basis of 2%
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Oct 30, 2026

The statements, as filed

The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.

Income statement19 lines, as presented in the 10-Q
LineQ1 FY2027A year earlierChangeOf revenueSource
Revenues:
Revenues$5.49B$5.18B+6.1%100%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-30
Revenues, other than interest on funds held for clients and PEO revenues$3.36B$3.20B+4.8%61.1%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [adp:RevenuesOtherThanInterestOnFundsHeldForClientsAndPEORevenuesMember], as reported in the 10-Q filed 2026-10-30
Interest on funds held for clients$329.3M$286.8M+15%6.0%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [adp:InterestOnFundsHeldForClientsMember], as reported in the 10-Q filed 2026-10-30
PEO revenues$1.81B$1.68B+7.1%32.9%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [adp:PEORevenuesMember], as reported in the 10-Q filed 2026-10-30
Costs of revenues:
Operating expenses$2.58B$2.46B+5.0%47.1%Source10-Q, us-gaap:OperatingCostsAndExpenses, as reported in the 10-Q filed 2026-10-30
Research and development$251.3M$251.2M+0.0%4.6%Source10-Q, us-gaap:ResearchAndDevelopmentExpense, as reported in the 10-Q filed 2026-10-30
Depreciation and amortization$129.0M$123.3M+4.6%2.3%Source10-Q, us-gaap:CostOfGoodsAndServicesSoldDepreciationAndAmortization, as reported in the 10-Q filed 2026-10-30
Total costs of revenues$2.97B$2.84B+4.6%54.0%Source10-Q, us-gaap:CostOfGoodsAndServicesSold, as reported in the 10-Q filed 2026-10-30
Expenses:
Selling, general, and administrative expenses$1.06B$1.01B+5.6%19.4%Source10-Q, us-gaap:SellingGeneralAndAdministrativeExpense, as reported in the 10-Q filed 2026-10-30
Interest expense$148.1M$135.4M+9.4%2.7%Source10-Q, us-gaap:InterestExpense, as reported in the 10-Q filed 2026-10-30
Total expenses$4.18B$3.98B+5.0%76.1%Source10-Q, us-gaap:CostsAndExpenses, as reported in the 10-Q filed 2026-10-30
Income Statement
Other (income)/expense, net (shown as a deduction)($140.3M)$110.1M+27%2.6%Source10-Q, us-gaap:NonoperatingIncomeExpense, as reported in the 10-Q filed 2026-10-30
Earnings before income taxes$1.45B$1.31B+11%26.5%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest, as reported in the 10-Q filed 2026-10-30
Provision for income taxes$329.7M$294.5M+12%6.0%Source10-Q, us-gaap:IncomeTaxExpenseBenefit, as reported in the 10-Q filed 2026-10-30
Net earnings$1.13B$1.01B+11%20.5%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-10-30
BASIC EARNINGS PER SHARE (in dollars per share)$3$3+14%0.0%Source10-Q, us-gaap:EarningsPerShareBasic, as reported in the 10-Q filed 2026-10-30
DILUTED EARNINGS PER SHARE (in dollars per share)$3$2+14%0.0%Source10-Q, us-gaap:EarningsPerShareDiluted, as reported in the 10-Q filed 2026-10-30
Basic weighted average shares outstanding (in shares)396,500,000405,100,000-2.1%Source10-Q, us-gaap:WeightedAverageNumberOfSharesOutstandingBasic, as reported in the 10-Q filed 2026-10-30
Diluted weighted average shares outstanding (in shares)397,600,000406,500,000-2.2%Source10-Q, us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding, as reported in the 10-Q filed 2026-10-30
Cash flow statement41 lines, as presented in the 10-Q

Year to date, as a quarterly filing reports it.

LineQ1 FY2027A year earlierChangeSource
Cash Flows from Operating Activities:
Net earnings$1.13B$1.01B+11%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-10-30
Adjustments to reconcile net earnings to cash flows provided by operating activities:
Depreciation and amortization$155.0M$146.7M+5.7%Source10-Q, us-gaap:DepreciationDepletionAndAmortization, as reported in the 10-Q filed 2026-10-30
Amortization of deferred contract costs$302.6M$298.6M+1.3%Source10-Q, us-gaap:CapitalizedContractCostAmortization, as reported in the 10-Q filed 2026-10-30
Deferred income taxes$80.6M$64.8M+24%Source10-Q, adp:DeferredIncomeTaxExpenseBenefitNetOfDisposals, as reported in the 10-Q filed 2026-10-30
Stock-based compensation expense$67.2M$58.7M+14%Source10-Q, us-gaap:ShareBasedCompensation, as reported in the 10-Q filed 2026-10-30
Bad debt expense$16.4M$10.3M+59%Source10-Q, us-gaap:ProvisionForDoubtfulAccounts, as reported in the 10-Q filed 2026-10-30
Net pension income-$2.2M-$3.8M-42%Source10-Q, us-gaap:IncreaseDecreaseInPensionPlanObligations, as reported in the 10-Q filed 2026-10-30
Net accretion of discounts and amortization of premiums on available-for-sale securities (shown as a deduction)($50.0M)$22.5M+122%Source10-Q, us-gaap:AccretionAmortizationOfDiscountsAndPremiumsInvestments, as reported in the 10-Q filed 2026-10-30
Other (shown as a deduction)(-$2.0M)-$2.5M-20%Source10-Q, us-gaap:OtherNoncashIncomeExpense, as reported in the 10-Q filed 2026-10-30
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable (shown as a deduction)($21.5M)-$102.0MSource10-Q, us-gaap:IncreaseDecreaseInAccountsAndNotesReceivable, as reported in the 10-Q filed 2026-10-30
Increase in deferred contract costs (shown as a deduction)($263.1M)$271.4M-3.1%Source10-Q, us-gaap:IncreaseDecreaseInContractWithCustomerAsset, as reported in the 10-Q filed 2026-10-30
Increase in other assets (shown as a deduction)($346.2M)$342.4M+1.1%Source10-Q, us-gaap:IncreaseDecreaseInOtherOperatingAssets, as reported in the 10-Q filed 2026-10-30
Decrease in accounts payable-$25.6M-$38.0M-33%Source10-Q, us-gaap:IncreaseDecreaseInAccountsPayableTrade, as reported in the 10-Q filed 2026-10-30
Decrease in accrued expenses and other liabilities-$389.4M-$376.2M+3.5%Source10-Q, us-gaap:IncreaseDecreaseInAccruedLiabilities, as reported in the 10-Q filed 2026-10-30
Cash Flows from Operating Activities:
Net cash flows provided by operating activities$651.0M$642.3M+1.4%Source10-Q, us-gaap:NetCashProvidedByUsedInOperatingActivities, as reported in the 10-Q filed 2026-10-30
Cash Flows from Investing Activities:
Purchases of corporate and client funds marketable securities (shown as a deduction)($2.67B)$3.60B-26%Source10-Q, us-gaap:PaymentsToAcquireMarketableSecurities, as reported in the 10-Q filed 2026-10-30
Proceeds from the sales and maturities of corporate and client funds marketable securities$1.96B$1.90B+3.3%Source10-Q, us-gaap:ProceedsFromSaleAndMaturityOfAvailableForSaleSecurities, as reported in the 10-Q filed 2026-10-30
Capital expenditures (shown as a deduction)($52.7M)$46.7M+13%Source10-Q, us-gaap:PaymentsToAcquireOtherPropertyPlantAndEquipment, as reported in the 10-Q filed 2026-10-30
Additions to intangibles (shown as a deduction)($117.1M)$94.1M+24%Source10-Q, us-gaap:PaymentsToAcquireIntangibleAssets, as reported in the 10-Q filed 2026-10-30
Acquisitions of businesses, net of cash acquired (shown as a deduction)($0)-$500.0KSource10-Q, us-gaap:PaymentsForProceedsFromPreviousAcquisition, as reported in the 10-Q filed 2026-10-30
Other (shown as a deduction)($5.4M)$13.7M-61%Source10-Q, us-gaap:PaymentsForProceedsFromOtherInvestingActivities, as reported in the 10-Q filed 2026-10-30
Net cash flows used in investing activities-$882.4M-$1.86B-53%Source10-Q, us-gaap:NetCashProvidedByUsedInInvestingActivities, as reported in the 10-Q filed 2026-10-30
Cash Flows from Financing Activities:
Net increase in client funds obligations$1.65B$573.1M+189%Source10-Q, adp:NetIncreaseDecreaseInClientFundsObligations, as reported in the 10-Q filed 2026-10-30
Net cash received/(distributed) from the Internal Revenue Service$50.9M-$11.5MSource10-Q, adp:PaymentsForProceedsFromInternalRevenueServiceNet, as reported in the 10-Q filed 2026-10-30
Payments of debt (shown as a deduction)($300.0K)$300.0K0.0%Source10-Q, us-gaap:RepaymentsOfLongTermDebt, as reported in the 10-Q filed 2026-10-30
Repurchases of common stock (shown as a deduction)($758.8M)$366.0M+107%Source10-Q, us-gaap:PaymentsForRepurchaseOfCommonStock, as reported in the 10-Q filed 2026-10-30
Net repurchases for stock-based compensation plans and stock purchase plan-$27.6M-$57.8M-52%Source10-Q, adp:PaymentsForProceedsFromStockBasedCompensationPlansAndStockPurchasePlanNet, as reported in the 10-Q filed 2026-10-30
Dividends paid (shown as a deduction)($677.0M)$626.7M+8.0%Source10-Q, us-gaap:PaymentsOfDividends, as reported in the 10-Q filed 2026-10-30
Net proceeds related to reverse repurchase agreements$49.9M$214.8M-77%Source10-Q, adp:NetPaymentsOfProceedsFromReverseRepurchaseAgreements, as reported in the 10-Q filed 2026-10-30
Net proceeds related to commercial paper$0$438.5MSource10-Q, us-gaap:ProceedsFromRepaymentsOfCommercialPaper, as reported in the 10-Q filed 2026-10-30
Other$13.9M$0Source10-Q, us-gaap:ProceedsFromPaymentsForOtherFinancingActivities, as reported in the 10-Q filed 2026-10-30
Net cash flows provided by financing activities$305.0M$164.1M+86%Source10-Q, us-gaap:NetCashProvidedByUsedInFinancingActivities, as reported in the 10-Q filed 2026-10-30
Statement of Cash Flows
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents$6.6M-$6.7MSource10-Q, us-gaap:EffectOfExchangeRateOnCashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-10-30
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents$80.2M-$1.06BSource10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect, as reported in the 10-Q filed 2026-10-30
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period$10.63BSource10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-10-30
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period$10.71B$3.99B+168%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-10-30
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Consolidated Balance Sheets
Cash, cash equivalents, and restricted cash$3.30B$2.48B+33%Source10-Q, adp:CashCashEquivalentAndRestrictedCashCurrent, as reported in the 10-Q filed 2026-10-30
Restricted cash and restricted cash equivalents included in funds held for clients$7.41B$1.51B+389%Source10-Q, us-gaap:RestrictedCashAndCashEquivalentsNoncurrent, as reported in the 10-Q filed 2026-10-30
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$10.71B$3.99B+168%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-10-30
Supplemental disclosures of cash flow information:
Cash paid for interest$130.7M$130.3M+0.3%Source10-Q, us-gaap:InterestPaidNet, as reported in the 10-Q filed 2026-10-30
Cash paid for income taxes, net of income tax refunds$187.2M$73.8M+154%Source10-Q, us-gaap:IncomeTaxesPaidNet, as reported in the 10-Q filed 2026-10-30
Balance sheet37 lines, as presented in the 10-Q
LineQ1 FY2027A year earlierChangeSource
Current assets:
Cash and cash equivalents$3.28BSource10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-10-30
Accounts receivable, net of allowance for doubtful accounts of $50.3 and $44.5, respectively$3.52BSource10-Q, us-gaap:AccountsReceivableNetCurrent, as reported in the 10-Q filed 2026-10-30
Other current assets$1.29BSource10-Q, us-gaap:OtherAssetsCurrent, as reported in the 10-Q filed 2026-10-30
Total current assets before funds held for clients$8.09BSource10-Q, adp:TotalAssetsBeforeFundsHeldClients, as reported in the 10-Q filed 2026-10-30
Funds held for clients$44.73BSource10-Q, adp:FundsHeldClients, as reported in the 10-Q filed 2026-10-30
Total current assets$52.83BSource10-Q, us-gaap:AssetsCurrent, as reported in the 10-Q filed 2026-10-30
Assets
Property, plant and equipment, net$644.3MSource10-Q, us-gaap:PropertyPlantAndEquipmentNet, as reported in the 10-Q filed 2026-10-30
Operating lease right-of-use assets$382.5MSource10-Q, us-gaap:OperatingLeaseRightOfUseAsset, as reported in the 10-Q filed 2026-10-30
Deferred contract costs$3.20BSource10-Q, us-gaap:CapitalizedContractCostNet, as reported in the 10-Q filed 2026-10-30
Other assets$1.46BSource10-Q, us-gaap:OtherAssetsNoncurrent, as reported in the 10-Q filed 2026-10-30
Goodwill$3.28BSource10-Q, us-gaap:Goodwill, as reported in the 10-Q filed 2026-10-30
Intangible assets, net$1.66BSource10-Q, us-gaap:IntangibleAssetsNetExcludingGoodwill, as reported in the 10-Q filed 2026-10-30
Total assets$63.45BSource10-Q, us-gaap:Assets, as reported in the 10-Q filed 2026-10-30
Current liabilities:
Accounts payable$138.7MSource10-Q, us-gaap:AccountsPayableCurrent, as reported in the 10-Q filed 2026-10-30
Accrued expenses and other current liabilities$3.33BSource10-Q, us-gaap:AccruedLiabilitiesCurrent, as reported in the 10-Q filed 2026-10-30
Accrued payroll and payroll-related expenses$579.2MSource10-Q, us-gaap:EmployeeRelatedLiabilitiesCurrent, as reported in the 10-Q filed 2026-10-30
Dividends payable$670.2MSource10-Q, us-gaap:DividendsPayableCurrentAndNoncurrent, as reported in the 10-Q filed 2026-10-30
Short-term deferred revenues$257.9MSource10-Q, us-gaap:ContractWithCustomerLiabilityCurrent, as reported in the 10-Q filed 2026-10-30
Obligations under reverse repurchase agreements$198.3MSource10-Q, adp:ObligationsUnderReverseRepurchaseAgreements, as reported in the 10-Q filed 2026-10-30
Income taxes payable$153.1MSource10-Q, us-gaap:AccruedIncomeTaxesCurrent, as reported in the 10-Q filed 2026-10-30
Total current liabilities before client funds obligations$5.33BSource10-Q, adp:TotalCurrentLiabilitiesBeforeClientFundsObligations, as reported in the 10-Q filed 2026-10-30
Client funds obligations$46.04BSource10-Q, adp:ClientFundsObligations, as reported in the 10-Q filed 2026-10-30
Total current liabilities$51.37BSource10-Q, us-gaap:LiabilitiesCurrent, as reported in the 10-Q filed 2026-10-30
Liabilities and Stockholders' Equity
Long-term debt$4.97BSource10-Q, us-gaap:LongTermDebtNoncurrent, as reported in the 10-Q filed 2026-10-30
Operating lease liabilities$308.0MSource10-Q, us-gaap:OperatingLeaseLiabilityNoncurrent, as reported in the 10-Q filed 2026-10-30
Other liabilities$1.13BSource10-Q, us-gaap:OtherLiabilitiesNoncurrent, as reported in the 10-Q filed 2026-10-30
Deferred income taxes$218.8MSource10-Q, us-gaap:DeferredIncomeTaxLiabilitiesNet, as reported in the 10-Q filed 2026-10-30
Long-term deferred revenues$376.2MSource10-Q, us-gaap:ContractWithCustomerLiabilityNoncurrent, as reported in the 10-Q filed 2026-10-30
Total liabilities$58.36BSource10-Q, us-gaap:Liabilities, as reported in the 10-Q filed 2026-10-30
Stockholders' equity:
Preferred stock, $1.00 par value: authorized, 0.3 shares; issued, none$0Source10-Q, us-gaap:PreferredStockValue, as reported in the 10-Q filed 2026-10-30
Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 638.7 shares at September 30, 2026 and June 30, 2026; outstanding, 395.6 and 397.8 shares at September 30, 2026 and June 30, 2026, respectively$63.9MSource10-Q, us-gaap:CommonStockValue, as reported in the 10-Q filed 2026-10-30
Capital in excess of par value$3.15BSource10-Q, us-gaap:AdditionalPaidInCapitalCommonStock, as reported in the 10-Q filed 2026-10-30
Retained earnings$27.41BSource10-Q, us-gaap:RetainedEarningsAccumulatedDeficit, as reported in the 10-Q filed 2026-10-30
Treasury stock - at cost: 243.1 and 240.9 shares at September 30, 2026 and June 30, 2026, respectively (shown as a deduction)($23.96B)Source10-Q, us-gaap:TreasuryStockValue, as reported in the 10-Q filed 2026-10-30
Accumulated other comprehensive income/(loss)-$1.57BSource10-Q, us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax, as reported in the 10-Q filed 2026-10-30
Total stockholders’ equity$5.09B$6.37B-20%Source10-Q, us-gaap:StockholdersEquity, as reported in the 10-Q filed 2026-10-30
Liabilities and Stockholders' Equity
Total liabilities and stockholders’ equity$63.45BSource10-Q, us-gaap:LiabilitiesAndStockholdersEquity, as reported in the 10-Q filed 2026-10-30

About this data

Source
ADP 10-Q, accession 0000008670-26-000044, filed Oct 30, 2026, read on Nov 2, 2026.
History
From the SEC's XBRL company facts, the value from the latest filing that stated each period.
Reading
Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
Version
methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
Edge and risks

What holds ADP's model up, and what could bend it

Competitive edge

  • Scale of client funds turns payroll timing into income

    ADP held an average $36.9B of client funds, up 5.7%, invested on a maturity ladder the filing says lets it average through rate cycles.

    The detail

    Clients fund payroll and taxes before they are paid out. ADP invests the balance in high-grade securities laddered out to five years in its extended portfolio and ten in its long one, structured "to allow us to average our way through an interest rate cycle". Short-term borrowing covers timing needs so invested securities need not be sold, and the filing describes its commercial paper ratings as the highest possible short-term credit ratings.1

    AnalysisAnalysis: the advantage is size and trust. Balances grow with clients' payrolls without a new sale, and few rivals hold enough client money, with the credit standing to fund it, to run the same strategy. The ladder means a rate change reaches income gradually, in both directions.

  • Net margin widened from 16.2% to 20.1% since FY2019

    Revenue rose to $21.95B in FY2026 from $14.11B in FY2019, while net earnings nearly doubled to $4.41B from $2.29B.

    The detail

    Annual revenue grew in every year of the record, from $14.11B in FY2019 to $21.95B in FY2026, and net margin rose from 16.2% to 20.1%. In the latest quarter, costs of revenues grew 4.55% against revenue growth of 6.1%.1

    AnalysisAnalysis: payroll is the same job every pay period. Once a client is implemented, serving it again costs less than winning it, and software built once spreads across more clients. The annual record does not split the gain between operating efficiency and float income, which depends on rates, so the two should not be read as one.

  • ADP Assist added more than 100,000 clients in a quarter

    The filing says its generative AI assistant, built on ADP's payroll data, became more deeply embedded in client workflows, adding more than 100,000 clients.

    The detail

    The filing describes ADP Assist as a cross-platform solution that "combines the power of ADP data, expertise, and generative AI". It added more than 100,000 clients in the quarter, and the company extended Lyric HCM to companies headquartered in the United Kingdom, France, Germany and the Netherlands.1

    AnalysisAnalysis: the edge, if it holds, is data and placement. An assistant inside the system that already runs a client's payroll has information a standalone tool lacks. The filing gives no revenue or cost figure for it, so whether it earns its keep should show in servicing costs and pricing over time.

What to watch

  • Falling rates would reach profit faster than sales

    Float interest is 6.0% of revenue but equals 22.6% of pre-tax earnings, so the 3.6% rate earned matters more than the revenue mix suggests.

    The detail

    The filing names interest rates, the credit quality of its investments and its own credit ratings, which set its funding costs, as market risks. It warns that reduced financing in periods of economic turmoil "may limit our ability to access short-term debt markets", which the client funds strategy relies on to meet timing needs.1

    Rising rates work the other way on the securities themselves: the filing reports larger net unrealized losses on its available-for-sale securities at quarter end than at June, recorded outside net earnings.1

    AnalysisAnalysis: the ladder slows a change in rates in both directions, so a turn would show first in the average rate earned on client funds, now 3.6% against 3.3% a year earlier, and only gradually in earnings.

  • Slower hiring would cut fees and float together

    Pays per control and worksite employees each grew 2%; fees and client fund balances both depend on the same payrolls, so job losses would hit twice.

    The detail

    The filing lists employment and wage levels among its risk factors. U.S. pays per control, the same-store growth in employees on existing clients' payrolls, rose 2%, and PEO average worksite employees rose 2%. Average client funds balances rose 5.7%.1

    The filing says that when employment falls in a slowdown, it may sell securities or not reinvest maturing ones, to shrink funds held for clients to match client funds obligations.1

    AnalysisAnalysis: revenue tied to headcount shrinks without a lost client, and smaller payrolls mean smaller balances to invest. With underlying headcount growing at a low single-digit pace, growth above it depends on bookings, retention and pricing.

  • PEO benefit costs are rising faster than covered workers

    Pass-throughs grew 8.6% against 2% more worksite employees; ADP earns nothing on them, but small-business clients pay the whole rising bill.

    The detail

    PEO zero-margin benefits pass-throughs were $1.23B, up 8.6%, while average worksite employees rose 2%. The PEO also carries workers' compensation exposure, which ADP reinsures and estimates using "historical loss experience and actuarial judgment".1

    AnalysisAnalysis: ADP passes benefit costs on at no margin, so rising costs do not reduce its earnings directly. The pressure is on demand: the PEO grows only while clients value pooled benefits and co-employment more than they feel the rising price of the package. This is a reading of two figures, not a trend the filing states.

Sources

  1. 1.ADP 10-Q for the period to 2026-09-30 (the filing), Oct 30, 2026, read Nov 2, 2026
Go deeper

ADP, further in

Member research, then your own questions on ChatGPT.

What could change the outlook

What ADP's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.

  • What ADP's profit depends on from here

    How much of the earnings growth rests on rates rather than service, and which payroll measures would show the double exposure to hiring first.

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Questions to start with
  • How would a lower rate on ADP's client funds, now 3.6%, change its pre-tax earnings, given float interest equals 22.6% of them?
  • Why are ADP's PEO benefit pass-throughs growing 8.6% when average worksite employees grew only 2%?
  • How much of ADP's rise in pre-tax earnings to 26.5% of revenue came from cost efficiency rather than interest income?

Business Lens describes ADP from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.