olivLaw · US equity research
Automatic Data Processing, Inc. ADP
Services-Computer Processing & Data Preparation · SIC 7374 · Vertical: Services-Computer Processing & Data Preparation (SIC 7374)
ADP is a global provider of HR and payroll solutions, serving clients from small businesses to large enterprises across more than 140 countries and territories. For fiscal 2026 the company reported revenues of 21.9 billion USD, up 7%, and offered fiscal 2027 guidance for revenue growth of 5% to 6%, as it embeds AI into its platforms. If the AI integration translates into productivity gains for clients, its data scale and global position could matter more over time.
The AI analysis may be outdated: new filings came after its sources (see the «AI analysis» section).
At the close of 04 Nov 2026, Automatic Data Processing, Inc. (ADP) stock was 303.54 USD (+2.54% on the day), with market capitalisation 119.8 bn USD, P/E 27.7 on diluted EPS of 10.94 USD over the last 12 months, dividend yield 2.19%, beta 0.39, 52-week range 188.79–307.94 USD. Latest reported quarter (Q1 2027): revenue of 5.5 bn USD, net income of 1.1 bn USD, diluted EPS 2.83 USD.
Data as of · AI analysis dated · Source: SEC filings and closing prices, computed by olivLaw.
Price history
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Technical reading
- RSI (14)
- 64.4
- strong (55–70)
- Bollinger (20, 2)
- 267.85 – 311.19
- in the upper half of the band · %B 0.82 · band width 15.0%
- SMA 50 / 200
- 278.29 / 240.99
- uptrend (price > SMA50 > SMA200)
- MACD (12, 26, 9)
- 6.87 / 6.48
- MACD above signal
Indicators describe past prices; on their own they do not predict direction. On our history the RSI ≤ 40 filter added no return (see the signals methodology).
Performance
| Company | S&P 500 | vs S&P 500 | Vertical median | |
|---|---|---|---|---|
| 1 month | +16.6% | −1.1% | +17.7 pp | — |
| 3 months | +12.4% | −0.5% | +12.8 pp | — |
| 6 months | +46.5% | +4.4% | +42.1 pp | — |
| Year to date | +18.0% | +12.3% | +5.7 pp | — |
| 1 year | +17.1% | +13.5% | +3.6 pp | −12.8% |
| 3 years | +38.4% | +76.4% | −38.0 pp | −17.6% |
| 5 years | +32.2% | +63.7% | −31.5 pp | — |
Price returns, dividends excluded.
Quarterly results
Latest quarter: Q1 2027 · 30 Sept 2026
Quarterly margins
Quarterly statements · USD
| Fiscal year | Q4 '23 | Q3 '24 | Q4 '24 | Q3 '25 | Q4 '25 | Q3 '26 | Q4 '26 | Q1 '27 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 4.7 bn | 4.8 bn | 5.0 bn | 5.2 bn | 5.4 bn | 5.9 bn | 5.5 bn | 5.5 bn |
| Cost of revenue | 2.6 bn | 2.6 bn | 2.7 bn | 2.8 bn | 2.9 bn | 3.1 bn | 3.0 bn | 3.0 bn |
| Research & development | 228.7 m | 232.6 m | 239.5 m | 251.2 m | 257.8 m | 253.9 m | 265.9 m | 251.3 m |
| SG&A | 922.5 m | 926.7 m | 1.0 bn | 1.0 bn | 1.1 bn | 1.1 bn | 1.3 bn | 1.1 bn |
| Depreciation & amortisation | 140.4 m | 138.6 m | 151.0 m | 146.7 m | 145.6 m | 146.4 m | 147.2 m | 155.0 m |
| Interest expense | 104.9 m | 137.8 m | 129.6 m | 135.4 m | 124.1 m | 78.7 m | 121.0 m | 148.1 m |
| Pre-tax income | 1.1 bn | 1.2 bn | 1.3 bn | 1.3 bn | 1.4 bn | 1.8 bn | 1.3 bn | 1.5 bn |
| Income tax | 265.4 m | 279.9 m | 298.1 m | 294.5 m | 321.2 m | 422.0 m | 279.2 m | 329.7 m |
| Net income | 878.4 m | 956.3 m | 963.2 m | 1.0 bn | 1.1 bn | 1.4 bn | 978.6 m | 1.1 bn |
| Diluted EPS | 2.13 | 2.34 | 2.35 | 2.49 | 2.62 | 3.38 | 2.45 ≈ | 2.83 |
| Operating cash flow | 1.2 bn | 824.4 m | 1.3 bn | 642.3 m | 1.4 bn | — | 1.4 bn | 651.0 m |
| Dividends paid | 517.5 m | 572.6 m | 575.1 m | 626.7 m | 625.8 m | — | 683.2 m | 677.0 m |
| Share repurchases | 303.9 m | 372.6 m | 435.5 m | 366.0 m | 324.0 m | — | 620.1 m | 758.8 m |
≈ derived quarter (cumulative difference / share-days average)
E/P over time
E/P = trailing-12-month diluted EPS / price at quarter end. E/P is the inverse of P/E and stays defined when earnings are negative.
Today's P/E sits at the 50 percentile of its own 10-quarter history (min 20.5, median 28.4, max 32.7; quarters with earnings only).
Fiscal years
| Fiscal year | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 14.1 bn | 14.6 bn | 15.0 bn | 16.5 bn | 18.0 bn | 19.2 bn | 20.6 bn | 21.9 bn |
| Revenue YoY | +6.3% | +3.4% | +2.8% | +9.9% | +9.2% | +6.6% | +7.1% | +6.7% |
| Net income | 2.3 bn | 2.5 bn | 2.6 bn | 2.9 bn | 3.4 bn | 3.8 bn | 4.1 bn | 4.4 bn |
| Net income YoY | +21.6% | +7.6% | +5.4% | +13.5% | +15.7% | +10.0% | +8.7% | +8.2% |
| Diluted EPS | 5.24 | 5.70 | 6.07 | 7.00 | 8.21 | 9.10 | 9.98 | 10.94 |
| Diluted EPS YoY | +23.3% | +8.8% | +6.5% | +15.3% | +17.3% | +10.8% | +9.7% | +9.6% |
| net % | 16.2% | 16.9% | 17.3% | 17.9% | 18.9% | 19.5% | 19.8% | 20.1% |
| Free cash flow | unavailable | unavailable | unavailable | unavailable | unavailable | unavailable | unavailable | unavailable |
Reported results vs expectations
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Balance sheet & financial health
Fiscal year 2026 · 30 Jun 2026
- Cash
- 4.2 bn USD
- Financial debt
- 5.0 bn USD
- Net debt
- 735.0 m USD
- Equity
- 6.0 bn USD
- Total assets
- 63.2 bn USD
- Debt / equity
- 0.82x
- Current ratio
- 1.05x
- ROE
- 72.2%
- ROA
- 7.6%
- FCF margin
- unavailable
Financial statements (source on every figure)
Revenue and net income (USD)
Margins
Income statement · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Revenue | 15.0 bn | 16.5 bn | 18.0 bn | 19.2 bn | 20.6 bn | 21.9 bn | SEC (XBRL)· 05 Aug 2026verified |
| Cost of revenue | 8.6 bn | 9.5 bn | 10.0 bn | 10.5 bn | 11.1 bn | 11.8 bn | SEC (XBRL)· 05 Aug 2026verified |
| Gross profit | 6.4 bn ≈ | 7.0 bn ≈ | 8.1 bn ≈ | 8.7 bn ≈ | 9.5 bn ≈ | 10.2 bn ≈ | SEC (XBRL)· 05 Aug 2026derived |
| Research & development | — | 798.6 m | 844.8 m | 955.7 m | 988.6 m | 1.0 bn | SEC (XBRL)· 05 Aug 2026verified |
| SG&A | 3.0 bn | 3.2 bn | 3.6 bn | 3.8 bn | 4.1 bn | 4.4 bn | SEC (XBRL)· 05 Aug 2026verified |
| Depreciation & amortisation | 510.7 m | 515.1 m | 549.3 m | 561.9 m | 582.4 m | 585.9 m | SEC (XBRL)· 05 Aug 2026verified |
| Interest expense | 59.7 m | 81.9 m | 253.3 m | 361.4 m | 455.9 m | 459.3 m | SEC (XBRL)· 05 Aug 2026verified |
| Pre-tax income | 3.4 bn | 3.8 bn | 4.4 bn | 4.9 bn | 5.3 bn | 5.7 bn | SEC (XBRL)· 05 Aug 2026verified |
| Income tax | 762.7 m | 855.2 m | 1.0 bn | 1.1 bn | 1.2 bn | 1.3 bn | SEC (XBRL)· 05 Aug 2026verified |
| Net income | 2.6 bn | 2.9 bn | 3.4 bn | 3.8 bn | 4.1 bn | 4.4 bn | SEC (XBRL)· 05 Aug 2026verified |
| Diluted EPS | 6.07 | 7.00 | 8.21 | 9.10 | 9.98 | 10.94 | SEC (XBRL)· 05 Aug 2026verified |
| Weighted average diluted shares | 428.1 m | 421.1 m | 415.7 m | 412.2 m | 408.7 m | 403.3 m | SEC (XBRL)· 05 Aug 2026verified |
| Dividend per share | 3.70 | 4.05 | 4.79 | 5.45 | 6.02 | 6.64 | SEC (XBRL)· 05 Aug 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Revenue − Cost of revenue.
Balance sheet · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Cash | 2.6 bn | 1.4 bn | 2.1 bn | 2.9 bn | 3.3 bn | 4.2 bn | SEC (XBRL)· 05 Aug 2026verified |
| Receivables | 2.7 bn | 3.2 bn | 3.0 bn | 3.4 bn | 3.6 bn | 3.5 bn | SEC (XBRL)· 05 Aug 2026verified |
| Current assets | 40.7 bn | 54.8 bn | 42.2 bn | 45.5 bn | 43.3 bn | 52.6 bn | SEC (XBRL)· 05 Aug 2026verified |
| Property, plant & equipment, net | 684.5 m | 652.6 m | 681.4 m | 685.6 m | 655.4 m | 641.3 m | SEC (XBRL)· 05 Aug 2026verified |
| Goodwill | 2.3 bn | 2.3 bn | 2.3 bn | 2.4 bn | 3.3 bn | 3.3 bn | SEC (XBRL)· 05 Aug 2026verified |
| Intangibles (excl. goodwill) | 1.3 bn | 1.3 bn | 1.3 bn | 1.3 bn | 1.6 bn | 1.7 bn | SEC (XBRL)· 05 Aug 2026verified |
| Total assets | 48.8 bn | 63.1 bn | 51.0 bn | 54.4 bn | 53.4 bn | 63.2 bn | SEC (XBRL)· 05 Aug 2026verified |
| Accounts payable | 141.1 m | 110.2 m | 96.8 m | 100.6 m | 169.1 m | 162.5 m | SEC (XBRL)· 05 Aug 2026verified |
| Short-term debt | 1.2 m | 1.2 m | 1.2 m | 1.1 m | 1.0 m | 1.0 m | SEC (XBRL)· 05 Aug 2026verified |
| Long-term debt | 3.0 bn | 3.0 bn | 3.0 bn | 3.0 bn | 4.0 bn | 5.0 bn | SEC (XBRL)· 05 Aug 2026verified |
| Current liabilities | 38.1 bn | 55.2 bn | 42.8 bn | 45.1 bn | 41.3 bn | 50.0 bn | SEC (XBRL)· 05 Aug 2026verified |
| Total liabilities | 43.1 bn | 59.8 bn | 47.5 bn | 49.8 bn | 47.2 bn | 57.2 bn | SEC (XBRL)· 05 Aug 2026verified |
| Equity | 5.7 bn † | 3.2 bn † | 3.5 bn † | 4.5 bn † | 6.2 bn † | 6.0 bn † | SEC (XBRL)· 05 Aug 2026verified |
† equity attributable to the parent's shareholders: in these years the issuer no longer reports the total including non-controlling interests.
Cash flow · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Operating cash flow | 3.1 bn | 3.1 bn | 4.2 bn | 4.2 bn | 4.9 bn | 5.4 bn | SEC (XBRL)· 05 Aug 2026verified |
| Investing cash flow | -3.5 bn | -7.0 bn | -2.5 bn | -1.4 bn | -3.0 bn | -4.7 bn | SEC (XBRL)· 05 Aug 2026verified |
| Financing cash flow | 6.4 bn | 13.7 bn | -15.7 bn | -1.4 bn | -7.0 bn | 4.9 bn | SEC (XBRL)· 05 Aug 2026verified |
| Dividends paid | 1.6 bn | 1.7 bn | 1.9 bn | 2.2 bn | 2.4 bn | 2.6 bn | SEC (XBRL)· 05 Aug 2026verified |
| Share repurchases | 1.4 bn | 2.0 bn | 1.1 bn | 1.2 bn | 1.3 bn | 2.1 bn | SEC (XBRL)· 05 Aug 2026verified |
Computed indicators
Growth
Profitability
Returns
Balance sheet
Liquidity
Cash
Efficiency
Market and valuation
4 indicators that do not apply to the sector.
Valuation
olivLaw classification
Score: 29 / 100
A scoring methodology on indicators and valuation, not investment advice.
score < 40
Closing price
04 Nov 2026Source: olivLaw, closing series
Market cap: 119.8 bn USD
Key indicators
Coverage and freshness
Score by group
- Valuation21
- Balance sheet13
- Quality16
- Growth31
- Returns99
Estimated value range
The combined range = the median of the valid methods' low, central and high values; it is not a probability interval and does not cover every result. Envelope of all methods: 45.59 – 227.50 USD.
Valuation assumptions are editorial choices, not measured; beta is not measured.
Method ranges (USD per share)
— — Mid · ▏ Price
Valuation methods
- DCF (discounted cash flow)unavailable · input data missing
- Peers: EV/Sales45.59 – 227.50 (Mid 98.33)10 companies used · median multiple 1.8x · quartiles 0.9x – 4.2xEGHT, EVTC, IBEX, OOMA, PLTK, SOPH, SY, VRSK, WDAY, YEXT
- Peers: EV/EBITDAunavailable · input data missing
Classification (SIC) comparables group by industry code, not by economic activity; the direct group is an editorial selection by activity. Members' multiples are on their own trailing twelve months, at their own latest close.
Assumptions (illustrative, editorial)
- Risk-free rate
- 4.3%
- Equity risk premium
- 5.0%
- Beta (default)
- 1.00
- Cost of equity
- 9.3%
- Terminal growth
- 2.5%
Factor scorecard
Unattractive profile · Score 29/100
| Factor | Value | Score | Weight used |
|---|---|---|---|
| Gross margin · Quality | 46.4% | 16 (on a fixed band) | 17% |
| EBIT margin · Quality | unavailable | unavailable | — |
| FCF margin · Quality | unavailable | unavailable | — |
| Revenue CAGR 3Y · Growth | 6.8% | 27 (on a fixed band) | 27% |
| Revenue growth (YoY) · Growth | 6.7% | 40 (vs peers) | 13% |
| Net debt / EBITDA · Balance sheet | unavailable | unavailable | — |
| Current ratio · Balance sheet | 1.0x | 13 (on a fixed band) | 10% |
| EV/Sales · Valuation | 5.5x | 21 (vs peers) | 27% |
| FCF yield · Valuation | unavailable | unavailable | — |
| Shareholder yield (distributions) · Returns | 3.9% | 99 (on a fixed band) | 7% |
Factors without a value were dropped; the remaining weights were renormalised.
Score groups
- Balance sheet· partial13/100 · 1/2 factors with a value
- Growth31/100 · 2/2 factors with a value
- Quality· partial16/100 · 1/3 factors with a value
- Returns99/100 · 1/1 factors with a value
- Valuation· partial21/100 · 1/2 factors with a value
A «partial» group is computed from under half of its weight or from one factor: it is not a full assessment of the group.
Memo
AUTOMATIC DATA PROCESSING, INC. (ADP). Latest full fiscal year: 2026; data up to 2026-09-30.
Figures computed from the financial statements: revenue 21.9 bn USD in 2026; YoY growth 6.7%; net margin 20.1%; ROE 77.0%.
The estimated value range is 45.59–227.50 USD per share (median of 1 methods, agreement: single method); assumptions are illustrative. Against the central value of 98.33 USD, the price of 303.54 USD leaves a potential of -67.6% (value / price − 1) and a margin of safety of -208.7% (1 − price / value). The range is the median of the methods' low, central and high values, not a probability interval.
olivLaw score 29/100, methodological classification: unattractive profile (score, margin of safety and method agreement together; not a judgement of the right price). Groups assessed only in part: balance, quality, valuation. Not investment advice.
Text generated deterministically from the figures shown; no language model. Not investment advice.
What supports the thesis
- Shareholder yield (distributions): 3.9%
What contradicts it
- Gross margin: 46.4%
- Revenue CAGR 3Y: 6.8%
- Current ratio: 1.0x
- EV/Sales: 5.5x
- The price is above the estimated value range
Not assessed (insufficient data or a ratio without meaning): EBIT margin, FCF margin, Net debt / EBITDA, FCF yield.
Versus the vertical median
Services-Computer Processing & Data Preparation (SIC 7374) · same industry (4-digit SIC) · compared with 39 companies
The size band was not applied: too few companies would have remained; the vertical includes much smaller or larger companies.
Multiples and returns vs the median
Price rebased to 100 (monthly, 5 years)
Companies in the vertical
| Market cap | P/E | ROE | Net margin | Revenue YoY | 1A / 3A | |
|---|---|---|---|---|---|---|
| ADPAutomatic Data Processing, Inc. | 119.8 bn | 27.7 | 77.0% | 20.1% | +6.7% | +17% / +38% |
| WDAYWorkday, Inc. | 44.4 bn | 40.9 | 16.0% | 12.3% | +13.1% | −6% / −25% |
| VRSKVerisk Analytics, Inc. | 25.9 bn | 30.1 | — | 29.3% | +6.6% | −12% / −18% |
| ATHMAutohome Inc. | 10.4 bn | 53.5 | 6.3% | 443.2% | +11.1% | −5% / −18% |
| FIRYFiry Inc. | 4.3 bn | — | -63.0% | -60.2% | +12.5% | +107% / +94% |
| EVTCEVERTEC, Inc. | 2.1 bn | 22.9 | 14.4% | 9.0% | +10.2% | +20% / −6% |
| INFQInfleqtion, Inc. | 1.9 bn | — | -70.8% | — | unavailable | unavailable / unavailable |
| INODInnodata Inc | 1.5 bn | 32.8 | 37.7% | 14.7% | +47.6% | −25% / +541% |
| PLTKPlaytika Holding Corp. | 808.6 m | — | — | -9.9% | +8.1% | −48% / −76% |
| YEXTYext, Inc. | 775.0 m | 40.6 | 27.8% | 5.9% | +6.1% | −7% / +18% |
| IBEXIBEX Limited | 593.6 m | 14.3 | 30.4% | 7.2% | +15.4% | +27% / +152% |
| OOMAOoma, Inc. | 524.7 m | 49.8 | 11.7% | 3.6% | +6.5% | +69% / +64% |
| SOPHSOPHiA GENETICS SA | 477.3 m | — | -110.0% | -102.2% | +18.6% | +42% / +73% |
| GRVYGravity Co., Ltd. | 475.7 m | 0.0 | 16.5% | 17.0% | −31.0% | +19% / −6% |
| SOHUSohu.com Limited | 355.1 m | 1.0 | 35.8% | 67.4% | −2.4% | −12% / +70% |
| EGHT8x8, Inc. | 326.4 m | 55.5 | 3.5% | 0.6% | +2.9% | +16% / −27% |
| SYSo-Young International Inc. | 146.7 m | — | -14.6% | -15.9% | +8.4% | −29% / +86% |
| TCXTucows Inc | 140.3 m | — | — | -21.2% | +7.7% | −42% / −41% |
| DTCXDatacentrex, Inc. | 39.8 m | — | -36.2% | -165.4% | +939,640.5% | −75% / −81% |
| DGNXDiginex Limited | 38.7 m | — | — | -255.5% | +57.0% | −99% / unavailable |
| PHUNPhunware, Inc. | 36.6 m | — | -13.7% | -471.7% | −19.9% | −14% / −69% |
| DDIDoubleDown Interactive Co., Ltd. | 34.1 m | 0.3 | 11.4% | 28.5% | +5.5% | +48% / +72% |
| SJScienjoy Holding Corporation | 23.5 m | — | -66.6% | -47.3% | −4.9% | +28% / −68% |
| CHRCheer Holding, Inc. | 14.0 m | 0.1 | 7.6% | 17.2% | +1.1% | −77% / −100% |
| VSVersus Systems Inc. | 5.6 m | — | -14.6% | -78.4% | +3,711.3% | −40% / −69% |
1- and 3-year price returns: for ADP from daily closes (the same as the performance table), for the other companies from month-end closes.
olivLaw engine forecast
The world engine ran after the company's latest material disclosure. Probabilities are of TOUCHING a level within the horizon (not closing there) and sit next to the random walk (p_rw), the no-information benchmark.
Valuation scenarios (editable assumptions)
Illustrative scenarios
Illustrative: not forecasts and without probabilities. Each case is one coherent set of assumptions, computed on today's figures.
Estimated price (USD)
| Estimated price | Bear | Base | Bull |
|---|---|---|---|
| 1 years | 187.61 Total return -36% · Per year -36% | 331.33 Total return 12% · Per year 12% | 498.58 Total return 67% · Per year 67% |
| 3 years | 190.63 Total return -32% · Per year -12% | 377.98 Total return 32% · Per year 10% | 623.28 Total return 115% · Per year 29% |
| 5 years | 193.69 Total return -27% · Per year -6% | 431.20 Total return 56% · Per year 9% | 779.16 Total return 175% · Per year 22% |
- Exit P/E± 94.49
- Net margin± 66.15
- Annual revenue growth± 53.12
- Annual dilution± 5.56
AI analysis
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
Possibly outdated: the newest document it read is from 05 Aug 2026; since then the company filed 10-Q (30 Oct 2026), 8-K (28 Oct 2026 · results).
In brief
ADP is a global provider of HR and payroll solutions, serving clients from small businesses to large enterprises across more than 140 countries and territories. For fiscal 2026 the company reported revenues of 21.9 billion USD, up 7%, and offered fiscal 2027 guidance for revenue growth of 5% to 6%, as it embeds AI into its platforms. If the AI integration translates into productivity gains for clients, its data scale and global position could matter more over time.
SWOT
Strengths
- Global scale, its workforce dataset and its integration network with tax authorities and banks are hard for competitors to replicate. The company runs a low capital intensity model and generates strong cash flows.
- Brand recognition and a reputation for payroll reliability are important assets with large clients. Client retention remains solid, and the company reports high client satisfaction.
- Decades of expertise in HR processes and regulation allow complex services, including outsourcing, which differentiates the company from pure software vendors.
Weaknesses
- Organic revenue growth trails reported growth, and growth in paid US employees is modest. The PEO segment saw margin decline while operating costs are rising.
- Part of revenue depends on interest earned on client funds, which can fluctuate with the monetary environment. Pass-through benefit revenue in PEO inflates top-line figures without adding proportional profit.
- Investment in sales, AI technology and acquisition integration raises near-term expenses, which could pressure margins if revenue growth lags.
Opportunities
- Adoption of AI agents across HCM platforms could open new revenue streams and increase the value offered to existing clients. The launch of a marketplace for partner agents expands the ecosystem.
- Growing regulatory and compliance complexity increases demand for outsourcing and integrated platforms, a favorable ground for large-scale providers.
- Expansion in the global enterprise segment, with unified payroll and HR solutions, could bring larger and more durable contracts.
Threats
- Regulatory changes on taxes, benefits and the PEO model could reduce revenue or require the company to change its operating model.
- Competition from HCM software vendors and new AI platforms could pressure prices and affect client retention.
- Cyberattacks, privacy incidents and AI-related risks could damage reputation and attract fines or litigation.
Risks
- Regulatory compliancehigh
Failure to comply with tax, employment, data protection or anti-corruption laws could lead to fines, sanctions and reputational harm. The company acknowledges its policies cannot fully eliminate violations by employees or agents.
- Cybersecurity and personal datahigh
The company handles personal data for a very large number of workers, and a breach could create notification costs, litigation and loss of client trust.
- Interest incomemedium
Revenue from client funds depends on rates and fund balances. Changes in monetary policy or client behavior could reduce this important income source.
- Non-remittance risk in PEOmedium
Under the co-employment model the company can be liable for wage and tax payments even if clients do not remit them. A major financial event in the banking system could delay recovery of such amounts.
- Competitive and pricing pressuremedium
Competition and pricing pressure, including from AI-focused providers, could limit revenue and margin growth in the coming years.
Investment thesis
What would need to be true (bull case)
- If AI integration into HCM platforms translates into broad adoption and additional revenue, ADP could accelerate growth and strengthen margins over the long term. Its data base and global scale offer an advantage that is hard to match.
- If demand for HR outsourcing and compliance services continues, the Employer Services and PEO segments could sustain revenue growth above market pace, while financial discipline could support dividends and buybacks.
- Fiscal 2027 guidance points to moderate but predictable growth in revenue and earnings per share, which could reduce uncertainty for investors who value stability.
What would break the thesis
- If interest rates fall faster than expected, income on client funds could slow and total growth could come in below guidance.
- Modest organic growth in paid employees and margin decline in the PEO segment could signal a mature market where gains are harder to win.
- If investment in AI and sales does not quickly convert into revenue, elevated costs could pressure near-term margins and reduce operating leverage.
What to watch
- Delivery of the revenue growth guidance of 5% to 6% and the adjusted EBIT margin expansionfiscal 2027
- Trend in Employer Services client revenue retention versus the 92.1% levelnext quarterly report
- PEO Services segment margin and the trend in revenue excluding zero-margin pass-throughsQ1 2027
Products, market & competition
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
Possibly outdated: the newest document it read is from 05 Aug 2026; since then the company filed 10-Q (30 Oct 2026), 8-K (28 Oct 2026 · results).
The business
ADP describes its mission as helping clients manage the workforce infrastructure that makes business possible, from Fortune 500 companies to small local businesses. It offers Human Capital Management (HCM) solutions covering payroll, benefits, time management, talent, compliance and retirement, delivered as software and as HR outsourcing services. According to its annual report, ADP builds its strategy on three priorities: best-in-class HCM technology with AI built in, expertise and outsourcing, and global scale. It reports two segments, Employer Services and PEO Services, and is listed on NASDAQ under the symbol ADP.
The business model rests on recurring service revenue and low capital intensity, according to management, which supports dividends and share repurchases. A meaningful part of revenue also comes from interest earned on client funds held in transit, which rose in fiscal 2026 on larger average balances and a higher average rate. The company also points to its proprietary data, drawn from more than 42 million workers, as an advantage in training its AI agents.
Segments
Employer Services
The Employer Services segment, the largest by revenue, reported about 14.8 billion USD in fiscal 2026, up 7% from the prior year. It offers payroll, benefits administration, talent management, time and attendance tools, compliance and retirement services, including platforms such as RUN Powered by ADP, Workforce Now and Lyric HCM.
PEO Services
PEO Services, delivered through ADP TotalSource, offers a co-employment model for small and mid-sized businesses, with revenues of about 7.1 billion USD in fiscal 2026. The segment margin declined, partly because of zero-margin benefit pass-through costs that raise reported revenue without adding proportional profit.
Market context
ADP operates in the global Human Capital Management market and in HR outsourcing, which the company describes as large and growing. In the United States it pays about 26 million workers, roughly one in six, a scale that is difficult to replicate. Employment growth at US clients on ADP payrolls was only 1% in fiscal 2026, pointing to a mature payroll segment.
Management links the outlook to AI adoption and rising regulatory complexity, which it sees as advantages for a provider with large-scale data and compliance infrastructure. Interest income, however, also depends on the level of interest rates, a factor the company does not control.
Trends
- AI integration into productsmixed
ADP is extending its ADP Assist agents across most of its client base and launched a space for partner AI agents, which could support client productivity and retention if adoption continues. Without clear monetization, however, development costs could weigh on margins.
- Interest income on client fundsmixed
Interest earned on client funds rose, and fiscal 2027 guidance points to a higher average yield. If rates decline, this income source could slow, making revenue dependent on the monetary environment.
- Regulation and tax compliancemixed
Changes in tax, benefit and data protection rules can raise compliance costs but also create demand for compliance services. The fragmented regulatory landscape, which the company says AI is accelerating, favors providers with global scale.
- Demand for HR outsourcing among smaller firmstailwind
Small and mid-sized businesses increasingly seek outsourced HR solutions, and ADP TotalSource and RUN have grown in this direction. If the trend continues, it could support growth in the PEO segment, although its margin remains under pressure.
Competitive position
The HCM market is competitive, and ADP differentiates itself through its data, global scale and integration network with tax authorities and banks. The annual report does not detail competitor positions but treats competition as a risk factor. The company argues its advantage comes from combining technology with human expertise, not from software alone.
As a services provider, ADP also competes with other outsourcing firms and with specialized players in niche segments. Competitive pressure can affect pricing and client retention, a risk the company states explicitly in its analysis.
- PaychexPAYX
A payroll and HR provider for small and mid-sized businesses, cited as a reference point in payroll services for clients of similar size, based on general sector context.
- Paycom SoftwarePAYC
A cloud-based HCM platform competing for mid-market clients, mainly in payroll and employee management.
- PaylocityPCTY
A provider of HCM and payroll solutions for mid-sized firms, present in the same service categories as ADP in its target segment.
- InsperityNSP
A PEO services provider, relevant for comparison with ADP's PEO Services segment, where ADP TotalSource is the largest IRS-certified PEO.
Links, dependencies and risks
Who the company is tied to, from its own SEC filings (customers, suppliers, production, partners, competitors, countries, regulation), from the 5 %+ holders' statements (13D/13G) and from what other companies say about it. Click a node for its evidence; on a listed company the graph moves to it.
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News & filings
In the press
- Automatic Data Processing Stock: Is ADP Underperforming the Technology Sector?Yahoo Finance — News · 02 Sept 2026 · EN
The latest news item in our archive is from 02 Sept 2026; the newest SEC filing is from 30 Oct 2026. The press archive comes from the RSS feeds we follow and does not necessarily cover the latest event — the filings alongside do.
SEC filings
- Quarterly report30 Oct 2026
- Current report28 Oct 2026Results of operations · Financial statements and exhibits
- Proxy statement24 Sept 2026
- Annual report05 Aug 2026
- Current report29 Jul 2026Results of operations · Financial statements and exhibits
- Current report26 Jun 2026Material agreement · Creation of a direct financial obligation · Financial statements and exhibits
- Current report07 May 2026Material agreement · Other events · Financial statements and exhibits
- Quarterly report30 Apr 2026
- Current report29 Apr 2026Results of operations · Financial statements and exhibits
- Quarterly report29 Jan 2026
Sources
- [1] Form 10-K, fiscal year ended 2026-06-30 · SEC / Automatic Data Processing, Inc. · 05 Aug 2026
- [2] Form 8-K, results release (exhibit 99.1) · SEC / Automatic Data Processing, Inc. · 29 Jul 2026
Figures computed by olivLaw from SEC filings and closing prices; the qualitative analysis is AI-generated from cited sources. Not investment advice.