Automatic Data Processing (NASDAQ:ADP) Announces Earnings Results

Key Points

• ADP beat Q3 estimates with $3.37 EPS (vs. $3.30 consensus) and $5.94B revenue (+7% YoY), and raised FY‑2026 guidance to roughly $11.01–$11.11 EPS while guiding to mid‑single‑digit revenue growth and margin expansion.
• Management highlighted operational tailwinds — higher client funds (midpoint interest revenue up ~$25M) and productivity gains from expanded AI deployments (e.g., time savings for payroll agents and HR tasks) — though PEO segment margins incurred near‑term pressure.
• Shares rose about 6.4% on the news; ADP also announced a quarterly dividend of $1.70 (3.2% yield) and authorized a $6.0 billion stock buyback (≈5.8% of shares outstanding).

Automatic Data Processing (NASDAQ:ADP - Get Free Report) announced its quarterly earnings data on Wednesday. The business services provider reported $3.37 earnings per share for the quarter, topping analysts' consensus estimates of $3.30 by $0.07, Zacks reports. The business had revenue of $5.94 billion for the quarter, compared to analysts' expectations of $5.85 billion. Automatic Data Processing had a net margin of 19.96% and a return on equity of 68.44%. The business's revenue was up 7.0% compared to the same quarter last year. During the same quarter in the prior year, the company earned $3.06 earnings per share. Automatic Data Processing updated its FY 2026 guidance to 11.010-11.110 EPS.

Here are the key takeaways from Automatic Data Processing's conference call:

• ADP reported a strong Q3 beat with 7% revenue growth, 80 basis points of adjusted EBIT margin expansion and 10% adjusted EPS growth, and raised full‑year guidance to 6%–7% revenue growth, 70–80 bps margin expansion, and 10%–11% adjusted EPS growth.
• The company increased its client funds outlook—average client funds balances growth to ~6% and raised the midpoint of client funds interest revenue by $25 million to a $1.34B–$1.35B range—creating a meaningful near‑term revenue tailwind.
• ADP is leaning into AI across products and service delivery (ADP Assist, Lyric HCM, Marketplace agents), citing productivity gains such as ~30 minutes saved per payroll agent and ~80% time reductions for common HR actions, with The Zone rollout expected to cover >40% of service staff by year‑end.
• PEO revenue rose but PEO margins fell ~120 basis points in Q3 due to zero‑margin passthrough growth, higher SUI costs and increased selling expenses, representing a notable near‑term margin headwind for that segment.
• Bookings and retention show strengths—record Employer Services retention and client satisfaction and solid bookings (notably in international and compliance)—but ADP kept its ES bookings range wide (4%–7%) and warned Q4 outcomes remain sensitive to pipeline, FX, and end‑of‑year dynamics.

Automatic Data Processing Stock Up 6.4%

Shares of NASDAQ ADP traded up $12.77 during midday trading on Wednesday, hitting $211.94. The stock had a trading volume of 1,977,550 shares, compared to its average volume of 3,416,165. The business's 50 day moving average is $206.80 and its 200-day moving average is $238.99. The company has a market cap of $85.34 billion, a P/E ratio of 20.35 and a beta of 0.85. Automatic Data Processing has a 52 week low of $188.16 and a 52 week high of $329.93. The company has a quick ratio of 1.03, a current ratio of 1.03 and a debt-to-equity ratio of 0.62.

Automatic Data Processing Announces Dividend

The company also recently announced a quarterly dividend, which will be paid on Wednesday, July 1st. Stockholders of record on Friday, June 12th will be paid a $1.70 dividend. This represents a $6.80 annualized dividend and a dividend yield of 3.2%. The ex-dividend date is Friday, June 12th. Automatic Data Processing's dividend payout ratio is currently 65.38%.

Insider Transactions at Automatic Data Processing

In other news, VP David Foskett sold 266 shares of the company's stock in a transaction that occurred on Thursday, February 5th. The shares were sold at an average price of $237.00, for a total value of $63,042.00. Following the transaction, the vice president owned 10,954 shares in the company, valued at approximately $2,596,098. This represents a 2.37% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is accessible through this link. Also, VP Brian L. Michaud sold 1,000 shares of the stock in a transaction that occurred on Friday, February 6th. The shares were sold at an average price of $234.18, for a total transaction of $234,180.00. Following the transaction, the vice president owned 15,310 shares in the company, valued at approximately $3,585,295.80. This trade represents a 6.13% decrease in their position. The disclosure for this sale is available in the SEC filing. Over the last 90 days, insiders have sold 1,809 shares of company stock worth $410,410. Corporate insiders own 0.20% of the company's stock.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. Brighton Jones LLC lifted its position in Automatic Data Processing by 92.1% during the fourth quarter. Brighton Jones LLC now owns 10,026 shares of the business services provider's stock valued at $2,935,000 after purchasing an additional 4,808 shares during the period. Schnieders Capital Management LLC. lifted its position in Automatic Data Processing by 21.8% during the second quarter. Schnieders Capital Management LLC. now owns 1,259 shares of the business services provider's stock valued at $388,000 after purchasing an additional 225 shares during the period. Bison Wealth LLC lifted its position in Automatic Data Processing by 22.8% during the fourth quarter. Bison Wealth LLC now owns 3,664 shares of the business services provider's stock valued at $1,073,000 after purchasing an additional 681 shares during the period. Loomis Sayles & Co. L P bought a new position in Automatic Data Processing during the fourth quarter valued at approximately $135,000. Finally, WFA of San Diego LLC bought a new position in Automatic Data Processing during the second quarter valued at approximately $125,000. Institutional investors own 80.03% of the company's stock.

Analyst Upgrades and Downgrades

A number of equities research analysts have weighed in on the stock. UBS Group cut their price objective on shares of Automatic Data Processing from $220.00 to $210.00 and set a "neutral" rating on the stock in a report on Monday, April 13th. JPMorgan Chase & Co. cut their price objective on shares of Automatic Data Processing from $295.00 to $275.00 and set an "underweight" rating on the stock in a report on Thursday, January 29th. Stifel Nicolaus cut their price objective on shares of Automatic Data Processing from $280.00 to $270.00 and set a "hold" rating on the stock in a report on Monday, February 9th. Wells Fargo & Company cut their price objective on shares of Automatic Data Processing from $262.00 to $214.00 and set an "underweight" rating on the stock in a report on Friday, March 27th. Finally, Cantor Fitzgerald cut their price objective on shares of Automatic Data Processing from $306.00 to $244.00 and set an "overweight" rating on the stock in a report on Tuesday, April 21st. One research analyst has rated the stock with a Strong Buy rating, two have issued a Buy rating, nine have assigned a Hold rating and two have assigned a Sell rating to the company. Based on data from MarketBeat, Automatic Data Processing presently has an average rating of "Hold" and an average target price of $265.69.

Automatic Data Processing declared that its Board of Directors has initiated a stock repurchase program on Wednesday, January 14th that permits the company to repurchase $6.00 billion in outstanding shares. This repurchase authorization permits the business services provider to reacquire up to 5.8% of its stock through open market purchases. Stock repurchase programs are usually an indication that the company's board believes its stock is undervalued.

Automatic Data Processing News Roundup

Here are the key news stories impacting Automatic Data Processing this week:

• Positive Sentiment: Q3 earnings and revenue beat consensus: ADP reported $3.37 EPS vs. consensus ~$3.30 and revenue of $5.94B vs. ~$5.85B; revenue rose ~7% year-over-year, supporting the upside reaction. ADP Reports Third Quarter Fiscal 2026 Results
• Positive Sentiment: Company lifted FY‑2026 guidance: ADP set EPS guidance of $11.010–$11.110 (above consensus ~10.96) and revenue guidance of ~$21.8B–$22.0B, signaling confidence in execution and driving bullish sentiment. ADP Lifts Outlook as Profit, Revenue Rise
• Positive Sentiment: Operational strength highlighted: Analysts and coverage point to strong revenue execution, rising client funds income and healthy margins/ROE that underpin the beats and guidance. ADP Q3 Earnings Top Estimates on Strong Revenue Execution
• Neutral Sentiment: Company materials and call available: Press release, slide deck and conference call transcript provide more detail for modeling — useful for confirming revenue mix, client retention and margin drivers. Listen to Conference Call / View Materials
• Neutral Sentiment: ADP's NER product shows steady private payroll gains, reinforcing long‑run demand for payroll/HCM services but not a direct near‑term driver of stock moves. ADP National Employment Report Preliminary Estimate
• Negative Sentiment: Analyst target cuts temper the move: Morgan Stanley trimmed its price target (from $311 to $274) and assigned an equal‑weight rating; Cantor Fitzgerald lowered its target as well — reminders that valuation and macro concerns still influence sentiment. Morgan Stanley adjusts price target on ADP Cantor Fitzgerald commentary on ADP
• Negative Sentiment: Near‑term pressure noted by some outlets: Commentary flags recent weaker macro/job prints and 2026 YTD share weakness; these macro risks could cap upside despite the beat. ADP faces near-term pressure analysis

About Automatic Data Processing

Automatic Data Processing, Inc (ADP) is a global provider of cloud-based human capital management (HCM) and payroll solutions. Founded in 1949 and headquartered in Roseland, New Jersey, ADP began as a payroll processing company and has evolved into a diversified provider of workforce management, HR, benefits administration, tax and compliance services, and analytics for employers of all sizes.

ADP's product portfolio includes payroll processing and tax filing, time and attendance systems, benefits administration, talent management, and HR outsourcing.

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