ADP Raises 2026 Guidance After Q3 Beat, Accelerates AI Rollout

Overview

• ADP reported revenue of $5.94 billion and adjusted EPS of $3.37, topping estimates with sales up 7% from a year ago.
• The company raised its fiscal 2026 outlook to 6%–7% revenue growth and 10%–11% adjusted EPS growth.
• Management lifted its margin expansion plan to 70–80 basis points for the year, citing productivity gains from new automation.
• AI and automation are scaling across operations as the Zone platform reaches 20% of users with a goal above 40% by year‑end, and ADP Assist moves into core payroll and tax work.
• Interest on client funds rose 14% to $404 million as average balances climbed to $48.3 billion, supporting buybacks that management expects to keep at or above today’s pace through fiscal 2027, while PEO margins face pressure from higher selling costs and a shift toward lower‑margin state unemployment insurance.