WS Investor
28 Oct 2026, 14:31
ADP Falls 2% Despite Strong Fiscal Q1 Results and Higher 2027 Guidance
Automatic Data Processing (NASDAQ: ADP) shares fell about 2% even after the company reported stronger-than-expected fiscal first-quarter 2027 results and raised its full-year outlook.
Revenue increased 6% year over year to $5.5 billion, while adjusted net earnings rose 11% to $1.1 billion. Adjusted EBIT increased 12% to $1.5 billion, with adjusted EBIT margin expanding 130 basis points to 26.8%. Adjusted diluted EPS rose 13% to $2.82.
Employer Services revenue grew 6%, with U.S. pays per control up 2% and segment margin improving 130 basis points. PEO Services revenue increased 7%, while average worksite employees rose 2% to about 771,000.
Interest income on client funds was another positive, increasing 15% to $329 million as average client balances rose 6% and the average yield increased to 3.6%.
ADP raised its fiscal 2027 outlook, now expecting revenue growth of about 6%, adjusted EBIT margin expansion of 70 to 90 basis points and adjusted EPS growth of 10% to 12%.
The 2% decline appears to reflect investor concerns over the forward growth profile rather than the quarter itself. Employer Services new business bookings are expected to grow only 4% to 7%, client retention is projected to decline modestly, and U.S. pays per control growth is expected to slow to about 1% for the full year.
Automatic Data Processing (NASDAQ: ADP) shares fell about 2% even after the company reported stronger-than-expected fiscal first-quarter 2027 results and raised its full-year outlook.
Revenue increased 6% year over year to $5.5 billion, while adjusted net earnings rose 11% to $1.1 billion. Adjusted EBIT increased 12% to $1.5 billion, with adjusted EBIT margin expanding 130 basis points to 26.8%. Adjusted diluted EPS rose 13% to $2.82.
Employer Services revenue grew 6%, with U.S. pays per control up 2% and segment margin improving 130 basis points. PEO Services revenue increased 7%, while average worksite employees rose 2% to about 771,000.
Interest income on client funds was another positive, increasing 15% to $329 million as average client balances rose 6% and the average yield increased to 3.6%.
ADP raised its fiscal 2027 outlook, now expecting revenue growth of about 6%, adjusted EBIT margin expansion of 70 to 90 basis points and adjusted EPS growth of 10% to 12%.
The 2% decline appears to reflect investor concerns over the forward growth profile rather than the quarter itself. Employer Services new business bookings are expected to grow only 4% to 7%, client retention is projected to decline modestly, and U.S. pays per control growth is expected to slow to about 1% for the full year.
