ADP reported a strong start to fiscal 2027, with first-quarter revenue and earnings rising and its adjusted operating margin expanding. The payroll and human-resources services company also raised its full-year outlook for revenue growth and adjusted diluted earnings-per-share growth, though the release provided no new numerical targets in the material available here.
Key details
- Revenue rose 6% to $5.5 billion for the quarter ended September 30. Growth was also 6% on an organic, constant-currency basis.
- Net earnings increased 11% to $1.1 billion. Adjusted net earnings also rose 11% to $1.1 billion.
- Adjusted operating income (EBIT) grew 12% to $1.5 billion. Adjusted EBIT margin expanded 1.3 percentage points to 26.8%.
- Diluted earnings per share climbed 14% to $2.83. Adjusted diluted EPS increased 13% to $2.82.
- ADP’s effective tax rate was 22.7% on both a reported and adjusted basis.
- Employer Services revenue increased 6%, both as reported and on an organic, constant-currency basis. U.S. pays per control—a measure of payroll volume—rose 2%, while the segment’s margin expanded 1.3 percentage points.
- PEO Services revenue grew 7%. Excluding benefits pass-throughs, which carry no margin, revenue rose 4%. The average number of worksite employees paid through the segment increased 2% to about 771,000. PEO Services’ segment margin was flat.
- ADP said first-quarter performance exceeded its expectations for revenue growth, adjusted margin expansion and adjusted EPS growth. Management also pointed to continued investment in its AI transformation.
Plain-English implications
Both major segments recorded revenue growth, while Employer Services delivered margin expansion and PEO Services held its margin steady. The reported results and higher full-year growth outlook indicate that ADP is entering the rest of fiscal 2027 with stronger expectations than it had previously set. Adjusted measures are non-GAAP figures and are not directly interchangeable with the company’s reported results.