"ADP hit the right marks on the headline numbers. Adjusted EPS came in at $2.49 versus $2.44 expected, while revenue reached $5.20 billion against a $5.13 billion estimate. The 7.6% year-over-year revenue growth reflects solid momentum across the business, and net income climbed 6% to $1.01 billion."
"Employer Services margins contracted 50 basis points, while PEO Services margins fell 140 basis points. That's the kind of compression that can make investors nervous, especially when growth is only in the mid-single digits. Adjusted EBIT margin held at 25.5%, which is respectable, but the directional pressure in the segments is worth watching. Management attributed the decline to investments in AI and product development."
ADP reported Q1 FY2026 adjusted EPS of $2.49 versus $2.44 expected and revenue of $5.20 billion versus $5.13 billion, marking 7.6% year-over-year revenue growth and net income of $1.01 billion, up 6%. New business bookings and client retention were strong, with record client satisfaction cited, supporting durable demand and pricing power. Employer Services margins contracted 50 basis points and PEO Services margins fell 140 basis points, putting directional pressure on profitability, although adjusted EBIT margin remained 25.5%. Management tied margin declines to investments in AI and product development. The stock fell about 4% despite the results.
Read at 24/7 Wall St.
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