ADP Reports 6% Revenue Growth to $5.36 Billion in Q2 Fiscal 2026

Automatic Data Processing, Inc. (ADP) reported strong financial performance for the second quarter of fiscal 2026, with total revenues reaching $5.36 billion for the three months ended December 31, 2025, a 6% increase from $5.05 billion in the same period last year. For the six months ended December 31, 2025, revenues totaled $10.53 billion, up 7% from $9.88 billion in the prior year. The company's net earnings also saw a significant rise, reaching $1.06 billion for the quarter, compared to $963.2 million in the previous year, marking a 10% increase. Diluted earnings per share (EPS) rose to $2.62, up from $2.35, reflecting an 11% growth.

The increase in revenue was attributed to several factors, including new business bookings, strong client retention, and an increase in pricing. Additionally, interest on funds held for clients increased to $308.6 million for the quarter, up from $272.8 million a year earlier, driven by a 6.5% rise in average client funds balances and a higher average interest rate earned. The Professional Employer Organization (PEO) revenues also contributed positively, with a 6% increase to $1.75 billion for the quarter.

In terms of operational metrics, ADP reported a 1% growth in its pays per control metric, which measures the number of employees on clients' payrolls, and a 2% increase in average worksite employees for the PEO segment. The company also made strategic advancements, including the launch of the ADP WorkForce Suite, an integrated workforce management solution, and the introduction of a Pooled Employer Plan in its Retirement Services business.

ADP's total expenses for the quarter increased to $4.08 billion, up from $3.88 billion, primarily due to higher operating expenses and increased selling, general, and administrative costs. The company reported a 5% increase in total costs of revenues, which included a notable rise in zero-margin benefits pass-through costs associated with PEO services. Despite these increases, ADP managed to expand its earnings before income taxes margin by 30 basis points, reflecting improved operational efficiency.

Looking ahead, ADP remains optimistic about its growth trajectory, supported by a solid business model and significant cash flow generation. The company plans to continue investing in research and development to enhance its product offerings and maintain its competitive edge in the HR and payroll solutions market. With a strong liquidity position, including $2.4 billion in cash and cash equivalents, and access to substantial credit facilities, ADP is well-positioned to meet its operational and strategic objectives in the coming quarters.