Automatic Data Processing Inc.

ADP
Financial Analysis · Updated May 13, 2026 · Coverage 2026-Q2
Latest Q Revenue
$5.9B
Q3 FY2026 · +7% YoY
TTM ROIC
41.5%
FY2025 · NOPAT / Invested Capital (excl. client fund float); NOPAT = Operating Income × (1 - effective tax rate) · WACC ~8% · Moat spread +33.5pp

Financial Snapshot

ticker: ADP step: 04 generated: 2026-05-12 source: quick-research

Automatic Data Processing Inc. (ADP) — Financial Snapshot

Income Statement Summary

Metric FY2022 FY2023 FY2024 YoY
Revenue $16.50B $18.01B $19.20B +7%
Gross Margin ~43% ~44% ~45% +1pp
Operating Margin ~23% ~25% ~26% +1pp
Net Income ~$3.15B ~$3.69B ~$3.96B +7%
EPS (diluted) ~$7.25 ~$8.57 $9.14 +7%

Note: ADP fiscal year ends June 30 (FY2024 = July 2023–June 2024). FY2025 (July 2024–June 2025): revenue $20.56B (+7%), EPS $10.02 (+10%). Revenue includes significant client funds float income (~$1.5–2B/yr), which is sensitive to interest rates.

Cash Flow & Balance Sheet (FY2024)

Metric Value
Operating Cash Flow ~$4.8B
Free Cash Flow $3.98B
Cash & Equivalents ~$3.0B (excl. client funds)
Total Debt ~$3.5B

Key Ratios (approximate)

  • P/E: ~27x (FY2025) | EV/EBITDA: ~22x | FCF Yield: ~3.5%
  • Revenue Growth (FY2025): +7% | Net Margin: ~20%
  • ROIC: ~35%+ | Dividend Yield: ~2.2%

Growth Profile

ADP has delivered steady 6–9% annual revenue growth for years, driven by net new client wins, higher pays-per-control (employer headcount growth), and pricing. The interest rate tailwind — ADP earns ~$1.5–2B/year on ~$30B+ in client funds held in custody — significantly boosted earnings from 2022–2024 as rates rose. As rates decline, this reverses to a headwind. The WorkForce Software acquisition ($1.2B, Oct 2024) adds specialized workforce management capabilities for global enterprises, extending ADP's platform beyond core payroll. New Lyric HCM platform targets enterprise migration from legacy ADP systems.

Forward Estimates

  • FY2026E: Revenue ~$21.6B (+5%), EPS ~$10.70–$11.00
  • Float income headwind: each 25bps rate cut reduces annual earnings by ~$75–100M
  • Bull case ($332 target): Lyric HCM reaches critical enterprise mass; EBITDA margins expand to 29%+
  • Bear case ($214 target): Pays-per-control stays flat; PEO worksite employee growth stalls

Deeper Financial Analysis

The fundamental tier adds 9 additional research dimensions for $ADP.

Revenue Breakdown
Segment revenue, geographic mix, product-line contribution margins, and cohort dynamics.
Financial Trends
Quarter-over-quarter momentum, leading indicators, and inflection point analysis.
Balance Sheet
Debt structure, liquidity runway, dilution risk, and working capital dynamics.
Capital Allocation
Buyback cadence, M&A appetite, dividend policy, and reinvestment priorities.
Returns on Capital (ROIC)
Multi-year ROIC vs. WACC, marginal returns on reinvestment, sales-to-invested-capital efficiency, and moat spread.
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