Automatic Data Processing reported second-quarter fiscal 2026 adjusted earnings per share of $2.62, surpassing analyst consensus by four cents. Total revenues rose 6.2% year-over-year, driven by a 5.8% increase in Employer Services and an 8.5% gain in PEO Services. Net new business wins totaled $135 million in annualized revenue, bringing total client payroll accounts to 1.1 million. Operating margins expanded by 120 basis points to 25.4%, reflecting disciplined cost management and scale leverage.

Within Employer Services, recurring subscription revenues climbed 6.0% as average revenue per client grew by 3.2% on product adoption upgrades. PEO Services added 22,000 worksite employees over the quarter, contributing a 9.1% rise in gross PEO billings. The retention rate for both segments held at 91%, underscoring high client satisfaction. Services revenue, including HR outsourcing and benefits administration, increased 7.3%, supported by a 12% surge in advisory engagements.

ADP launched new ADP Assist AI agents built on its global data platform covering 42 million wage earners in 140 countries. These persona-based agents automate payroll variance audits, tax ID registrations and HR policy queries, reducing manual effort by up to 40% in pilot programs. The company highlighted over 75 years of workforce data fueling analytics agents that generate custom dashboards and actionable workforce insights, reinforcing ADP’s value proposition for mid-market and enterprise clients.

Despite robust results, ADP trades at roughly 22 times forward earnings, a premium to peers given mid‐single-digit revenue growth. Slowing employment trends and demographic headwinds may pressure new business momentum, while fixed reinvestment in client funds should cushion net interest margin declines as rate cuts approach. Management raised its full-year revenue growth guidance to 6.0%–6.5% and forecasts free cash flow of $2.9 billion, offering modest upside for investors focused on cash generation and margin expansion.