01—Abstract
Summary
Summary of the 10-Q filed January 29, 2026. Cited figures are marked; the original filing is the authoritative source.
Automatic Data Processing, Inc. (ADP) reported solid financial results for the six months ended December 31, 2025, demonstrating consistent growth and operational efficiency.
Total revenues increased by 7% year-over-year to $10.53 billiona, driven by new business, client retention, strategic pricing, and a notable increase in interest income from client funds, which benefited from higher average client fund balances and increased interest rates. The company also achieved an expansion in its earnings before income taxes (EBIT) margin by 30 basis points, reflecting effective cost management and revenue growth. This growth was underpinned by strategic investments in technology and an expanded sales organization, balanced by disciplined expense control.
ADP continued its commitment to shareholder returns, repurchasing approximately $0.9 billionb of its stock and paying $1.3 billion in dividends during the period. The acquisition of WorkForce Software in October 2024 is being integrated into the Employer Services segment and is expected to contribute to future growth.
The company's financial position remains strong, with ample liquidity from operations and committed credit facilities to support ongoing operations, dividend payments, and potential future investments. Looking ahead, ADP remains focused on its strategic priorities of leading with best-in-class HCM technology and leveraging its global scale to serve clients.
02—Key points
Key Highlights
- Total revenues grew 7% to $10.53 billion for the six months ended December 31, 2025, with organic constant currency growth at 6%.
- Earnings Before Income Taxes (EBIT) margin expanded by 30 basis points, reaching 25.5% for the six-month period.
- Diluted Earnings Per Share (EPS) increased by 9% to $5.12 for the six months ended December 31, 2025.
- Interest on funds held for clients increased due to higher average client fund balances and improved interest rates, contributing to revenue growth.
- The company returned $2.1 billion to shareholders through dividends ($1.3 billion) and share repurchases ($0.9 billion) during the six-month period.
- The acquisition of WorkForce Software in October 2024 is being integrated into the Employer Services segment.
- Operating cash flow for the six months ended December 31, 2025, was $1.78 billion, while investing activities used $2.54 billion, and financing activities provided $29.34 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed January 29, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $5.36B$5.05B | +6.2% |
| Cost of Revenue | $2.89B$2.74B | +5.4% |
| Gross Profit | $2.47B$2.31B | +7.1% |
| R&D Expenses | $257.80M$239.50M | +7.6% |
| SG&A Expenses | $1.07B$1.01B | +6.2% |
| Operating Expenses | $4.08B$3.88B | +5.3% |
| Interest Expense | $124.10M$129.60M | −4.2% |
| Net Income | $1.06B$963.20M | +10.3% |
| EPS (Basic) | $2.63$2.36 | +11.4% |
| EPS (Diluted) | $2.62$2.35 | +11.5% |
| Shares Outstanding (Basic) | 403.80M407.60M | −0.9% |
| Shares Outstanding (Diluted) | 404.70M409.00M | −1.1% |
05—Questions
Frequently Asked Questions
How did ADP's revenue performance compare to the prior year?
For the six months ended December 31, 2025, total revenues increased by 7% to $10.53 billion, compared to $9.88 billion for the same period in the prior year. On an organic constant currency basis, revenue grew by 6%.
What drove the increase in interest on funds held for clients?
The increase in interest on funds held for clients was driven by a 6.5% increase in average client fund balances to $36.2 billion and an increase in the average interest rate earned to 3.3% for the six months ended December 31, 2025.
How is ADP managing its expenses?
While total expenses increased by 6% to $8.06 billion for the six months ended December 31, 2025, the company has shown effective cost management. Operating expenses increased mainly due to higher PEO zero-margin benefits pass-through costs and service/implementation costs. Selling, general, and administrative expenses rose due to investments in the sales organization. Despite these increases, the EBIT margin expanded, indicating efficient operations relative to revenue growth.
What is ADP's outlook on liquidity and capital resources?
ADP's financial condition remains solid with sufficient liquidity. The company expects its existing cash, cash equivalents, marketable securities, and operating cash flow, along with its committed credit facilities, to be adequate for its operational, investing, and financing activities, including dividends and share repurchases.
06—Continue