Q1 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Revenue growth | 6% | versus a year earlier |
| Adjusted EBIT margin expansion | 130 basis points | versus a year earlier |
| Adjusted EPS growth | 13% | versus a year earlier |
| Employer Services revenue growth | 6% | versus a year earlier |
| PEO revenue growth | 7% | versus a year earlier |
Guidance and outlook
- Consolidated revenue growth: about 6%
- Adjusted EBIT margin expansion: 70 to 90 basis points
- Adjusted EPS growth: 10% to 12%
- Employer Services revenue growth: about 6%
- PEO revenue growth: 5% to 7%
- Pays per control growth: around 1%
How management sounded
Positive (+6 on our -10 to +10 scale). Management raised full year guidance for revenue and EPS while highlighting strong momentum in AI adoption and operational productivity. Management sounded more upbeat than on 8% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
PNC Bank Partnership
Asked: Is the PNC deal a Cash Flow Central deal, and is there a pipeline for more bank partnerships?
Answer: It is an expansion of the embedded strategy, putting ADP Payroll directly into PNC's digital banking platform, and there is a pipeline for similar partnerships.
Pays per control and margins
Asked: Does the pays per control acceleration impact margins?
Answer: Pays per control is a small part of the margin pie; the company is maintaining its margin guidance while investing in AI and other growth areas.
AI Monetization
Asked: How does ADP plan to monetize new AI tools?
Answer: The company uses a value-based pricing approach, which may involve new line items, upsells, or general price increases depending on whether the tool is new functionality or an enhancement to existing services.
PEO Trends
Asked: What is driving the reduction in revenue per worksite employee?
Answer: Management noted that there were timing differences in state tax items last year that make the year-over-year comparison difficult, but underlying fundamentals remain strong.
What to watch before the next call
- The impact of SUI tables on PEO revenue in the third quarter.
- The pace of Zone deployment and its contribution to operational productivity.
- The conversion of the enterprise backlog into revenue throughout the fiscal year.
