Oct 28, 2026 earnings call — AI-driven product adoption and margin expansion
ADP reported 6% revenue growth this quarter with 130 basis points adjusted EBIT margin expansion and 13% adjusted EPS growth.
Revenue $5.5B (est $5.5B) · EPS $2.82 (est $2.77)
Key quotes
"Since the fourth quarter alone, we have added 100 thousand more clients on ADP Assist."
"Today, I am proud to announce that we have expanded our embedded payroll offering through a new partnership with PNC Bank, 1 of the largest financial services institutions in The United States."
"As we exited Q1, that number had grown to 60% and we continue to track ahead of our deployment plans."
Analyst Q&A 7
Bank partnership embedding payroll
Q (Tien-Tsin Huang · JPMorgan): Analyst asked whether the PNC deal is part of Cash Flow Central or a different type of bank partnership, and if more bank partnerships are in the pipeline.
A: Management said the PNC deal embeds ADP payroll inside PNC's digital banking platform and extends ADP's embedded strategy into small businesses and beyond-payroll services. They said this stretches ADP into the upper end of the down market and that there is more pipeline alongside it.
"This announcement is specifically putting ADP, payroll inside of the digital banking platform of PNC." — Maria Black (CEO)
Monetizing AI tools
Q (Daniel Jester · BMO): Analyst asked how ADP plans to monetize new AI tools and whether any monetization is embedded in this year's guidance.
A: Management described ADP Assist and 50 agents in general availability that drive measurable outcomes and value for clients. They said pricing follows a value-based approach and is situation dependent, using new line items, upsells, general price increases, seat-based, and consumption models as appropriate.
"Value based pricing is also, or value-based approach is also what we take to pricing, Dan." — Peter Hadley (CFO)
Pricing methods and APIs
Q (Mark Marcon · Baird): Analyst asked about pricing philosophy for new tools (seat vs consumption) and how ADP uses its structural advantages to offer transparent pricing.
A: Management said core system pricing tends to be per employee volume-based for transparency, while consumption pricing is used for ancillary and data offerings. They also explained API Central grew from ADP's marketplace and is monetized on a consumption basis, with model context protocol added for agents to provide governance and safety.
"Just to kind of take everybody back to the genesis of API Central, it really started with our approach to ADP and the marketplace." — Maria Black (CEO)
PEO revenue per worker change
Q (Michael Infante · Morgan Stanley): Analyst asked why revenue per worksite employee fell in the quarter and what normalization assumptions are in the guide.
A: Management said they do not disclose workers' comp revenue and noted timing differences last year related to state tax (SUI) recognition that made the compare uneven. They said underlying PEO fundamentals are very strong, worksite employee growth accelerated, and they expect normalization as SUI tables are released later.
"The underlying fundamentals, I think, with respect to the PEO, we are very, very strong." — Peter Hadley (CFO)
WIC acceleration and margins
Q (Jared Levine · TD Cowen): Analyst asked whether retention or new client sales contributed to the WIC pays-per-control acceleration and why margin guidance was held steady despite upside.
A: Management said PEO pays per control rose from momentum and net new business with some help from PPC, and that PEO still lags ES in percentage terms. On margins, they said Q1 outperformed but they will balance returning some gains to shareholders and reinvesting in AI, product, and infrastructure, with FX headwinds partially offsetting float gains.
"We would be happy, obviously, if that were to continue, and perhaps there is an opportunity to outperform." — Peter Hadley (CFO)
Zone AI rollout and impact
Q (Samad Samana · Jefferies): Analyst asked how the zone deployment will reach 100% and how much productivity or cost leverage it can drive in sales and service.
A: Management said the sales zone should reach 100% of North America sellers by fiscal year end and that the service zone is deployed to 60% of the service organization, up from 48%. They said the sales zone improves sales effectiveness and the service zone improves client experience and efficiency, helping productivity and freeing dollars for reinvestment.
"We are optimistic that by the end of this fiscal year, we will have 100% of our sellers across North America deployed on the sale zone." — Maria Black (CEO)
Lyric wins go-live timing
Q (Jacob Smith · Guggenheim): Analyst asked how Lyric and global payroll go-live timing shapes revenue expectations for the rest of the year and whether ES growth will step up.
A: Management said they have strong Lyric momentum and are onboarding clients faster than a year ago, but enterprise deals lead to a back-ended revenue story with many large wins going live later this fiscal year or into FY 2028. They also said faster-to-revenue areas like retirement and insurance services will supplement revenue in FY 27.
"We sold well through Outlast year, so we have more of a back ended revenue story with business going live throughout this year." — Peter Hadley (CFO)