ADP F4Q26 Preview: Flight to Safety for Customers and Investors

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ADP F4Q26 Preview: Flight to Safety for Customers and Investors

July 20, 2026

Jacob Smith jacob.smith@guggenheimpartners.com ADP F4Q26 Preview: Flight to Safety for Customers

212 518 9286 and Investors

John DiFucci

john.difucci@guggenheimpartners.com

212 518 9670 Key Message: We see a favorable setup into F4Q26 and expect ADP to finish

FY26 toward the high end of Employer Services guidance of 6%-7%. Achieving the

6.5% midpoint would require flat New ARR growth in F4Q, implying a decline in

business momentum that seems unlikely given broad-based strength across ES business

segments. In a more plausible scenario where New ARR grows 15% with stableADP BUY momentum on a 2-year stack, we model F4Q ES revenue up 6.1% y/y (a 0.4% beat)

Automatic Data Processing, Inc. resulting in 6.7% growth for FY26. Our checks point to a clear flight to safety among

Sector: Software customers navigating an unpredictable macro backdrop, with partners describing buyers

as willing to absorb price increases from established industry leaders like ADP, and Earnings Preview CFOs increasingly involved in vendor decisions. Notably, a national practice leader at an

Share Price $255.24 insurance broker is most bullish on ADP across the HCM and payroll market and expects

Price Target $270.00 higher win rates in FY27 given the flight to safety dynamic driving customer decisions.

We think that same logic extends to investors, as ADP's recurring revenue durability and

compliance moat look underappreciated at 6x EV/NTM recurring revenue. On bookings,

Revenue ($M) Investors view FY26 guidance of 4%-7% as a proxy for next year's growth, and we think

(FY JUN) 1Q 2Q 3Q 4Q FY Lyric and International will likely sway the balance given more large enterprise deals