Automatic Data Processing Inc (ADP.O): Productivity Improvement Support

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Automatic Data Processing Inc (ADP.O): Productivity Improvement Support

Automatic Data Processing Inc (ADP.O)

29 July 2026 Citi Research

n AI Increasingly Translating Into Measurable Financial Benefits. AI remained

the central theme of the call, with management increasingly tying investments

to tangible business outcomes rather than future potential. ADP Assist is now

available to nearly all 1.1M+ clients, generating 12M conversations from 3.1M

unique users while surfacing 45K compliance insights since January. In addition,

The Zone, ADP’s AI-enabled platform for service associates, expanded from 10%

to 48% of the service organization, with 96% of participating associates’ work

now completed within the platform, contributing to a 4% reduction in client

inquiries and record seller productivity. We believe these early operating metrics

support a longer runway for productivity-driven margin expansion.

n Underlying Employer Services Fundamentals Remained Strong Despite Softer

FY27 Guide. During FY26, Employer Services bookings grew 6% to more than

$2.2B, retention reached a record 92.1%, and pricing contributed >130 bps to

revenue growth (vs. ~100 bps contemplated at Investor Day). While FY27

Employer Services revenue growth guidance of 5-6% appears modestly softer,

management attributed the moderation primarily to the anniversary of the

WorkForce Software Acquisition (closed in mid F2Q25; ~30 bps headwind to ES

growth in FY27) and FX shifting from a tailwind to a slight headwind, while

emphasizing no meaningful change in FY27 assumptions for bookings, pricing,

retention or pays per control. We believe this reinforces that underlying demand

trends remain healthy despite a more conservative reported growth outlook.