ADP · 10-K · 2026A · Full report

Margin Drivers

AUTOMATIC DATA PROCESSING INC · 2026-08-05 · Importance 49 · Surprise 32

GAAP EBIT increased to $5,730.3 million from $5,310.1 million, and EBIT margin expanded 30 basis points to 26.1%. Adjusted EBIT increased to $5,874.6 million from $5,347.1 million, while adjusted EBIT margin expanded 80 basis points to 26.8%. Margin expansion benefited from client-funds interest revenue, higher corporate-funds interest income, lower amortization of client contracts and lists, and lower commercial-paper and reverse-repurchase interest expense. Increased selling and marketing costs and $67.2 million of company-wide initiative costs partially offset the improvement.

Key facts

• EBIT for fiscal 2026: $5,730.3 million and EBIT margin 26.1%, a 30 basis point expansion versus prior year source
• Adjusted EBIT for fiscal 2026: $5,874.6 million and adjusted EBIT margin 26.8%, an 80 basis point expansion versus prior year source
• Employer Services' margin increase drivers included contributions from client funds interest revenues, operating efficiencies for costs of servicing and implementing clients, and lower amortization of client contracts and lists, partially offset by increased selling and marketing expenses and impact from the WorkForce Software acquisition in October 2024 source
• Adjusted EBIT excludes interest income and interest expense not related to the client funds extended investment strategy and net charges including certain legal matters, non-recurring, broad-based, company-wide initiatives, gain on sale of assets, and (gains)/losses on ADP Ventures' investments source