ADP · 10-K · 2026A · Full report

Operating Expense Trends

AUTOMATIC DATA PROCESSING INC · 2026-08-05 · Importance 42 · Surprise 14 · Matches filing data

Total expenses increased to $16,627.7 million in fiscal 2026 from $15,604.9 million, with operating expenses rising to $10,240.6 million from $9,622.7 million. PEO zero-margin benefits pass-through costs increased $318.3 million to $4,607.3 million, while service and implementation costs increased $188.9 million to support revenue growth. Hosting, cloud-based service, and software-license costs increased $74.4 million, and workers’ compensation and state unemployment-tax costs increased $37.1 million. R&D increased to $1,028.8 million from $988.6 million, primarily because of product development and WorkForce Software integration costs.

Key facts

• Operating expenses (costs of revenues - operating expenses) for fiscal 2026: $10,240.6 million versus $9,622.7 million in fiscal 2025 source
• Total costs of revenues for fiscal 2026: $11,760.2 million versus $11,097.3 million in fiscal 2025 source
• Selling, general, and administrative expenses for fiscal 2026: $4,408.2 million versus $4,051.7 million in fiscal 2025 source
• SG&A increased by a non-recurring net legal settlement of $18.0 million in fiscal 2026 source
• Research and development expense for fiscal 2026: $1,028.8 million versus $988.6 million in fiscal 2025 source
• SG&A increased by $67.2 million related to non-recurring, broad-based, company-wide initiatives source
• Optimization initiatives adjustment in fiscal 2026: $(4.5) million (partial reversals) included in adjusted results source
• Depreciation and amortization for fiscal 2026: $490.8 million versus $486.0 million in fiscal 2025 source

Impact estimates