Automatic Data Processing Inc Q1 2026 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : Good morning, and thanks for taking my questions, and congratulations on the on what sounds like pretty good start from a from a sales perspective. Maria, you went through a number of different areas on in terms of new bookings. What area was the most surprising from your perspective? And in addition to that, can you just describe a little bit more about what you're doing on the embedded side like how widespread is that on the lower end of the market in terms of percentage of sales and does that have any impact with regards to the economics of the business?

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : Great. And then for a follow-up, just you mentioned in terms of majors NextGen basically comprising 80% of the new sales in the core area within majors. Can you talk a little bit about what you're seeing in terms of the utilization of NextGen with the clients? To what extent is the client satisfaction rate going up what does that make you feel from a retention perspective as that continues? And any sort of impact from a profitability perspective? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 12:30PM, ADP.OQ - Q1 2026 Automatic Data Processing Inc Earnings Call

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : That's great to hear. Thank you.

Question: Kathy Chan - Wells Fargo Securities - Analyst : This is Kathy Chan on for Jason. Just a quick question from me and maybe a follow-up. So I mean, obviously, you guys talked about U.S. GPC coming in flat for the quarter, maybe a little bit below expectations, and now you guys are expecting the full year guide to be flat. I guess just diving a little bit deeper, what drove that weakness? And what gives you guys confidence that it won't maybe even decelerate or be down through F '26? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 12:30PM, ADP.OQ - Q1 2026 Automatic Data Processing Inc Earnings Call

Question: Kathy Chan - Wells Fargo Securities - Analyst : Okay. That's helpful. And then just on margins. I think you guys did around flat margins for the quarter and then you're maintaining the 50 basis points to 70 basis points expansion for the full year. I guess how are you expecting the rest of the year to shape up in terms of expenses and the margin dynamic there just so we have that model correctly. Thank you.

Question: Kathy Chan - Wells Fargo Securities - Analyst : Great. Appreciate it.

Question: Kartik Mehta - Northcoast Research. - Analyst : Yeah, good morning. Yes. Peter, I wanted to start off with you. I think when you originally gave guidance for you yet, at least for FY '26, we anticipated that pricing would be about 100 basis point benefit, a little bit lower than what it had been a little bit after COVID, little bit higher than pre-COVID. And I'm wondering if your expectations are still the same, considering the environment has changed a little bit, at least economic environment.

Question: Kartik Mehta - Northcoast Research. - Analyst : Perfect. And just to follow-up, Maria, you talked about an analyst AI roll out, especially for the sales force, and how that was helping them become a little bit more productive, and I'm wondering where you are in that roll out. Maybe I'm not sure if you can give a percentage of the sales people that are able to use the AI or what the plans are for kind of full roll out of that program?

Question: Kartik Mehta - Northcoast Research. - Analyst : Thanks very much. Thank you for all the detail.

Question: Bryan Bergin - TD Cowen - Analyst : Hi. This is actually Jared Levine on for Bryan today. To start here on the POPs, I just want to confirm that actually came in line with your expectations for 1Q. And I guess what drives the confidence that you can accelerate that growth to hit the midpoint of the guide?

Question: Bryan Bergin - TD Cowen - Analyst : Great. And then in terms of the PEO, July 1 enrollment period, can you talk about your performance there? Did you witness any change in participation rates, enrollment rates, or any kind of die down behavior?

Question: David Paige - RBC Capital Markets. - Analyst : Hi. Good morning. This is David Page on for Ashish. I was wondering if you could just provide a little color on the acquisition that you made in the quarter? Why it was needed, and what I guess what are the benefits and maybe financial profile if you had one? Thank you.

Question: David Paige - RBC Capital Markets. - Analyst : Oh great. Thank you so much appreciate the color.

Question: Daniel Jester - BMO Capital Markets - Analyst : Great. Appreciate all the color on the demand environment so far. Maybe I'll just tackle it from a little bit of a different angle. Anything that you'd call out with regards to the difference between sort of the U.S. and international markets? I know last fiscal year; there's maybe a little bit of choppiness on the international side but just wondering kind of what you're seeing in that mix. Thank you.

Question: Daniel Jester - BMO Capital Markets - Analyst : Great. And then maybe to go back to an earlier topic of conversation on the Workforce Now NextGen. For the 20% of new bookings to choose not to take it. Is there any commonalities in terms of why that is or friction that you're seeing? And should the expectation be for that segment of the market at some point this fiscal year, that gets to 100% or how should we be thinking about that? Thank you so much.

Question: Tien-tsin Huang - JP Morgan. - Analyst : Just a couple of questions. One, on the PEO side, thinking about WSEs and how that's tracking and your benchmarking versus your peers. How would you to rate your performance there? I'm curious if we're seeing some pretty wide variance in where that's coming out. So it does feel like ADP is doing well from a share side but just wanted to hear your impressions of that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 12:30PM, ADP.OQ - Q1 2026 Automatic Data Processing Inc Earnings Call

Question: Tien-tsin Huang - JP Morgan. - Analyst : Okay. Good. I'm glad to hear it. Just my quick follow-up. I had to ask you here for you, Maria. It's nice to see you at the Fiserv Customer Conference, the reporting results right now as well and stock is down quite a bit because through quite a bit of change, cultural shift. So just the commitment on -- obviously, our view being at the event shows the commitment, but could this alter some of the maybe the targets that you're expecting from the partnership, given they're going through some restructuring there? And I don't know how much insight you have on that, but I thought I'd ask you on the call. .

Question: Tien-tsin Huang - JP Morgan. - Analyst : Thank you.

Question: Kevin McVeigh - UBS AG - Analyst : Great. Thanks so much. I know you talked about the impact of the one processing day. Can you just remind us of what that sensitivity is in terms of what the impact is Q1 to Q2?

Question: Kevin McVeigh - UBS AG - Analyst : That's very helpful. And then can you just remind us because it was great to see that the increase in the float on both the client funds and the extended strategy. But obviously, the balances are pretty meaningfully different in terms of the principal, right? Just remind us why -- because both went up about $10 million. Is that just purely the difference in rate or timing? It's just -- it's a pretty interesting phenomena. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 12:30PM, ADP.OQ - Q1 2026 Automatic Data Processing Inc Earnings Call

Question: Dan Dolev - Miziho - Analyst : And I was on a different call. So apologies if the question was asked. Can you maybe touch again on that pays per control, lower pays per control, that would be helpful. We're getting a lot of questions about it. And apologies if that was addressed.

Question: Dan Dolev - Miziho - Analyst : Got it. And hopefully, I'm not redundant at again because I should be on the entire call. But on these recent announcements, whether it's Amazon or whatever, is that changing the calculus or it's already included in your expectations?

Question: Dan Dolev - Miziho - Analyst : Great. Well, great quarter again. Good job.

Question: Mike Infante - Morgan Stanley - Analyst : Hi. It's Mike Infante on for James. Maria, it'd be great to get your perspective on the stable coin topic potentially being used as a mechanism to pay employees. We can obviously sort of debate the magnitude of adoption. But how do you think about your intention to support that as a rail? And how do you think about some of the regulatory compliance or tax constraints that would have to be cleared in the interim. Thanks

Question: Mike Infante - Morgan Stanley - Analyst : Thanks for that.

Question: Zachary Gunn - FT Partners - Analyst : Hey there, thanks for squeezing me in here. I just want to go back to last quarter, there's some commentary around the full year guide, assuming a continued moderation in the macro. I recognize is tightening the range on pays per control more around basis points. But I just wanted to see if that -- if the guide still has some level of moderation baked in or if we've seen the macro move towards those expectations? Thanks.