Automatic Data Processing, Inc.

Strong FY26 and Q4 performance (good): - Q4: Revenue +7%, +140 bps adjusted EBIT margin expansion, +17% adjusted EPS growth. - FY26: Revenue $21.9B (+7%), with results at the high end of updated guidance; adjusted EBIT margin expansion 80 bps and adjusted EPS growth +11%. - Commercial quality: Employer Services new bookings >$2.2B (+6% YoY) and client retention 92.1%; overall client satisfaction scores hit new record highs for the 3rd straight year.

Strategic momentum in AI-enabled HCM + service productivity (good/surprising): - ADP Assist (agents): Launched Jan; rolled out to nearly all 1.1M+ clients. FY26 saw 3.1M unique active users, 12M conversations. - Risk/compliance impact: ADP Assist surfaced 45,000 compliance insights since Jan. - ADP Lyric traction (surprising strength): Live clients +94% YoY; pipeline +50% YoY with new logos = 70% of opportunities; deal wins referenced in France & UK. - The Zone (AI service platform): Service-associate adoption rose from 10% at start of FY26 to 48% by year-end, with 96% of work for users done on-platform; contact per client down 4% (interpreted as less admin time, more value-added service). - AI narrative / employment data: Management emphasized ADP data suggesting AI is not eliminating jobs at scale, but reshaping roles at the task level.

Segment performance and what’s holding back margins (mixed/bad): - Employer Services (ES): Q4 revenue +7% reported / +6% constant currency; full-year ES revenue +7% reported / +5% constant currency. ES margins +60 bps for FY26 (includes ~20 bps drag from Workforce Software acquisition anniversary). - PEO: Full-year PEO revenue +7% (+5% excluding zero-margin pass-throughs), but margins contracted ~110 bps; FY26 margin pressure driven by faster growth in pass-throughs and higher workers’ comp + selling expenses; Q4 margin contract similarly explained.