ADP's Q4 2025: Unraveling Contradictions in Bookings, Revenue Growth, and Product Impact

International bookings and pipeline activity, PEO revenue growth and pass-through revenue, employer services bookings growth, Lyric product impact on growth, and PEO bookings and retention are the key contradictions discussed in ADP's latest 2025Q4 earnings call.



Revenue and Earnings Growth:
- ADP reported 8% revenue growth in Q4, with 40 basis points expansion in adjusted EBIT margin, alongside 8% adjusted EPS growth.
- For the full year, revenue grew 7%, with 50 basis points adjusted EBIT margin expansion and 9% adjusted EPS growth.
- Growth was driven by strong investments in innovation and strategic priorities, including new products like ADP Lyric and enhanced global payroll capabilities.

Employer Services Bookings and Retention:
- Employer Services new business bookings increased by 3% in fiscal '25, while retention improved by 10 basis points to 92.1%.
- The softness in international bookings was attributed to macroeconomic uncertainty, impacting client decision-making in HRO businesses.
- Strong retention rates were attributed to product investments improving client experience and client satisfaction scores reaching record highs.

AI and Product Initiatives:
- ADP continued the rollout of ADP Assist, enhancing AI capabilities in its products with millions of client interactions in fiscal '25.
- Investments in AI were aimed at operational efficiency and improving client experience by expanding ADP's AI offering from basic tools to autonomous agents.
- The success of the ADP Lyric launch and AI initiatives are expected to contribute significantly to future bookings and financial growth.

PEO Revenue and Margin Trends:
- PEO revenue grew 7% in Q4, with average worksite employees increasing by 3%, driven by strong new business bookings.
- PEO margins contracted by 20 basis points in Q4 due to higher zero-margin pass-through benefits and increased state unemployment insurance costs.
- The revenue growth was supported by healthy new business bookings and strong retention, despite challenges from higher pass-through costs and wage moderation.