ADP raised its fiscal 2027 revenue and adjusted earnings outlook on October 28 after first-quarter revenue rose 6% to $5.5 billion. On the same day, the payroll provider announced a partnership with PNC Bank that will put ADP payroll and HR tools inside PNC’s digital banking platform for small businesses.

The quarter

For the quarter ended September 30, 2026, net earnings rose 11% to $1.1 billion and diluted earnings per share (EPS) rose 14% to $2.83, according to ADP’s earnings release, filed with the US Securities and Exchange Commission. Adjusted diluted EPS rose 13% to $2.82, and the adjusted EBIT (earnings before interest and taxes) margin widened 130 basis points to 26.8%.

Revenue in the Employer Services segment grew 6% on both a reported and an organic constant-currency basis, and the segment margin rose 130 basis points. U.S. pays per control, which ADP defines as the approximate growth in the number of employees on its clients’ processed payrolls, rose 2%. Revenue in PEO Services, ADP’s professional employer organization business, rose 7%, and average worksite employees grew 2% to about 771,000.

Interest earned on funds held for clients rose 15% to $329 million. Average client fund balances grew 6% to $36.9 billion, and the average yield rose 30 basis points to 3.6%.

“ADP is off to a strong start in fiscal 2027 with first quarter results that reflect the resilience of our business model and the trust our clients continue to place in us,” said Maria Black, president and chief executive officer.

The new outlook

ADP now expects fiscal 2027 revenue growth of about 6%, up from a range of 5% to 6%, and adjusted diluted EPS growth of 10% to 12%, up from 9% to 11%. It kept its forecast for adjusted EBIT margin expansion of 70 to 90 basis points and an adjusted effective tax rate of about 23%.

For Employer Services, ADP held its forecast for new business bookings growth of 4% to 7%, from a fiscal 2026 base of $2.2 billion, and for client revenue retention to decline by 10 to 30 basis points from 92.1%. It raised its U.S. pays per control forecast to about 1%, from a range of 0% to 1%. Client funds interest revenue is now expected at $1.59 billion to $1.61 billion, up from $1.54 billion to $1.56 billion.

Chief financial officer Peter Hadley said the results “exceeded our expectations across revenue growth, adjusted EBIT margin expansion, and adjusted EPS growth.” He added that ADP’s “ongoing commitment to a disciplined investment approach is enabling us to drive our AI transformation forward.”

Payroll inside the bank

The PNC partnership will create PNC Payroll by ADP, which brings ADP’s payroll, HR, benefits, time, insurance and retirement tools into PNC’s digital banking platform, so business customers can manage payroll alongside PNC’s cash management and payment tools. The companies said the service is aimed at small businesses at every stage, from startups and one-person operations to established companies looking to scale.

According to the release, the offering will include digital self-service, 24/7 live access to ADP payroll experts and AI-powered automation of routine tasks. The release says the service is built on ADP’s experience serving more than 900,000 small businesses. The announcement did not give a launch date or pricing.

“Small businesses want technology that works together seamlessly,” said Matt Farwell, president of Small Business Services at ADP.

Dave Shorten, head of SMB Treasury Management at PNC Bank, said: “Our clients rely on us for the tools and support they need to build and grow their businesses.”

Why it matters

Pays per control is a read on employment at existing ADP clients; the company measures it on a same-store-sales basis for a subset of clients ranging from small to large businesses. Growth of 2% in the quarter, and a full-year forecast raised only to about 1%, indicate that ADP expects slow growth in employee counts at the businesses it already serves. ADP’s earnings release mentions small businesses only in its company description and does not break out results for small business customers.

The PNC product is an example of what ADP markets as embedded payroll: its payroll and HR features delivered inside another company’s digital platform, in this case a bank’s. For small business banking customers, it would place payroll in the same digital environment as their cash management and payments.

What to watch

PNC and ADP have not said when PNC Payroll by ADP will be available or how it will be priced. ADP’s first-quarter release gives full-year forecasts for new business bookings and client revenue retention but no quarterly figures for either.