Automatic Data Processing Inc (ADP.DE) delivered a mixed Q1 FY2026 (QQ1 2026) presentation. Revenue rose 8.5% year over year to $5.176 billion, underscored by strength in its cloud-based HCM offerings and diversified income streams. However, the quarter also featured a pronounced swing in profitability driven by a substantial non-operating item, resulting in a negative operating income of $122.5 million despite an EBITDA of $1.566 billion and a healthy net income of $1.013 billion. The anomalous profitability dynamic is highlighted by total other income and expenses net of $1.430 billion, which more than offset the operating shortfall and pushed pretax earnings to $1.3075 billion and net income to $1.013 billion. On a per-share basis, diluted EPS was $2.49 while GAAP EPS stood at $2.50, based on a weighted-average share count of ~405 million shares.
From a liquidity and capital allocation standpoint, ADP.DE maintains robust cash generation with operating cash flow of $642 million and free cash flow of $596 million in the quarter. Cash and cash equivalents plus short-term investments totaled about $7.94 billion, while total debt stood at $9.53 billion and net debt at roughly $7.05 billion. The company generated $626.7 million in dividends and repurchased $366 million of stock in the period, signaling a shareholder-friendly approach amid a still-levered balance sheet. The balance sheet remains liquid with approximately $12.5 billion in current assets against $10.1 billion in current liabilities (current ratio â 1.24x).
Looking ahead, there was no explicit numerical guidance disclosed in the dataset. The established revenue trajectory (mid-to-high single-digit YoY growth), a cloud/HCM services expansion narrative, and the potential for margin stabilization through cost discipline and mix optimization point to a constructive longer-term trajectory. Investors should monitor (1) the durability of operating margins in a softer macro environment, (2) the sustainability of non-operating gains or one-time items underpinning net income, (3) progression of debt deleveraging and capital allocation toward shareholder returns vs. investment in growth platforms, and (4) evolving competitive dynamics within cloud-based HR solutions and global staffing services.