ADP forecasts annual 2026 revenue growth below estimates

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(Reuters) -Automatic Data Processing forecast full-year 2026 revenue growth slightly below analyst estimates on Wednesday, as demand for its payroll and human capital management services softened amid ongoing economic uncertainty.

Businesses have tightened spending in response to elevated interest rates and a volatile macroeconomic environment, weighing on demand for companies such as ADP.

The conservative forecast comes as the industry undergoes consolidation and enterprises seek to deploy cash reserves to expand operations. In a bid to strengthen its market position, ADP acquired management services provider WorkForce Software last year.

For the full year 2026, the company expects revenue growth between 5% and 6%, the midpoint of which is below analysts’ growth expectations of 5.7%, according to data compiled by LSEG.

The company expects revenue from PEO services to grow in the 5% to 7% range, while analysts expect it to grow about 5.7%.

For the fourth quarter, the company reported revenue of $5.12 billion, compared with analysts’ estimate of $5.04 billion.

Revenue for its PEO segment grew 7% to $1.66 billion.

(Reporting by Kritika Lamba in Bengaluru; Editing by Pooja Desai)