AUTOMATIC DATA PROCESSING Business Summary

Automatic Data Processing, Inc. (ADP) is a global leader in cloud-based human capital management (HCM) solutions, generating revenue through a high-margin, recurring model primarily composed of subscription-based software fees and per-employee-per-month (PEPM) transaction charges. The company operates through two core segments: Employer Services, which provides a comprehensive suite of payroll, HR, tax, and benefits administration tools, and PEO Services (ADP TotalSource), where it acts as a co-employer for small to mid-sized businesses. A significant tertiary revenue stream is derived from the "float," or interest earned on client funds held for tax and net pay disbursements, which reached an average yield of approximately 3.4% in early fiscal 2026. In a competitive landscape featuring Paychex, Workday, Dayforce, and Paycom, ADP maintains the dominant market position by scale, serving over 1.1 million clients and processing payroll for approximately one-sixth of the U.S. workforce. Founded in 1949 by Henry Taub as a manual payroll processing service, ADP is currently led by President and CEO Maria Black, a veteran executive who assumed the role in 2023. The leadership team includes Chief Financial Officer Peter Hadley, who transitioned into the role in late 2025, and Sreeni Kutam, President of Global Product & Innovation, who oversees the firm’s integration of generative AI and the "Lyric" HCM platform. The company is governed by a board that includes Executive Chair Carlos Rodriguez and recent high-profile appointees such as former Intel CEO Robert Swan and former CVS Health CEO Karen Lynch. As of February 2026, ADP remains heavily backed by institutional investors like Vanguard and BlackRock, recently signaling financial strength through a $6 billion share repurchase authorization and a robust quarterly dividend yield of approximately 3.1%.