Automatic Data Processing, Inc. stock research
FY2026 Q1
Automatic Data Processing (ADP) Gross Margin — Quarter Ended Sep 30, 2025
Revenue increased while cost of revenue also grew, resulting in higher gross profit and a slight improvement in gross margin. The gross margin ratio strengthened modestly compared to the prior quarter but weakened relative to the same quarter last year.
Gross margin takeaway
Quarter ended Sep 30, 2025 · FY2026 Q1
Revenue increased while cost of revenue also grew, resulting in higher gross profit and a slight improvement in gross margin. The gross margin ratio strengthened modestly compared to the prior quarter but weakened relative to the same quarter last year.
- The gross margin improved sequentially as revenue growth outpaced the increase in cost of revenue. The ratio remains higher than the preceding quarter's level.
- Compared to the prior quarter, revenue and gross profit were higher, cost of revenue was stable, and gross margin improved slightly. Versus the same quarter a year ago, revenue and gross profit were higher, cost of revenue rose more rapidly, and gross margin weakened.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
45.2%
Gross profit
$2.3B
Revenue
$5.2B
Cost of revenue
$2.8B
Quarter-over-quarter change
+0.1 pts
Year-over-year change
-0.3 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Dec 31, 2024 | $5.0B | $2.3B | $2.7B | 45.7% |
| Mar 31, 2025 | $5.6B | $2.6B | $2.9B | 47.7% |
| Jun 30, 2025 | $5.1B | $2.3B | $2.8B | 45.1% |
| Sep 30, 2025 | $5.2B | $2.3B | $2.8B | 45.2% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2025
+0.1 pts
Year-over-year change
Sep 30, 2024
-0.3 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The gross margin improved sequentially as revenue growth outpaced the increase in cost of revenue. The ratio remains higher than the preceding quarter's level.
Compared to the prior quarter, revenue and gross profit were higher, cost of revenue was stable, and gross margin improved slightly. Versus the same quarter a year ago, revenue and gross profit were higher, cost of revenue rose more rapidly, and gross margin weakened.
Monitor the trajectory of cost of revenue relative to revenue growth in upcoming quarters.