Automatic Data Processing, Inc. stock research
FY2026 Q2
Automatic Data Processing (ADP) Gross Margin — Quarter Ended Dec 31, 2025
Revenue increased compared to the prior quarter and the same quarter last year, while cost of revenue also rose. Gross profit grew, and gross margin improved relative to both periods.
Gross margin takeaway
Quarter ended Dec 31, 2025 · FY2026 Q2
Revenue increased compared to the prior quarter and the same quarter last year, while cost of revenue also rose. Gross profit grew, and gross margin improved relative to both periods.
- The gross margin improvement was driven by gross profit increasing at a faster rate than revenue, with cost of revenue rising less proportionally.
- Sequential quarter gross margin improved, and year-over-year gross margin also strengthened.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
46.1%
Gross profit
$2.5B
Revenue
$5.4B
Cost of revenue
$2.9B
Quarter-over-quarter change
+0.9 pts
Year-over-year change
+0.4 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 |
|---|---|---|---|---|
| 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% |
| Dec 31, 2025 | $5.4B | $2.5B | $2.9B | 46.1% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Sep 30, 2025
+0.9 pts
Year-over-year change
Dec 31, 2024
+0.4 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The gross margin improvement was driven by gross profit increasing at a faster rate than revenue, with cost of revenue rising less proportionally.
Sequential quarter gross margin improved, and year-over-year gross margin also strengthened.
Monitor the relationship between cost of revenue growth and revenue growth in upcoming quarters.