Automatic Data Processing

ADP’s moat is anchored in high switching costs, regulatory expertise, trusted brand, and efficient scale. Payroll and tax compliance are mission‑critical, error‑intolerant workflows; migrations risk penalties and employee trust, which discourages switching.

ADP serves 1.1 million clients and pays over 42 million workers globally, reinforcing brand and process scale. ES client revenue retention was 92.1 percent in FY25. Competitively, ADP faces cloud HCM vendors, PEOs, and in‑house systems, yet remains one of the largest global providers.

Risks to moat durability include rapid AI‑led UX improvements by insurgents and regulatory shifts, but ADP’s investment pace (Lyric, Assist) and compliance depth help defend share. Net: multiple moat layers with good durability.