High Customer Switching Costs Underpin ADP’s Narrow Moat Rating

ADP is a leading global payroll and human capital management provider. Payroll providers often focus on either the enterprise or down-market segments, and ADP is one of the few with comprehensive solution suites equipped to serve clients of all sizes. The firm's breadth of solutions, combined with decades of navigating regulatory changes and the high costs of switching payroll providers, has enabled ADP to build a strong enterprise foothold, supporting healthy cash flows even through macroeconomic downturns. The firm operates two segments, employer services and professional employer organization, or PEO.