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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q
______________

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2025
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to
Commission File Number 1-5397
__________________________
AUTOMATIC DATA PROCESSING, INC.
(Exact name of registrant as specified in its charter)
__________________________

Delaware | 22-1467904
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.)
One ADP Boulevard |
Roseland, | NJ | 07068
(Address of principal executive offices) | (Zip Code)

Registrant's telephone number, including area code: (973) 974-5000
__________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, $0.10 Par Value (voting) | ADP | NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer | ☒ | Accelerated filer | ☐
Non-accelerated filer | ☐ | Smaller reporting company | ☐
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes ☐ No ý
The number of shares outstanding of the registrant’s common stock as of April 28, 2025 was 405,922,749.

Table of Contents

|  | Page
PART I – FINANCIAL INFORMATION |  |
Item 1. | Financial Statements (Unaudited) |
| Statements of Consolidated Earnings Three and nine months ended March 31, 202 5 and 202 4 | 3
| Statements of Consolidated Comprehensive Income Three and nine months ended March 31, 202 5 and 202 4 | 4
| Consolidated Balance Sheets At March 31, 202 5 and June 30, 2024 | 5
| Statements of Consolidated Cash Flows Nine months ended March 31, 202 5 and 202 4 | 6
| Notes to the Consolidated Financial Statements | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 40
Item 4. | Controls and Procedures | 40
PART II – OTHER INFORMATION |  |
Item 1. | Legal Proceedings | 40
Item 1A. | Risk Factors | 41
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 41
Item 5. | Other Information | 42
Item 6. | Exhibits | 43
| Signatures | 44

2

Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Automatic Data Processing, Inc. and Subsidiaries
Statements of Consolidated Earnings
(In millions, except per share amounts)
(Unaudited)

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
REVENUES: |  |  |  |  |  |  |
Revenues, other than interest on funds held for clients and PEO revenues | $ | 3,412.6 |  |  | $ | 3,270.3 |  |  | $ | 9,534.6 |  |  | $ | 9,011.7 |
Interest on funds held for clients | 355.2 |  |  | 320.8 |  |  | 881.3 |  |  | 747.9 |
PEO revenues (A) | 1,785.2 |  |  | 1,662.7 |  |  | 5,018.2 |  |  | 4,674.5 |
TOTAL REVENUES | 5,553.0 |  |  | 5,253.8 |  |  | 15,434.1 |  |  | 14,434.1 |
EXPENSES: |  |  |  |  |  |  |
Costs of revenues: |  |  |  |  |  |  |
Operating expenses | 2,534.7 |  |  | 2,406.5 |  |  | 7,196.6 |  |  | 6,777.4 |
Research and development | 247.1 |  |  | 242.7 |  |  | 719.2 |  |  | 707.8 |
Depreciation and amortization | 122.4 |  |  | 119.0 |  |  | 364.6 |  |  | 359.9 |
TOTAL COSTS OF REVENUES | 2,904.2 |  |  | 2,768.2 |  |  | 8,280.4 |  |  | 7,845.1 |
Selling, general, and administrative expenses | 1,015.8 |  |  | 940.9 |  |  | 2,948.6 |  |  | 2,743.6 |
Interest expense | 74.8 |  |  | 62.7 |  |  | 342.2 |  |  | 259.2 |
TOTAL EXPENSES | 3,994.8 |  |  | 3,771.8 |  |  | 11,571.2 |  |  | 10,847.9 |
Other income, net | (63.7) |  |  | (64.3) |  |  | (256.5) |  |  | (196.8) |
EARNINGS BEFORE INCOME TAXES | 1,621.9 |  |  | 1,546.3 |  |  | 4,119.4 |  |  | 3,783.0 |
Provision for income taxes | 372.4 |  |  | 361.4 |  |  | 950.4 |  |  | 860.3 |
NET EARNINGS | $ | 1,249.5 |  |  | $ | 1,184.9 |  |  | $ | 3,169.0 |  |  | $ | 2,922.7 |
BASIC EARNINGS PER SHARE | $ | 3.07 |  |  | $ | 2.89 |  |  | $ | 7.78 |  |  | $ | 7.11 |
DILUTED EARNINGS PER SHARE | $ | 3.06 |  |  | $ | 2.88 |  |  | $ | 7.75 |  |  | $ | 7.07 |
Basic weighted average shares outstanding | 406.9 |  |  | 410.5 |  |  | 407.5 |  |  | 411.1 |
Diluted weighted average shares outstanding | 408.5 |  |  | 412.1 |  |  | 409.1 |  |  | 413.6 |

(A) Professional Employer Organization (“PEO”) revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes of $20,293.3 million and $18,339.6 million for the three months ended March 31, 2025 and 2024, respectively, and $56,907.7 million and $52,713.4 million for the nine months ended March 31, 2025 and 2024, respectively.
See notes to the Consolidated Financial Statements.
3

Automatic Data Processing, Inc. and Subsidiaries
Statements of Consolidated Comprehensive Income
(In millions)
(Unaudited)

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Net earnings | $ | 1,249.5 |  |  | $ | 1,184.9 |  |  | $ | 3,169.0 |  |  | $ | 2,922.7 |
Other comprehensive income/(loss): |  |  |  |  |  |  |
Currency translation adjustments | 45.3 |  |  | (37.4) |  |  | (6.5) |  |  | (28.1) |
Unrealized net gains/(losses) on available-for-sale securities | 386.2 |  |  | (91.0) |  |  | 826.9 |  |  | 618.8 |
Tax effect | (87.5) |  |  | 19.1 |  |  | (191.2) |  |  | (145.7) |
Reclassification of realized net losses on available-for-sale securities to net earnings | 0.1 |  |  | 1.2 |  |  | 0.8 |  |  | 5.2 |
Tax effect | — |  |  | (0.2) |  |  | (0.1) |  |  | (1.1) |
Unrealized loss on cash flow hedging activities | (4.7) |  |  | — |  |  | (17.2) |  |  | — |
Tax effect | 1.2 |  |  | — |  |  | 4.3 |  |  | — |
Amortization of unrealized losses on cash flow hedging activities | 1.4 |  |  | 1.1 |  |  | 4.0 |  |  | 3.3 |
Tax effect | (0.3) |  |  | (0.3) |  |  | (1.0) |  |  | (0.8) |
Reclassification of pension liability adjustment to net earnings | 1.2 |  |  | 1.0 |  |  | 3.0 |  |  | 2.9 |
Tax effect | (0.2) |  |  | (0.2) |  |  | (0.7) |  |  | (0.6) |
Other comprehensive income/(loss), net of tax | 342.7 |  |  | (106.7) |  |  | 622.3 |  |  | 453.9 |
Comprehensive income | $ | 1,592.2 |  |  | $ | 1,078.2 |  |  | $ | 3,791.3 |  |  | $ | 3,376.6 |

See notes to the Consolidated Financial Statements.
4

Automatic Data Processing, Inc. and Subsidiaries
Consolidated Balance Sheets
(In millions, except per share amounts)
(Unaudited)

|  | March 31, |  | June 30,
|  | 2025 |  | 2024
Assets |  |  |  |
Current assets: |  |  |  |
Cash and cash equivalents |  | $ | 2,680.6 |  |  | $ | 2,913.4 |
Accounts receivable, net of allowance for doubtful accounts of $48.2 and $52.2, respectively |  | 3,547.9 |  |  | 3,428.2 |
Other current assets |  | 933.1 |  |  | 1,204.8 |
Total current assets before funds held for clients |  | 7,161.6 |  |  | 7,546.4 |
Funds held for clients |  | 39,375.2 |  |  | 37,996.1 |
Total current assets |  | 46,536.8 |  |  | 45,542.5 |
Long-term receivables, net of allowance for doubtful accounts of $0.2 and $0.1, respectively |  | 5.1 |  |  | 7.3 |
Property, plant and equipment, net |  | 670.4 |  |  | 685.6 |
Operating lease right-of-use asset |  | 335.6 |  |  | 370.6 |
Deferred contract costs |  | 2,996.3 |  |  | 2,965.0 |
Other assets |  | 999.9 |  |  | 1,102.1 |
Goodwill |  | 3,300.2 |  |  | 2,353.6 |
Intangible assets, net |  | 1,604.3 |  |  | 1,336.0 |
Total assets |  | $ | 56,448.6 |  |  | $ | 54,362.7 |
Liabilities and Stockholders' Equity |  |  |  |
Current liabilities: |  |  |  |
Accounts payable |  | $ | 146.3 |  |  | $ | 100.6 |
Accrued expenses and other current liabilities |  | 2,977.2 |  |  | 3,349.0 |
Accrued payroll and payroll-related expenses |  | 732.1 |  |  | 958.7 |
Dividends payable |  | 620.7 |  |  | 566.4 |
Short-term deferred revenues |  | 241.3 |  |  | 199.8 |
Obligations under reverse repurchase agreements (A) |  | — |  |  | 385.4 |
Short-term debt |  | 1,000.7 |  |  | 1.1 |
Income taxes payable |  | 63.9 |  |  | 15.1 |
Total current liabilities before client funds obligations |  | 5,782.2 |  |  | 5,576.1 |
Client funds obligations |  | 40,063.2 |  |  | 39,503.9 |
Total current liabilities |  | 45,845.4 |  |  | 45,080.0 |
Long-term debt |  | 2,982.5 |  |  | 2,991.3 |
Operating lease liabilities |  | 283.2 |  |  | 328.6 |
Other liabilities |  | 991.2 |  |  | 990.8 |
Deferred income taxes |  | 129.1 |  |  | 64.3 |
Long-term deferred revenues |  | 361.9 |  |  | 360.1 |
Total liabilities |  | 50,593.3 |  |  | 49,815.1 |
Commitments and contingencies (Note 14) |  |  |  |
Stockholders' equity: |  |  |  |
Preferred stock, $1.00 par value: authorized, 0.3 shares; issued, none |  | — |  |  | — |
Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 638.7 shares at March 31, 2025 and June 30, 2024; outstanding, 406.3 and 408.1 shares at March 31, 2025 and June 30, 2024, respectively |  | 63.9 |  |  | 63.9 |
Capital in excess of par value |  | 2,720.8 |  |  | 2,406.9 |
Retained earnings |  | 24,956.6 |  |  | 23,622.2 |
Treasury stock - at cost: 232.4 and 230.6 shares at March 31, 2025 and June 30, 2024, respectively |  | (20,700.0) |  |  | (19,737.1) |
Accumulated other comprehensive loss |  | (1,186.0) |  |  | (1,808.3) |
Total stockholders’ equity |  | 5,855.3 |  |  | 4,547.6 |
Total liabilities and stockholders’ equity |  | $ | 56,448.6 |  |  | $ | 54,362.7 |

(A) As of June 30, 2024, $384.0 million of short-term marketable securities and $1.4 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements (see Note 10).
See notes to the Consolidated Financial Statements.
5

A utomatic Data Processing, Inc. and Subsidiaries
Statements of Consolidated Cash Flows
(In millions)
(Unaudited)

|  | Nine Months Ended |
|  | March 31, |
|  | 2025 |  | 2024 |
Cash Flows from Operating Activities: |  |  |  |  |
Net earnings |  | $ | 3,169.0 |  |  | $ | 2,922.7 |  |
Adjustments to reconcile net earnings to cash flows provided by operating activities: |  |  |  |  |
Depreciation and amortization |  | 436.7 |  |  | 426.2 |  |
Amortization of deferred contract costs |  | 852.0 |  |  | 795.0 |  |
Deferred income taxes |  | 17.2 |  |  | (4.4) |  |
Stock-based compensation expense |  | 202.5 |  |  | 188.7 |  |
Bad debt expense |  | 40.2 |  |  | 38.5 |  |
Net pension income |  | (14.8) |  |  | (17.4) |  |
Net accretion of discounts and amortization of premiums on available-for-sale securities |  | (49.8) |  |  | (29.2) |  |
Other |  | 10.8 |  |  | (5.4) |  |
Changes in operating assets and liabilities: |  |  |  |  |
Increase in accounts receivable |  | (138.7) |  |  | (496.2) |  |
Increase in deferred contract costs |  | (890.8) |  |  | (865.9) |  |
Increase in other assets |  | (154.9) |  |  | (225.7) |  |
Increase/(decrease) in accounts payable |  | 42.0 |  |  | (9.1) |  |
Increase/(decrease) in accrued expenses and other liabilities |  | (20.9) |  |  | 139.2 |  |
Net cash flows provided by operating activities |  | 3,500.5 |  |  | 2,857.0 |  |
Cash Flows from Investing Activities: |  |  |  |  |
Purchases of corporate and client funds marketable securities |  | (5,656.4) |  |  | (4,365.7) |  |
Proceeds from the sales and maturities of corporate and client funds marketable securities |  | 3,782.9 |  |  | 3,624.6 |  |
Capital expenditures |  | (134.6) |  |  | (153.7) |  |
Additions to intangibles |  | (276.8) |  |  | (263.2) |  |
Acquisitions of businesses, net of cash acquired |  | (1,165.1) |  |  | (33.6) |  |
Proceeds from sale of property, plant, and equipment and other assets |  | 3.3 |  |  | 28.3 |  |
Other |  | (11.5) |  |  | (8.5) |  |
Net cash flows used in investing activities |  | (3,458.2) |  |  | (1,171.8) |  |
Cash Flows from Financing Activities: |  |  |  |  |
Net increase in client funds obligations |  | 634.4 |  |  | 10,999.6 |  |
Net cash (distributed)/received from the Internal Revenue Service |  | (549.2) |  |  | 1,132.0 |  |
Payments of debt |  | (0.9) |  |  | (0.7) |  |
Proceeds from the issuance of debt |  | 988.9 |  |  | — |  |
Settlement of cash flow hedges |  | (12.5) |  |  | — |  |
Repurchases of common stock |  | (956.5) |  |  | (796.2) |  |
Net proceeds from stock purchase plan and stock-based compensation plans |  | 98.7 |  |  | 24.6 |  |
Dividends paid |  | (1,773.1) |  |  | (1,608.0) |  |
Net proceeds related to reverse repurchase agreements |  | (346.2) |  |  | (67.5) |  |
Net cash flows (used in)/provided by financing activities |  | (1,916.4) |  |  | 9,683.8 |  |
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents |  | (12.7) |  |  | (15.7) |  |
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents |  | (1,886.8) |  |  | 11,353.3 |  |
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period |  | 10,086.0 |  |  | 8,771.5 |  |
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period |  | $ | 8,199.2 |  |  | $ | 20,124.8 |  |
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Consolidated Balance Sheets |  |  |  |  |
Cash and cash equivalents |  | $ | 2,680.6 |  |  | $ | 3,291.7 |  |
Restricted cash and restricted cash equivalents included in funds held for clients (A) |  | 5,518.6 |  |  | 16,833.1 |  |
Total cash, cash equivalents, restricted cash, and restricted cash equivalents |  | $ | 8,199.2 |  |  | $ | 20,124.8 |  |
Supplemental disclosures of cash flow information: |  |  |  |  |
Cash paid for interest |  | $ | 339.9 |  |  | $ | 260.9 |  |
Cash paid for income taxes, net of income tax refunds |  | $ | 836.9 |  |  | $ | 806.1 |  |

(A) See Note 7 for a reconciliation of restricted cash and restricted cash equivalents in funds held for clients on the Consolidated Balance Sheets.
See notes to the Consolidated Financial Statements.
6

Automatic Data Processing, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
(Tabular dollars in millions, except per share amounts or where otherwise stated)
(Unaudited)
Note 1. Basis of Presentation
The accompanying Consolidated Financial Statements and footnotes thereto of Automatic Data Processing, Inc., its subsidiaries and variable interest entity (“ADP” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Consolidated Financial Statements and footnotes thereto are unaudited. In the opinion of the Company’s management, the Consolidated Financial Statements reflect all adjustments, which are of a normal recurring nature, that are necessary for a fair presentation of the Company’s interim financial results.
The Company has a grantor trust, which holds the majority of the funds provided by its clients pending remittance to employees of those clients, tax authorities, and other payees. The Company is the sole beneficial owner of the trust. The trust meets the criteria in Accounting Standards Codification (“ASC”) 810, “Consolidation” to be characterized as a variable interest entity (“VIE”). The Company has determined that it has a controlling financial interest in the trust because it has both (1) the power to direct the activities that most significantly impact the economic performance of the trust (including the power to make all investment decisions for the trust) and (2) the right to receive benefits that could potentially be significant to the trust (in the form of investment returns) and, therefore, consolidates the trust. Further information on these funds and the Company’s obligations to remit to its clients’ employees, tax authorities, and other payees is provided in Note 7, “Corporate Investments and Funds Held for Clients.”
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the assets, liabilities, revenue, expenses, and accumulated other comprehensive income that are reported in the Consolidated Financial Statements and footnotes thereto. Actual results may differ from those estimates. Interim financial results are not necessarily indicative of financial results for a full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (“fiscal 2024”). Certain amounts from the prior year's financial statements have been reclassified in order to conform to the current year's presentation.
Note 2. New Accounting Pronouncements
Recently Adopted Accounting Pronouncements
None.
Recently Issued Accounting Pronouncements

Standard | Description | Effective Date | Effect on Financial Statements or Other Significant Matters
ASU 2024-03 Disaggregation of Income Statement Expenses (Subtopic 220-40) | This update improves financial reporting by requiring enhanced disclosures of the expense captions in the Income Statement within the Notes to the financial statements. | June 30, 2028 (fiscal 2028) | The Company is assessing this guidance. The adoption will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, and cash flows.
ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures | This update enhances the transparency and decision usefulness of income tax disclosures to better assess how an entity’s operations and related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows. | June 30, 2026 (fiscal 2026) | The Company is assessing this guidance. The adoption will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, and cash flows.
ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures | This update improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and certain quantitative disclosures. | June 30, 2025 (fiscal 2025) | The Company is assessing this guidance. The adoption will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, and cash flows.

7

Note 3. Revenue
Based upon similar operational and economic characteristics, the Company’s revenues are disaggregated by its three business pillars: Human Capital Management (“HCM”), HR Outsourcing (“HRO”), and Global Solutions (“Global”), with separate disaggregation for PEO zero-margin benefits pass-through revenues and client funds interest revenues. The Company believes these revenue categories depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors.
The following tables provide details of revenue by our business pillars, and include a reconciliation to the Company’s reportable segments:

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
Types of Revenues | 2025 |  | 2024 |  | 2025 |  | 2024
HCM | $ | 2,392.3 |  |  | $ | 2,278.8 |  |  | $ | 6,549.6 |  |  | $ | 6,168.3 |
HRO, excluding PEO zero-margin benefits pass-throughs | 1,063.6 |  |  | 988.1 |  |  | 2,872.1 |  |  | 2,688.5 |
PEO zero-margin benefits pass-throughs | 1,090.0 |  |  | 1,016.3 |  |  | 3,194.4 |  |  | 2,963.7 |
Global | 651.9 |  |  | 649.8 |  |  | 1,936.7 |  |  | 1,865.7 |
Interest on funds held for clients | 355.2 |  |  | 320.8 |  |  | 881.3 |  |  | 747.9 |
Total Revenues | $ | 5,553.0 |  |  | $ | 5,253.8 |  |  | $ | 15,434.1 |  |  | $ | 14,434.1 |

Reconciliation of disaggregated revenue to our reportable segments for the three months ended March 31, 2025:

Types of Revenues | Employer Services |  | PEO |  | Other |  | Total
HCM | $ | 2,395.1 |  |  | $ | — |  |  | $ | (2.8) |  |  | $ | 2,392.3 |
HRO, excluding PEO zero-margin benefits pass-throughs | 369.0 |  |  | 695.2 |  |  | (0.6) |  |  | 1,063.6 |
PEO zero-margin benefits pass-throughs | — |  |  | 1,090.0 |  |  | — |  |  | 1,090.0 |
Global | 651.9 |  |  | — |  |  | — |  |  | 651.9 |
Interest on funds held for clients | 351.9 |  |  | 3.3 |  |  | — |  |  | 355.2 |
Total Segment Revenues | $ | 3,767.9 |  |  | $ | 1,788.5 |  |  | $ | (3.4) |  |  | $ | 5,553.0 |

Reconciliation of disaggregated revenue to our reportable segments for the three months ended March 31, 2024:

Types of Revenues | Employer Services |  | PEO |  | Other |  | Total
HCM | $ | 2,280.8 |  |  | $ | — |  |  | $ | (2.0) |  |  | $ | 2,278.8 |
HRO, excluding PEO zero-margin benefits pass-throughs | 342.2 |  |  | 646.4 |  |  | (0.5) |  |  | 988.1 |
PEO zero-margin benefits pass-throughs | — |  |  | 1,016.3 |  |  | — |  |  | 1,016.3 |
Global | 649.8 |  |  | — |  |  | — |  |  | 649.8 |
Interest on funds held for clients | 317.9 |  |  | 2.9 |  |  | — |  |  | 320.8 |
Total Segment Revenues | $ | 3,590.7 |  |  | $ | 1,665.6 |  |  | $ | (2.5) |  |  | $ | 5,253.8 |

Reconciliation of disaggregated revenue to our reportable segments for the nine months ended March 31, 2025:

Types of Revenues | Employer Services |  | PEO |  | Other |  | Total
HCM | $ | 6,557.1 |  |  | $ | — |  |  | $ | (7.5) |  |  | $ | 6,549.6 |
HRO, excluding PEO zero-margin benefits pass-throughs | 1,050.4 |  |  | 1,823.8 |  |  | (2.1) |  |  | 2,872.1 |
PEO zero-margin benefits pass-throughs | — |  |  | 3,194.4 |  |  | — |  |  | 3,194.4 |
Global | 1,936.7 |  |  | — |  |  | — |  |  | 1,936.7 |
Interest on funds held for clients | 873.2 |  |  | 8.1 |  |  | — |  |  | 881.3 |
Total Segment Revenues | $ | 10,417.4 |  |  | $ | 5,026.3 |  |  | $ | (9.6) |  |  | $ | 15,434.1 |

8

Reconciliation of disaggregated revenue to our reportable segments for the nine months ended March 31, 2024:

Types of Revenues | Employer Services |  | PEO |  | Other |  | Total
HCM | $ | 6,174.8 |  |  | $ | — |  |  | $ | (6.5) |  |  | $ | 6,168.3 |
HRO, excluding PEO zero-margin benefits pass-throughs | 980.7 |  |  | 1,710.7 |  |  | (2.9) |  |  | 2,688.5 |
PEO zero-margin benefits pass-throughs | — |  |  | 2,963.7 |  |  | — |  |  | 2,963.7 |
Global | 1,865.7 |  |  | — |  |  | — |  |  | 1,865.7 |
Interest on funds held for clients | 741.1 |  |  | 6.8 |  |  | — |  |  | 747.9 |
Total Segment Revenues | $ | 9,762.3 |  |  | $ | 4,681.2 |  |  | $ | (9.4) |  |  | $ | 14,434.1 |

Contract Balances
The timing of revenue recognition for HCM, HRO and Global is consistent with the invoicing of clients, as invoicing occurs in the period the services are provided. Therefore, the Company does not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing.
Changes in deferred revenues related to set up fees for the nine months ended March 31, 2025 were as follows:

Contract Liability |
Contract liability, July 1, 2024 | $ | 491.6 |
Recognition of revenue included in beginning of year contract liability | (102.4) |
Contract liability, net of revenue recognized on contracts during the period | 103.7 |
Currency translation adjustments | (0.7) |
Contract liability, March 31, 2025 | $ | 492.2 |

Note 4. Acquisition
In October 2024, the Company acquired WorkForce Software, a premier workforce management solutions provider that specializes in supporting large, global enterprises, utilizing cash on hand. The results of WorkForce Software are reported within the Company’s Employer Services segment. Pro forma information has not been presented because the effect of the acquisition is not material to the Company's consolidated financial results.
The following table reconciles the purchase price to the cash paid for the acquisition, net of cash acquired:

Purchase price | $ | 1,170.8 |
Less: cash acquired | (12.5) |
Cash paid for acquisition of business, net of cash acquired | $ | 1,158.3 |

The preliminary allocation of the purchase price is based upon estimates and assumptions that are subject to change within the measurement period, which is one year from the acquisition date. The primary areas of the purchase price allocation that are not yet finalized relate to the measurement of certain assets and liabilities, including identifiable intangible assets. Accordingly, the measurement period for such purchase price allocations will end when the information becomes available but will not exceed twelve months from the date of acquisition.
9

The acquisition was accounted for using the acquisition method of accounting. The Company recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess recorded to goodwill. The preliminary purchase price allocation for WorkForce Software is as follows:

Cash | $ | 12.5 |
Accounts receivable, net of allowance for doubtful accounts | 20.0 |
Identifiable intangible assets (1) | 292.0 |
Goodwill | 940.8 |
All other assets | 18.5 |
Total assets acquired | $ | 1,283.8 |
Deferred revenue | $ | 39.6 |
Deferred income taxes | 12.8 |
All other liabilities | 60.6 |
Total liabilities assumed | $ | 113.0 |
Total net assets acquired | $ | 1,170.8 |

(1) Intangible assets are recorded at estimated fair value, as determined by management based on available information which includes an estimated valuation by an independent third-party. The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to the future cash flows. The estimated fair value of intangible assets and related useful lives as included in the estimated purchase price allocation include:

| Estimated Fair Value |  | Estimated Useful Life (in years)
Technology | $ | 115.0 |  |  | 7
Customer/Partner relationships | $ | 170.0 |  |  | 8
Tradename | $ | 7.0 |  |  | 4

The goodwill recorded as a result of the WorkForce Software transaction represents future economic benefits the Company expects to achieve as a result of the acquisition, including expected synergies along with the value of the assembled workforce. None of the goodwill resulting from the acquisition is tax deductible.
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Note 5. Earnings per Share (“EPS”)

|  | Basic |  | Effect of Employee Stock Option Shares |  | Effect of Employee Restricted Stock Shares |  | Diluted
Three Months Ended March 31, 2025 |  |  |  |  |  |  |  |
Net earnings |  | $ | 1,249.5 |  |  |  |  |  |  | $ | 1,249.5 |
Weighted average shares (in millions) |  | 406.9 |  |  | 0.6 |  |  | 1.0 |  |  | 408.5 |
EPS |  | $ | 3.07 |  |  |  |  |  |  | $ | 3.06 |
Three Months Ended March 31, 2024 |  |  |  |  |  |  |  |
Net earnings |  | $ | 1,184.9 |  |  |  |  |  |  | $ | 1,184.9 |
Weighted average shares (in millions) |  | 410.5 |  |  | 0.7 |  |  | 0.9 |  |  | 412.1 |
EPS |  | $ | 2.89 |  |  |  |  |  |  | $ | 2.88 |
Nine Months Ended March 31, 2025 |  |  |  |  |  |  |  |
Net earnings |  | $ | 3,169.0 |  |  |  |  |  |  | $ | 3,169.0 |
Weighted average shares (in millions) |  | 407.5 |  |  | 0.7 |  |  | 0.9 |  |  | 409.1 |
EPS |  | $ | 7.78 |  |  |  |  |  |  | $ | 7.75 |
Nine Months Ended March 31, 2024 |  |  |  |  |  |  |  |
Net earnings |  | $ | 2,922.7 |  |  |  |  |  |  | $ | 2,922.7 |
Weighted average shares (in millions) |  | 411.1 |  |  | 0.8 |  |  | 1.7 |  |  | 413.6 |
EPS |  | $ | 7.11 |  |  |  |  |  |  | $ | 7.07 |

For the three and nine months ended March 31, 2025 and 2024, there were no stock options excluded from the calculation of diluted earnings per share due to anti-dilution.
Note 6. Other (Income)/Expense, Net

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Interest income on corporate funds | $ | (55.9) |  |  | $ | (55.9) |  |  | $ | (231.5) |  |  | $ | (159.3) |
Realized losses on available-for-sale securities, net | 0.1 |  |  | 1.2 |  |  | 0.8 |  |  | 5.2 |
Gain on sale of assets | — |  |  | (1.2) |  |  | (2.4) |  |  | (17.1) |
Non-service components of pension income, net (see Note 12) | (7.9) |  |  | (8.4) |  |  | (23.4) |  |  | (25.6) |
Other income, net | $ | (63.7) |  |  | $ | (64.3) |  |  | $ | (256.5) |  |  | $ | (196.8) |

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Note 7. Corporate Investments and Funds Held for Clients
Corporate investments and funds held for clients at March 31, 2025 and June 30, 2024 were as follows:

| March 31, 2025
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  |  |  | Fair Market Value (A)
Type of issue: |  |  |  |  |  |  |  |  |
Money market securities, cash and other cash equivalents | $ | 8,199.2 |  |  | $ | — |  |  | $ | — |  |  |  |  | $ | 8,199.2 |
Available-for-sale securities: |  |  |  |  |  |  |  |  |
Corporate bonds | 17,602.6 |  |  | 56.3 |  |  | (536.7) |  |  |  |  | 17,122.2 |
U.S. Treasury securities | 8,494.6 |  |  | 56.1 |  |  | (62.5) |  |  |  |  | 8,488.2 |
Canadian government obligations and Canadian government agency obligations | 2,167.1 |  |  | 21.1 |  |  | (37.0) |  |  |  |  | 2,151.2 |
U.S. government agency securities | 1,588.4 |  |  | 2.0 |  |  | (91.8) |  |  |  |  | 1,498.6 |
Asset-backed securities | 1,788.1 |  |  | 15.2 |  |  | (21.1) |  |  |  |  | 1,782.2 |
Canadian provincial bonds | 1,131.8 |  |  | 14.6 |  |  | (31.6) |  |  |  |  | 1,114.8 |
Commercial mortgage-backed securities | 467.2 |  |  | 0.4 |  |  | (22.0) |  |  |  |  | 445.6 |
Other securities | 1,304.8 |  |  | 2.5 |  |  | (53.5) |  |  |  |  | 1,253.8 |
Total available-for-sale securities | 34,544.6 |  |  | 168.2 |  |  | (856.2) |  |  |  |  | 33,856.6 |
Total corporate investments and funds held for clients | $ | 42,743.8 |  |  | $ | 168.2 |  |  | $ | (856.2) |  |  |  |  | $ | 42,055.8 |

(A) Included within available-for-sale securities are funds held for clients with fair values of $33,856.6 million. There are no corporate investments included within available-for-sale securities at March 31, 2025. All available-for-sale securities were included in Level 2 of the fair value hierarchy.

| June 30, 2024
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Market Value (B)
Type of issue: |  |  |  |  |  |  |
Money market securities, cash and other cash equivalents | $ | 10,086.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,086.0 |
Available-for-sale securities: |  |  |  |  |  |  |
Corporate bonds | 16,833.3 |  |  | 11.5 |  |  | (944.8) |  |  | 15,900.0 |
U.S. Treasury securities | 7,701.2 |  |  | 9.0 |  |  | (164.5) |  |  | 7,545.7 |
Canadian government obligations and Canadian government agency obligations | 2,130.7 |  |  | 1.7 |  |  | (86.6) |  |  | 2,045.8 |
U.S. government agency securities | 1,645.0 |  |  | 0.5 |  |  | (140.6) |  |  | 1,504.9 |
Asset-backed securities | 1,394.9 |  |  | 3.9 |  |  | (43.0) |  |  | 1,355.8 |
Canadian provincial bonds | 1,116.3 |  |  | 2.3 |  |  | (56.2) |  |  | 1,062.4 |
Commercial mortgage-backed securities | 535.9 |  |  | — |  |  | (35.1) |  |  | 500.8 |
Other securities | 1,366.0 |  |  | 2.0 |  |  | (75.9) |  |  | 1,292.1 |
Total available-for-sale securities | 32,723.3 |  |  | 30.9 |  |  | (1,546.7) |  |  | 31,207.5 |
Total corporate investments and funds held for clients | $ | 42,809.3 |  |  | $ | 30.9 |  |  | $ | (1,546.7) |  |  | $ | 41,293.5 |

(B) Included within available-for-sale securities are corporate investments with fair values of $384.0 million and funds held for clients with fair values of $30,823.5 million. All available-for-sale securities were included in Level 2 of the fair value hierarchy.
12

For a description of the fair value hierarchy and the Company's fair value methodologies, including the use of an independent third-party pricing service, see Note 1 “Summary of Significant Accounting Policies” in the Company's Annual Report on Form 10-K for fiscal 2024. The Company concurred with and did not adjust the prices obtained from the independent pricing service. The Company had no available-for-sale securities included in Level 1 or Level 3 at March 31, 2025.
The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of March 31, 2025, are as follows:

| March 31, 2025
| Securities in Unrealized Loss Position Less Than 12 Months |  | Securities in Unrealized Loss Position Greater Than 12 Months |  | Total
| Gross Unrealized Losses |  | Fair Market Value |  | Gross Unrealized Losses |  | Fair Market Value |  | Gross Unrealized Losses |  | Fair Market Value
Corporate bonds | $ | (18.9) |  |  | $ | 1,724.1 |  |  | $ | (517.8) |  |  | $ | 11,020.7 |  |  | $ | (536.7) |  |  | $ | 12,744.8 |
U.S. Treasury securities | (4.0) |  |  | 1,004.4 |  |  | (58.5) |  |  | 2,780.4 |  |  | (62.5) |  |  | 3,784.8 |
Canadian government obligations and Canadian government agency obligations | (0.1) |  |  | 19.9 |  |  | (36.9) |  |  | 1,115.6 |  |  | (37.0) |  |  | 1,135.5 |
U.S. government agency securities | (0.1) |  |  | 22.9 |  |  | (91.7) |  |  | 1,304.1 |  |  | (91.8) |  |  | 1,327.0 |
Asset-backed securities | (1.3) |  |  | 230.8 |  |  | (19.8) |  |  | 530.9 |  |  | (21.1) |  |  | 761.7 |
Canadian provincial bonds | (1.4) |  |  | 68.6 |  |  | (30.2) |  |  | 599.1 |  |  | (31.6) |  |  | 667.7 |
Commercial mortgage-backed securities | (0.1) |  |  | 4.0 |  |  | (21.9) |  |  | 419.5 |  |  | (22.0) |  |  | 423.5 |
Other securities | (3.2) |  |  | 314.6 |  |  | (50.3) |  |  | 733.5 |  |  | (53.5) |  |  | 1,048.1 |
| $ | (29.1) |  |  | $ | 3,389.3 |  |  | $ | (827.1) |  |  | $ | 18,503.8 |  |  | $ | (856.2) |  |  | $ | 21,893.1 |

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of June 30, 2024, are as follows:

| June 30, 2024
| Securities in Unrealized Loss Position Less Than 12 Months |  | Securities in Unrealized Loss Position Greater Than 12 Months |  | Total
| Gross Unrealized Losses |  | Fair Market Value |  | Gross Unrealized Losses |  | Fair Market Value |  | Gross Unrealized Losses |  | Fair Market Value
Corporate bonds | $ | (25.8) |  |  | $ | 2,173.6 |  |  | $ | (919.0) |  |  | $ | 12,413.4 |  |  | $ | (944.8) |  |  | $ | 14,587.0 |
U.S. Treasury securities | (23.1) |  |  | 2,186.2 |  |  | (141.4) |  |  | 4,076.9 |  |  | (164.5) |  |  | 6,263.1 |
Canadian government obligations and Canadian government agency obligations | (0.9) |  |  | 304.6 |  |  | (85.7) |  |  | 1,591.6 |  |  | (86.6) |  |  | 1,896.2 |
U.S. government agency securities | (0.7) |  |  | 51.5 |  |  | (139.9) |  |  | 1,428.2 |  |  | (140.6) |  |  | 1,479.7 |
Asset-backed securities | (2.3) |  |  | 351.4 |  |  | (40.7) |  |  | 668.0 |  |  | (43.0) |  |  | 1,019.4 |
Canadian provincial bonds | (1.3) |  |  | 193.0 |  |  | (54.9) |  |  | 717.4 |  |  | (56.2) |  |  | 910.4 |
Commercial mortgage-backed securities | (0.5) |  |  | 11.2 |  |  | (34.6) |  |  | 489.6 |  |  | (35.1) |  |  | 500.8 |
Other securities | (12.2) |  |  | 288.5 |  |  | (63.7) |  |  | 864.8 |  |  | (75.9) |  |  | 1,153.3 |
| $ | (66.8) |  |  | $ | 5,560.0 |  |  | $ | (1,479.9) |  |  | $ | 22,249.9 |  |  | $ | (1,546.7) |  |  | $ | 27,809.9 |

At March 31, 2025, corporate bonds include investment-grade debt securities with a wide variety of issuers, industries, and sectors, primarily carrying credit ratings of A and above, and have maturities ranging from April 2025 through March 2035.
At March 31, 2025, asset-backed securities include AAA-rated senior tranches of securities with predomi nantly prime collateral of fixed-rate auto loan, credit card, and equipment lease receivables with fair values of $816.0 million, $536.1 million, and $211.8 million, respectively. These securities are collateralized by the cash flow s of the underlying pools of receivables. The primary risk associated with these securities is the collection risk of the underlying receivables. All collateral on such asset-backed securities has performed as expected through March 31, 2025.
13

At March 31, 2025, U.S. government a gency securities primarily include debt directly issued by Federal Farm Credit Banks and Federal Home Loan Banks with fair values of $965.9 million and $486.8 million, respectively. U.S. government agency securities represent senior, unsecured, non-callable debt that primarily carry ratings of Aaa by Moody's, and AA+ by Standard & Poor's, with maturities ranging from April 2025 through August 2034.
At March 31, 2025, U.S. government agency commercial mortgage-backed securities, with fair values of $445.6 million, include those issued by Federal Home Loan Mortgage Corporation and Federal National Mortgage Association.
At March 31, 2025, other securities primarily include municipal bonds, diversified with a variety of issuers, with credit ratings of A and above with fair val ues of $532.1 million, AA-rated United Kingdom Gilt securities of $330.7 million, and AAA-rated supranational bonds of $227.7 million.
Classification of corporate investments on the Consolidated Balance Sheets is as follows:

|  | March 31, |  | June 30,
|  | 2025 |  | 2024
Corporate investments: |  |  |  |
Cash and cash equivalents |  | $ | 2,680.6 |  |  | $ | 2,913.4 |
Short-term marketable securities (a) |  | — |  |  | 384.0 |
Long-term marketable securities (b) |  | — |  |  | — |
Total corporate investments |  | $ | 2,680.6 |  |  | $ | 3,297.4 |

(a) - Short-term marketable securities are included within Other current assets on the Consolidated Balance Sheets.
(b) - Long-term marketable securities are included within Other assets on the Consolidated Balance Sheets.
Funds held for clients represent assets that, based upon the Company's intent, are restricted for use solely for the purposes of satisfying the obligations to remit funds relating to the Company’s payroll and payroll tax filing services, which are classified as client funds obligations on our Consolidated Balance Sheets.
Funds held for clients have been invested in the following categories:

|  | March 31, |  | June 30,
|  | 2025 |  | 2024
Funds held for clients: |  |  |  |
Restricted cash and cash equivalents held to satisfy client funds obligations |  | $ | 5,518.6 |  |  | $ | 7,172.6 |
Restricted short-term marketable securities held to satisfy client funds obligations |  | 8,454.4 |  |  | 5,538.1 |
Restricted long-term marketable securities held to satisfy client funds obligations |  | 25,402.2 |  |  | 25,285.4 |
Total funds held for clients |  | $ | 39,375.2 |  |  | $ | 37,996.1 |

Client funds obligations represent the Company's contractual obligations to remit funds to satisfy clients' payroll, tax, and other payee payment obligations and are recorded on the Consolidated Balance Sheets at the time that the Company impounds funds from clients. The client funds obligations represent liabilities that will be repaid within one year of the balance sheet date. The Company has reported client funds obligations as a current liability on the Consolidated Balance Sheets totalin g $40,063.2 million and $39,503.9 million at March 31, 2025 and June 30, 2024, respectively. The Company has classified funds held for clients as a current asset since these funds are held solely for the purpose of satisfying the client funds obligations. Of the Company’s funds held for clients at March 31, 2025 and June 30, 2024, $35,394.9 million and $34,940.0 million, respectively, are held in the grantor trust. The liabilities held within the trust are intercompany liabilities to other Company subsidiaries and are eliminated in consolidation.
The Company has reported the cash flows related to the purchases of corporate and client funds marketable securities and related to the proceeds from the sales and maturities of corporate and client funds marketable securities on a gross basis in the investing section of the Statements of Consolidated Cash Flows. The Company has reported the cash and cash equivalents related to client funds investments with original maturities of ninety days or less, within the beginning and ending balances of cash, cash equivalents, restricted cash, and restricted cash equivalents. The Company has reported the cash flows related to the cash received from and paid on behalf of clients on a net basis within net increase / (decrease) in client funds obligations in the financing activities section of the Statements of Consolidated Cash Flows.
14

All available-for-sale securities were rated as investment grade at March 31, 2025.
Expected maturities of available-for-sale securities at March 31, 2025 are as follows:

One year or less | $ | 8,454.4 |
One year to two years | 6,522.9 |
Two years to three years | 4,144.1 |
Three years to four years | 5,217.7 |
After four years | 9,517.5 |
Total available-for-sale securities | $ | 33,856.6 |

Note 8. Leases
The Company records leases on the Consolidated Balance Sheets as operating lease right-of-use (“ROU”) assets, records the current portion of operating lease liabilities within accrued expenses and other current liabilities and, separately, records long-term operating lease liabilities. The difference between total ROU assets and total lease liabilities is primarily attributable to prepayments of our obligations and the recognition of various lease incentives.
The Company has entered into operating lease agreements for facilities and equipment. The Company's leases have remaining lease terms of up to approximately eleven years.
The components of operating lease expense were as follows:

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Operating lease cost | $ | 27.4 |  |  | $ | 29.4 |  |  | $ | 82.3 |  |  | $ | 95.6 |
Short-term lease cost | 0.3 |  |  | 0.3 |  |  | 0.8 |  |  | 1.1 |
Variable lease cost | 4.6 |  |  | 4.7 |  |  | 15.8 |  |  | 12.8 |
Total operating lease cost | $ | 32.3 |  |  | $ | 34.4 |  |  | $ | 98.9 |  |  | $ | 109.5 |

The following table provides supplemental cash flow information related to the Company's leases:

| Nine Months Ended
| March 31,
| 2025 |  | 2024
Cash paid for operating lease liabilities | $ | 95.4 |  |  | $ | 95.6 |
Operating lease ROU assets obtained in exchange for new operating lease liabilities | $ | 44.5 |  |  | $ | 54.2 |

Other information related to our operating lease liabilities is as follows:

| March 31, |  | June 30,
| 2025 |  | 2024
Weighted-average remaining lease term (in years) | 5 |  | 5
Weighted-average discount rate | 3.4 | % |  | 3.3 | %
Current operating lease liability | $ | 100.3 |  |  | $ | 92.2 |

15

As of March 31, 2025, maturities of operating lease liabilities are as follows:

Three months ending June 30, 2025 | $ | 28.4 |
Twelve months ending June 30, 2026 | 103.4 |
Twelve months ending June 30, 2027 | 89.5 |
Twelve months ending June 30, 2028 | 67.5 |
Twelve months ending June 30, 2029 | 45.0 |
Thereafter | 83.7 |
Total undiscounted lease obligations | 417.5 |
Less: Imputed interest | (34.0) |
Net lease obligations | $ | 383.5 |

Note 9. Goodwill and Intangible Assets, net
Changes in goodwill for the nine months ended March 31, 2025 are as follows:

| Employer Services |  | PEO Services |  |  |  | Total
Balance at June 30, 2024 | $ | 2,348.8 |  |  | $ | 4.8 |  |  |  |  | $ | 2,353.6 |
Additions and other adjustments | 947.3 |  |  | — |  |  |  |  | 947.3 |
Currency translation adjustments | (0.7) |  |  | — |  |  |  |  | (0.7) |
Balance at March 31, 2025 | $ | 3,295.4 |  |  | $ | 4.8 |  |  |  |  | $ | 3,300.2 |

Components of intangible assets, net, are as follows:

|  | March 31, |  | June 30,
|  | 2025 |  | 2024
Intangible assets: |  |  |  |
Software and software licenses |  | $ | 4,042.7 |  |  | $ | 3,803.7 |
Customer contracts and lists |  | 1,394.8 |  |  | 1,181.6 |
Other intangibles |  | 249.5 |  |  | 242.0 |
|  | 5,687.0 |  |  | 5,227.3 |
Less accumulated amortization: |  |  |  |
Software and software licenses |  | (2,762.8) |  |  | (2,642.6) |
Customer contracts and lists |  | (1,076.7) |  |  | (1,007.6) |
Other intangibles |  | (243.2) |  |  | (241.1) |
|  | (4,082.7) |  |  | (3,891.3) |
Intangible assets, net |  | $ | 1,604.3 |  |  | $ | 1,336.0 |

Other intangibles consist primarily of purchased rights, trademarks and trade names (acquired directly or through acquisitions). All intangible assets have finite lives and, as such, are subject to amortization. The weighted average remaining useful life of the intangible assets is 6 years (6 years for software and software licenses, 5 years for customer contracts and lists, and 4 years for other intangibles). Amortization of intangible assets was $96.3 million and $94.9 million for the three months ended March 31, 2025 and 2024, respectively, and $286.0 million and $285.1 million for the nine months ended March 31, 2025 and 2024, respectively.
16

Estimated future amortization expenses of the Company's existing intangible assets are as follows:

| Amount
Three months ending June 30, 2025 | $ | 124.7 |
Twelve months ending June 30, 2026 | $ | 396.6 |
Twelve months ending June 30, 2027 | $ | 255.4 |
Twelve months ending June 30, 2028 | $ | 213.6 |
Twelve months ending June 30, 2029 | $ | 183.0 |
Twelve months ending June 30, 2030 | $ | 142.1 |

Note 10. Short-term Financing
The Company has a $4.55 billion, 364-day credit agreement that matures in June 2025 with a one year term-out option. The Company also has a $2.25 billion, five year credit facility that matures in June 2028 that contains an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments. In addition, the Company also has a five year, $3.5 billion credit facility maturing in June 2029 that contains an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments. The interest rate applicable to committed borrowings is tied to SOFR, the effective federal funds rate, or the prime rate depending on the notification provided by the Company to the syndicated financial institutions prior to borrowing. The Company is also required to pay facility fees on the credit agreements. The primary uses of the credit facilities are to provide liquidity to the commercial paper program and funding for general corporate purposes, if necessary. The Company had no borrowings through March 31, 2025 under the credit agreements.
The Company's U.S. short-term funding requirements related to client funds are sometimes obtained on an unsecured basis through the issuance of commercial paper, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. This commercial paper program provides for the issuance of up to $10.3 billion in aggregate maturity value. The Company’s commercial paper program is rated A-1+ by Standard & Poor’s, Prime-1 (“P-1”) by Moody’s and F1+ by Fitch. These ratings denote the highest quality commercial paper securities. Maturities of commercial paper can range from overnight to up to 364 days. At March 31, 2025 and June 30, 2024, the Company had no commercial paper borrowing outstanding. Details of the borrowings under the commercial paper program are as follows:

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Average daily borrowings (in billions) | $ | 3.3 |  |  | $ | 2.7 |  |  | $ | 4.2 |  |  | $ | 3.6 |
Weighted average interest rates | 4.4 | % |  | 5.4 | % |  | 4.9 | % |  | 5.3 | %
Weighted average maturity (approximately in days) | 2 days |  | 2 days |  | 2 days |  | 2 days

The Company’s U.S., Canadian and United Kingdom short-term funding requirements related to client funds obligations are sometimes obtained on a secured basis through the use of reverse repurchase agreements, which are collateralized principally by government and government agency securities, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. These agreements generally have terms ranging from overnight to up to five business days. At March 31, 2025, the Company had no outstanding obligations related to reverse repurchase agreements. At June 30, 2024, the Company had $385.4 million of outstanding obligations related to reverse repurchase agreements which were fully paid in early July 2024. As of March 31, 2025, the Company has $7.3 billion available on a committed basis under the U.S. reverse repurchase agreements. Details of the reverse repurchase agreements are as follows:

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Average outstanding balances (in billions) | $ | 0.9 |  |  | $ | 0.6 |  |  | $ | 2.8 |  |  | $ | 1.5 |
Weighted average interest rates | 4.1 | % |  | 5.4 | % |  | 4.9 | % |  | 5.4 | %

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Note 11. Debt
The Company issued four series of fixed-rate notes with staggered maturities of 7 and 10 years totaling $4.0 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, semi-annually.
During the first quarter ended September 30, 2024, the Company issued $1.0 billion of senior notes due in 2034 bearing a fixed interest rate of 4.450%. In connection with the senior notes issuance, the Company terminated several derivative contracts in place to hedge exposure in changes in benchmark interest rates for the senior notes issued with an aggregate notional amount totaling $1.0 billion (of which $400.0 million were executed during the first quarter ended September 30, 2024 and $600.0 million were executed on the day of issuance). Since these derivative contracts were classified as cash flow hedges, the unamortized loss of $12.5 million was deferred in accumulated other comprehensive income and will be amortized to earnings over the life of the issued Notes as the interest payments are made.
The principal amounts and associated effective interest rates of the Notes and other debt as of March 31, 2025 and June 30, 2024, are as follows:

Debt instrument |  | Effective Interest Rate |  | March 31, 2025 |  | June 30, 2024
Fixed-rate 3.375% notes due September 15, 2025 |  | 3.47% |  | $ | 1,000.0 |  |  | $ | 1,000.0 |
Fixed-rate 1.700% notes due May 15, 2028 |  | 1.85% |  | 1,000.0 |  |  | 1,000.0 |
Fixed-rate 1.250% notes due September 1, 2030 |  | 1.83% |  | 1,000.0 |  |  | 1,000.0 |
Fixed-rate 4.450% notes due September 9, 2034 |  | 4.75% |  | 1,000.0 |  |  | — |
Other |  |  |  | 3.2 |  |  | 4.1 |
|  |  |  | 4,003.2 |  |  | 3,004.1 |
Less: current portion |  |  |  | (1,000.7) |  |  | (1.1) |
Less: unamortized discount and debt issuance costs |  |  |  | (20.0) |  |  | (11.7) |
Total long-term debt |  |  |  | $ | 2,982.5 |  |  | $ | 2,991.3 |

The effective interest rates for the Notes include the interest on the Notes and amortization of the discount and debt issuance costs.
As of March 31, 2025, the fair value of the Notes, based on Level 2 inputs, was $3,739.8 million. For a description of the fair value hierarchy and the Company's fair value methodologies, including the use of an independent third-party pricing service, see Note 1 “Summary of Significant Accounting Policies” in the Company's Annual Report on Form 10-K for fiscal 2024.
In anticipation of the refinancing of our fixed-rate 3.375% notes due September 15, 2025, the Company entered into a series of treasury rate lock transactions from January 16, 2025 through April 24, 2025, with an aggregate notional amount totaling $400.0 million, of which $300.0 million were entered into during the third quarter ended March 31, 2025, $50.0 million entered into on April 2, 2025 and $50.0 million entered into on April 24, 2025, to hedge its exposure to changes in interest rates through the completion of the refinancing. The derivative contracts entered into during the fiscal year ended June 30, 2025 have been designated as cash-flow hedges and will be terminated upon completion of the refinancing. Changes in the derivatives’ fair value are recorded each period in other comprehensive income with a corresponding current asset or liability and, upon settlement, the aggregate amount in accumulated other comprehensive income will be amortized into net income over the term of the future debt instrument. Refer to Note 16 for the impact to accumulated other comprehensive income. There are no cash flows associated with the derivatives until settlement occurs with the counter-parties. The treasury rate lock derivatives are classified as Level 2 in the fair value hierarchy as their value is determined using observable inputs such as forward treasury rates.
Note 12. Employee Benefit Plans
A. Stock-based Compensation Plans
The Company's share-based compensation consists of stock options, time-based restricted stock, time-based restricted stock units, performance-based restricted stock, and performance-based restricted stock units. The Company also offers an employee stock purchase plan for eligible employees. Beginning in September 2022, the Company discontinued granting stock options, time-based restricted stock and performance-based restricted stock. Any such future awards will be grants of time-based restricted stock units and/or performance-based restricted stock units, depending on employee eligibility. Time-based restricted
18

stock unit awards and performance-based restricted stock unit awards granted to employees with a home country of the United States are settled in stock, and for awards granted to employees with a home country outside the United States are generally settled in cash.
The Company currently utilizes treasury stock to satisfy stock option exercises, issuances under the Company's employee stock purchase plan, and restricted stock units. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program. The Company repurchased 1.0 million and 1.2 million shares in the three months ended March 31, 2025 and 2024, respectively, and repurchased 3.4 million and 3.3 million shares in the nine months ended March 31, 2025 and 2024, respectively. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions.
The following table represents pre-tax stock-based compensation expense for the three and nine months ended March 31, 2025 and 2024, respectively:

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Operating expenses | $ | 9.0 |  |  | $ | 7.8 |  |  | $ | 27.3 |  |  | $ | 22.6 |
Selling, general and administrative expenses | 45.5 |  |  | 39.2 |  |  | 147.4 |  |  | 139.6 |
Research and development | 8.3 |  |  | 9.3 |  |  | 27.8 |  |  | 26.5 |
Total stock-based compensation expense | $ | 62.8 |  |  | $ | 56.3 |  |  | $ | 202.5 |  |  | $ | 188.7 |

B. Pension Plans
The components of net pension income were as follows:

| Three Months Ended |  |  |  | Nine Months Ended
| March 31, |  |  |  | March 31,
| 2025 |  | 2024 |  |  |  |  |  | 2025 |  | 2024
Service cost – benefits earned during the period | $ | 1.5 |  |  | $ | 1.3 |  |  |  |  |  |  | $ | 4.5 |  |  | $ | 3.9 |
Interest cost on projected benefits | 21.8 |  |  | 21.2 |  |  |  |  |  |  | 65.5 |  |  | 63.4 |
Expected return on plan assets | (29.0) |  |  | (29.0) |  |  |  |  |  |  | (87.0) |  |  | (86.9) |
Net amortization and deferral | 0.7 |  |  | 0.7 |  |  |  |  |  |  | 2.2 |  |  | 2.2 |
Net pension income | $ | (5.0) |  |  | $ | (5.8) |  |  |  |  |  |  | $ | (14.8) |  |  | $ | (17.4) |

Note 13. Income Taxes
The effective tax rate for the three months ended March 31, 2025 and 2024 was 23.0% and 23.4%, respectively. The decrease in the effective tax rate is primarily due to a benefit for a decrease in uncertain tax position activity and a higher excess tax benefit on stock-based compensation in the three months ended March 31, 2025, partially offset by the benefits of an intercompany transfer of certain assets in the three months ended March 31, 2024.
The effective tax rate for the nine months ended March 31, 2025 and 2024 was 23.1% and 22.7%, respectively. The increase in the effective tax rate is primarily due to a benefit for adjustments to prior year tax liabilities and a valuation allowance release in the nine months ended March 31, 2024.
Note 14. Commitments and Contingencies
In May 2020, a putative class action complaint was filed against ADP, TotalSource and related defendants in the U.S. District Court, District of New Jersey. The complaint asserts violations of the Employee Retirement Income Security Act of 1974 (“ERISA”) in connection with the ADP TotalSource Retirement Savings Plan’s fiduciary administrative and investment decision-making. The complaint seeks statutory and other unspecified monetary damages, injunctive relief and attorney’s fees. The Company is unable to estimate any reasonably possible loss, or range of loss, with respect to this matter. The Company is vigorously defending against this lawsuit.
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The Company is subject to various claims, litigation, and regulatory compliance matters in the normal course of business. When a loss is considered probable and reasonably estimable, the Company records a liability in the amount of its best estimate for the ultimate loss. Management currently believes that the resolution of these claims, litigation and regulatory compliance matters against us, individually or in the aggregate, will not have a material adverse impact on our consolidated results of operations, financial condition or cash flows. These matters are subject to inherent uncertainties and management's view of these matters may change in the future.
It is not the Company’s business practice to enter into off-balance sheet arrangements. In the normal course of business, the Company may enter into contracts in which it makes representations and warranties that relate to the performance of the Company’s services and products. The Company does not expect any material losses related to such representations and warranties.
Note 15. Stockholders' Equity
Changes in stockholders' equity by component are as follows:

| Three Months Ended
| March 31, 2025
| Common Stock |  | Capital in Excess of Par Value |  | Retained Earnings |  | Treasury Stock |  | AOCI |  | Total
Balance at December 31, 2024 | $ | 63.9 |  |  | $ | 2,619.6 |  |  | $ | 24,335.6 |  |  | $ | (20,412.3) |  |  | $ | (1,528.7) |  |  | $ | 5,078.1 |
Net earnings | — |  |  | — |  |  | 1,249.5 |  |  | — |  |  | — |  |  | 1,249.5 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 342.7 |  |  | 342.7 |
Stock-based compensation expense | — |  |  | 54.3 |  |  | — |  |  | — |  |  | — |  |  | 54.3 |
Issuances relating to stock compensation plans | — |  |  | 46.9 |  |  | — |  |  | 13.6 |  |  | — |  |  | 60.5 |
Treasury stock acquired (1.0 million shares repurchased) | — |  |  | — |  |  | — |  |  | (301.3) |  |  | — |  |  | (301.3) |
Dividends declared ($1.54 per share) | — |  |  | — |  |  | (628.5) |  |  | — |  |  | — |  |  | (628.5) |
Balance at March 31, 2025 | $ | 63.9 |  |  | $ | 2,720.8 |  |  | $ | 24,956.6 |  |  | $ | (20,700.0) |  |  | $ | (1,186.0) |  |  | $ | 5,855.3 |

| Three Months Ended
| March 31, 2024
| Common Stock |  | Capital in Excess of Par Value |  | Retained Earnings |  | Treasury Stock |  | AOCI |  | Total
Balance at December 31, 2023 | $ | 63.9 |  |  | $ | 2,262.9 |  |  | $ | 22,757.1 |  |  | $ | (19,019.1) |  |  | $ | (1,745.2) |  |  | $ | 4,319.6 |
Net earnings | — |  |  | — |  |  | 1,184.9 |  |  | — |  |  | — |  |  | 1,184.9 |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (106.7) |  |  | (106.7) |
Stock-based compensation expense | — |  |  | 48.6 |  |  | — |  |  | — |  |  | — |  |  | 48.6 |
Issuances relating to stock compensation plans | — |  |  | 42.5 |  |  | — |  |  | 15.0 |  |  | — |  |  | 57.5 |
Treasury stock acquired (1.2 million shares repurchased) | — |  |  | — |  |  | — |  |  | (301.3) |  |  | — |  |  | (301.3) |
Dividends declared ($1.40 per share) | — |  |  | — |  |  | (575.9) |  |  | — |  |  | — |  |  | (575.9) |
Balance at March 31, 2024 | $ | 63.9 |  |  | $ | 2,354.0 |  |  | $ | 23,366.1 |  |  | $ | (19,305.4) |  |  | $ | (1,851.9) |  |  | $ | 4,626.7 |

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| Nine Months Ended
| March 31, 2025
| Common Stock |  | Capital in Excess of Par Value |  | Retained Earnings |  | Treasury Stock |  | AOCI |  | Total
Balance at June 30, 2024 | $ | 63.9 |  |  | $ | 2,406.9 |  |  | $ | 23,622.2 |  |  | $ | (19,737.1) |  |  | $ | (1,808.3) |  |  | $ | 4,547.6 |
Net earnings | — |  |  | — |  |  | 3,169.0 |  |  | — |  |  | — |  |  | 3,169.0 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 622.3 |  |  | 622.3 |
Stock-based compensation expense | — |  |  | 179.3 |  |  | — |  |  | — |  |  | — |  |  | 179.3 |
Issuances relating to stock compensation plans | — |  |  | 134.6 |  |  | — |  |  | 69.8 |  |  | — |  |  | 204.4 |
Treasury stock acquired (3.4 million shares repurchased) | — |  |  | — |  |  | — |  |  | (1,032.7) |  |  | — |  |  | (1,032.7) |
Dividends declared ($4.48 per share) | — |  |  | — |  |  | (1,834.6) |  |  | — |  |  | — |  |  | (1,834.6) |
Balance at March 31, 2025 | $ | 63.9 |  |  | $ | 2,720.8 |  |  | $ | 24,956.6 |  |  | $ | (20,700.0) |  |  | $ | (1,186.0) |  |  | $ | 5,855.3 |

| Nine Months Ended
| March 31, 2024
| Common Stock |  | Capital in Excess of Par Value |  | Retained Earnings |  | Treasury Stock |  | AOCI |  | Total
Balance at June 30, 2023 | $ | 63.9 |  |  | $ | 2,102.3 |  |  | $ | 22,118.0 |  |  | $ | (18,469.3) |  |  | $ | (2,305.8) |  |  | $ | 3,509.1 |
Net earnings | — |  |  | — |  |  | 2,922.7 |  |  | — |  |  | — |  |  | 2,922.7 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 453.9 |  |  | 453.9 |
Stock-based compensation expense | — |  |  | 170.4 |  |  | — |  |  | — |  |  | — |  |  | 170.4 |
Issuances relating to stock compensation plans | — |  |  | 81.3 |  |  | — |  |  | 64.7 |  |  | — |  |  | 146.0 |
Treasury stock acquired (3.3 million shares repurchased) | — |  |  | — |  |  | — |  |  | (900.8) |  |  | — |  |  | (900.8) |
Dividends declared ($4.05 per share) | — |  |  | — |  |  | (1,674.6) |  |  | — |  |  | — |  |  | (1,674.6) |
Balance at March 31, 2024 | $ | 63.9 |  |  | $ | 2,354.0 |  |  | $ | 23,366.1 |  |  | $ | (19,305.4) |  |  | $ | (1,851.9) |  |  | $ | 4,626.7 |

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Note 16. Reclassifications out of Accumulated Other Comprehensive Income/(Loss) (“AOCI”)
Changes in AOCI by component are as follows:

| Three Months Ended
| March 31, 2025
| Currency Translation Adjustment |  | Net Gains/Losses on Available-for-sale Securities |  | Cash Flow Hedging Activities |  | Pension Liability |  |  |  | Accumulated Other Comprehensive (Loss)/Income
Balance at December 31, 2024 | $ | (430.6) |  |  | $ | (840.4) |  |  | $ | (27.5) |  |  | $ | (230.2) |  |  |  |  | $ | (1,528.7) |
Other comprehensive income/(loss) before reclassification adjustments | 45.3 |  |  | 386.2 |  |  | (4.7) |  |  | — |  |  |  |  | 426.8 |
Tax effect | — |  |  | (87.5) |  |  | 1.2 |  |  | — |  |  |  |  | (86.3) |
Reclassification adjustments to net earnings | — |  |  | 0.1 |  | (A) | 1.4 |  | (C) | 1.2 |  | (B) |  |  | 2.7 |
Tax effect | — |  |  | — |  |  | (0.3) |  |  | (0.2) |  |  |  |  | (0.5) |
Balance at March 31, 2025 | $ | (385.3) |  |  | $ | (541.6) |  |  | $ | (29.9) |  |  | $ | (229.2) |  |  |  |  | $ | (1,186.0) |

| Three Months Ended
| March 31, 2024
| Currency Translation Adjustment |  | Net Gains/Losses on Available-for-sale Securities |  | Cash Flow Hedging Activities |  | Pension Liability |  |  |  | Accumulated Other Comprehensive (Loss)/Income
Balance at December 31, 2023 | $ | (331.5) |  |  | $ | (1,157.5) |  |  | $ | (21.6) |  |  | $ | (234.6) |  |  |  |  | $ | (1,745.2) |
Other comprehensive income/(loss) before reclassification adjustments | (37.4) |  |  | (91.0) |  |  | — |  |  | — |  |  |  |  | (128.4) |
Tax effect | — |  |  | 19.1 |  |  | — |  |  | — |  |  |  |  | 19.1 |
Reclassification adjustments to net earnings | — |  |  | 1.2 |  | (A) | 1.1 |  | (C) | 1.0 |  | (B) |  |  | 3.3 |
Tax effect | — |  |  | (0.2) |  |  | (0.3) |  |  | (0.2) |  |  |  |  | (0.7) |
Balance at March 31, 2024 | $ | (368.9) |  |  | $ | (1,228.4) |  |  | $ | (20.8) |  |  | $ | (233.8) |  |  |  |  | $ | (1,851.9) |

22

| Nine Months Ended
| March 31, 2025
| Currency Translation Adjustment |  | Net Gains/Losses on Available-for-sale Securities |  | Cash Flow Hedging Activities |  | Pension Liability |  |  |  | Accumulated Other Comprehensive (Loss)/Income
Balance at June 30, 2024 | $ | (378.8) |  |  | $ | (1,178.0) |  |  | $ | (20.0) |  |  | $ | (231.5) |  |  |  |  | $ | (1,808.3) |
Other comprehensive income/(loss) before reclassification adjustments | (6.5) |  |  | 826.9 |  |  | (17.2) |  |  | — |  |  |  |  | 803.2 |
Tax effect | — |  |  | (191.2) |  |  | 4.3 |  |  | — |  |  |  |  | (186.9) |
Reclassification adjustments to net earnings | — |  |  | 0.8 |  | (A) | 4.0 |  | (C) | 3.0 |  | (B) |  |  | 7.8 |
Tax effect | — |  |  | (0.1) |  |  | (1.0) |  |  | (0.7) |  |  |  |  | (1.8) |
Balance at March 31, 2025 | $ | (385.3) |  |  | $ | (541.6) |  |  | $ | (29.9) |  |  | $ | (229.2) |  |  |  |  | $ | (1,186.0) |

| Nine Months Ended
| March 31, 2024
| Currency Translation Adjustment |  | Net Gains/Losses on Available-for-sale Securities |  | Cash Flow Hedging Activities |  | Pension Liability |  |  |  | Accumulated Other Comprehensive (Loss)/Income
Balance at June 30, 2023 | $ | (340.8) |  |  | $ | (1,705.6) |  |  | $ | (23.3) |  |  | $ | (236.1) |  |  |  |  | $ | (2,305.8) |
Other comprehensive income/(loss) before reclassification adjustments | (28.1) |  |  | 618.8 |  |  | — |  |  | — |  |  |  |  | 590.7 |
Tax effect | — |  |  | (145.7) |  |  | — |  |  | — |  |  |  |  | (145.7) |
Reclassification adjustments to net earnings | — |  |  | 5.2 |  | (A) | 3.3 |  | (C) | 2.9 |  | (B) |  |  | 11.4 |
Tax effect | — |  |  | (1.1) |  |  | (0.8) |  |  | (0.6) |  |  |  |  | (2.5) |
Balance at March 31, 2024 | $ | (368.9) |  |  | $ | (1,228.4) |  |  | $ | (20.8) |  |  | $ | (233.8) |  |  |  |  | $ | (1,851.9) |

(A) Reclassification adjustments out of AOCI are included within Other income, net, on the Statements of Consolidated Earnings.
(B) Reclassification adjustments out of AOCI are included in net pension income (see Note 12).
(C) Reclassification adjustments out of AOCI are included in Interest expense on the Statements of Consolidated Earnings (see Note 11).
Note 17. Interim Financial Data by Segment
Based upon similar economic and operational characteristics, the Company’s strategic business units have been aggregated into the following two reportable segments: Employer Services and PEO Services. The primary components of the “Other” segment are certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, costs related to transformation, severance costs, non-recurring gains and losses, the elimination of intercompany transactions, interest expense and corporate interest income. Certain revenues and expenses are charged to the reportable segments at a standard rate for management reasons. Other costs are recorded based on management responsibility.
23

Segment Results:

| Revenues
| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Employer Services | $ | 3,767.9 |  |  | $ | 3,590.7 |  |  | $ | 10,417.4 |  |  | $ | 9,762.3 |
PEO Services | 1,788.5 |  |  | 1,665.6 |  |  | 5,026.3 |  |  | 4,681.2 |
Other | (3.4) |  |  | (2.5) |  |  | (9.6) |  |  | (9.4) |
| $ | 5,553.0 |  |  | $ | 5,253.8 |  |  | $ | 15,434.1 |  |  | $ | 14,434.1 |

| Earnings before Income Taxes
| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Employer Services | $ | 1,500.1 |  |  | $ | 1,421.7 |  |  | $ | 3,847.3 |  |  | $ | 3,492.1 |
PEO Services | 253.3 |  |  | 235.9 |  |  | 730.6 |  |  | 713.8 |
Other | (131.5) |  |  | (111.3) |  |  | (458.5) |  |  | (422.9) |
| $ | 1,621.9 |  |  | $ | 1,546.3 |  |  | $ | 4,119.4 |  |  | $ | 3,783.0 |

24

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
(Tabular dollars are presented in millions, except per share amounts)
FORWARD-LOOKING STATEMENTS
This document and other written or oral statements made from time to time by Automatic Data Processing, Inc., its subsidiaries and variable interest entity (“ADP” or the “Company”) may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like "outlook", “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could,” “is designed to” and other words of similar meaning, are forward-looking statements. These statements are based on management’s expectations and assumptions and depend upon or refer to future events or conditions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements or that could contribute to such difference include: ADP's success in obtaining and retaining clients, and selling additional services to clients; the pricing of products and services; the success of our new solutions; our ability to respond successfully to changes in technology, including artificial intelligence; compliance with existing or new legislation or regulations; changes in, or interpretations of, existing legislation or regulations; overall market, political and economic conditions, including interest rate and foreign currency trends and inflation; competitive conditions; our ability to maintain our current credit ratings and the impact on our funding costs and profitability; security or cyber breaches, fraudulent acts, and system interruptions and failures; employment and wage levels; availability of skilled associates; the impact of new acquisitions and divestitures; the adequacy, effectiveness and success of our business transformation initiatives and the impact of any uncertainties related to major natural disasters or catastrophic events; and supply-chain disruptions. ADP disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. These risks and uncertainties, along with the risk factors discussed under “Item 1A. - Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (“fiscal 2024”), and in other written or oral statements made from time to time by ADP, should be considered in evaluating any forward-looking statements contained herein.
NON-GAAP FINANCIAL MEASURES
In addition to our U.S. GAAP results, we use adjusted results and other non-GAAP metrics to evaluate our operating performance in the absence of certain items and for planning and forecasting of future periods. Adjusted EBIT, adjusted EBIT margin, adjusted net earnings, adjusted diluted earnings per share, adjusted effective tax rate and organic constant currency are all non-GAAP financial measures. Please refer to the accompanying financial tables in the “Non-GAAP Financial Measures” section for a discussion of why ADP believes these measures are important and for a reconciliation of non-GAAP financial measures to their comparable GAAP financial measures.
25

EXECUTIVE OVERVIEW
We are a leading global provider of cloud-based Human Capital Management (“HCM”) technology solutions to employers around the world. Our HCM solutions, which include both software and outsourcing services, are designed to help our clients manage their workforce through a dynamic business and regulatory landscape and the changing world of work. We continuously seek to enhance our leading HCM solutions to further support our clients. We see tremendous opportunity ahead as we focus on our three key Strategic Priorities: Leading with Best-in-Class HCM technology, Providing Unmatched Expertise and Outsourcing Solutions, and Leveraging our Global Scale for the Benefit of our Clients. Executing on our Strategic Priorities will be critical to enabling our growth in the years ahead.
During the third quarter, we continued to make meaningful progress on our Strategic Priorities. We continued to integrate WorkForce Software, which we acquired in October, into our global HCM ecosystem to better serve mid-sized and large, global enterprises. We augmented our global payroll capabilities by acquiring PEI (Procesamiento Externo de Informacion, S.C.) in Mexico in January, enhancing the experience provided to our local and global clients and we continued to make broad-based improvements to our products and overall client experience resulting in continued improvement in client satisfaction scores.
Highlights from the nine months ended March 31, 2025 include:
•Revenue growth of 7% to $15,434.1 million; 7% organic constant currency
•Earnings before income taxes margin expansion of 50 bps, and adjusted EBIT margin expansion of 60 bps
•Diluted and adjusted diluted earnings per share ("EPS") growth of 10% and 9%, respectively, to $7.75
•Cash returned via shareholder friendly actions of $2.8B, including $1.8B of dividends and $1.0B of share repurchases; including increasing our dividend for the 50th consecutive year
•Closed the PEI (Procesamiento Externo de Informacion, S.C.) acquisition in January
•Closed the WorkForce Software acquisition in October and progressed on integration efforts
For the nine months ended March 31, 2025, we delivered solid revenue growth of 7%, 7% organic constant currency. Our pays per control metric, which represents the number of employees on ADP clients' payrolls in the United States when measured on a same-store-sales basis for a subset of clients ranging from small to large businesses, grew 1% for the nine months ended March 31, 2025 as compared to the nine months ended March 31, 2024. PEO average worksite employees increased 3% for the nine months ended March 31, 2025, as compared to the nine months ended March 31, 2024.
We have a strong business model, generating significant cash flows with low capital intensity, and offer a suite of products that provide critical support to our clients’ HCM functions. We generate sufficient free cash flow to satisfy our cash dividend and our modest debt obligations, which enables us to absorb the impact of downturns and remain steadfast in our re-investments, longer term strategy, and commitments to shareholder friendly actions. We are committed to building upon our past successes by investing in our business through enhancements in research and development and by driving meaningful transformation in the way we operate. Our financial condition remained solid at March 31, 2025, leaving us well positioned to support our clients and our associates.
26

RESULTS AND ANALYSIS OF CONSOLIDATED OPERATIONS
Total Revenues
For the three and nine months ended March 31, respectively:

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Total Revenues | $ | 5,553.0 |  |  | $ | 5,253.8 |  |  | $ | 15,434.1 |  |  | $ | 14,434.1 |
YoY Growth | 6 | % |  | 7 | % |  | 7 | % |  | 7 | %
YoY Growth, Organic Constant Currency | 6 | % |  | 6 | % |  | 7 | % |  | 6 | %

Total revenues for the three months ended March 31, 2025 increased due to new business started from New Business Bookings, strong client retention, an increase in zero-margin benefits pass-throughs, an increase in pricing, an increase in interest on funds held for clients, and the impact from the WorkForce Software acquisition, partially offset by the impact of foreign currency.
Total revenues for the nine months ended March 31, 2025 increased due to new business started from New Business Bookings, strong client retention, an increase in zero-margin benefits pass-throughs, an increase in pricing, an increase in interest on funds held for clients, and the impact from the WorkForce Software acquisition.
Total revenues for the three months ended March 31, 2025 include interest on funds held for clients of $355.2 million, as compared to $320.8 million for the three months ended March 31, 2024. The increase in the interest earned on funds held for clients resulted from an increase in our average client funds balances of 6.7% to $44.5 billion for the three months ended March 31, 2025, and an increase in our average interest rate earned to 3.2% for the three months ended March 31, 2025, as compared to 3.1% for the three months ended March 31, 2024.
Total revenues for the nine months ended March 31, 2025 include interest on funds held for clients of $881.3 million, as compared to $747.9 million for the nine months ended March 31, 2024. The increase in the interest earned on funds held for clients resulted from an increase in our average interest rate earned to 3.1% for the nine months ended March 31, 2025, as compared to 2.8% for the nine months ended March 31, 2024, and an increase in our average client funds balances of 6.6% to $37.5 billion for the nine months ended March 31, 2025.
Total Expenses

| Three Months Ended |  |  |  |  |  | Nine Months Ended |  |  |  |
| March 31, |  |  |  |  | March 31, |  |  |
| 2025 |  | 2024 |  | % Change |  |  |  | 2025 |  | 2024 |  | % Change |  |
Costs of revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating expenses | $ | 2,534.7 |  |  | $ | 2,406.5 |  |  | 5 | % |  |  |  | $ | 7,196.6 |  |  | $ | 6,777.4 |  |  | 6 | % |  |
Research and development | 247.1 |  |  | 242.7 |  |  | 2 | % |  |  |  | 719.2 |  |  | 707.8 |  |  | 2 | % |  |
Depreciation and amortization | 122.4 |  |  | 119.0 |  |  | 3 | % |  |  |  | 364.6 |  |  | 359.9 |  |  | 1 | % |  |
Total costs of revenues | 2,904.2 |  |  | 2,768.2 |  |  | 5 | % |  |  |  | 8,280.4 |  |  | 7,845.1 |  |  | 6 | % |  |
Selling, general and administrative expenses | 1,015.8 |  |  | 940.9 |  |  | 8 | % |  |  |  | 2,948.6 |  |  | 2,743.6 |  |  | 7 | % |  |
Interest expense | 74.8 |  |  | 62.7 |  |  | 19 | % |  |  |  | 342.2 |  |  | 259.2 |  |  | 32 | % |  |
Total expenses | $ | 3,994.8 |  |  | $ | 3,771.8 |  |  | 6 | % |  |  |  | $ | 11,571.2 |  |  | $ | 10,847.9 |  |  | 7 | % |  |

For the three months ended March 31, 2025, operating expenses increased primarily due to an increase of $73.7 million of PEO Services zero-margin benefits pass-through costs from $1,016.3 million to $1,090.0 million. Additionally, for the three months ended March 31, 2025 operating expenses increased by $28.8 million due to higher service and implementation costs in support
27

of our growing revenue and by $23.9 million due to an increase in costs related to workers' compensation coverage and state unemployment taxes for worksite employees.
For the nine months ended March 31, 2025, operating expenses increased primarily due to an increase of $230.7 million of PEO Services zero-margin benefits pass-through costs from $2,963.7 million to $3,194.4 million. Additionally, for the nine months ended March 31, 2025 operating expenses increased by $89.5 million due to higher service and implementation costs in support of our growing revenue and by $54.2 million due to an increase in costs related to workers' compensation coverage and state unemployment taxes for worksite employees.
Research and development expenses increased for the three and nine months ended March 31, 2025 due to the WorkForce Software acquisition, and increased costs to develop, support, and maintain our new and existing products, partially offset by efficiencies from workforce optimization efforts initiated in the prior year and an increase in the capitalizable spend related to the integration of GenAI into our products, as compared to the prior year.
Depreciation and amortization expenses increased for the three and nine months ended March 31, 2025 due to the WorkForce Software acquisition and amortization of new investments in internally developed software primarily for our next-gen products and purchased software, partially offset by lower amortization of customer contracts and lists.
Selling, general and administrative expenses increased for the three and nine months ended March 31, 2025 primarily due to increases in selling and marketing expenses of $41.5 million and $115.3 million, respectively, as a result of investments in our sales organization, and an increase from acquisition related costs.
Interest expense increased for the three months ended March 31, 2025 primarily due to the issuance of $1.0 billion of senior notes during the first quarter ended September 30, 2024.
Interest expense increased for the nine months ended March 31, 2025 primarily due to a higher volume of average commercial paper borrowings of $4.2 billion and reverse repurchase borrowings of $2.8 billion, as compared to $3.6 billion and $1.5 billion, respectively, for the nine months ended March 31, 2024, and the issuance of $1.0 billion of senior notes during the first quarter ended September 30, 2024, partially offset by a decrease in average interest rates of 40 basis points for commercial paper and reverse repurchase borrowings.
Other (Income)/Expense, net

| Three Months Ended |  |  |  | Nine Months Ended |  |
| March 31, |  |  |  | March 31, |  |
| 2025 |  | 2024 |  | $ Change |  | 2025 |  | 2024 |  | $ Change
Interest income on corporate funds | $ | (55.9) |  |  | $ | (55.9) |  |  | $ | — |  |  | $ | (231.5) |  |  | $ | (159.3) |  |  | $ | 72.2 |
Realized losses on available-for-sale securities, net | 0.1 |  |  | 1.2 |  |  | 1.1 |  |  | 0.8 |  |  | 5.2 |  |  | 4.4 |
Gain on sale of assets | — |  |  | (1.2) |  |  | (1.2) |  |  | (2.4) |  |  | (17.1) |  |  | (14.7) |
Non-service components of pension income, net | (7.9) |  |  | (8.4) |  |  | (0.5) |  |  | (23.4) |  |  | (25.6) |  |  | (2.2) |
Other income, net | $ | (63.7) |  |  | $ | (64.3) |  |  | $ | (0.6) |  |  | $ | (256.5) |  |  | $ | (196.8) |  |  | $ | 59.7 |

Interest income on corporate funds remained flat for the three months ended March 31, 2025 due to higher average investment balances of $6.3 billion as compared to $5.5 billion for the three months ended March 31, 2024, offset by a decrease in average interest rates of 40 basis points.
Interest income on corporate funds increased for the nine months ended March 31, 2025 due to higher average investment balances of $9.0 billion as compared to $6.8 billion for the nine months ended March 31, 2024, coupled with an increase in average interest rates of 30 basis points.
See Note 12 of our Consolidated Financial Statements for further details on non-service components of pension income, net.
28

Earnings Before Income Taxes ("EBIT") and Adjusted EBIT
For the three and nine months ended March 31:

| Three Months Ended |  |  |  | Nine Months Ended |  |
| March 31, |  |  |  | March 31, |  |
| 2025 |  | 2024 |  | YoY Growth |  | 2025 |  | 2024 |  | YoY Growth
EBIT | $ | 1,621.9 |  |  | $ | 1,546.3 |  |  | 5 | % |  | $ | 4,119.4 |  |  | $ | 3,783.0 |  |  | 9 | %
EBIT Margin | 29.2 | % |  | 29.4 | % |  | (20) bps |  | 26.7 | % |  | 26.2 | % |  | 50 bps
Adjusted EBIT | $ | 1,629.7 |  |  | $ | 1,538.7 |  |  | 6 | % |  | $ | 4,134.2 |  |  | $ | 3,779.1 |  |  | 9 | %
Adjusted EBIT Margin | 29.3 | % |  | 29.3 | % |  | 10 bps |  | 26.8 | % |  | 26.2 | % |  | 60 bps

Note: Numbers may not foot due to rounding.
Earnings before income taxes increased for the three and nine months ended March 31, 2025, due to the components discussed above.
EBIT Margin decreased for the three months ended March 31, 2025, due to unfavorable impacts from interest expense, acquisition related expenses, and selling and marketing expenses, partially offset by contributions from client funds interest revenues discussed above and operating efficiencies for costs of servicing and implementing our clients on growing revenue.
EBIT Margin increased for the nine months ended March 31, 2025, due to contributions from client funds interest revenues discussed above, increased interest income on corporate funds, and operating efficiencies for costs of servicing and implementing our clients on growing revenue, partially offset by increased interest expense and acquisition related expenses.
Adjusted EBIT and Adjusted EBIT margin exclude interest income and interest expense that are not related to our client funds extended investment strate gy, legal settlements, and net charges related to our broad-based transformation initiatives, in the applicable periods.
Provision for Income Taxes
The effective tax rate for the three months ended March 31, 2025 and 2024 was 23.0% and 23.4%, respectively. The decrease in the effective tax rate is primarily due to a benefit for a decrease in uncertain tax position activity and a higher excess tax benefit on stock-based compensation in the three months ended March 31, 2025, partially offset by the benefits of an intercompany transfer of certain assets in the three months ended March 31, 2024.
The effective tax rate for the nine months ended March 31, 2025 and 2024 was 23.1% and 22.7%, respectively. The increase in the effective tax rate is primarily due to a benefit for adjustments to prior year tax liabilities and a valuation allowance release in the nine months ended March 31, 2024.
Adjusted Provision for Income Taxes
The adjusted effective tax rate for the three months ended March 31, 2025 and 2024 was 23.0% and 23.4%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.
The adjusted effective tax rate for the nine months ended March 31, 2025 and 2024 was 23.1% and 22.7%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.
29

Net Earnings and Diluted EPS, Unadjusted and Adjusted
For the three and nine months ended March 31:

|  | Three Months Ended |  |  |  |  |  | Nine Months Ended |  |  |  |
|  | March 31, |  |  |  |  | March 31, |  |  |
|  | 2025 |  | 2024 |  | YoY Growth |  |  |  | 2025 |  | 2024 |  | YoY Growth |  |
Net earnings |  | $ | 1,249.5 |  |  | $ | 1,184.9 |  |  | 5 | % |  |  |  | $ | 3,169.0 |  |  | $ | 2,922.7 |  |  | 8 | % |  |
Diluted EPS |  | $ | 3.06 |  |  | $ | 2.88 |  |  | 6 | % |  |  |  | $ | 7.75 |  |  | $ | 7.07 |  |  | 10 | % |  |
Adjusted net earnings |  | $ | 1,249.6 |  |  | $ | 1,186.0 |  |  | 5 | % |  |  |  | $ | 3,168.8 |  |  | $ | 2,926.4 |  |  | 8 | % |  |
Adjusted diluted EPS |  | $ | 3.06 |  |  | $ | 2.88 |  |  | 6 | % |  |  |  | $ | 7.75 |  |  | $ | 7.08 |  |  | 9 | % |  |

For the three and nine months ended March 31, 2025, net earnings reflect the changes described above in our earnings before income taxes and our effective tax rate.
For the three months ended March 31, 2025, in addition to the increase in net earnings, diluted EPS increased as a result of the impact of fewer shares outstanding resulting from the repurchase of approximately 1.0 million shares during the three months ended March 31, 2025, and 1.2 million shares during the three months ended March 31, 2024, partially offset by the issuances of shares under our employee benefit plans.
For the nine months ended March 31, 2025, in addition to the increase in net earnings, diluted EPS increased as a result of the impact of fewer shares outstanding resulting from the repurchase of approximately 3.4 million shares during the nine months ended March 31, 2025, and 3.3 million shares during the nine months ended March 31, 2024, partially offset by the issuances of shares under our employee benefit plans.
30

ANALYSIS OF REPORTABLE SEGMENTS

| Revenues
| Three Months Ended |  | % Change |  | Nine Months Ended |  | % Change
| March 31, |  |  | March 31, |
| 2025 |  | 2024 |  | As Reported |  | Organic constant currency |  | 2025 |  | 2024 |  | As Reported |  | Organic constant currency
Employer Services | $ | 3,767.9 |  |  | $ | 3,590.7 |  |  | 5 | % |  | 5 | % |  | $ | 10,417.4 |  |  | $ | 9,762.3 |  |  | 7 | % |  | 6 | %
PEO Services | 1,788.5 |  |  | 1,665.6 |  |  | 7 | % |  | 7 | % |  | 5,026.3 |  |  | 4,681.2 |  |  | 7 | % |  | 7 | %
Other | (3.4) |  |  | (2.5) |  |  | n/m |  | n/m |  | (9.6) |  |  | (9.4) |  |  | n/m |  | n/m
| $ | 5,553.0 |  |  | $ | 5,253.8 |  |  | 6 | % |  | 6 | % |  | $ | 15,434.1 |  |  | $ | 14,434.1 |  |  | 7 | % |  | 7 | %

| Earnings before Income Taxes
| Three Months Ended |  | % Change |  |  |  | Nine Months Ended |  | % Change |  |
| March 31, |  |  |  |  | March 31, |  |  |
| 2025 |  | 2024 |  | As Reported |  |  |  | 2025 |  | 2024 |  | As Reported |  |
Employer Services | $ | 1,500.1 |  |  | $ | 1,421.7 |  |  | 6 | % |  |  |  | $ | 3,847.3 |  |  | $ | 3,492.1 |  |  | 10 | % |  |
PEO Services | 253.3 |  |  | 235.9 |  |  | 7 | % |  |  |  | 730.6 |  |  | 713.8 |  |  | 2 | % |  |
Other | (131.5) |  |  | (111.3) |  |  | n/m |  |  |  | (458.5) |  |  | (422.9) |  |  | n/m |  |
| $ | 1,621.9 |  |  | $ | 1,546.3 |  |  | 5 | % |  |  |  | $ | 4,119.4 |  |  | $ | 3,783.0 |  |  | 9 | % |  |

| Margin
| Three Months Ended |  |  |  |  |  | Nine Months Ended |  |  |  |
| March 31, |  |  |  |  | March 31, |  |  |
| 2025 |  | 2024 |  | YoY Growth |  |  |  | 2025 |  | 2024 |  | YoY Growth |  |
Employer Services | 39.8 | % |  | 39.6 | % |  | 20 bps |  |  |  | 36.9 | % |  | 35.8 | % |  | 120 bps |  |
PEO Services | 14.2 | % |  | 14.2 | % |  | 0 bps |  |  |  | 14.5 | % |  | 15.2 | % |  | (70) bps |  |

n/m - not meaningful
Note: Numbers may not foot due to rounding.
Employer Services
Revenues
Revenues increased for the three months ended March 31, 2025 due to new business started from New Business Bookings, strong client retention, an increase in pricing, an increase in interest earned on funds held for clients, an increase in our pays per control of 1% for each period, and the impact from the WorkForce Software acquisition, partially offset by impact of foreign currency.
Revenues increased for the nine months ended March 31, 2025 due to new business started from New Business Bookings, strong client retention, an increase in pricing, an increase in interest earned on funds held for clients, an increase in our pays per control of 1% for each period, and the impact from the WorkForce Software acquisition.
31

Earnings before Income Taxes
Employer Services' earnings before income taxes increased 6% and 10% for the three and nine months ended March 31, 2025, respectively, due to contributions from client funds interest revenues discussed above, and operating efficiencies for costs of servicing and implementing our clients on growing revenue, partially offset by increased selling and marketing expenses.
Margin
Employer Services' margin increased for the three months ended March 31, 2025, due to contributions from client funds interest revenues discussed above and operating efficiencies for costs of servicing and implementing our clients on growing revenue, partially offset by increased selling and marketing expenses and acquisition related expenses.
Employer Services' margin increased for the nine months ended March 31, 2025, due to contributions from operating efficiencies for costs of servicing and implementing our clients on growing revenue, and client funds interest revenues discussed above, partially offset by acquisition related expenses.
PEO Services
Revenues

| PEO Revenues
| Three Months Ended |  | Change |  | Nine Months Ended |  | Change
| March 31, |  |  | March 31, |
| 2025 |  | 2024 |  | $ |  | % |  | 2025 |  | 2024 |  | $ |  | %
PEO Services' revenues | $ | 1,788.5 |  |  | $ | 1,665.6 |  |  | $ | 122.9 |  |  | 7 | % |  | $ | 5,026.3 |  |  | $ | 4,681.2 |  |  | $ | 345.1 |  |  | 7 | %
Less: PEO zero-margin benefits pass-throughs | 1,090.0 |  |  | 1,016.3 |  |  | 73.7 |  |  | 7 | % |  | 3,194.4 |  |  | 2,963.7 |  |  | 230.7 |  |  | 8 | %
PEO Services' revenues excluding zero-margin benefits pass-throughs | $ | 698.5 |  |  | $ | 649.3 |  |  | $ | 49.2 |  |  | 8 | % |  | $ | 1,831.9 |  |  | $ | 1,717.5 |  |  | $ | 114.4 |  |  | 7 | %

PEO Services' revenue increased for the three and nine months ended March 31, 2025, due to the increase in zero-margin benefits pass-throughs, and an increase in average worksite employees of 2% and 3%, respectively, as compared to the three and nine months ended March 31, 2024.
Earnings before Income Taxes
PEO Services' earnings before income taxes increased 7% and 2% for the three and nine months ended March 31, 2025, respectively, due to increased revenues discussed above, partially offset by increases in zero-margin benefits pass-through costs, operating costs related to workers' compensation and state unemployment insurance, and selling and marketing expenses, as compared to the three and nine months ended March 31, 2024.
Margin
PEO Services' margin remained flat for the three months ended March 31, 2025, due to an increase in the pre-tax benefit from ADP Indemnity and operating efficiencies for costs of servicing and implementing our clients on growing revenue, offset by an increase in zero-margin benefits pass-through costs, operating costs related to workers' compensation and state unemployment insurance, and selling and marketing expenses.
PEO Services' margin decreased for the nine months ended March 31, 2025, due to increases in zero-margin benefits pass-through costs, operating costs related to workers' compensation and state unemployment insurance, and selling and marketing expenses.
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ADP Indemnity provides workers’ compensation and employer’s liability deductible reimbursement insurance protection for PEO Services’ worksite employees up to $1 million per occurrence. PEO Services has secured a workers’ compensation and employer’s liability insurance policy that caps the exposure for each claim at $1 million per occurrence and has also secured aggregate stop loss insurance that caps aggregate losses at a certain level in fiscal years 2012 and prior from an admitted and licensed insurance company of AIG. We utilize historical loss experience and actuarial judgment to determine the estimated claim liability, and changes in estimated ultimate incurred losses are included in the PEO segment.
Additionally, starting in fiscal year 2013, ADP Indemnity paid premiums to enter into reinsurance arrangements with ACE American Insurance Company, a wholly-owned subsidiary of Chubb Limited (“Chubb”), to cover substantially all losses incurred by the Company up to the $1 million per occurrence related to the workers' compensation and employer's liability deductible reimbursement insurance protection for PEO Services' worksite employees. Each of these reinsurance arrangements limits our overall exposure incurred up to a certain limit. The Company believes the likelihood of ultimate losses exceeding this limit is remote. ADP Indemnity recorded a pre-tax benefit of approximately $5.6 million and $9.7 million for the three and nine months ended March 31, 2025, respectively, as compared to approximately $1.6 million and $6.1 million for the three and nine months ended March 31, 2024, respectively. The pre-tax benefit for the three months and nine months ended March 31, 2025 was primarily a result of more favorable actuarial loss development in workers’ compensation reserves as compared to the three and nine months ended March 31, 2024. In July 2024, ADP Indemnity paid a premium of $276 million t o enter into a reinsurance arrangement with Chubb to cover substantially all losses incurred by ADP Indemnity for the fiscal 2025 policy year on terms substantially similar to the fiscal 2024 reinsurance policy.
Other
The primary components of “Other” are certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, costs related to our transformation office, severance costs, non-recurring gains and losses, the elimination of intercompany transactions, and other interest income and expense.
Non-GAAP Financial Measures
In addition to our U.S. GAAP results, we use the adjusted results and other non-GAAP metrics set forth in the table below to evaluate our operating performance in the absence of certain items and for planning and forecasting of future periods:

Adjusted Financial Measure | U.S. GAAP Measures |
Adjusted EBIT | Net earnings |
Adjusted provision for income taxes | Provision for income taxes |
Adjusted net earnings | Net earnings |
Adjusted diluted earnings per share | Diluted earnings per share |
Adjusted effective tax rate | Effective tax rate |
Organic constant currency | Revenues |

We believe that the exclusion of the identified items helps us reflect the fundamentals of our underlying business model and analyze results against our expectations and against prior period, and to plan for future periods by focusing on our underlying operations. We believe that the adjusted results provide relevant and useful information for investors because it allows investors to view performance in a manner similar to the method used by management and improves their ability to understand and assess our operating performance. The nature of these exclusions is for specific items that are not fundamental to our underlying business operations. Since these adjusted financial measures and other non-GAAP metrics are not measures of performance calculated in accordance with U.S. GAAP, they should not be considered in isolation from, as a substitute for, or superior to their corresponding U.S. GAAP measures, and they may not be comparable to similarly titled measures at other companies.
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|  | Three Months Ended |  | % Change |  |  |  | Nine Months Ended |  | % Change |  |
|  | March 31, |  |  |  |  | March 31, |  |  |
|  | 2025 |  | 2024 |  | As Reported |  |  |  | 2025 |  | 2024 |  | As Reported |  |
Net earnings |  | $ | 1,249.5 |  |  | $ | 1,184.9 |  |  | 5 | % |  |  |  | $ | 3,169.0 |  |  | $ | 2,922.7 |  |  | 8 | % |  |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for income taxes |  | 372.4 |  |  | 361.4 |  |  |  |  |  |  | 950.4 |  |  | 860.3 |  |  |  |  |
All other interest expense (a) |  | 29.3 |  |  | 17.8 |  |  |  |  |  |  | 79.5 |  |  | 53.5 |  |  |  |  |
All other interest income (a) |  | (21.6) |  |  | (26.9) |  |  |  |  |  |  | (64.4) |  |  | (62.3) |  |  |  |  |
Transformation initiatives |  | 0.1 |  |  | 1.5 |  |  |  |  |  |  | 0.1 |  |  | 4.9 |  |  |  |  |
Legal settlements (b) |  | — |  |  | — |  |  |  |  |  |  | (0.4) |  |  | — |  |  |  |  |
Adjusted EBIT |  | $ | 1,629.7 |  |  | $ | 1,538.7 |  |  | 6 | % |  |  |  | $ | 4,134.2 |  |  | $ | 3,779.1 |  |  | 9 | % |  |
Adjusted EBIT Margin |  | 29.3 | % |  | 29.3 | % |  |  |  |  |  | 26.8 | % |  | 26.2 | % |  |  |  |
Provision for income taxes |  | $ | 372.4 |  |  | $ | 361.4 |  |  | 3 | % |  |  |  | $ | 950.4 |  |  | $ | 860.3 |  |  | 10 | % |  |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transformation initiatives (c) |  | — |  |  | 0.4 |  |  |  |  |  |  | — |  |  | 1.2 |  |  |  |  |
Legal settlements (c) |  | — |  |  | — |  |  |  |  |  |  | (0.1) |  |  | — |  |  |  |  |
Adjusted provision for income taxes |  | $ | 372.4 |  |  | $ | 361.8 |  |  | 3 | % |  |  |  | $ | 950.3 |  |  | $ | 861.5 |  |  | 10 | % |  |
Adjusted effective tax rate (d) |  | 23.0 | % |  | 23.4 | % |  |  |  |  |  | 23.1 | % |  | 22.7 | % |  |  |  |
Net earnings |  | $ | 1,249.5 |  |  | $ | 1,184.9 |  |  | 5 | % |  |  |  | $ | 3,169.0 |  |  | $ | 2,922.7 |  |  | 8 | % |  |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transformation initiatives |  | 0.1 |  |  | 1.5 |  |  |  |  |  |  | 0.1 |  |  | 4.9 |  |  |  |  |
Income tax (benefit)/provision for transformation initiatives (c) |  | — |  |  | (0.4) |  |  |  |  |  |  | — |  |  | (1.2) |  |  |  |  |
Legal settlements (b) |  | — |  |  | — |  |  |  |  |  |  | (0.4) |  |  | — |  |  |  |  |
Income tax (benefit)/provision for legal settlements (c) |  | — |  |  | — |  |  |  |  |  |  | 0.1 |  |  | — |  |  |  |  |
Adjusted net earnings |  | $ | 1,249.6 |  |  | $ | 1,186.0 |  |  | 5 | % |  |  |  | $ | 3,168.8 |  |  | $ | 2,926.4 |  |  | 8 | % |  |
Diluted EPS |  | $ | 3.06 |  |  | $ | 2.88 |  |  | 6 | % |  |  |  | $ | 7.75 |  |  | $ | 7.07 |  |  | 10 | % |  |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transformation initiatives (c) |  | — |  |  | — |  |  |  |  |  |  | — |  |  | 0.01 |  |  |  |  |
Legal settlements (b) (c) |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  |  |  |
Adjusted diluted EPS |  | $ | 3.06 |  |  | $ | 2.88 |  |  | 6 | % |  |  |  | $ | 7.75 |  |  | $ | 7.08 |  |  | 9 | % |  |

(a) In Adjusted EBIT, we include the interest income earned on investments associated with our client funds extended investment strategy and interest expense on borrowings related to our client funds extended investment strategy as we believe these amounts to be fundamental to the underlying operations of our business model. The adjustments in the table above represent the interest income and interest expense that are not related to our client funds extended investment strategy and are labeled as “All other interest expense” and “All other interest income.”
(b) Represents a reserve reversal of a legal matter from fiscal 2023 previously recorded as an adjustment to EBIT.
(c) The income tax (benefit)/provision was calculated based on the annualized marginal rate in effect during the quarter of the adjustment.
(d) The Adjusted effective tax rate is calculated as our Adjusted provision for income taxes divided by the sum of our Adjusted net earnings plus our Adjusted provision for income taxes.
The following table reconciles our reported growth rates to the non-GAAP measure of organic constant currency, which excludes the impact of acquisitions, the impact of dispositions, and the impact of foreign currency. The impact of acquisitions and dispositions is calculated by excluding the current year revenues of acquisitions until the one-year anniversary of the transaction and by excluding the prior year revenues of divestitures for the one-year period preceding the transaction. The
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impact of foreign currency is determined by calculating the current year result using foreign exchange rates consistent with the prior year. The PEO segment is not impacted by acquisitions, dispositions or foreign currency.

| Three Months Ended |  |  |  | Nine Months Ended |  |  |
| March 31, |  |  |  | March 31, |  |  |
| 2025 |  |  |  | 2025 |  |  |
Consolidated revenue growth as reported | 6 | % |  |  |  | 7 | % |  |  |
Adjustments: |  |  |  |  |  |  |  |
Impact of acquisitions | (1) | % |  |  |  | — | % |  |  |
Impact of foreign currency | 1 | % |  |  |  | — | % |  |  |
Consolidated revenue growth, organic constant currency | 6 | % |  |  |  | 7 | % |  |  |
Employer Services revenue growth as reported | 5 | % |  |  |  | 7 | % |  |  |
Adjustments: |  |  |  |  |  |  |  |
Impact of acquisitions | (1) | % |  |  |  | (1) | % |  |  |
Impact of foreign currency | 1 | % |  |  |  | — | % |  |  |
Employer Services revenue growth, organic constant currency | 5 | % |  |  |  | 6 | % |  |  |

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCE S
At March 31, 2025, cash and cash equivalents were $2.7 billion, which were primarily invested in time deposits and money market funds.
For corporate liquidity, we expect existing cash, cash equivalents, marketable securities, cash flow from operations together with our $10.3 billion of co mmitted credit facilities and our ability to access both long-term and short-term debt financing from the capital markets will be adequate to meet our operating, investing, and financing activities such as regular quarterly dividends, share repurchases, acquisitions and capital expenditures for the foreseeable future. Our financial condition remains solid at March 31, 2025 and we have sufficient liquidity.
For client funds liquidity, we have the ability to borrow through our financing arrangements under our U.S. short-term commercial paper program and our U.S., Canadian and United Kingdom short-term reverse repurchase agreements ($7.3 billion of which is available on a committed basis in the U.S. as of March 31, 2025), together with our $10.3 billion of committed credit facilities and our ability to use corporate liquidity when necessary to meet short-term funding requirements related to client funds obligations. Please see “Quantitative and Qualitative Disclosures about Market Risk” for a further discussion of the risks related to our client funds extended investment strategy. See Note 10 of our Consolidated Financial Statements for a description of our short-term financing including commercial paper.
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Operating, Investing and Financing Cash Flows
Our cash flows from operating, investing, and financing activities, as reflected in the Statements of Consolidated Cash Flows for the nine months ended March 31, 2025 and 2024, respectively, are summarized as follows:

|  | Nine Months Ended
|  | March 31,
|  | 2025 |  | 2024 |  | $ Change
Cash provided by / (used in): |  |  |  |  |  |
Operating activities |  | $ | 3,500.5 |  |  | $ | 2,857.0 |  |  | $ | 643.5 |
Investing activities |  | (3,458.2) |  |  | (1,171.8) |  |  | (2,286.4) |
Financing activities |  | (1,916.4) |  |  | 9,683.8 |  |  | (11,600.2) |
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents |  | (12.7) |  |  | (15.7) |  |  | 3.0 |
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents |  | $ | (1,886.8) |  |  | $ | 11,353.3 |  |  | $ | (13,240.1) |

Net cash flows provided by operating activities increased due to an increase in growth in our business and timing on collections of accounts receivables, partially offset by a reduction in operational accruals due to timing, as compared to the nine months ended March 31, 2024.
Net cash flows used in investing activities changed primarily due to the acquisition of Workforce Software with a net cash disbursement of $1,158.3 million and the timing of purchases and proceeds of corporate and client funds marketable securities of $1,132.4 million.
Net cash flows used in financing activities changed due to a net decrease in the cash flow from client funds obligations of $10,365.2 million, which is due to the timing of impounds from our clients and payments to our clients' employees and other payees, and a net decrease in cash distributed from the Internal Revenue Service as of March 31, 2025, which is processed to our clients, partially offset by proceeds from the issuance of debt.
From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions. We purchased approximately 3.4 million shares of our common stock at an average price per share of $283.14 during the nine months ended March 31, 2025, as compared to purchases of 3.3 million shares at an average price per share of $242.02 during the nine months ended March 31, 2024.
Capital Resources and Client Funds Obligations
We have $4.0 billion of senior unsecured notes with maturity dates in 2025, 2028, 2030 and 2034. We may from time to time revisit the long-term debt market to refinance existing debt, finance investments including acquisitions for our growth, and maintain the appropriate capital structure. However, there can be no assurance that volatility in the global capital and credit markets would not impair our ability to access these markets on terms acceptable to us, or at all. See Note 11 of our Consolidated Financial Statements for a description of our long-term financing.
Our U.S. short-term funding requirements primarily related to client funds are sometimes obtained on an unsecured basis through the issuance of commercial paper, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. This commercial paper program provides for the issuance of up to $10.3 billion in aggregate maturity value. Our commercial paper program is rated A-1+ by St andard & Poor’s, Prime-1 (“P-1”) by Moody’s and F1+ by Fitch. These ratings denote the highest quality commercial paper securities. Maturities of commercial paper can range
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from overnight to up to 364 days. At March 31, 2025 and June 30, 2024, the Compa ny had no comm ercial paper borrowing outstanding. Details of the borrowings under the commercial paper program are as follows:

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Average daily borrowings (in billions) | $ | 3.3 |  |  | $ | 2.7 |  |  | $ | 4.2 |  |  | $ | 3.6 |
Weighted average interest rates | 4.4 | % |  | 5.4 | % |  | 4.9 | % |  | 5.3 | %
Weighted average maturity (approximately in days) | 2 days |  | 2 days |  | 2 days |  | 2 days

Our U.S., Canadian, and United Kingdom short-term funding requirements related to client funds obligations are sometimes obtained on a secured basis through the use of reverse repurchase agreements, which are collateralized principally by government and government agency securities, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. These agreements generally have terms ranging from overnight to up to five business days. We have successfully borrowed through the use of reverse repurchase agreements on an as-needed basis to meet short-term funding requirements related to client funds obligatio ns. As of March 31, 2025, we have $7.3 billion available to us on a committed basis under the U.S. reverse repurchase agreements. At March 31, 2025, the Company had no outstanding obligations related to reverse repurchase agreements. At June 30, 2024, the Company had $385.4 million of outstanding obligations related to reverse repurchase agreements which were fully paid in early July 2024. Details of the reverse repurchase agreements are as follows:

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Average outstanding balances (in billions) | $ | 0.9 |  |  | $ | 0.6 |  |  | $ | 2.8 |  |  | $ | 1.5 |
Weighted average interest rates | 4.1 | % |  | 5.4 | % |  | 4.9 | % |  | 5.4 | %

We vary the maturities of our committed credit facilities to limit the refinancing risk of any one facility. We have a $4.55 billion, 364-day credit agreement that matures in June 2025 with a one year term-out option. In addition, we have a five-year $2.25 billion credit facility and a five-year $3.5 billion credit facility maturing in June 2028 and June 2029, respectively, each with an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments. The primary uses of the credit facilities are to provide liquidity to the commercial paper program and funding for general corporate purposes, if necessary. We had no borrowings through March 31, 2025 under the credit facilities. We believe that we currently meet all conditions set forth in the revolving credit agreements to borrow thereunder and we are not aware of any conditions that would prevent us from borrowing part or all of the $10.3 billion available to us under the revolving credit agreements. See Note 10 of our Consolidated Financial Statements for a description of our short-term financing, including credit facilities.
Our investment portfolio does not contain any asset-backed securities with underlying collateral of sub-prime mortgages, alternative-A mortgages, sub-prime auto loans or sub-prime home equity loans, collateralized debt obligations, collateralized loan obligations, credit default swaps, derivatives, auction rate securities, structured investment vehicles or non-investment grade fixed-income securities. We own AAA-rated senior tranches of primarily fixed rate auto loan, credit card, and equipment lease receivables, secured predominantly by prime collateral. All collateral on asset-backed securities has performed as expected through March 31, 2025. In addition, we own U.S. government securities which primarily include debt directly issued by Federal Farm Credit Banks and Federal Home Loan Banks. Our client funds investment strategy is structured to allow us to average our way through an interest rate cycle by laddering the maturities of our investments out to five years (in the case of the extended portfolio) and out to ten years (in the case of the long portfolio). This investment strategy is supported by our short-term financing arrangements necessary to satisfy short-term funding requirements relating to client funds obligations. See Note 7 of our Consolidated Financial Statements for a description of our corporate investments and funds held for clients.
Capital expenditures for the nine months ended March 31, 2025 were $139.9 million, as compared to $151.6 million for the nine months ended March 31, 2024. We expect capital expenditures in fiscal 2025 to be between $180.0 million and $200.0 million, as compared to $211.7 million in fiscal 2024.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our overall investment portfolio is comprised of corporate investments (cash and cash equivalents, marketable securities) and client funds assets (funds that have been collected from clients but have not yet been remitted to the applicable tax authorities or client employees).
Our corporate investments are invested in cash and cash equivalents and highly liquid, investment-grade marketable securities. These assets are available for our regular quarterly dividends, share repurchases, capital expenditures and/or acquisitions, as well as other corporate operating purposes. All of our short-term and long-term fixed-income securities are classified as available-for-sale securities.
Our client funds assets are invested with safety of principal, liquidity, and diversification as the primary objectives. Consistent with those objectives, we also seek to maximize interest income and to minimize the volatility of interest income. Client funds assets are invested in highly liquid, investment-grade marketable securities, with a maximum maturity of 10 years at the time of purchase, and money market securities and other cash equivalents.
We utilize a strategy by which we extend the maturities of our investment portfolio for funds held for clients and employ short-term financing arrangements to satisfy our short-term funding requirements related to client funds obligations. Our client funds investment strategy is structured to allow us to average our way through an interest rate cycle by laddering the maturities of our investments out to five years (in the case of the extended portfolio) and out to ten years (in the case of the long portfolio). As part of our client funds investment strategy, we use the daily collection of funds from our clients to satisfy other unrelated client funds obligations, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. In circumstances where we experience a reduction in employment levels due to a slowdown in the economy, we may make tactical decisions to sell certain securities or not reinvest maturing securities in order to reduce the size of the funds held for clients to correspond to client funds obligations. We attempt to minimize the risk of not having funds collected from a client available at the time such client’s obligation becomes due by generally impounding the client's funds by the time we pay such client’s obligation. When we don't impound client funds in advance of paying such client obligations, we are at risk of not recovering such funds or material delay in such recovery. Through our client funds investment strategy and client impounding processes, we have consistently maintained the required level of liquidity to satisfy all of our obligations.
There are inherent risks and uncertainties involving our investment strategy relating to our client funds assets. Such risks include liquidity risk, including the risk associated with our ability to liquidate, if necessary, our available-for-sale securities in a timely manner in order to satisfy our client funds obligations. However, our investments are made with the safety of principal, liquidity, and diversification as the primary goals to minimize the risk of not having sufficient funds to satisfy all of our client funds obligations. We also believe we have significantly reduced the risk of not having sufficient funds to satisfy our client funds obligations by consistently maintaining access to other sources of liquidity, including our corporate cash balances, available borrowings under our $10.3 billion commercial paper program (rated A-1+ by Standard and Poor’s, P-1 by Moody’s, and F1+ by Fitch, the highest possible short-term credit ratings), and our ability to engage in reverse repurchase agreement transactions ($7.3 billion of which is available on a committed basis in the U.S. as of March 31, 2025) and available borrowings under our $10.3 billion committed credit facilities. The reduced availability of financing during periods of economic turmoil, even to borrowers with the highest credit ratings, may limit our ability to access short-term debt markets to meet the liquidity needs of our business. In addition to liquidity risk, our investments are subject to interest rate risk and credit risk, as discussed below.
We have established credit quality, maturity, and exposure limits for our investments. The minimum allowed credit rating at time of purchase for Corporate, Canadian government agency and Canadian provincial bonds is BBB, for asset-backed securities is AAA, and for municipal bonds is A. The maximum maturity at time of purchase for BBB-rated securities is 5 years, and for single A rated securities, AA-rated and AAA-rated securities is 10 years. Time deposits and commercial paper must be rated A-1 and/or P-1. Money market funds must be rated AAA/Aaa-mf.
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Details regarding our overall investment portfolio are as follows:

| Three Months Ended |  | Nine Months Ended
| March 31, |  | March 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Average investment balances at cost: |  |  |  |  |  |  |
Corporate investments | $ | 6,269.5 |  |  | $ | 5,547.1 |  |  | $ | 8,987.7 |  |  | $ | 6,837.5 |
Funds held for clients | 44,495.8 |  |  | 41,701.7 |  |  | 37,470.6 |  |  | 35,135.3 |
Total | $ | 50,765.3 |  |  | $ | 47,248.8 |  |  | $ | 46,458.3 |  |  | $ | 41,972.8 |
Average interest rates earned exclusive of realized (gains)/losses on: |  |  |  |  |  |  |
Corporate investments | 3.6 | % |  | 4.0 | % |  | 3.4 | % |  | 3.1 | %
Funds held for clients | 3.2 | % |  | 3.1 | % |  | 3.1 | % |  | 2.8 | %
Total | 3.2 | % |  | 3.2 | % |  | 3.2 | % |  | 2.9 | %
Net realized losses on available-for-sale securities | $ | 0.1 |  |  | $ | 1.2 |  |  | $ | 0.8 |  |  | $ | 5.2 |

| March 31, 2025 |  | June 30, 2024
Net unrealized pre-tax losses on available-for-sale securities | $ | (688.0) |  |  | $ | (1,515.8) |
Total available-for-sale securities at fair value | $ | 33,856.6 |  |  | $ | 31,207.5 |

We are exposed to interest rate risk in relation to securities that mature, as the proceeds from maturing securities are reinvested. Factors that influence the earnings impact of interest rate changes include, among others, the amount of invested funds and the overall portfolio mix between short-term and long-term investments. This mix varies during the fiscal year and is impacted by daily interest rate changes. The annu alized interest rate earned on ou r entire portfolio increased from 2.9% for the nine months ended March 31, 2024 to 3.2% for the nine months ended March 31, 2025. A hypothetical change in both short-term interest rates (e.g., overnight interest rates or the federal funds rate) and intermediate-term interest rates of 25 basis points applied to the estimated average investment balances and any related short-term borrowings would result in approximately a $24 million impact to earnings before income taxes over the ensuing twelve-month period ending March 31, 2026. A hypothetical change in only short-term interest rates of 25 basis points applied to the estimated average short-term investment balances and any related short-term borrowings would result in approximately a $9 million impact to earnings before income taxes over the ensuing twelve-month period ending March 31, 2026.
We are exposed to credit risk in connection with our available-for-sale securities through the possible inability of the borrowers to meet the terms of the securities. We limit credit risk by investing in investment-grade securities, primarily AAA-rated and AA- rated securities, as rated by Moody’s, Standard & Poor’s, DBRS for Canadian dollar denominated securities, and Fitch for asset-backed and commercial-mortgage-backed securities. In addition, we limit amounts that can be invested in any security other than U.S. government and government agency, Canadian government, and United Kingdom government securities.
We operate and transact business in various foreign jurisdictions and are therefore exposed to market risk from changes in foreign currency exchange rates that could impact our consolidated results of operations, financial position, or cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. We may use derivative financial instruments as risk management tools and not for trading purposes.
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CRITICAL ACCOUNTING POLICIES
Our Consolidated Financial Statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues, expenses, and other comprehensive income. We continually evaluate the accounting policies and estimates used to prepare the Consolidated Financial Statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Refer to Note 2 of our Consolidated Financial Statements for changes to our accounting policies effective for the fiscal 2025.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 2, New Accounting Pronouncements, of Notes to the Consolidated Financial Statements for a discussion of recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The information called for by this item is provided under the caption “Quantitative and Qualitative Disclosures about Market Risk” under Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 4. Controls and Procedures
The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “evaluation”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025 in ensuring that (i) information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and (ii) such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
There was no change in the Company's internal control over financial reporting that occurred during the three months ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Except as noted below, all other items are either inapplicable or would result in negative responses and, therefore, have been omitted.
Item 1. Legal Proceedings
In the normal course of business, the Company is subject to various claims and litigation. While the outcome of any litigation is inherently unpredictable, the Company believes it has valid defenses with respect to the legal matters pending against it and the Company believes that the ultimate resolution of these matters will not have a material adverse impact on its financial condition, results of operations, or cash flows.
With respect to the disclosure of administrative or judicial proceedings arising under any Federal, State, or local provisions regulating the discharge of materials into the environment or that are primarily for the purpose of protecting the environment, the Company has determined that the following threshold is reasonably designed to result in disclosure of any such proceeding that is material to its business or financial condition: any proceeding when the potential monetary sanctions exceed $1 million.
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Item 1A. Risk Factors
There have been no material changes in our risk factors disclosed in Part 1, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities

|  | Total Number of Shares Purchased (1) |  | Average Price Paid per Share (3) |  | Total Number of Shares Purchased as Part of the Publicly Announced Common Stock Repurchase Plan (2) |  | Maximum Approximate Dollar Value of Shares that may yet be Purchased under the Common Stock Repurchase Plan (2) (3)
Period |  |  |  |
January 1 to 31, 2025 |  | 340,468 |  |  | $ | 297.61 |  |  | 338,823 |  |  | $ | 2,330,801,457 |
February 1 to 28, 2025 |  | 284,523 |  |  | $ | 311.75 |  |  | 284,197 |  |  | $ | 2,242,204,855 |
March 1 to 31, 2025 |  | 374,139 |  |  | $ | 303.22 |  |  | 373,926 |  |  | $ | 2,128,823,410 |
Total |  | 999,130 |  |  |  |  | 996,946 |  |  |

(1) |  | During the three months ended March 31, 2025, pursuant to the terms of the Company’s restricted stock program, the Company purchased 2,184 shares at the then-market value of the shares to satisfy certain tax withholding requirements for employees upon the vesting of their restricted shares.
(2) |  | The Company received the Board of Directors' approval in November 2022 to repurchase $5 billion of its common stock.
(3) |  | Inclusive of the impact of the one-percent excise tax under the Inflation Reduction Act of 2022.

There is no expiration date for the common stock repurchase authorization.
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Item 5. Other Information
(a) On April 28, 2025, the Board of Directors (the "Board") of the Company amended and restated the Company's By-Laws to make minor clarifying changes under Sections 2.04 and 2.05 of the By-Laws. The full text of the amended and restated By-Laws is attached hereto as Exhibit 3.1 and is incorporated herein by reference.
(c) The following individuals became executive officers under Section 16 of the Securities Exchange Act of 1934 during the fiscal quarter ended March 31, 2025. We are reporting the following trading arrangements that are intended to satisfy the affirmative defense of Rule 10b5–1(c), which the executive officers adopted prior to becoming executive officers. For the fiscal quarter ended March 31, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

Name & Title | Date of Adoption | Duration of Trading Arrangement | The maximum number of securities to be sold pursuant to the trading arrangement (1)
David Foskett, President, Global Sales | September 5, 2024 | January 6, 2025 – September 2, 2025 | 5,177
Virginia Magliulo, Executive Vice President, Employer Services International | September 5, 2024 | January 6, 2025 – December 31, 2025 | 5,643
Brian Michaud, Executive Vice President, Smart Compliance Solutions & Human Resources Outsourcing | September 9, 2024 | January 2, 2025 – July 1, 2025 | 2,068

(1) Securities reported in this column reflect options, restricted stock units (“RSUs”), performance-based stock units (“PSUs”) and shares of common stock, as appropriate. In the case of RSUs, quantities included in this column reflect the full amount of RSUs as reported in an officer’s respective plan and do not reflect the impact of tax withholding which will not be determined until the RSUs vest. In the case of PSUs (which have a three-year performance period), quantities included in this column reflect the application of performance factors at target and the inclusion of accrued dividend equivalents through the date of adoption of the trading arrangement. The PSU amounts do not reflect the impact of tax withholding which will not be determined until the PSUs vest. In addition, securities reported in this column include securities subject to limit orders and such orders may not fill if limit order conditions are not met.
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Item 6. Exhibits

Exhibit Number | Exhibit
3.1 | Amended and Restated By-laws of Automatic Data Processing, Inc., dated April 28, 2025
31.1 | Certification by Maria Black pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
31.2 | Certification by Don McGuire pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1 | Certification by Maria Black pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 | Certification by Don McGuire pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS | Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH | Inline XBRL Taxonomy Extension Schema
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase
101.LAB | Inline XBRL Taxonomy Label Linkbase
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF | Inline XBRL Taxonomy Extension Definition Document
104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | AUTOMATIC DATA PROCESSING, INC. (Registrant)
Date: | May 1, 2025 | /s/ Don McGuire Don McGuire
|  | Chief Financial Officer (Title)

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