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Automatic Data Processing, Inc. | ||
| (Exact name of registrant as specified in charter) | ||
| Delaware | 1-5397 | 22-1467904 | ||||||||||||
|
(State or Other Jurisdiction
of Incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
||||||||||||
| N/A | |||||
| (Former name or former address, if changed since last report) | |||||
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||
| 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 | ||||||
| Emerging growth company | ☐ | ||||
| (d) | Earnings Release dated January 28, 2026 issued by Automatic Data Processing, Inc. | |||||||||||||
| 104 | Cover Page Interactive Data File, embedded in Inline XBRL. | |||||||||||||
| AUTOMATIC DATA PROCESSING, INC. | |||||||||||||||||||||||||||||||||||||||||||||||
| (Registrant) | |||||||||||||||||||||||||||||||||||||||||||||||
| By: | /s/ Peter Hadley | ||||||||||||||||||||||||||||||||||||||||||||||
| Date: January 28, 2026 | Name: Peter Hadley | ||||||||||||||||||||||||||||||||||||||||||||||
| Title: Chief Financial Officer | |||||||||||||||||||||||||||||||||||||||||||||||
| Exhibit Number | Description | |||||||
| Earnings Release dated January 28, 2026 issued by Automatic Data Processing, Inc. | ||||||||
| 104 | Cover Page Interactive Data File, embedded in Inline XBRL. | |||||||
|
Fiscal 2025
(unaudited)
|
October 29, 2025 Fiscal 2026 Outlook (a) |
January 28, 2026 Fiscal 2026 Outlook (a) |
||||||||||||
| Total ADP | Revenues | $20,561M | 5 to 6% | ~6% | ||||||||||
| Adj. EBIT Margin | 26.0% | 50 to 70 bps | 50 to 70 bps | |||||||||||
| Adj. Effective Tax Rate | 23.2% | ~23% | ~23% | |||||||||||
| Adj. Diluted EPS | $10.01 | 8 to 10% | 9 to 10% | |||||||||||
| Employer Services | Revenues | $13,883M | 5 to 6% | ~6% | ||||||||||
| ES New Business Bookings | $2.1B | 4 to 7% | 4 to 7% | |||||||||||
| Client Revenue Retention | 92.1% | (30) to (10) bps | (30) to (10) bps | |||||||||||
| U.S. Pays Per Control | 1% | ~Flat | ~Flat | |||||||||||
| PEO Services | Revenues | $6,690M | 5 to 7% | 5 to 7% | ||||||||||
| Revenues Ex Zero-Margin Pass-throughs | $2,401M | 3 to 5% | 3 to 5% | |||||||||||
| Average WSEs | 748,000 | 2 to 3% | ~2% | |||||||||||
| Client Funds Interest | Average Client Funds Balances | $37.6B | 3 to 4% | 4 to 5% | ||||||||||
| Yield on Client Funds Portfolio | 3.2% | ~3.4% | ~3.4% | |||||||||||
| Client Funds Interest Revenue | $1,189M | $1,300 to $1,320M | $1,310 to $1,330M | |||||||||||
| Net Impact from Client Funds Extended Strategy | $1,073M | $1,260 to $1,280M | $1,270 to $1,290M | |||||||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||||||||||||||||||||||||||
| Statements of Consolidated Earnings | |||||||||||||||||||||||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Revenues, other than interest on funds held for clients and PEO revenues |
$ | 3,298.3 | $ | 3,114.8 | $ | 6,501.7 | $ | 6,122.0 | |||||||||||||||||||||||||||
| Interest on funds held for clients | 308.6 | 272.8 | 595.5 | 526.1 | |||||||||||||||||||||||||||||||
| PEO revenues (A) (B) (C) | 1,752.4 | 1,660.8 | 3,437.3 | 3,233.0 | |||||||||||||||||||||||||||||||
| Total revenues | 5,359.3 | 5,048.4 | 10,534.5 | 9,881.1 | |||||||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||||||
| Costs of revenues: | |||||||||||||||||||||||||||||||||||
| Operating expenses (B) (C) | 2,509.0 | 2,376.1 | 4,970.6 | 4,661.9 | |||||||||||||||||||||||||||||||
| Research and development | 257.8 | 239.5 | 509.0 | 472.1 | |||||||||||||||||||||||||||||||
| Depreciation and amortization | 122.9 | 126.9 | 246.2 | 242.2 | |||||||||||||||||||||||||||||||
| Total costs of revenues | 2,889.7 | 2,742.5 | 5,725.8 | 5,376.2 | |||||||||||||||||||||||||||||||
| Selling, general, and administrative expenses | 1,068.1 | 1,006.1 | 2,074.4 | 1,932.8 | |||||||||||||||||||||||||||||||
| Interest expense | 124.1 | 129.6 | 259.5 | 267.4 | |||||||||||||||||||||||||||||||
| Total expenses | 4,081.9 | 3,878.2 | 8,059.7 | 7,576.4 | |||||||||||||||||||||||||||||||
| Other (income)/loss, net | (105.8) | (91.1) | (215.9) | (192.8) | |||||||||||||||||||||||||||||||
| Earnings before income taxes | 1,383.2 | 1,261.3 | 2,690.7 | 2,497.5 | |||||||||||||||||||||||||||||||
| Provision for income taxes | 321.2 | 298.1 | 615.6 | 578.0 | |||||||||||||||||||||||||||||||
| Net earnings | $ | 1,062.0 | $ | 963.2 | $ | 2,075.1 | $ | 1,919.5 | |||||||||||||||||||||||||||
| Basic earnings per share | $ | 2.63 | $ | 2.36 | $ | 5.13 | $ | 4.71 | |||||||||||||||||||||||||||
| Diluted earnings per share | $ | 2.62 | $ | 2.35 | $ | 5.12 | $ | 4.69 | |||||||||||||||||||||||||||
| Components of Other (income)/expense, net: | |||||||||||||||||||||||||||||||||||
| Interest income on corporate funds | $ | (96.8) | $ | (83.9) | $ | (198.3) | $ | (175.5) | |||||||||||||||||||||||||||
| Realized (gains)/losses on available-for-sale securities, net | 0.3 | 0.6 | (1.2) | 0.8 | |||||||||||||||||||||||||||||||
| Gain on sale of assets | — | — | — | (2.4) | |||||||||||||||||||||||||||||||
| Non-service components of pension income, net | (7.1) | (7.8) | (14.2) | (15.7) | |||||||||||||||||||||||||||||||
| Net (gain)/loss on ADP Ventures' investments | (2.2) | — | (2.2) | — | |||||||||||||||||||||||||||||||
| Other (income)/loss, net | $ | (105.8) | $ | (91.1) | $ | (215.9) | $ | (192.8) | |||||||||||||||||||||||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||
| Consolidated Balance Sheets | |||||||||||
| (In millions, except per share amounts) | |||||||||||
| (Unaudited) | |||||||||||
| December 31, | June 30, | ||||||||||
| 2025 | 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 2,424.7 | $ | 3,347.8 | |||||||
| Short-term marketable securities (A) | 45.7 | 4,498.8 | |||||||||
Accounts receivable, net of allowance for doubtful accounts of $47.5 and $47.1, respectively |
3,408.5 | 3,579.1 | |||||||||
| Other current assets | 1,083.1 | 840.8 | |||||||||
| Total current assets before funds held for clients | 6,962.0 | 12,266.5 | |||||||||
| Funds held for clients | 67,510.1 | 30,985.7 | |||||||||
| Total current assets | 74,472.1 | 43,252.2 | |||||||||
| Property, plant and equipment, net | 622.7 | 655.4 | |||||||||
| Operating lease right-of-use asset | 405.7 | 374.1 | |||||||||
| Deferred contract costs | 3,109.1 | 3,154.1 | |||||||||
| Other assets | 1,113.1 | 1,057.0 | |||||||||
| Goodwill | 3,294.2 | 3,273.5 | |||||||||
| Intangible assets, net | 1,622.5 | 1,603.0 | |||||||||
| Total assets | $ | 84,639.4 | $ | 53,369.3 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 143.1 | $ | 169.1 | |||||||
| Accrued expenses and other current liabilities | 2,478.1 | 3,092.4 | |||||||||
| Accrued payroll and payroll-related expenses | 721.3 | 973.1 | |||||||||
| Dividends payable | 680.5 | 620.6 | |||||||||
| Short-term deferred revenues | 261.7 | 262.8 | |||||||||
| Obligations under reverse repurchase agreements (A) | 45.8 | 38.4 | |||||||||
| Obligations under commercial paper borrowings | — | 4,769.5 | |||||||||
| Income taxes payable | 197.3 | 9.1 | |||||||||
| Total current liabilities before client funds obligations | 4,527.8 | 9,935.0 | |||||||||
| Client funds obligations | 67,613.7 | 31,343.3 | |||||||||
| Total current liabilities | 72,141.5 | 41,278.3 | |||||||||
| Long-term debt | 3,976.4 | 3,974.7 | |||||||||
| Operating lease liabilities | 347.6 | 321.2 | |||||||||
| Other liabilities | 1,051.2 | 1,058.3 | |||||||||
| Deferred income taxes | 349.5 | 163.6 | |||||||||
| Long-term deferred revenues | 380.2 | 385.2 | |||||||||
| Total liabilities | 78,246.4 | 47,181.3 | |||||||||
| 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 December 31, 2025 and June 30, 2025;
outstanding, 403.0 and 405.3 shares at December 31, 2025 and June 30, 2025, respectively
|
63.9 | 63.9 | |||||||||
| Capital in excess of par value | 2,936.8 | 2,788.3 | |||||||||
| Retained earnings | 25,992.6 | 25,240.6 | |||||||||
Treasury stock - at cost: 235.7 and 233.4 shares at December 31, 2025 and June 30, 2025, respectively |
(21,960.6) | (21,021.4) | |||||||||
| Accumulated other comprehensive income/(loss) | (639.7) | (883.4) | |||||||||
| Total stockholders’ equity | 6,393.0 | 6,188.0 | |||||||||
| Total liabilities and stockholders’ equity | $ | 84,639.4 | $ | 53,369.3 | |||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||
| Statements of Consolidated Cash Flows | |||||||||||
| (In millions) | |||||||||||
| (Unaudited) | Six Months Ended | ||||||||||
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net earnings | $ | 2,075.1 | $ | 1,919.5 | |||||||
| Adjustments to reconcile net earnings to cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | 292.3 | 289.7 | |||||||||
| Amortization of deferred contract costs | 598.1 | 565.9 | |||||||||
| Deferred income taxes | 119.1 | 32.5 | |||||||||
| Stock-based compensation expense | 131.9 | 139.7 | |||||||||
| Bad debt expense | 22.5 | 23.1 | |||||||||
| Net pension (income)/loss | (7.7) | (9.8) | |||||||||
| Net accretion of discounts and amortization of premiums on available-for-sale securities | (45.4) | (31.5) | |||||||||
| Other | 4.2 | 4.7 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Decrease/(increase) in accounts receivable | 145.9 | (94.7) | |||||||||
| Increase in deferred contract costs | (556.4) | (565.3) | |||||||||
| Increase in other assets | (350.1) | (271.0) | |||||||||
| (Decrease)/increase in accounts payable | (25.0) | 82.4 | |||||||||
| Decrease in accrued expenses and other liabilities | (629.3) | (110.5) | |||||||||
| Net cash flows provided by operating activities | 1,775.2 | 1,974.7 | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Purchases of corporate and client funds marketable securities | (5,652.0) | (3,990.7) | |||||||||
| Proceeds from the sales and maturities of corporate and client funds marketable securities | 3,436.1 | 2,524.1 | |||||||||
| Capital expenditures | (73.2) | (98.2) | |||||||||
| Additions to intangibles | (209.1) | (175.7) | |||||||||
| Acquisitions of businesses, net of cash acquired | (22.9) | (1,160.6) | |||||||||
| Proceeds from the sale of property, plant, and equipment and other assets | — | 3.3 | |||||||||
| Other | (18.4) | (4.5) | |||||||||
| Net cash flows used in investing activities | (2,539.5) | (2,902.3) | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Net increase in client funds obligations | 36,273.1 | 9,090.4 | |||||||||
| Net cash distributed from the Internal Revenue Service | (1.2) | (487.6) | |||||||||
| Payments of debt | (0.5) | (0.6) | |||||||||
| Proceeds from the issuance of debt | — | 988.9 | |||||||||
| Settlement of cash flow hedges | — | (12.5) | |||||||||
| Repurchases of common stock | (881.8) | (644.9) | |||||||||
| Net (repurchases)/proceeds from stock-based compensation plans and stock purchase plan | (40.0) | 38.6 | |||||||||
| Dividends paid | (1,256.0) | (1,145.1) | |||||||||
| Net (payments)/proceeds related to reverse repurchase agreements | 18.5 | (344.7) | |||||||||
| Net (payments)/proceeds related to commercial paper | (4,769.5) | — | |||||||||
| Net cash flows provided by financing activities | 29,342.6 | 7,482.5 | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents | 28.8 | (36.7) | |||||||||
| Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents | 28,607.1 | 6,518.2 | |||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period | 5,054.6 | 10,086.0 | |||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period | $ | 33,661.7 | $ | 16,604.2 | |||||||
| Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Consolidated Balance Sheets | |||||||||||
| Cash and cash equivalents | $ | 2,424.7 | $ | 2,216.4 | |||||||
| Restricted cash and restricted cash equivalents included in funds held for clients | 31,237.0 | 14,387.8 | |||||||||
| Total cash, cash equivalents, restricted cash, and restricted cash equivalents | $ | 33,661.7 | $ | 16,604.2 | |||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for interest | $ | 253.9 | $ | 249.5 | |||||||
| Cash paid for income taxes, net of income tax refunds | $ | 303.7 | $ | 583.5 | |||||||
| Automatic Data Processing, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||
| Other Selected Financial Data | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| Segment revenues | ||||||||||||||||||||||||||||||||||||||
Employer Services |
$ | 3,607.4 | $ | 3,388.5 | 6 | % | $ | 7,098.6 | $ | 6,649.5 | 7 | % | ||||||||||||||||||||||||||
PEO Services |
1,755.2 | 1,663.3 | 6 | % | 3,442.7 | 3,237.8 | 6 | % | ||||||||||||||||||||||||||||||
Other |
(3.3) | (3.4) | n/m | (6.8) | (6.2) | n/m | ||||||||||||||||||||||||||||||||
Total revenues |
$ | 5,359.3 | $ | 5,048.4 | 6 | % | $ | 10,534.5 | $ | 9,881.1 | 7 | % | ||||||||||||||||||||||||||
| Segment earnings | ||||||||||||||||||||||||||||||||||||||
Employer Services |
$ | 1,278.8 | $ | 1,183.0 | 8 | % | $ | 2,507.6 | $ | 2,347.3 | 7 | % | ||||||||||||||||||||||||||
PEO Services |
252.9 | 251.7 | — | % | 471.7 | 477.3 | (1) | % | ||||||||||||||||||||||||||||||
Other |
(148.5) | (173.4) | n/m | (288.6) | (327.1) | n/m | ||||||||||||||||||||||||||||||||
Total pretax earnings |
$ | 1,383.2 | $ | 1,261.3 | 10 | % | $ | 2,690.7 | $ | 2,497.5 | 8 | % | ||||||||||||||||||||||||||
| Segment margin | ||||||||||||||||||||||||||||||||||||||
Employer Services |
35.4 | % | 34.9 | % | 0.5 | % | 35.3 | % | 35.3 | % | — | % | ||||||||||||||||||||||||||
PEO Services |
14.4 | % | 15.1 | % | (0.7) | % | 13.7 | % | 14.7 | % | (1.0) | % | ||||||||||||||||||||||||||
Other |
n/m | n/m | n/m | n/m | n/m | n/m | ||||||||||||||||||||||||||||||||
Total pretax margin |
25.8 | % | 25.0 | % | 0.8 | % | 25.5 | % | 25.3 | % | 0.3 | % | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| Earnings per share information | 2025 | 2024 | % Change | 2025 | 2024 | % Change | ||||||||||||||||||||||||||||||||
| Net earnings | $ | 1,062.0 | $ | 963.2 | 10 | % | $ | 2,075.1 | $ | 1,919.5 | 8 | % | ||||||||||||||||||||||||||
| Basic weighted average shares outstanding | 403.8 | 407.6 | (1) | % | 404.4 | 407.7 | (1) | % | ||||||||||||||||||||||||||||||
| Basic earnings per share | $ | 2.63 | $ | 2.36 | 11 | % | $ | 5.13 | $ | 4.71 | 9 | % | ||||||||||||||||||||||||||
| Diluted weighted average shares outstanding | 404.7 | 409.0 | (1) | % | 405.5 | 409.3 | (1) | % | ||||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 2.62 | $ | 2.35 | 11 | % | $ | 5.12 | $ | 4.69 | 9 | % | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Key Statistics: | |||||||||||||||||||||||
| Employer Services: | |||||||||||||||||||||||
Change in pays per control - U.S. (A) |
1 | % | 1 | % | 1 | % | 2 | % | |||||||||||||||
| PEO Services: | |||||||||||||||||||||||
| Paid PEO worksite employees at end of period | 762,000 | 751,000 | 762,000 | 751,000 | |||||||||||||||||||
| Average paid PEO worksite employees during the period | 758,000 | 746,000 | 756,000 | 741,000 | |||||||||||||||||||
Significant PEO expenses included within Operating expenses |
|||||||||||||||||||||||
Zero-margin benefits pass-through costs |
$ | 1,126.2 | $ | 1,055.2 | $ | 2,257.2 | $ | 2,104.4 | |||||||||||||||
Workers' compensation and state unemployment taxes |
$ | 158.5 | $ | 156.1 | $ | 293.4 | $ | 280.4 | |||||||||||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||||||||
| Other Selected Financial Data, Continued | |||||||||||||||||
| (Dollars in millions, except where otherwise stated) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Client Funds Strategy - Supplemental Information | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| December 31, | |||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||
| Average investment balances at cost (in billions) | |||||||||||||||||
| Funds held for clients | $ | 37.6 | $ | 35.3 | 6 | % | |||||||||||
| Corporate extended (A) | $ | 8.7 | $ | 8.2 | 6 | % | |||||||||||
| Short-term financing to support Client Funds Strategy (A) | $ | 8.7 | $ | 8.2 | 6 | % | |||||||||||
| Average interest rates earned or paid (exclusive of realized gains or losses) | |||||||||||||||||
| Funds held for clients | 3.3 | % | 3.1 | % | |||||||||||||
| Corporate extended (A) | 3.5 | % | 3.2 | % | |||||||||||||
| Short-term financing to support Client Funds Strategy (A) | 4.1 | % | 4.8 | % | |||||||||||||
| Interest income (expense) | |||||||||||||||||
| Funds held for clients | $ | 308.6 | $ | 272.8 | 13 | % | |||||||||||
| Corporate extended (B) | 77.0 | 65.0 | 18 | % | |||||||||||||
| Short-term financing to support Client Funds Strategy (B) | (91.3) | (100.0) | (9) | % | |||||||||||||
| Net Impact from Client Funds Strategy | $ | 294.3 | $ | 237.8 | 24 | % | |||||||||||
| Funds Held for Clients - Supplemental Information | |||||||||||
| Three Months Ended | |||||||||||
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Average balance - Client short | $ | 8.2 | $ | 7.1 | |||||||
| Average balance - Client extended | 15.4 | 14.6 | |||||||||
| Average balance - Client long | 14.0 | 13.6 | |||||||||
| Average balance - Funds held for clients (in billions) | $ | 37.6 | $ | 35.3 | |||||||
| Average interest rate - Client short | 3.3 | % | 4.6 | % | |||||||
| Average interest rate - Client extended | 3.3 | % | 2.6 | % | |||||||
| Average interest rate - Client long | 3.2 | % | 3.1 | % | |||||||
| Average interest rate - Funds held for clients | 3.3 | % | 3.1 | % | |||||||
| Interest Income and Expense - Non-GAAP Reconciliation | |||||||||||
| Three Months Ended | |||||||||||
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Corporate extended interest income (B) | $ | 77.0 | $ | 65.0 | |||||||
| All other interest income | 19.8 | 18.9 | |||||||||
| Total interest income on corporate funds (component of Other (income)/expense, net) | $ | 96.8 | $ | 83.9 | |||||||
| Short-term financing to support Client Funds Strategy (B) | $ | 91.3 | $ | 100.0 | |||||||
| All other interest expense | 32.8 | 29.6 | |||||||||
| Total interest expense | $ | 124.1 | $ | 129.6 | |||||||
| Automatic Data Processing, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated Statement of Adjusted / Non-GAAP Financial Information | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| In addition to our 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 Measures |
U.S. GAAP Measures |
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| 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 | |||||||||||||||||||||||||||||||||||||||||||||||||
Corporate extended interest income (see prior page) |
Interest income | |||||||||||||||||||||||||||||||||||||||||||||||||
Short-term financing to Support Client Funds Extended Strategy (see prior page) |
Interest expense | |||||||||||||||||||||||||||||||||||||||||||||||||
| We believe that the exclusion of the identified items below helps us reflect the fundamentals of our underlying business model and analyze results against our expectations and against prior periods, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | % Change | December 31, | % Change | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | As Reported | 2025 | 2024 | As Reported | |||||||||||||||||||||||||||||||||
| Net earnings | $ | 1,062.0 | $ | 963.2 | 10 | % | $ | 2,075.1 | $ | 1,919.5 | 8 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 321.2 | 298.1 | 615.6 | 578.0 | ||||||||||||||||||||||||||||||||||
| All other interest expense (a) | 32.8 | 29.6 | 66.5 | 50.1 | ||||||||||||||||||||||||||||||||||
| All other interest income (a) | (19.8) | (18.9) | (42.7) | (42.8) | ||||||||||||||||||||||||||||||||||
| Optimization initiatives (b) | (1.2) | — | (1.2) | — | ||||||||||||||||||||||||||||||||||
| Net (gain)/loss on ADP Ventures' investments (c) | (2.2) | — | (2.2) | — | ||||||||||||||||||||||||||||||||||
| Legal settlements (d) | — | — | — | (0.3) | ||||||||||||||||||||||||||||||||||
| Adjusted EBIT | $ | 1,392.8 | $ | 1,272.0 | 10 | % | $ | 2,711.1 | $ | 2,504.5 | 8 | % | ||||||||||||||||||||||||||
| Adjusted EBIT Margin | 26.0 | % | 25.2 | % | 25.7 | % | 25.3 | % | ||||||||||||||||||||||||||||||
| Provision for income taxes | $ | 321.2 | $ | 298.1 | 8 | % | $ | 615.6 | $ | 578.0 | 7 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Optimization initiatives (e) | (0.3) | — | (0.3) | — | ||||||||||||||||||||||||||||||||||
| Net (gain)/loss on ADP Ventures' investments (e) | (0.6) | — | (0.6) | — | ||||||||||||||||||||||||||||||||||
| Legal settlements (e) | — | — | — | (0.1) | ||||||||||||||||||||||||||||||||||
| Adjusted provision for income taxes | $ | 320.3 | $ | 298.1 | 7 | % | $ | 614.7 | $ | 577.9 | 6 | % | ||||||||||||||||||||||||||
| Adjusted effective tax rate (f) | 23.2 | % | 23.6 | % | 22.9 | % | 23.1 | % | ||||||||||||||||||||||||||||||
| Net earnings | $ | 1,062.0 | $ | 963.2 | 10 | % | $ | 2,075.1 | $ | 1,919.5 | 8 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Optimization initiatives (b) | (1.2) | — | (1.2) | — | ||||||||||||||||||||||||||||||||||
| Income tax provision for optimization initiatives (e) | 0.3 | — | 0.3 | — | ||||||||||||||||||||||||||||||||||
| Net (gain)/loss on ADP Ventures' investments (c) | (2.2) | — | (2.2) | — | ||||||||||||||||||||||||||||||||||
| Income tax provision for net (gain)/loss on ADP Ventures' investments (e) | 0.6 | — | 0.6 | — | ||||||||||||||||||||||||||||||||||
| Legal settlements (d) | — | — | — | (0.3) | ||||||||||||||||||||||||||||||||||
| Income tax provision for legal settlements (e) | — | — | — | 0.1 | ||||||||||||||||||||||||||||||||||
| Adjusted net earnings | $ | 1,059.5 | $ | 963.2 | 10 | % | $ | 2,072.6 | $ | 1,919.3 | 8 | % | ||||||||||||||||||||||||||
| Diluted EPS | $ | 2.62 | $ | 2.35 | 11 | % | $ | 5.12 | $ | 4.69 | 9 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Net (gain)/loss on ADP Ventures' investments (c) (e) | — | — | (0.01) | — | ||||||||||||||||||||||||||||||||||
| Adjusted diluted EPS | $ | 2.62 | $ | 2.35 | 11 | % | $ | 5.11 | $ | 4.69 | 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.” |
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(b) Represents a partial reversal of the workforce optimization initiative from fiscal 2024. Severance charges/(reversals) have been taken in the past and not included as an adjustment to get to adjusted results. Unlike severance charges/(reversals) in prior periods, this specific reversal relates to a broad-based, company-wide initiative. |
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| (c) Represents (gains)/losses on investments made through our Corporate Venture Capital arm, ADP Ventures. (Gains)/losses on these investments may result from observable price changes, changes in ownership interest, and impairment charges. These adjustments may be highly variable, are predominantly non-cash, are outside our control, and are not fundamental to the underlying operations of our business model. | |||||||||||||||||||||||
| (d) In the six months ended December 31, 2024, this represents a reversal of a legal reserve recorded during the year ended June 30, 2023. | |||||||||||||||||||||||
| (e) The income tax provision was calculated based on the annualized marginal rate in effect during the quarter of the adjustment. | |||||||||||||||||||||||
(f) 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. |
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| 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 impact of foreign currency is determined by calculating the current year results using foreign exchange rates consistent with the prior year. The PEO segment is not impacted by acquisitions, dispositions or foreign currency. | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||
| Revenue growth consolidated: | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
Employer Services |
6 | % | 8 | % | 7 | % | 8 | % | |||||||||||||||
PEO Services |
6 | % | 8 | % | 6 | % | 7 | % | |||||||||||||||
| Consolidated revenue growth as reported | 6 | % | 8 | % | 7 | % | 8 | % | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Impact of acquisitions |
— | % | (1) | % | — | % | — | % | |||||||||||||||
Impact of foreign currency |
(1) | % | — | % | (1) | % | — | % | |||||||||||||||
| Consolidated revenue growth, organic constant currency | 5 | % | 8 | % | 6 | % | 7 | % | |||||||||||||||
| Segment: | |||||||||||||||||||||||
| Employer Services revenue growth as reported | 6 | % | 8 | % | 7 | % | 8 | % | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Impact of acquisitions |
— | % | (1) | % | (1) | % | (1) | % | |||||||||||||||
Impact of foreign currency |
(1) | % | — | % | (1) | % | — | % | |||||||||||||||
| Employer Services revenue growth, organic constant currency | 5 | % | 7 | % | 5 | % | 7 | % | |||||||||||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||||||||
| Fiscal 2025 to Fiscal 2026 Non-GAAP Guidance Reconciliation | |||||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Fiscal 2026 | |||||||||||||||||
| Fiscal 2025 | Outlook | ||||||||||||||||
| Earnings before income taxes / margin (GAAP) | $ | 5,310.1 | 25.8 | % | 40 to 60 bps | ||||||||||||
| All other interest expense (a) | 114.8 | 60 bps | 10 bps | ||||||||||||||
| All other interest income (a) | (94.2) | (50) bps | 10 bps | ||||||||||||||
| Gain on sale of assets - FY25 | (2.6) | - | - | ||||||||||||||
| Transformation initiatives - FY25 | 0.1 | - | - | ||||||||||||||
| Legal settlements - FY25 | (0.4) | - | - | ||||||||||||||
| Optimization initiatives - FY25 | 19.3 | 10 bps | (10) bps | ||||||||||||||
| Adjusted EBIT margin (Non-GAAP) | $ | 5,347.1 | 26.0 | % | 50 to 70 bps | ||||||||||||
| Effective tax rate (GAAP) | 23.2 | % | 23.0 | % | |||||||||||||
| Transformation initiatives - FY25 | - | - | |||||||||||||||
| Legal settlements - FY25 | - | - | |||||||||||||||
| Optimization initiatives - FY25 | - | - | |||||||||||||||
| Adjusted effective tax rate (Non-GAAP) | 23.2 | % | 23.0 | % | |||||||||||||
| Diluted earnings per share (GAAP) | $ | 9.98 | 9% to 10% | ||||||||||||||
| Transformation initiatives - FY25 | - | - | |||||||||||||||
| Legal settlements - FY25 | - | - | |||||||||||||||
| Optimization initiatives - FY25 | 0.03 | - | |||||||||||||||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 10.01 | 9% to 10% | ||||||||||||||
| (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.” | |||||||||||||||||