Reputable outlets only (Reuters, WSJ, CNBC, Barron's, and peers). More on Google News ↗
What Changed
Risk factors · Aug 7, 2024 → Aug 6, 2025
36 added · 42 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
Depreciation and amortization increased in fiscal 2025 due to the WorkForce Software acquisition, amortization of investments in internally developed software primarily for our next-gen products, and amortization of purchased software, partially offset by lower amortization of customer contracts and lists. 30 Selling, general and administrative expenses increased in fiscal 2025 primarily due to increases in selling and marketing expenses of $184.4 million as a result of investments in our sales organization and an increase from acquisition related costs.
EBIT Margin increased in fiscal 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 interest expense and acquisition related expenses.
Earnings before Income Taxes Employer Services' earnings before income taxes increased in fiscal 2025 due to increased revenues, including contributions from client funds interest, 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 the impact from the WorkForce Software acquisition.
Margin Employer Services' margin increased in fiscal 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. 33 PEO Services Revenues PEO Revenues Years Ended Change June 30, 2025 2024 $ % PEO Services' revenues $ 6,690.4 $ 6,233.6 $ 456.8 7 % Less: PEO zero-margin benefits pass-throughs 4,289.0 3,975.9 313.1 8 % PEO Services' revenues excluding zero-margin benefits pass-throughs $ 2,401.4 $ 2,257.7 $ 143.7 6 % PEO Services' revenues increased in fiscal 2025 due to the increase in zero-margin benefits pass-throughs, and an increase in average worksite employees of 3%, as compared to fiscal 2024.
Research and development expenses increased in fiscal 2025 due to increased costs to develop, support, and maintain our new and existing products and the WorkForce Software acquisition.
Interest expense increased in fiscal 2025 primarily due to an increase of $51.1 million related to commercial paper and reverse repurchase borrowings as a result of increases in average daily commercial paper borrowings of $0.6 billion, and average reverse repurchase outstanding balances of $1.1 billion, as compared to fiscal 2024 , offset by decreases in average interest rates on commercial paper issuances and reverse repurchases of 50 basis points and 70 basis points, respectively, as compared to fiscal 2024.
Earnings Before Income Taxes ("EBIT") and Adjusted EBIT For the year ended June 30, respectively: Years Ended June 30, 2025 2024 YoY Growth EBIT $ 5,310.1 $ 4,872.3 9 % EBIT Margin 25.8 % 25.4 % 50 bps Adjusted EBIT $ 5,347.1 $ 4,890.1 9 % Adjusted EBIT Margin 26.0 % 25.5 % 50 bps Note: Numbers may not foot due to rounding.
Adjusted EBIT and Adjusted EBIT margin exclude interest income and interest expense that are not related to our client funds extended investment strategy, and net charges, including certain legal matters, gain on sale of assets, and broad-based optimization initiatives, in the applicable periods. 31 Provision for Income Taxes The effective tax rate in fiscal 2025 and 2024 was 23.2% and 23.0%, respectively.
The increase in the effective tax rate is primarily due to higher reserves for uncertain tax positions in fiscal 2025 and a valuation allowance release in fiscal 2024 offset by an increase in the excess tax benefit on stock-based compensation in fiscal 2025.
Net Earnings and Diluted EPS, Unadjusted and Adjusted For the year ended June 30, respectively: Years Ended June 30, 2025 2024 YoY Growth Net earnings $ 4,079.7 $ 3,752.0 9 % Diluted EPS $ 9.98 $ 9.10 10 % Adjusted net earnings $ 4,092.0 $ 3,784.5 8 % Adjusted diluted EPS $ 10.01 $ 9.18 9 % For fiscal 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 4.4 million shares during fiscal 2025 and 5.1 million shares during fiscal 2024, partially offset by the issuances of shares under our employee benefit plans.
Earnings before Income Taxes PEO Services’ earnings before income taxes increased in fiscal 2025 due to increased revenues discussed above, partially offset by increases in operating costs related to workers' compensation and state unemployment insurance, zero-margin benefits pass-through costs, and selling and marketing expenses.
Margin PEO Services' margin decreased in fiscal 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, partially offset by an increase in the pre-tax benefit from ADP Indemnity.
No longer disclosed
We completed our annual assessment of goodwill as of June 30, 2024 and determined that there was no impairment of goodwill.
We took action to lead with best-in-class HCM technology by launching ADP Assist, our cross-platform solution powered by generative AI ("GenAI") that empowers employees and HR professionals through smart, user-centric solutions.
Research and development expenses increased for fiscal 2024 due to increased investments and costs to develop, support, and maintain our new and existing products, and increased investments in GenAI, including the integration of GenAI in our existing products.
Depreciation and amortization expenses increased for fiscal 2024 due to the amortization of new investments in purchased software and internally developed software primarily for our next-gen products. 30 Selling, general and administrative expenses increased for fiscal 2024 due to increased selling expenses as a result of investments in our sales organization to support increased bookings, and increased severance costs due to company-wide efforts related to workforce optimization.
Interest expense increased due to the increase i n average interest rates on commercial paper issuances and reverse repurchases to 5.3% and 5.5%, respectively, for the year ended June 30, 2024, as compared to 3.7% and 4.3%, respectively, for the year ended June 30, 2023, also coupled with a higher volume of average commercial paper and reverse repurchase borrowings, as compared to the year ended June 30, 2023 .
Earnings Before Income Taxes ("EBIT") and Adjusted EBIT For the year ended June 30, respectively: Years Ended June 30, 2024 2023 YoY Growth EBIT $ 4,872.3 $ 4,437.6 10 % EBIT Margin 25.4 % 24.6 % 70 bps Adjusted EBIT $ 4,890.1 $ 4,467.9 9 % Adjusted EBIT Margin 25.5 % 24.8 % 70 bps Earnings before income taxes increased due to the increases in total revenues partially offset by the increases in total expenses discussed above.
Net Earnings and Diluted EPS, Unadjusted and Adjusted For the year ended June 30, respectively: Years Ended June 30, 2024 2023 YoY Growth Net earnings $ 3,752.0 $ 3,412.0 10 % Diluted EPS $ 9.10 $ 8.21 11 % Adjusted net earnings $ 3,784.5 $ 3,419.5 11 % Adjusted diluted EPS $ 9.18 $ 8.23 12 % Adjusted net earnings and adjusted diluted EPS reflect the changes in components described above.
Diluted EPS increased as a result of the increase in net earnings and the impact of fewer shares outstanding resulting from the repurchase of approximately 5.1 million shares during fiscal 2024 and 4.9 million shares during fiscal 2023, partially offset by the issuances of shares under our employee benefit plans.
PEO Services Revenues PEO Revenues Years Ended Change June 30, 2024 2023 $ % PEO Services' revenues $ 6,233.6 $ 5,984.2 $ 249.4 4 % Less: PEO zero-margin benefits pass-throughs 3,975.9 3,800.9 175.0 5 % PEO Services' revenues excluding zero-margin benefits pass-throughs $ 2,257.7 $ 2,183.3 $ 74.4 3 % PEO Services' revenues increased 4% for fiscal 2024 due to increases in average worksite employees of 2% for fiscal 2024, as compared to fiscal 2023, and due to an increase in zero-margin benefits pass-throughs.
Earnings before Income Taxes PEO Services’ earnings before income taxes decreased 6% in fiscal 2024 due to less favorable actuarial loss development in workers’ compensation reserves in ADP Indemnity of $70.0 million as compared to prior year, increases in selling expenses, and increases in zero-margin benefits pass-through costs for the year ended June 30, 2024, partially offset by increased revenues discussed above.
Margin 33 PEO Services' overall margin decreased for fiscal 2024 due to less favorable actuarial loss development in workers’ compensation reserves in ADP Indemnity, increases in selling expenses, and increases in zero-margin benefits pass-through costs, partially offset by increased revenues discussed above.
Operating, Investing and Financing Cash Flow s Our cash flows from operating, investing, and financing activities, as reflected in the Statements of Consolidated Cash Flows are summarized as follows: Years ended June 30, 2024 2023 $ Change Cash provided by (used in): Operating activities $ 4,157.6 $ 4,207.6 $ (50.0) Investing activities (1,389.0) (2,517.3) 1,128.3 Financing activities (1,431.7) (15,680.7) 14,249.0 Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents (22.4) (21.1) (1.3) Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents $ 1,314.5 $ (14,011.5) $ 15,326.0 36 Net cash flows provided by operating activities decreased due to a net unfavorable change in the components of operating assets and liabilities primarily due to timing on collections of accounts receivable, offset by growth in our underlying business (net income adjusted for non-cash adjustments), as compared to the year ended June 30, 2023.