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What changed in Automatic Data Processing's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Automatic Data Processing's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+290 added−307 removedSource: 10-K (2025-08-06) vs 10-K (2024-08-07)

Top changes in Automatic Data Processing's 2025 10-K

290 paragraphs added · 307 removed · 241 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

93 edited+30 added−49 removed46 unchanged
Biggest changeOur solutions provide performance, learning, succession and compensation management tools that help employers align goals to outcomes, and enable managers to identify and mitigate potential retention risks. Our talent activation solutions include StandOut ® powered by ADP, which provides team leaders with data and insights to drive employee engagement and leadership development, which in turn help drive employee performance.
Biggest changeOur talent activation solutions include StandOut ® powered by ADP, which provides team leaders with data and insights to drive employee engagement and leadership development, which in turn help drive employee performance. Workforce Management. ADP’s Workforce Management offers a range of solutions to over 140,000 employers of all sizes, including time and attendance, absence management and scheduling tools.
In addition, ADP Retirement Services offers investment management services to retirement plans through ADP Strategic Plan Services, LLC, an SEC registered investment adviser under the Investment Advisers Act of 1940. ADP Retirement Services also offers trustee services through a third party as well as through ADP Retirement Trust Services, LLC, a New Hampshire state-chartered affiliated trust company.
In addition, ADP Retirement Services offers investment management services to retirement plans through ADP Strategic Plan Services, LLC, an SEC registered investment adviser under the Investment Advisers Act of 1940. ADP Retirement Services also offers trustee services through ADP Retirement Trust Services, LLC, a New Hampshire state-chartered affiliated trust company, as well as through a third party.
ADP’s HR Outsourcing solutions serve over three million employees. Professional Employer Organization. ADP TotalSource is enabled by ADP Workforce Now and offers small and mid-sized businesses a comprehensive HR outsourcing solution through a co-employment model. With a PEO, both ADP and the client have a co-employment relationship with the client’s employees.
ADP’s HR Outsourcing solutions serve over three million client employees. Professional Employer Organization. ADP TotalSource is enabled by ADP Workforce Now and offers small and mid-sized businesses a comprehensive HR outsourcing solution through a co-employment model. With a PEO, both ADP and the client have a co-employment relationship with the client’s employees.
In the area of artificial intelligence, some states and localities in the U.S., the EU and elsewhere have proposed or already enacted legislation that imposes obligations on how we develop and market AI-based products and solutions. Specifically, the EU Artificial Intelligence Act imposes requirements on providers of certain types of AI services.
In the area of AI, some states and localities in the U.S., the EU and elsewhere have proposed or already enacted legislation that imposes obligations on how we develop and market AI-based products and solutions. Specifically, the EU Artificial Intelligence Act imposes requirements on providers of certain types of AI services.
Our current and future offerings in the payments and/or consumer space may also subject us to additional laws and regulations, which could also require corresponding compliance programs and policies and dedicated resources. In addition, many of our businesses offer solutions that assist our clients in complying with certain U.S. and foreign laws and regulations that apply to them.
Our current and future offerings in the payments and/or consumer space may also subject us to additional laws and regulations, which could also require corresponding compliance programs and policies and dedicated resources. 12 In addition, many of our businesses offer solutions that assist our clients in complying with certain U.S. and foreign laws and regulations that apply to them.
Our global ADP Cares program, which is funded by the Company, the ADP Foundation and our generous associates, helps members of our team get through difficult, unforeseen events such as natural disasters and major illnesses. We also proudly support our associates that give back to our communities through paid volunteer time off and our donation matching program.
Our global ADP Cares program, which is funded by the ADP Foundation and our generous associates, helps members of our team get through difficult, unforeseen events such as natural disasters and major illnesses. We also proudly support our associates that give back to our communities through paid volunteer time off and our donation matching program.
As part of its strategy, ADP Ventures invests in and partners with early-stage and scaling tech startups that advance ADP’s innovation strategy. Reportable Segments Our two reportable business segments are Employer Services and Professional Employer Organization (“PEO”), and are based on the way that management reviews the performance of, and makes decisions about, our business.
As part of its strategy, ADP Ventures invests in and partners with early-stage and scaling tech startups that advance ADP’s innovation strategy. Reportable Segments Our two reportable business segments are Employer Services and Professional Employer Organization (“PEO”), and are based on the way that management reviews the performance of, and makes decisions about, our businesses.
These investments include expenses for activities such as the development of new products, maintenance expenses associated with our existing technologies, investments in generative AI, purchases of new software and software licenses, and additions to software resulting from business combinations. LICENSES We are the licensee under a number of agreements for computer programs and databases.
These investments include expenses for activities such as the development of new products, maintenance expenses associated with our existing technologies, investments in generative AI, purchases of 13 new software and software licenses, and additions to software resulting from business combinations. LICENSES We are the licensee under a number of agreements for computer programs and databases.
Because ADP TotalSource is a co-employer with respect to its clients’ worksite employees, we may be subject to certain obligations and responsibilities of an employer under federal and state tax, insurance and employment laws, including worksite employee payroll obligations and with respect to claimed employee retention and other tax credits.
Because ADP TotalSource is a co-employer with respect to its clients’ worksite employees, we may be subject to certain obligations, responsibilities and liabilities of an employer under federal and state tax, insurance and employment laws, including worksite employee payroll obligations and with respect to claimed employee retention and other tax credits.
As a full-service PEO, ADP TotalSource provides a broad range of HR administrative services, including payroll and payroll tax, employer compliance, HR guidance, employee benefits and benefit administration, talent strategies, and workers’ compensation insurance including risk and claims management.
As a full-service PEO, ADP TotalSource provides a broad range of HR administrative services, including payroll and payroll tax, employer compliance, HR guidance, employee benefits and benefit administration, talent strategies, and workers’ compensation insurance including risk and claims management. ADP Comprehensive Services.
Our clients look to us as a source of expertise to understand key HR trends and best practices, employment and related legislation, and to offer thoughtful strategies to utilize HCM technology to achieve their business objectives and support their workforce.
Our clients look to us as a source of expertise to understand key HR trends and best practices, employment and related legislation and regulations, and to offer thoughtful strategies to utilize HCM technology to achieve their business objectives and support their workforce.
We intend to continue to build on our deep expertise and make it readily available to our clients through a variety of channels, ranging from traditional call and chat options to self-guided and AI-powered options.
We continue to build on our deep expertise and make it readily available to our clients through a variety of channels, ranging from traditional call and chat options to self-guided and AI-powered options.
Culture of responsible AI In harnessing the power of data through AI and ML, ADP recognizes the importance of accountability, transparency, privacy, explainability and governance, and in furtherance of those goals has established an active AI & Data Ethics Committee, comprised of both industry leaders and ADP experts, which advises on emerging industry trends and concerns and provides guidance with respect to compliance with the principles that ADP should follow while developing products, systems and applications that involve AI, ML and data.
Sustaining a culture of responsible AI In harnessing the power of data through AI and ML, ADP recognizes the importance of accountability, transparency, privacy, explainability and governance, and in furtherance of those goals has established an active AI & Data Ethics Committee, comprised of both industry leaders and ADP experts, which advises on emerging industry trends and concerns and provides guidance with respect to compliance with the principles that ADP should follow while developing products, systems and applications that involve AI, ML and data.
In February 2024, ADP Canada Co. became a registered entity with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada’s anti-money laundering and anti-terrorist financing supervisor, as a Money Service Business (MSB) as a result of a change in policy guidance from FINTRAC related to the Canadian Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
In February 2024, ADP Canada Co. became a registered entity with the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”), Canada’s anti-money laundering and anti-terrorist financing supervisor, as a Money Service Business as a result of a change in policy guidance from FINTRAC related to the Canadian Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
ADP’s Insurance Services business, in conjunction with our licensed insurance agency, Automatic Data Processing Insurance Agency, Inc., facilitates access in the United States to workers’ compensation and group health insurance for over 240,000 small and mid-sized clients through a variety of insurance carriers.
ADP’s Insurance Services business, in conjunction with our licensed insurance agency, Automatic Data Processing Insurance Agency, Inc., facilitates access in the United States to workers’ compensation and group health insurance for over 260,000 small and mid-sized clients through a variety of insurance carriers.
CLIENTS AND CLIENT CONTRACTS We provide services to more than 1.1 million clients. In fiscal 2024, no single client or group of affiliated clients accounted for revenues in excess of 2% of our annual consolidated revenues. We are continuously in the process of performing implementation services for new clients.
CLIENTS AND CLIENT CONTRACTS We provide services to more than 1.1 million clients. In fiscal 2025, no single client or group of affiliated clients accounted for revenues in excess of 2% of our annual consolidated revenues. We are continuously in the process of performing implementation services for new clients.
ADP DataCloud analyzes aggregated, anonymized and timely HCM and compensation data from more than one million organizations across the U.S., powering solutions that provide clients with in-depth workforce and business insights that support critical HR decisions.
ADP DataCloud analyzes aggregated, anonymized and timely HCM and compensation data from more than one million organizations across the U.S., powering solutions that provide clients with in-depth workforce and business insights that enable critical HR decisions.
With our cloud-based HCM software at the core, we serve more than 17,000 clients and 10 more than 750,000 worksite employees in all 50 U.S. states. ADP TotalSource is the largest PEO certified by the Internal Revenue Service as meeting the requirements to operate as a Certified Professional Employer Organization under the Internal Revenue Code.
With our cloud-based HCM software at the core, we serve more than 18,000 clients and more than 750,000 worksite employees in all 50 U.S. states. ADP TotalSource is the largest PEO certified by the Internal Revenue Service as meeting the requirements to operate as a Certified Professional Employer Organization under the Internal Revenue Code.
We partner with clients to help them navigate the most complex HR and payroll scenarios using tailored and scalable technology supported by our deep compliance expertise. ADP Global Payroll is a solution for multinational organizations of all sizes, empowering them to harmonize 11 HCM strategies in over 140 countries globally.
We partner with clients to help them navigate the most complex HR and payroll scenarios using tailored and scalable technology supported by our deep compliance expertise. 10 ADP Global Payroll is a solution for multinational organizations of all sizes, empowering them to harmonize HCM strategies in over 140 countries and territories globally.
We are, therefore, subject to compliance obligations under federal, state and foreign privacy, data protection, artificial intelligence (AI) and cybersecurity-related laws, including federal, state and foreign security breach notification laws with respect to both client employee data and our own employee data.
We are, therefore, subject to compliance obligations under federal, state and foreign privacy, data protection, AI and cybersecurity-related laws, including federal, state and foreign security breach notification laws with respect to both client employee data and our own employee data.
Similarly, our Tax Credit Services business, which helps clients in the United States take advantage of tax credit opportunities in connection with the hiring of new employees and certain other activities, is based on federal, state or local tax laws and regulations allowing for tax credits, which are subject to renewal, amendment or rescission.
Similarly, our Tax Credit Services business, which helps clients in the United States realize tax credit opportunities in connection with the hiring of new employees and certain other activities, is based on federal, state or local tax laws and regulations allowing for tax credits, which are subject to renewal, amendment or rescission.
For financial data by segment and by geographic area, see Note 14 to the “Consolidated Financial Statements” contained in this Annual Report on Form 10-K. Employer Services .
For financial data by segment and by geographic area, see Note 15 to the “Consolidated Financial Statements” contained in this Annual Report on Form 10-K. Employer Services .
ADP Retirement Trust Services, LLC is a directed-fiduciary with responsibility for oversight of the retirement plan assets and regulated by the Department of Labor under the Employee Retirement Income Security Act of 1974, as amended, and is also subject to the oversight of the New Hampshire Banking Department.
ADP Retirement Trust Services, LLC is a directed-fiduciary trustee with responsibility for oversight of the retirement plan assets of our clients and regulated by the Department of Labor under the Employee Retirement Income Security Act of 1974, as amended, and is also subject to the oversight of the New Hampshire Banking Department.
And we intend to grow our sales organization and continue to invest in best-in-class sales technology to not only make the purchase experience seamless but to also empower our sellers to provide the deep expertise and insights our clients, partners and influencers require to ensure they have the right HCM solutions to help them achieve their objectives and make a meaningful impact for their employees.
And we intend to grow our sales organization and continue to invest in best-in-class sales technology to not only optimize the purchase experience but to also empower our sellers to provide the deep expertise and insights our clients require to ensure they have the right HCM solutions to help them achieve their objectives and make a meaningful impact for their employees.
HRO Solutions As a leader in the growing HR Outsourcing market, we partner with clients from small, midsized and large enterprise organizations, offering a full range of premium services and seamless technology for HR, benefits, payroll, and talent management.
HRO Solutions As a leader in the growing HR Outsourcing market, we partner with clients from small, mid-sized and large enterprise organizations, offering a full range of premium services and seamless technology for HR, benefits, payroll, and talent management.
At ADP, we are committed to upholding fair and equitable pay. Pay equity is critical to creating an inclusive and engaging culture that enables all associates to reach their full potential. We make pay decisions based on skills, job-related experience, the market value of the job and performance. We have incorporated regular pay equity reviews into our compensation decisions.
At ADP, we are committed to upholding fair and equitable pay. Pay equity is critical to creating a culture that enables all associates to reach their full potential. We make pay decisions based on skills, job-related experience, the market value of the job and performance. We have incorporated regular pay equity reviews into our compensation decisions.
We conduct an annual culture survey, myVoice, where our associates can share their perspectives on important topics, including client service, inclusion, diversity, equity and belonging, social responsibility, ethics, innovation and leadership. Along with many of our world-class clients, we leverage our innovative StandOut® powered by ADP platform, to help managers drive talent engagement throughout the year.
We conduct an annual culture survey, myVoice, where our associates can share their perspectives on important topics, including client service, culture, social responsibility, ethics and compliance, innovation and leadership. Along with many of our world-class clients, we leverage our innovative StandOut ® powered by ADP platform, to help managers drive talent engagement throughout the year.
The content on any website referenced in this filing is not incorporated by reference into this filing unless expressly noted otherwise. 16
The content on any website referenced in this filing is not incorporated by reference into this filing unless expressly noted otherwise. 15
We will continue to leverage our significant data insights and investments in AI and other enabling technologies to further enable our decades of knowledge and experience and more effectively 4 apply those to help our clients and their workers navigate the ever-changing world of work. • Benefit our Clients with Our Global Scale.
We will continue to leverage our significant data insights and investments in AI and other technologies to further enable and effectively apply our decades of knowledge and experience to help our clients and their workers navigate the ever-changing world of work. • Benefit our Clients with Our Global Scale.
We aim to solve the needs of our clients and their workers today by making HCM transactions effortless and compliant, while anticipating their needs of tomorrow by incorporating valuable data insights and guidance into our solutions to help them better understand their workforce and how they compare to industry peers, and position them to make better decisions. • Provide Unmatched Expertise and Outsourcing Solutions.
We aim to solve the needs of our clients and their workers today by making HCM transactions compliant and effortless, while anticipating their needs of tomorrow by incorporating valuable data insights and guidance into our solutions to help them better understand their workforce and position them to make better decisions. • Provide Unmatched Expertise and Outsourcing Solutions.
We help organizations streamline processes, reduce the daily workload and reduce compliance risk while also gaining a partner to navigate HR challenges. Whether a client chooses our Professional Employer Organization (PEO) or Human Resources Outsourcing (HRO)/Managed Services, we offer solutions tailored to a client’s specific needs and provide day-to-day expertise, guidance and tools, all personalized to meet their unique needs.
We help organizations streamline processes, reduce the daily workload and reduce compliance risk while also gaining a partner to navigate HR challenges. Whether a client chooses our PEO or HRO/Managed Services, we offer solutions tailored to a client’s specific needs and provide day-to-day expertise, guidance and tools, all personalized to meet their unique needs.
Our business is not dependent upon a single license or group of licenses. Third-party licenses, patents, trademarks, and franchises are not material to our business as a whole. 14 OUR HCM STRATEGY Our Human Capital Management (HCM) strategy is simple, our people have differentiated us for 75 years and we remain committed to valuing, developing and engaging them.
Our business is not dependent upon a single license or group of licenses. Third-party licenses, patents, trademarks, and franchises are not material to our business as a whole. OUR PEOPLE AND CULTURE Our HCM strategy is simple: our people have differentiated us for over 75 years and we remain committed to valuing, developing and engaging them.
Our Chief Human Resources Officer (CHRO), together with our Executive Leadership Team, manages our HCM strategy and related programs and initiatives, as well as our talent strategy.
Our Chief Human Resources Officer (“CHRO ” ), together with our Executive Leadership Team, manages our HCM strategy and related programs and initiatives, as well as our talent strategy.
In our fiscal year ended June 30, 2024, in the United States, we processed and delivered more than 78 million employee year-end tax statements and moved more than $3.1 trillion in client funds to our clients’ employees, tax authorities and other payees. • ADP SmartCompliance.
In our fiscal year ended June 30, 2025, in the United States, we processed and delivered more than 78 million employee year-end tax statements and moved more than $3.3 trillion in client funds to our clients’ employees, tax authorities and other payees.
To lean into our service expertise, we also extended generative AI capabilities to a broader portion of our service and implementation associates to deliver an even better client 5 experience. We also continue to explore generative AI capabilities to further empower our sellers and our product developers to be more productive.
To lean into our service expertise, we continue to extend generative AI capabilities to a broader portion of our service and implementation associates to deliver an even better client experience. We also continue to explore generative AI capabilities to further empower our sellers to be more productive.
We take the time to understand our clients’ businesses to offer the right support, enabling a flexible partnership that can cover one, some, or all areas of HR and payroll. Our service is designed to act as an extension of our client’s in-house resources, providing outsourced execution that effectively combines processes and technology.
We take the time to understand our clients’ businesses to offer the right strategic support, enabling a flexible partnership that can cover one, some, or all areas of their HR and payroll processes. Our scalable solution is designed to act as an extension of our clients’ in-house resources, providing outsourced execution that effectively combines expertise, processes and technology.
Talent Management. ADP’s Talent Management solutions simplify and improve the talent acquisition, management and activation process, from recruitment to ongoing employee engagement and development. Employers can also outsource their internal recruitment function to ADP.
Talent Management. ADP’s Talent Management solutions simplify and improve the talent acquisition, management and activation process, from recruitment to ongoing employee engagement and development. Employers can outsource their internal recruitment function to ADP through ADP’s Recruitment Process Outsourcing services.
In addition, we offer wage and tax collection and/or remittance services in the United States, Canada, the United Kingdom, Australia, India and China. Our PEO business offers services exclusively in the United States. We market our solutions primarily through our direct sales force.
In addition, we offer wage and tax collection and/or remittance services in the United States, Canada, the United Kingdom, Australia, India, China, Hong Kong, Macau, Malaysia, and Taiwan. Our PEO business offers services exclusively in the United States. We market our solutions primarily through our direct sales force.
PRODUCT DEVELOPMENT We continually upgrade, enhance, and expand our solutions and services. In general, new solutions and services supplement rather than replace our existing solutions and services and, given our recurring revenue model, do not have a material and immediate effect on our revenues. We believe that our strategic solutions and services have significant remaining life cycles.
In general, new solutions and services supplement rather than replace our existing solutions and services and, given our recurring revenue model, do not have a material and immediate effect on our revenues. We believe that our strategic solutions and services have significant remaining life cycles.
It’s at the core of our products and solutions, informing and driving our approach to innovation and new technology. The global scale and scope of our client base provide us the industry’s largest and deepest HCM dataset with over 1.1 million clients spanning over 140 countries and 42 million wage earners globally.
Data is at the core of our products and solutions, informing and driving our approach to innovation and new technology. The global scale and scope of our client base provide us the industry’s largest and deepest HCM dataset with over 1.1 million clients spanning over 140 countries and territories and 42 million workers globally.
RESEARCH AND DEVELOPMENT During the fiscal years ended June 30, 2024, 2023 and 2022, we invested approximately $1.276 billion, $1.195 billion, and $1.210 billion, respectively, in research and development.
RESEARCH AND DEVELOPMENT During the fiscal years ended June 30, 2025, 2024 and 2023, we invested approximately $1.388 billion, $1.276 billion, and $1.195 billion, respectively, in research and development.
As these tools change how work happens, we remain focused on providing our clients and associates with HCM technology that is easy to use, powered with smart insights and personalized to support a human-centric experience. To bring these solutions to market, we pursue multiple paths to innovation.
As technologies like AI, machine learning (“ML”) and generative AI change how work happens, we remain focused on providing our clients and associates with HCM technology that is easy to use, powered with smart insights and personalized to support a human-centric experience. To bring these solutions to market, we pursue multiple paths to innovation.
All of these solutions can be combined with ADP SmartCompliance® to address the increasingly broad and complex needs of employers. Outside the United States, we address the needs of over 65,000 clients with premier global solutions consisting of in-country solutions and multinational offerings, including ADP GlobalView®, ADP Celergo®/Streamline® and ADP iHCM.
All of these solutions can be combined with ADP SmartCompliance ® to address the increasingly broad and complex needs of employers. Outside the United States, we address the needs of over 70,000 clients with premier global solutions consisting of in-country solutions and multinational offerings, including Lyric, ADP Global Payroll and ADP iHCM. HCM Solutions Integrated HCM Solutions.
Our voluntary business resource groups (BRGs), which cover a broad array of diverse associates that share common interests and experiences, make us stronger by promoting inclusion, diversity, equity and belonging and cultural awareness, accelerating associate engagement, retention and career development, helping build relationships with diverse markets in our communities, and promoting the conservation and restoration of natural resources.
Our voluntary business resource groups, which cover a broad array of associates and are open to all that share common interests and experiences, make us stronger by promoting inclusion and cultural awareness, accelerating associate engagement, retention and career development, helping build relationships in our communities, and promoting the conservation and restoration of natural resources.
The changing nature of these comprehensive laws in the United States, Europe and elsewhere, including the European Union’s (the “EU”) General Data Protection Regulation (the “GDPR”) and the California Privacy Rights Act of 2020 (the “CPRA”), impact our processing of personal information of our employees and on behalf of our clients.
The changing nature of these comprehensive laws in the United States, Europe and elsewhere, including the European Union’s (the “EU”) General Data Protection Regulation (the “GDPR”), the California Privacy Rights Act of 2020 (the “CPRA”), and the Department of Justice’s (the “DOJ”) Data Security Program established under Executive Order 14117, impact our processing of personal information of our employees and on behalf of our clients.
We intend to build more relationships with partners, such as through the ADP Marketplace, in order to provide clients with seamless integrations and customizations that simplify their HR processes and help them meet their needs.
We continue to build more relationships with partners, such as through the ADP Marketplace, in order to provide clients with seamless integrations and customizations that simplify their HR processes and best address their unique needs.
ADP Assist also uses generative AI to simplify report creation, helping HR practitioners and leaders access internal, national, and global workforce data to analyze compensation, turnover, candidate profile relevancy, and talent market insights. ADP Assist earned the “Generative AI Innovation Award” in the 2024 AI Breakthrough Awards.
ADP Assist also uses generative AI to simplify report creation, helping HR practitioners and leaders access internal, national, and global workforce data to analyze compensation, turnover, candidate profile relevancy, and talent market insights.
Our common stock is listed on the NASDAQ Global Select Market® under the symbol “ADP.” When we refer to “we,” “us,” “our,” “ADP,” or the “Company” in this Annual Report on Form 10-K, we mean Automatic Data Processing, Inc. and its consolidated subsidiaries. 3 BUSINESS OVERVIEW ADP’s Mission Our mission is to power organizations with insightful Human Capital Management (HCM) solutions that meet the changing needs of our clients and their workers.
Our common stock is listed on the NASDAQ Global Select Market® under the symbol “ADP.” When we refer to “we,” “us,” “our,” “ADP,” or the “Company” in this Annual Report on Form 10-K, we mean Automatic Data Processing, Inc. and its consolidated subsidiaries. 3 BUSINESS OVERVIEW ADP’s Mission Our mission is to help businesses make meaningful change in the world of work by providing insightful HCM solutions that meet the evolving needs of our clients and their workers.
ADP Strategic Plan Services, LLC, our registered investment adviser, provides certain investment management and advisory services to retirement plan administrators under a heightened “fiduciary” standard and is regulated by the SEC and the U.S. Department of Labor.
ADP Strategic Plan Services, LLC, our registered investment adviser, provides certain investment management and advisory services to retirement plan administrators under a heightened “fiduciary” standard and is regulated by the SEC and the U.S. Department of Labor. ADP Broker-Dealer, Inc., which supports our Retirement Services business, is a registered broker-dealer regulated by the SEC and the Financial Industry Regulatory Authority.
Strategic Cloud-based Products and Solutions Across Client Size and Geography HCM Solutions Integrated HCM Solutions. Our premier suite of HCM products offers complete solutions that assist employers of all types and sizes in all stages of the employment cycle, from recruitment to retirement.
Our premier suite of HCM products offers complete solutions that assist employers of all types and sizes in all stages of the employment cycle, from recruitment to retirement.
Innovation at ADP Innovation is in our DNA. For 75 years, we have proven that actively listening and responding to what clients and their employees need and want keeps the world of work progressing forward. As a founder in the industry, we pioneered HCM automation, HCM in the cloud, mobile HCM and a digital HCM marketplace.
Innovation at ADP Innovation is in our DNA. For over 75 years, we have proven that actively listening and responding to what clients and their employees need and want keeps the world of work progressing forward.
We address these broad market needs with our cloud-based strategic platforms: RUN Powered by ADP®, serving over 890,000 small businesses; ADP Workforce Now®, serving over 85,000 mid-sized and large businesses across our strategic pillars; and ADP Vantage HCM® and our next-gen HCM platform, serving large enterprise businesses.
We address these broad market needs with our cloud-based strategic platforms: RUN Powered by ADP ® , serving over 940,000 small businesses; ADP Workforce Now ® , serving over 90,000 mid-sized and large businesses; and ADP Lyric HCM, serving large enterprise businesses.
We issue quarterly global StandOut® Engagement Pulse® surveys to ensure that all associates can share with their leaders how they feel about their work and their colleagues, and for us to get a snapshot of engagement across the globe. The strength of our ADP team comes from what each one of us offers each other, our clients and our community.
We issue quarterly global StandOut® Engagement Pulse® surveys to ensure that all associates can share with their leaders how they feel about their work and their colleagues, and for us to get a snapshot of engagement across the globe.
From leveraging our unique data to provide differentiated insights to collaborating with, or investing in, organizations with complementary products or purchasing solutions that add to our strong foundation, each of these avenues helps ADP sustain a culture focused on continuous innovation. Transforming our solutions and service through AI Data is the foundation of the advantage we bring to our clients.
From leveraging our unique data to provide differentiated insights to collaborating with, or investing in, organizations with complementary products to purchasing solutions that add to our strong foundation, each of these paths helps ADP sustain a culture focused on continuous innovation. Strategically infusing AI The AI landscape is evolving quickly.
RUN Powered by ADP also integrates with other ADP solutions, such as workforce management, workers’ compensation insurance premium payment plans, and retirement plan administration systems. • ADP Workforce Now is a flexible HCM solution used across mid-sized and large businesses in North America to manage their employees.
RUN also integrates with other ADP solutions, including workforce management, workers’ compensation, benefits, and retirement services. • ADP Workforce Now is a flexible HCM solution used across mid-sized and large businesses in North America to manage their employees.
Many of our clients also look to us to take on responsibility for a portion or all of their HCM workflow via one of our HRO solutions.
Many of our clients also ask us to take on responsibility for a portion or all of their HCM workflows via one of our Human Resources Outsourcing (“HRO”) solutions.
Our PEO business, called ADP TotalSource®, provides clients with comprehensive employment administration outsourcing solutions through a relationship in which employees who work for a client (referred to as “worksite employees”) are co-employed by us and the client. 7 PRODUCTS AND SOLUTIONS In order to serve the unique needs of our clients and their diverse types of businesses and workforce models, we provide a range of solutions which businesses of all types and sizes and across geographies can use to recruit, pay, manage, and retain their workforce.
Our PEO business, called ADP TotalSource ® , is our full-service PEO that offers expert guidance, user-friendly technology, comprehensive employee benefits, and a risk management, safety, and workers’ compensation program as part of a co-employment arrangement in which employees who work for a client (referred to as “worksite employees”) are co-employed by us and the client. 7 PRODUCTS AND SOLUTIONS In order to serve the unique needs of our clients and their diverse types of businesses and workforce models, we provide a range of solutions that businesses of all types and sizes and across geographies can use to recruit, onboard, pay, manage, and retain their workforce.
Reflecting our commitment to innovation, ADP launched a corporate venture capital arm and innovation lab, ADP Ventures. ADP Ventures’ mission is to enhance and strengthen ADP’s core business, create offerings in new adjacent segments and geographies, and develop new assets to monetize markets and segments beyond HCM.
Accelerating innovation Reflecting our commitment to innovation, ADP’s corporate venture capital arm and innovation lab, ADP Ventures, is focused on enhancing and strengthening ADP’s core business, creating offerings in new adjacent segments and geographies, and developing new assets to monetize markets and segments beyond HCM.
Our automated Pay-by-Pay® premium payment program calculates and collects workers’ compensation premium payments each pay period, simplifying this task for employers. Retirement Services. ADP Retirement Services helps over 170,000 employers in the United States administer various types of retirement plans, such as traditional and Roth 401(k)s, profit sharing (including new comparability), SIMPLE and SEP IRAs, and executive deferred compensation plans.
ADP Retirement Services helps over 190,000 employers in the United States administer various types of retirement plans, such as traditional and Roth 401(k)s, profit sharing (including new comparability), SIMPLE and SEP IRAs, and executive deferred compensation plans.
By operating a flexible service model, we help clients manage various combinations of payroll services, HR management, time and attendance management, talent management and benefits management, depending on the country in which the solution is provided.
By operating a flexible service model, we help clients manage various combinations of payroll services, HR management, time and attendance management, talent management and benefits management, depending on the country in which the solution is provided. We pay over 16 million workers outside the United States with our in-country and multi-country solutions, such as ADP iHCM and ADP Global Payroll.
This metric is not a reported number, but it is used by management as a planning tool to allocate resources needed to install services, and as a means of assessing our performance against the expectations of our clients. In addition, some of our products and services are sold under longer-term contracts with initial terms ranging from two to seven years.
This metric is not a reported number, but it is used by management as a planning tool to allocate resources needed to install services, and as a means of assessing our performance against the expectations of our clients.
Our global talent management solutions elevate the employee experience, from recruitment to ongoing employee engagement and development. Our comprehensive HR solutions combined with our deep expertise make our clients’ global HR management strategies a reality.
As part of our global payroll services, we supply year-end regulatory and legislative tax statements and other forms to our clients’ employees. Our global talent management solutions elevate the employee experience, from recruitment to ongoing employee engagement and development. Our comprehensive HR solutions combined with our deep expertise make our clients’ global HR management strategies a reality.
ADP Assist offers smart, user-centric solutions through a conversational interface that touches every aspect of HR – payroll, time, talent, benefits, recruitment, analytics, reporting, and compliance. ADP Assist validates payroll information, checking for payroll anomalies and using generative AI to identify and help resolve missing tax registrations and answer questions by drawing on ADP’s large, up-to-date dataset of compliance information.
ADP Assist validates payroll information, checking for payroll anomalies and using generative AI to identify and help resolve missing tax registrations and answer questions by drawing on ADP’s large, up-to-date dataset of compliance information.
In addition, industry-specific modules are available for labor forecasting, budgeting, activity and task management, grant and project tracking, and tips management. Compliance Solutions. ADP’s Compliance Solutions provides industry-leading expertise in payment compliance and employment-related tax matters that complement the payroll, HR and ERP systems of our clients.
ADP’s Compliance Solutions provides industry-leading expertise in payment compliance and employment-related tax matters that complement the payroll, HR and ERP systems of our clients.
Our employee background screening services business offers background checking services that are subject to the Fair Credit Reporting Act. ADP TotalSource is subject to various state licensing requirements and, as a Certified PEO, maintains certifications with the Internal Revenue Service.
ADP TotalSource is subject to various state licensing requirements and, as a Certified PEO, maintains certifications with the Internal Revenue Service.
Although these laws and regulations apply to our clients and not to ADP, changes in such laws or regulations may affect our operations, products and services.
Although these laws and regulations apply to our clients and not to ADP, changes in such laws or regulations may affect our operations, products and services. For example, our payroll services are designed to facilitate compliance with state laws and regulations applicable to the payment of wages.
Our commitment to building a better world of work and creating a workplace where everyone can thrive has led to recognition across the globe, including Fortune’s World’s Most Admired Companies (18 consecutive years); Disability:IN Best Place to Work for Disability Inclusion; Fair360 Top 50 Companies for Diversity; Seramount’s Best Companies for Multicultural Women; Fast Company’s Best Workplaces for Innovators; Newsweek’s America’s Most Responsible Companies; and Newsweek’s Most Trustworthy Companies in America.
And, we do not ask candidates to provide their salary history in most of the countries where we operate. 14 Our commitment to building a better world of work and creating a workplace where everyone can thrive has led to recognition across the globe, including Fortune’s World’s Most Admired Companies (19 consecutive years); Forbes’ America’s Best Large Employers; Fortune’s America’s Most Innovative Companies; Fast Company’s Best Workplaces for Innovators; TIME’s World’s Best Companies; and Newsweek’s Most Trustworthy Companies in America.
ADP’s Strategy Our business strategy has three key priorities: With a large and growing addressable market, we are focused on our core growth areas and further enhancing our market position by executing on our Strategy: • Lead with Best-in-Class HCM Technology.
ADP’s Strategy With a large and growing addressable market, we are focused on our core growth areas and further enhancing our market position by executing on our three strategic priorities: • Lead with Best-in-Class HCM Technology. We design and develop world-class HCM platforms that simplify work and utilize enabling technologies such as artificial intelligence (“AI”) and modern cloud architecture.
Item 1. Business CORPORATE BACKGROUND General In 1949, our founders established ADP to shape the world of work with a simple, innovative idea: help clients focus on their business by solving their payroll challenges.
Item 1. Business CORPORATE BACKGROUND General In 1949, our founders established ADP with a simple, innovative idea: help clients focus on their business by solving their payroll challenges. In the more than 75 years since, we have shaped the world of work with innovation and expertise, transforming Human Capital Management (“HCM”) from an administrative challenge to a strategic business advantage.
More businesses use ADP Workforce Now in North America than any other HCM solution designed for both mid-sized and large businesses. • ADP Vantage HCM is a solution for large enterprises in the United States.
More businesses use ADP Workforce Now in North America than any other HCM solution designed for both mid-sized and large businesses. • ADP Lyric HCM is a global HCM for large enterprises, unifying HR management, payroll, workforce management, talent, and data analytics into a flexible, intelligent, and human-centric solution.
Other competitive factors include a company’s in-house function, whereby a company installs and operates its own HCM system. Competition for business outsourcing solutions is primarily based on product and service quality, reputation, ease of use and accessibility of technology, breadth of offerings, and price.
We also face ongoing competition from companies’ in-house functions, whereby companies install and operate their own HCM system. Competition for business outsourcing solutions is primarily based on product and service quality, reputation, ease of use and accessibility of technology, breadth of offerings, and price.
In some cases, based on a client's timeline, the period may exceed two years for a large, multi-country GlobalView client or other large, multi-phase implementation. Although we monitor sales that have not yet been installed, we do not view this metric as material to an understanding of our overall business in light of the recurring nature of our business.
Although we monitor sales that have not yet been installed, we do not view this metric as material to an understanding of our overall business in light of the recurring nature of our business.
In addition, many of our solutions are designed to assist clients with their compliance with certain U.S. and foreign laws and regulations that apply to them. We have, and continue to enhance, compliance programs and policies to monitor and address the legal and regulatory requirements applicable to our operations and client solutions, including dedicated compliance personnel and training programs.
In addition, many of our solutions are designed to assist clients with their compliance with certain U.S. and foreign laws and regulations that apply to them.
For example, our payroll services are designed to facilitate compliance with state laws and regulations applicable to the payment of wages. 13 In addition, our HCM solutions help clients manage their compliance with certain requirements of the Affordable Care Act in the United States.
In addition, our HCM solutions help clients manage their compliance with certain requirements of the Affordable Care Act in the United States.
Creating a customized HR ecosystem To meet clients’ shifting needs, we also collaborate with partners through solutions like ADP Marketplace, one of the largest digital HR storefronts with over 800 partner solutions worldwide. ADP Marketplace is enhancing our client experience by offering integrated partner solutions.
Creating a customized HR ecosystem To meet clients’ shifting needs, we also collaborate with partners through solutions like ADP Marketplace, one of the largest e-commerce platforms for HR solutions in the industry.
Our suite of HCM solutions are powered by our strategic, cloud-based, award-winning platforms, including: • RUN Powered by ADP combines a software platform for small business payroll, HR management and tax compliance administration, with 24/7 service and support from our team of small business experts.
Our suite of HCM solutions are powered by our strategic, cloud-based, award-winning platforms, including: • RUN Powered by ADP is an all-in-one platform designed specifically for small businesses to simplify payroll, HR, and compliance. It combines easy-to-use technology with 24/7 real-person support from ADP’s team of payroll professionals.
Our CHRO, along with our CEO, as appropriate, regularly updates and supports our Compensation and Management Development Committee of the Board (“CMDC”) as well as the Board of Directors on HCM matters, including culture, engagement, hiring, rewards, and inclusion, diversity, equity and belonging efforts.
Our CHRO, along with our CEO, as appropriate, regularly updates and supports our Compensation and Management Development Committee of the Board (“CMDC”) as well as the Board of Directors on HCM matters. The CMDC is responsible for these matters, as well as our executive compensation program, company-wide equity-based plans, and our management succession planning and development program.
Inclusion, diversity, equity and belonging are cornerstones of our one-of-a-kind culture. We value diverse perspectives and believe that our associates and their best ideas thrive in a diverse and inclusive environment.
We value different perspectives and believe that our associates and their best ideas thrive in a diverse and inclusive environment. We have a number of initiatives to strengthen and further cultivate our values-based culture.
Leveraging our workforce data AI and ML drive many of the key features of ADP’s data products, including ADP DataCloud, our award-winning people analytics solution.
AI represents the next frontier, and our industry-leading data set married to our best-in-class distribution offers 5 ADP a distinct, competitive advantage. AI and ML drive many of the key features of ADP’s data products, including ADP DataCloud, our award-winning people analytics solution.
We are always designing better ways to work through cutting-edge products, premium services and exceptional experiences that enable people to reach their full potential. ADP ’ s Business Pillars Our business is organized around three pillars which represent our core growth areas. U.S.
We are always designing better ways to work through industry leading products, premium services and exceptional experiences that enable people to reach their full potential all around the world.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFailure to comply with anti-corruption laws and regulations, economic and trade sanctions, anti-money laundering laws and regulations, and similar laws could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences Regulators worldwide continue to exercise a high level of scrutiny with respect to anti-corruption, economic and trade sanctions, and anti-money laundering laws and regulations.
Biggest changeOur Wisely® offerings and potentially other future offerings in the payments and/or consumer space may subject us to additional laws and regulations, some of which may not be uniform and may require us to modify or restrict our offerings and decrease our potential revenue and earnings. 16 Failure to comply with anti-corruption laws and regulations, economic and trade sanctions, anti-money laundering laws and regulations, and similar laws could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences Regulators worldwide continue to exercise a high level of scrutiny with respect to anti-corruption, economic and trade sanctions, and anti-money laundering laws and regulations.
Nonetheless, the global environment continues to grow increasingly hostile as attacks on information technology systems continue to grow in frequency, complexity and sophistication (including due to the use of AI), and we are regularly targeted by unauthorized parties using malicious tactics, code and viruses. Certain of these malicious parties may be state-sponsored and/or supported by significant financial and technological resources.
Nonetheless, the global environment continues to grow increasingly hostile as attacks on information technology systems continue to grow in frequency, complexity and sophistication (including due to the use of AI), and we are regularly targeted by unauthorized parties using malicious tactics, code and viruses. Certain of these unauthorized parties may be state-sponsored and/or supported by significant financial and technological resources.
Failure to comply with laws and regulations applicable to our operations or client solutions and services could cause us to incur substantial costs or could result in the suspension or revocation of licenses or registrations, the limitation, suspension or termination of services, the imposition of consent orders or civil and criminal penalties, including fines, and lawsuits, including class actions, that could damage our reputation and have a materially adverse effect on our results of operation or financial condition.
Failure to comply with laws and regulations applicable to our operations or client solutions and services could cause us to incur substantial costs or could result in the suspension or revocation of licenses or registrations, the limitation, suspension or termination of services, the imposition of consent orders or civil and criminal penalties, including fines, and lawsuits, including class actions, that could damage our reputation and have a materially adverse effect on our results of operations or financial condition.
While ADP maintains insurance coverage that, subject to policy terms and conditions and a significant self-insured 20 retention, is designed to address losses or claims that may arise in connection with certain aspects of data and cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the continually evolving area of data and cyber risk.
While ADP maintains insurance coverage that, subject to policy terms and conditions and a significant self-insured retention, is designed to address losses or claims that may arise in connection with certain aspects of data and cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the continually evolving area of data and cyber risk.
BUSINESS AND INDUSTRY RISKS Our industry is subject to rapid technological change, including as a result of AI, and if we fail to upgrade, enhance and expand our technology and services to meet client needs and preferences, the demand for our solutions and services may materially diminish Our businesses operate in industries that are subject to rapid technological advances (such as AI) and changing client needs and preferences.
BUSINESS AND INDUSTRY RISKS Our industry is subject to rapid technological change, including as a result of AI, and if we fail to upgrade, enhance and expand our technology and services to meet 20 client needs and preferences, the demand for our solutions and services may materially diminish Our businesses operate in industries that are subject to rapid technological advances (such as AI) and changing client needs and preferences.
Our use of generative AI in our products and operations also introduces additional risks, including risks related to accuracy, bias, security, and privacy. For example, if the data used to train a model or the model’s output is inaccurate or biased, or alleged to be inaccurate or biased, we could be subject to reputational damage or litigation.
Our use of generative AI in our products and operations also introduces additional risks, including risks related to accuracy, bias, transparency, security, and privacy. For example, if the data used to train a model or the model’s output is inaccurate or biased, or alleged to be inaccurate or biased, we could be subject to reputational damage or litigation.
We operate our business around the world, including in numerous developing economies where companies and government officials are more likely to engage in business practices that are 17 prohibited by domestic and foreign laws and regulations, including the United States Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.
We operate our business around the world, including in numerous developing economies where companies and government officials are more likely to engage in business practices that are prohibited by domestic and foreign laws and regulations, including the United States Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.
Further, while we perform due diligence prior to acquisitions and take actions to safeguard the businesses that we acquire, these businesses may not have invested as significantly as we do in security and technology and may be more susceptible to cybersecurity incidents, which may make us more vulnerable to cybersecurity incidents as well.
Further, while we perform due diligence prior to acquisitions and take actions to safeguard the businesses that we acquire, these businesses may not have invested as significantly as we do in security and technology and may be more susceptible to 19 cybersecurity incidents, which may make us more vulnerable to cybersecurity incidents as well.
A reduction in the availability of any such financing during periods of disruption in the financial markets or otherwise may increase our borrowing costs and/or require us to sell available-for-sale securities in our funds held for clients to satisfy our short-term funding requirements.
A reduction in the availability of any such financing during periods of disruption in the financial markets or otherwise may increase our borrowing costs and/or require us to sell 21 available-for-sale securities in our funds held for clients to satisfy our short-term funding requirements.
SECURITY AND TECHNOLOGY RISKS Our businesses collect, host, store, transfer, process, disclose, use, secure, retain and dispose of personal and business information, and collect, hold and transmit client funds, and a security or privacy breach may damage or disrupt our businesses or operations, result in the disclosure of confidential information, damage our reputation, increase our costs, cause losses and materially adversely affect our results of operations In connection with our business, we collect, host, store, transfer, process, disclose, use, secure, retain and dispose of large amounts of personal and business information about our clients, employees of our clients, our vendors and our employees, contractors and temporary staff, including payroll information, health care information, personal and business financial data, social security 19 numbers and their foreign equivalents, bank account numbers, tax information and other personal and business information.
SECURITY AND TECHNOLOGY RISKS Our businesses collect, host, store, transfer, process, disclose, use, secure, retain and dispose of personal and business information, and collect, hold and transmit client funds, and a security or privacy breach may damage or disrupt our businesses or operations, result in the disclosure of confidential information, damage our reputation, increase our costs, cause losses and materially adversely affect our results of operations In connection with our business, we collect, host, store, transfer, process, disclose, use, secure, retain and dispose of large amounts of personal and business information about our clients, employees of our clients, our vendors, our partners, and our employees, contractors and temporary staff, including payroll information, health care information, personal and business financial data, social security numbers and their foreign equivalents, bank account numbers, tax information and other personal and business information.
As part of our overall data protection compliance program in connection with the GDPR, we implemented Binding Corporate Rules (“BCRs”) as both a data processor and data controller, which permits us to process and transfer personal data across borders in compliance with EU data protection laws.
As part of our overall data protection compliance program in connection with the GDPR, we implemented Binding 17 Corporate Rules (“BCRs”) as both a data processor and data controller, which permits us to process and transfer personal data across borders in compliance with EU data protection laws.
In addition, data security events, concerns about privacy abuses by other companies and increased awareness of the potential (positive and negative) of AI are changing consumer and social expectations for enhanced protections (including with respect to bias and potential discrimination).
In addition, data security events, concerns about privacy abuses by other companies and increased awareness of the potential (positive and negative) of AI are changing client, consumer and social expectations for enhanced protections (including with respect to bias and potential discrimination).
In connection with our client funds assets investment strategy, we attempt to minimize the risk of not having funds collected from a client available at the time such 22 client’s obligation becomes due by generally impounding the client’s funds at or before the time of payment of such client’s obligation.
In connection with our client funds assets investment strategy, 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 at or before the time of payment of such client’s obligation.
In addition , self-regulatory frameworks like the National Institute of Standards and Technology AI Risk 18 Management Framework are being promulgated and adherence to these may become an industry standard or a client expectation.
In addition , self-regulatory frameworks like the National Institute of Standards and Technology AI Risk Management Framework are being promulgated and adherence to these may become an industry standard or a client expectation.
We may also be obligated to indemnify our clients, vendors or partners in connection with any such claim or litigation. Even if we were to prevail in such a dispute, any litigation could be costly and time-consuming.
We may also be obligated to indemnify our clients, vendors or partners in 18 connection with any such claim or litigation. Even if we were to prevail in such a dispute, any litigation could be costly and time-consuming.
Although this is a global problem, it may affect our businesses more than other businesses because malevolent parties (which could include our personnel) may focus on the amount and type of personal and business information that our businesses collect, host, store, transfer, process, disclose, use, secure, retain and dispose of, and the client funds that we collect and transmit.
Although this is a global problem, it may affect our businesses more than other businesses because unauthorized parties (which could include our personnel) may focus on the amount and type of personal and business information that our businesses collect, host, store, transfer, process, disclose, use, secure, retain and dispose of, and the client funds that we collect and transmit.
Such scrutiny has resulted in aggressive investigations and enforcement of such laws and burdensome regulations, any of which could materially adversely impact our business.
Such scrutiny has resulted in aggressive investigations and enforcement of such laws and regulations, any of which could materially adversely impact our business.
We have been, and expect we will continue to be, the subject of cybersecurity attacks, including unauthorized intrusion, malicious software infiltration, network disruption, denial of service, corruption of data, ransomware attack, and theft of sensitive information (including our intellectual property).
We have been, and expect we will continue to be, the subject of cybersecurity attacks, including unauthorized intrusion, malicious software infiltration, network disruption, denial of service, corruption of data, ransomware attack, insider threats, and theft of sensitive information (including our intellectual property).
Our failure to achieve progress in these and other ESG areas on a timely basis, or at all, our failure to fully comply with these new ESG requirements, or our failure to do so in a timely manner, or a negative perception of our ESG initiatives could adversely impact our reputation, business, including employee recruitment and retention, financial results, and growth.
Our failure to achieve progress in these areas on a timely basis, or at all, our failure to fully comply with these requirements, or our failure to do so in a timely manner, or a negative perception of our initiatives could adversely impact our reputation, business, including employee recruitment and retention, financial results, and growth.
As a result, the breach or perceived breach of our security systems could result in a loss of confidence by our clients or potential clients and cause them to choose another service provider, which could have a materially adverse effect on our business, financial condition or results of operations.
As a result, the breach or perceived breach of our security systems or the security systems of our authorized third parties could result in a loss of confidence by our clients or potential clients and cause them to choose another service provider, which could have a materially adverse effect on our business, financial condition or results of operations.
Activist stockholders may create perceived uncertainties as to the future direction of our business or strategy, including with respect to our ESG efforts, which may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel, potential clients and business partners and may affect our relationships with current clients, vendors, investors and other third parties.
Activist stockholders may create perceived uncertainties as to the future direction of our business or strategy which may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel, potential clients and business partners and may affect our relationships with current clients, vendors, investors and other third parties.
While we have contingency plans in place for bank failures, a systemic shutdown of the banking industry would impede our ability to process funds on behalf of our payroll, tax and other money movement services clients and could have an adverse impact on our financial results and liquidity.
While we have contingency plans in place for isolated bank failures and outages, a systemic shutdown of the banking industry would impede our ability to process payments on behalf of our payroll, tax and other money movement services clients and could have an adverse impact on our financial results and liquidity.
Because our PEO is a co-employer with our PEO clients and a Certified PEO by the Internal Revenue Service, we may be subject to certain obligations, responsibilities and liabilities of an employer with respect to Worksite Employees (WSE), including with respect to their wages and the payment thereof, the payment of certain taxes with respect to WSE wages and employee benefits provided to the WSEs.
Because our PEO is a co-employer with our PEO clients and a Certified PEO by the Internal Revenue Service, we may be subject to certain obligations, responsibilities and liabilities of an employer with respect to Worksite Employees ( “ WSE”), including with respect to their wages and the payment thereof, tax credits for employers, the payment of certain taxes with respect to WSE wages and employee benefits provided to the WSEs.
In the future, a cybersecurity attack, unauthorized intrusion, malicious software infiltration, network disruption, denial of service, corruption of data, ransomware attack, theft of non-public or other sensitive information, or similar act by a malevolent party (which could include our personnel), or inadvertent acts or inactions by our vendors, partners or personnel, could result in the loss, disclosure or misuse of confidential personal or business information or our intellectual property or the theft of client or ADP funds, which could have a materially adverse effect on our business or results of operations or that of our clients, result in liability, litigation, regulatory investigations and sanctions or a loss of confidence in our ability to serve clients, or cause current or potential clients to choose another service provider.
In the future, a cybersecurity attack, unauthorized intrusion, malicious software infiltration, network disruption, denial of service, corruption of data, ransomware attack, theft of non-public or other sensitive information, or similar act by an unauthorized party (which could include our personnel) with respect to our businesses or our authorized third parties’ businesses, or inadvertent acts or inactions by our authorized third parties or personnel, could result in the loss, disclosure or misuse of confidential personal or business information or our intellectual property or the theft of client or ADP funds, which could have a materially adverse effect on our business or results of operations or that of our clients, result in liability, litigation, regulatory investigations and sanctions or a loss of confidence in our ability to serve clients, or cause current or potential clients to choose another service provider.
We believe that providing insights and content from data, including via artificial intelligence (AI) and machine learning (ML), will become increasingly important to the value that our solutions and services deliver to our clients.
We believe that providing insights and content from data, including via AI and ML, will become increasingly important to the value that our solutions and services deliver to our clients.
Any such event could prevent or materially delay the recovery of any funds from clients and could have an adverse impact on our financial results and liquidity. We are dependent upon various large banks to execute electronic payments and wire transfers as part of our client payroll, tax and other money movement services.
Any such event could prevent or materially delay the recovery of any funds from clients and could have an adverse impact on our financial results and liquidity. We are dependent upon various financial institutions to execute electronic funds transfer and paper check payments as part of our client payroll, tax and other money movement services.
We have registered our payroll card business as a provider of prepaid access, and registered ADP Trust Bank and ADP Retirement Trust Services with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). ADP Canada Co. is a registered entity with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as a Money Service Business (MSB).
We have registered our prepaid card business as a provider of prepaid access, and registered ADP Trust Bank and ADP Retirement Trust Services with the Treasury Department’s Financial Crimes Enforcement Network. ADP Canada Co. is a registered entity with FINTRAC as a Money Service Business.
Hardware, software, applications or services that we develop or procure from third parties, or are required by third parties such as foreign governments to install on our systems, may contain defects in design or manufacture or other problems that could (or, in respect of third-party software, may be designed to) compromise the confidentiality, integrity or availability of data or our systems.
Hardware, software, applications or services that we develop or procure from authorized third parties, or are required by governmental or law enforcement agencies to install on our systems, may contain defects in design or manufacture or other problems that could (or in respect of third party software, may be designed to) compromise the confidentiality, integrity or availability of data or our systems.
However, legislation that governs the development and/or use of AI has been adopted or is under consideration in the U.S. at the state and local level, as well as abroad.
However, legislation that governs the development and/or use of AI has been adopted or is under consideration in the U.S. at the state and local level, as well as abroad, most notably the European Union’s Artificial Intelligence Act.
Litigation brought to protect and enforce our intellectual property rights could be costly and time-consuming. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights, which may be successful.
Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights, which may be successful.
In addition, while our operating environments are designed to safeguard and protect confidential personal and business information, we may not have the ability to monitor the implementation or effectiveness of any safeguards by our clients, vendors or partners and, in any event, third parties may be able to circumvent those security measures.
While our operating environments are designed to safeguard and protect confidential personal and business information, we do not have the ability to monitor the systems, personnel or physical facilities of, or the implementation or effectiveness of any safeguards by, our clients or our authorized third parties and, in any event, unauthorized parties have circumvented in the past, and may in the future be able to circumvent, those security measures.
Unauthorized parties have also attempted to gain (and in certain cases have gained), and will continue to attempt to gain, access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery, or other methods of deceiving these third parties or our personnel, including phishing and other social engineering techniques whereby attackers use end-user behaviors to distribute computer viruses and malware into our systems or otherwise compromise the confidentiality, integrity or availability of data or our systems.
Unauthorized parties have also attempted to gain (and in certain cases have gained), and will continue to attempt to gain, access to our systems and facilities, and those of our authorized third parties, through fraud, trickery, and other methods of deceit, including using stolen identities to obtain employment with us or our authorized third parties as well as phishing and other social engineering techniques whereby attackers use end-user behaviors to distribute computer viruses and malware into our systems, our authorized third parties’ systems or otherwise compromise the confidentiality, integrity or availability of data or our systems.
Competition for skilled employees in the outsourcing and other markets in which we operate is increasingly intense, making it more difficult and expensive to attract and retain highly skilled, motivated and diverse personnel. If we are unable to attract and retain highly skilled, motivated and diverse personnel, results of our operations and culture may suffer.
Competition for skilled employees in the outsourcing and other markets in which we operate is increasingly intense, making it more difficult and expensive to attract and retain highly skilled, motivated and diverse personnel.
In addition, the steps we take to protect our intellectual property rights may be inadequate or ineffective, or may not provide us with a significant competitive advantage. Our intellectual property (including source code) could be wrongfully acquired as a result of a cyber-attack or other wrongful conduct by third parties or our personnel.
In addition, the steps we take to protect our intellectual property rights may be inadequate or ineffective, or may not provide us with a significant competitive advantage.
Any such event could prevent or materially delay the recovery of any payments not timely remitted and could have an adverse impact on our financial results and liquidity.
Any such event could prevent or materially delay the recovery of any payments not timely remitted and could have an adverse impact on our financial results and liquidity. In addition, our payroll and tax processing services involve the collection and disbursement of a significant amount of funds to a large number of federal, state and local tax authorities.
Information or system access obtained by malevolent parties (which could include our personnel) resulting from successful attacks against our clients, vendors, partners or other third parties may, in turn, be used to attack our information technology systems.
Information or system access obtained by unauthorized parties (which could include our personnel) resulting from successful attacks against our clients or our authorized third parties may, in turn, be used to attack and compromise our information technology systems, or result in production downtimes and operational disruptions that could have a material adverse effect on our business, results of operations or financial condition.
From time to time, these systems, applications or solutions fail to operate properly or become disabled.
From time to time in the past, these systems, applications or solutions have failed to operate properly or become disabled, and they may do so in the future.
In addition, the nature of the office environment and remote or hybrid working is changing, which may make it more difficult to attract and retain personnel. It may also present operational and workplace culture challenges that may adversely affect our business. 23 Item 1B. Unresolved Staff Comments None.
It may also present operational and workplace culture challenges that may adversely affect our business. 23 Item 1B. Unresolved Staff Comments None.
There has also been an increase in current and proposed ESG regulations, standards and reporting requirements, which may result in legal and regulatory uncertainty as well as increased compliance costs for our business. Further, developments in the law relative to diversity may influence our talent strategies.
We publicly share certain information about our corporate social responsibility initiatives and we may face increased scrutiny related to these initiatives. Further, regulations, standards and reporting requirements in this respect continue to evolve, and may be inconsistent across jurisdictions, which may result in legal and regulatory uncertainty as well as increased compliance costs for our business.
Removed
Our Wisely® offerings and potentially other future offerings in the payments and/or consumer space may subject us to additional laws and regulations, some of which may not be uniform and may require us to modify or restrict our offerings and decrease our potential revenue and earnings.
Added
In addition, changes in federal, state or local tax laws and regulations allowing for tax credits (including the non-renewal of such laws) could adversely impact our Tax Credit Services business, which helps clients in the United States realize tax credit opportunities in connection with the hiring of new employees and certain other activities.
Removed
We may not realize or sustain the expected benefits from our business transformation initiatives, and these efforts could have a materially adverse effect on our business, 21 operations, financial condition, results of operations and competitive position We have been and will be undertaking certain transformation initiatives, which are designed to streamline our organization, extend our world-class distribution and strengthen our talent and culture, while supporting our revenue growth, margin improvement and productivity.
Added
Changes in laws or regulations could also cause us to modify our client funds investment strategy, which may reduce the interest income earned on such funds.
Removed
If we do not successfully manage and execute these initiatives, or if they are inadequate or ineffective, we may fail to meet our financial goals and achieve anticipated benefits, improvements may be delayed, not sustained or not realized and our business, operations and competitive position could be adversely affected.
Added
Our failure to properly or timely remit taxes on behalf of our clients could result in fines, penalties and interest for which we could be responsible, and could materially adversely affect our reputation, results of operations or financial condition.
Removed
These initiatives, or our failure to successfully manage them, could result in unintended consequences or unforeseen costs, including distraction of our management and employees, attrition, inability to attract or retain key personnel, and reduced employee productivity, which could adversely affect our business, financial condition, and results of operations.
Added
In November 2024, ADP Canada Co. filed its application for registration with the Bank of Canada as a Payment Services Provider as defined and required under the Retail Payment Activities Act.
Removed
We publicly share certain information about our environmental, social and governance (“ESG”) initiatives, including our efforts related to greenhouse gas emissions reductions and Inclusion, Diversity, Equity and Belonging efforts. We may face increased scrutiny related to our ESG initiatives and any related targets, including from the investment community.
Added
In addition, the Department of Justice implemented a Data Security Program under Executive Order 14117 restricting certain transfers of U.S. persons’ sensitive data to “countries of concern” and we have taken appropriate steps to comply.
Removed
In addition, our ability to achieve certain ESG initiatives and targets may depend on the actions or continuing requirements of governmental entities (e.g., our paperless initiatives may depend on whether certain states continue to require employers to offer employees the option to be paid by paper check or to obtain employee consent to be paid electronically instead of by paper check).
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Our intellectual property (including source code) could be wrongfully acquired as a result of a cyber-attack or other wrongful conduct by third parties or our personnel, or as a result of increased use of generative AI tools by us or our vendors. Litigation brought to protect and enforce our intellectual property rights could be costly and time-consuming.
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In addition, new computing technologies, including quantum computing, new discoveries in the field of cryptography or other developments could result in a compromise or breach of the algorithms we or our authorized third parties use or have used to encrypt and protect data.
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In addition, as we become increasingly interconnected with our authorized third parties, the security risk of our networks and the larger ecosystem in which we operate is heightened.
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The investment community, clients, regulators, and other stakeholders may have evolving and varied expectations regarding our business, culture, and values. Negative publicity, regardless of whether claims are accurate, about our brand, our solutions, our data, our culture and values, or our partners, vendors, or employees, could adversely affect our reputation, our business, and our financial results.
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If we are unable to attract and retain highly skilled, motivated and diverse personnel, results of our operations and culture may suffer. 22 In addition, the nature of the office environment and remote or hybrid working is changing, which may make it more difficult to attract and retain personnel.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFindings are reported to our board and, in response, ADP develops initiatives to improve our maturity across each of the pillars of the NIST Cybersecurity Framework. The status of these initiatives is then reviewed with our audit committee during its quarterly meetings. This governance process encourages an environment of continuous improvement.
Biggest changeFindings are reported to our board of directors and, in response, ADP develops initiatives to improve our maturity across each of the pillars of the NIST Cybersecurity Framework. The status of these initiatives is then reviewed with our board of directors during its quarterly meetings. This governance process encourages an environment of continuous improvement.
This program uses an integrated framework that lays out our mitigation, preparedness, response and recovery process. • Third-Party Risk Management. We maintain a third-party risk management process, designed to identify and manage risks associated with our vendors and other third parties, that includes conducting security assessments prior to engagement and periodically during the engagement.
This program uses an integrated framework that lays out our mitigation, preparedness, response and recovery process. • Third-Party Risk Management. We maintain a third-party risk management process, designed to identify and manage risks associated with our vendors, our partners and other third parties, that includes conducting security assessments prior to engagement and periodically during the engagement.
Our CSO has over 20 years of experience in a range of security roles, including serving as a chief security officer at another public company, and participates in various cyber security organizations. The current CISO has served in various roles in cybersecurity and information technology for over 25 years and has attained the professional certification of Certified Information Security Manager.
Our CSO has over 25 years of experience in a range of security roles, including serving as a chief security officer at another public company, and participates in various cyber security organizations. The current CISO has served in various roles in cybersecurity and information technology for over 25 years and has attained the professional certification of Certified Information Security Manager.
In connection with our business, we collect, host, store, transfer, process, disclose, use, secure, retain and dispose of large amounts of personal and business information about our clients, employees of our clients, our vendors and our employees, contractors and temporary staff.
In connection with our business, we collect, host, store, transfer, process, disclose, use, secure, retain and dispose of large amounts of personal and business information about our clients, employees of our clients, our vendors, our partners, and our employees, contractors and temporary staff.
Although this is a global problem, it may affect our businesses more than other businesses because malevolent parties may focus on the amount and type of personal and business information that our businesses collect, host, store, transfer, process, disclose, use, secure, retain and dispose of, and the client funds that we collect and transmit.
Although this is a global problem, it may affect our businesses more than other businesses because unauthorized parties may focus on the amount and type of personal and business information that our businesses collect, host, store, transfer, process, disclose, use, secure, retain and dispose of, and the client funds that we collect and transmit.
Our audit committee receives regular, quarterly reports on these matters from our CSO and leadership from our global product and technology organization, including on the status of projects to strengthen the company’s cybersecurity systems and improve cyber readiness, as well as on existing and emerging threat landscapes.
Our board of directors receives regular, quarterly reports on these matters from our CSO and leadership from our global product and technology organization, including on the status of projects to strengthen the Company’s cybersecurity systems and improve cyber readiness, as well as on existing and emerging threat landscapes.
Our board of directors and our audit committee are actively engaged in the oversight of our global cybersecurity program.
Our board of directors is actively engaged in the oversight of our global cybersecurity program.
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In advance of these quarterly meetings, members of our audit committee with cybersecurity expertise informally meet with our CAO, CSO, and other members of leadership, as appropriate, to advise and provide additional guidance and industry insights to the Company.
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In addition, the corporate development & technology committee of our board of directors receives regular, quarterly reports on our global product security and resiliency program led by leadership from our global product and technology organization with assistance from our CSO.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties ADP owns 6 of its processing/print ce nters, and 12 other operational offices, sales offices, and its corporate headquarters in Roseland, New Jersey, which aggregate approximately 2,690,198 square feet. None of ADP’s owned facilities is subject to any material encumbrances. ADP leases space for some of its processing centers, other operational offices, and sales offices.
Biggest changeItem 2. Properties ADP ow ns 6 of its processing/print centers, and 10 other operational offices, sales offices, and its corporate headquarters in Roseland, New Jersey, which aggregate approximately 2,555,369 square feet. None of ADP’s owned facilities is subject to any material encumbrances. ADP leases space for some of its processing centers, other operational offices, and sales offices.
All of these leases, which aggregate approximately 5,649,576 square feet worldwide, expire at various times up to the year 2035. ADP believes its facilities are currently adequate for their intended purposes and are adequately maintained.
All of these leases, which aggregate approximately 5,640,668 square feet worldwide, expire at various times up to the year 2036. ADP believes its facilities are currently adequate for their intended purposes and are adequately maintained.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of such date, 1,620,873 additional holders held their common stock in “street name.” Issuer Purchases of Equity Securities Period 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) April 1, 2024 to April 30, 2024 583,609 $245.10 583,460 $3,368,435,067 May 1, 2024 to May 31, 2024 623,282 $246.45 622,878 $3,214,926,248 June 1, 2024 to June 30, 2024 544,622 $244.84 543,211 $3,077,743,017 Total 1,751,513 1,749,549 (1) During the three months ended June 30, 2024, pursuant to the terms of the Company’s restricted stock program, the Company purchased 1,964 shares at the then-market value of the shares to satisfy certain tax withholding requirements for employees upon the vesting of their restricted shares.
Biggest changeAs of such date, 1,780,085 additional holders held their common stock in “street name.” Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of the Publicly Announced Common Stock Repurchase Plan (1) Maximum Approximate Dollar Value of Shares that may yet be Purchased under the Common Stock Repurchase Plan (1) (2) April 1, 2025 to April 30, 2025 400,430 $296.09 400,430 $2,010,261,167 May 1, 2025 to May 31, 2025 333,958 $315.74 333,958 $1,904,817,267 June 1, 2025 to June 30, 2025 327,239 $314.51 327,239 $1,801,895,701 Total 1,061,627 1,061,627 (1) The Company received the Board of Directors' approval in November 2022 to repurchase $5 billion of its common stock.
For equity compensation plan information, please refer to Item 12 in Part III of this Annual Report on Form 10-K. 27 Performance Graph The following graph compares the cumulative return on ADP's common stock for the most recent five years with the cumulative return on the S&P 500 Index and the Peer Group Index, (a) assuming an initial investment of $100 on June 30, 2019, with all dividends reinvested.
For equity compensation plan information, please refer to Item 12 in Part III of this Annual Report on Form 10-K. 27 Performance Graph The following graph compares the cumulative return on ADP's common stock for the most recent five years with the cumulative return on the S&P 500 Index and the Peer Group Index, (a) assuming an initial investment of $100 on June 30, 2020, with all dividends reinvested.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Registrant's Common Equity The principal market for the Company’s common stock is the NASDAQ Global Select Market under the symbol ADP. As of June 30, 2024, there were 31,271 holders of record of the Company’s common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Registrant's Common Equity The principal market for the Company’s common stock is the NASDAQ Global Select Market under the symbol ADP. As of June 30, 2025, there were 29,972 holders of record of the Company’s common stock.
(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.
(2) 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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGAAP measures, and they may not be comparable to similarly titled measures at other companies. 34 Years Ended June 30, % Change 2024 2023 As Reported Net earnings $ 3,752.0 $ 3,412.0 10 % Adjustments: Provision for income taxes 1,120.3 1,025.6 All other interest expense (a) 71.4 70.9 All other interest income (a) (97.0) (50.5) Transformation initiatives (b) 5.4 8.7 Legal settlements (c) (4.0) 1.2 Workforce optimization (d) 42.0 — Adjusted EBIT $ 4,890.1 $ 4,467.9 9 % Adjusted EBIT Margin 25.5 % 24.8 % Provision for income taxes $ 1,120.3 $ 1,025.6 9 % Adjustments: Transformation initiatives (e) 1.3 2.2 Legal settlements (e) (0.9) 0.2 Workforce optimization (e) 10.5 — Adjusted provision for income taxes $ 1,131.2 $ 1,028.0 10 % Adjusted effective tax rate (f) 23.0 % 23.1 % Net earnings $ 3,752.0 $ 3,412.0 10 % Adjustments: Transformation initiatives (b) 5.4 8.7 Income tax (benefit)/provision for transformation initiatives (e) (1.3) (2.2) Legal settlements (c) (4.0) 1.2 Income tax (benefit)/provision for legal settlements (e) 0.9 (0.2) Workforce optimization (d) 42.0 — Income tax (benefit)/provision for workforce optimization (e) (10.5) — Adjusted net earnings $ 3,784.5 $ 3,419.5 11 % Diluted EPS $ 9.10 $ 8.21 11 % Adjustments: Transformation initiatives (b) (e) 0.01 0.02 Legal settlements (c) (e) (0.01) — Workforce optimization (d) (e) 0.08 — Adjusted diluted EPS $ 9.18 $ 8.23 12 % (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.
Biggest changeGAAP measures, and they may not be comparable to similarly titled measures at other companies. 35 Years Ended June 30, % Change 2025 2024 As Reported Net earnings $ 4,079.7 $ 3,752.0 9 % Adjustments: Provision for income taxes 1,230.4 1,120.3 All other interest expense (a) 114.8 71.4 All other interest income (a) (94.2) (97.0) Gain on sale of assets (2.6) — Transformation initiatives (b) 0.1 5.4 Legal settlements (c) (0.4) (4.0) Optimization initiatives (d) 19.3 42.0 Adjusted EBIT $ 5,347.1 $ 4,890.1 9 % Adjusted EBIT Margin 26.0 % 25.5 % Provision for income taxes $ 1,230.4 $ 1,120.3 10 % Adjustments: Gain on sale of assets (e) (0.6) — Transformation initiatives (e) — 1.3 Legal settlements (e) (0.1) (0.9) Optimization initiatives (e) 4.8 10.5 Adjusted provision for income taxes $ 1,234.5 $ 1,131.2 9 % Adjusted effective tax rate (f) 23.2 % 23.0 % Net earnings $ 4,079.7 $ 3,752.0 9 % Adjustments: Gain on sale of assets (2.6) — Income tax provision on gain on sale of assets (e) 0.6 — Transformation initiatives (b) 0.1 5.4 Income tax benefit for transformation initiatives (e) — (1.3) Legal settlements (c) (0.4) (4.0) Income tax provision for legal settlements (e) 0.1 0.9 Optimization initiatives (d) 19.3 42.0 Income tax benefit for optimization initiatives (e) (4.8) (10.5) Adjusted net earnings $ 4,092.0 $ 3,784.5 8 % Diluted EPS $ 9.98 $ 9.10 10 % Adjustments: Transformation initiatives (b) (e) — 0.01 Legal settlements (c) (e) — (0.01) Optimization initiatives (d) (e) 0.03 0.08 Adjusted diluted EPS $ 10.01 $ 9.18 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) In fiscal 2024, the charges include consulting costs relating to our company-wide transformation initiatives.
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) The charges in fiscal 2024 include consulting costs relating to our company-wide transformation initiatives.
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, client employees or other payees).
Quantitative and Qualitative Disclosures about Market Risk Our overall investment portfolio is comprised of corporate investments (cash and cash equivalents, and marketable securities) and client funds assets (funds that have been collected from clients but have not yet been remitted to the applicable tax authorities, client employees or other payees).
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).
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).
Judgments and Uncertainties 40 The Company has estimated the amortization periods for deferred costs by using its historical client retention rates by business unit to estimate the pattern during which the service transfers. The expected client relationship period ranges from three to eight years.
Judgments and Uncertainties The Company has estimated the amortization periods for deferred costs by using its historical client retention rates by business unit to estimate the pattern during which the service transfers. The expected client relationship period ranges from three to eight years.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS See Note 1, Recently Issued Accounting Pronouncements, of Notes to the Consolidated Financial Statements for a discussion of recent accounting pronouncements. CRITICAL ACCOUNTING ESTIMATES Our Consolidated Financial Statements and accompanying notes have been prepared in accordance with U.S. GAAP.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS See Note 1, Recently Issued Accounting Pronouncements, of Notes to the Consolidated Financial Statements for a discussion of recent accounting pronouncements. 41 CRITICAL ACCOUNTING ESTIMATES Our Consolidated Financial Statements and accompanying notes have been prepared in accordance with U.S. GAAP.
For corporate liquidity, we expect existing cash, cash equivalents, marketable securities, cash flow from operations together with our $10.3 billion of committed 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, and capital expenditures for the foreseeable future.
For corporate liquidity, we expect existing cash, cash equivalents, marketable securities, cash flow from operations together with our $10.6 billion of committed 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, and capital expenditures for the foreseeable future.
Goodwill is tested annually for impairment or more frequently when an event or circumstance indicates that goodwill might be impaired. Judgments and Uncertainties The Company’s annual goodwill impairment assessment as of June 30, 2024 was performed for all reporting units using a quantitative approach by comparing the fair value of each reporting unit to its carrying value.
Goodwill is tested annually for impairment or more frequently when an event or circumstance indicates that goodwill might be impaired. Judgments and Uncertainties The Company’s annual goodwill impairment assessment as of June 30, 2025 was performed for all reporting units using a quantitative approach by comparing the fair value of each reporting unit to its carrying value.
We regularly review our deferred costs for impairment. There were no impairment losses incurred during the fiscal years ended June 30, 2024, June 30, 2023, or June 30, 2022. Goodwill. Description Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of businesses acquired.
We regularly review our deferred costs for impairment. There were no impairment losses incurred during the fiscal years ended June 30, 2025, June 30, 2024, or June 30, 2023. Goodwill Description Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of businesses acquired.
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 28 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; the impact of any uncertainties related to major natural disasters or catastrophic events; and supply-chain disruptions.
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 28 skilled associates; the impact of new acquisitions and divestitures; the impact of any uncertainties related to major natural disasters or catastrophic events; and supply-chain disruptions.
Details of the borrowings under the commercial paper program are as follows: Years ended June 30, 2024 2023 Average daily borrowings (in billions) $ 3.5 $ 3.4 Weighted average interest rates 5.3 % 3.7 % Weighted average maturity (approximately in 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.
Details of the borrowings under the commercial paper program are as follows: Years ended June 30, 2025 2024 Average daily borrowings (in billions) $ 4.1 $ 3.5 Weighted average interest rates 4.8 % 5.3 % Weighted average maturity (approximately in 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.
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 June 30, 2024 under the credit facilities.
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 June 30, 2025 under the credit facilities.
A detailed review of our fiscal 2023 performance compared to our fiscal 2022 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended June 30, 2023.
A detailed review of our fiscal 2024 performance compared to our fiscal 2023 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended June 30, 2024.
A hy pothetical chan ge 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 an $17 million impact to earnings before income taxes over the ensuing twelve-month period ending June 30, 2025.
A hy pothetical chan ge 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 an $24 million impact to earnings before income taxes over the ensuing twelve-month period ending June 30, 2026.
When we don’t impound client funds in advance of paying such client obligations, we are at risk of not recovering such funds or experiencing a material delay in such recovery. Through our clients funds investment strategy and client impounding processes, we have consistently maintained the required level of liquidity to satisfy all of our obligations.
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.
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 2% for the year ended June 30, 2024 as compared to the year ended June 30, 2023.
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 year ended June 30, 2025 as compared to the year ended June 30, 2024.
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 an $7 million impact to earnings before income taxes over the ensuing twelve-month period ending June 30, 2025.
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 an $8 million impact to earnings before income taxes over the ensuing twelve-month period ending June 30, 2026.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Tabular dollars are presented in millions, except per share amounts The following section discusses our year ended June 30, 2024 (“fiscal 2024”), as compared to year ended June 30, 2023 (“fiscal 2023”).
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Tabular dollars are presented in millions, except per share amounts The following section discusses our year ended June 30, 2025 (“fiscal 2025”), as compared to year ended June 30, 2024 (“fiscal 2024”).
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 o ur $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), our ability to engage in reverse repurchase agreement transaction s ($7.3 billion of which is available on a committed basis), and available borrowings under our $10.3 billion committe d credit facilities.
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 o ur $10.6 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), our ability to engage in reverse repurchase agreement transaction s ($7.5 billion of which is available on a committed basis in the U.S. as of June 30, 2025), and available borrowings under our $10.6 billion committe d credit facilities.
The increase in interest earned on funds held for clients resulted from an increase in our average interest rate earned to 2.9% in fiscal 2024, as compared to 2.4% in fiscal 2023, coupled with an increase in our average client funds balances of 3.6% to $35.4 billion in fiscal 2024 as compared to fiscal 2023.
The increase in interest earned on funds held for clients resulted from an increase in our average interest rate earned to 3.2% in fiscal 2025, as compared to 2.9% in fiscal 2024, coupled with an increase in our average client funds balances of 6.4% to $37.6 billion in fiscal 2025 as compared to fiscal 2024.
See Note 8 of our Consolidated Financial Statements for a description of our short-term financing including credit facilities.
See Note 9 of our Consolidated Financial Statements for a description of our short-term financing including credit facilities.
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 in order to reduce the size of the funds held for clients to correspond to client funds obligations.
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.
ADP Indemnity paid a premium of $276 million in July 2024, to enter into a reinsurance agreement with Chubb to cover substantially all losses incurred by ADP Indemnity for fiscal 2025 policy year on terms substantially similar to the fiscal 2024 reinsurance policy.
ADP Indemnity paid a premium of $278 million in July 2025, to enter into a reinsurance agreement with Chubb to cover substantially all losses incurred by ADP Indemnity for fiscal 2026 policy year on terms substantially similar to the fiscal 2025 reinsurance policy.
Refer to “Analysis of Reportable Segments” for additional discussion of the changes in revenue for each of our reportable segments, Employer Services and Professional Employer Organization (“PEO”) Services. Total revenues in fiscal 2024 include interest on funds held for clients of $1,024.7 million, as compared to $813.4 million in fiscal 2023.
Refer to “Analysis of Reportable Segments” for additional discussion of the changes in revenue for each of our reportable segments, Employer Services and Professional Employer Organization (“PEO”) Services. Total revenues for fiscal 2025 include interest on funds held for clients of $1,189.1 million, as compared to $1,024.7 million in fiscal 2024.
During fiscal 2024, ADP Indemnity paid a premium of $269 million to enter into a reinsurance arrangement with Chubb to cover substantially all losses incurred by ADP Indemnity for the fiscal 2024 policy year up to $1 million per occurrence.
During fiscal 2025, ADP Indemnity paid a premium of $276 million to enter into a reinsurance arrangement with Chubb to cover substantially all losses incurred by ADP Indemnity for the fiscal 2025 policy year up to $1 million per occurrence.
Year Ended June 30, 2024 Consolidated revenue growth as reported 7 % Adjustments: Impact of acquisitions — % Impact of foreign currency — % Consolidated revenue growth, organic constant currency 6 % Employer Services revenue growth as reported 8 % Adjustments: Impact of acquisitions — % Impact of foreign currency — % Employer Services revenue growth, organic constant currency 7 % Note: Numbers may not foot due to rounding.
Year Ended June 30, 2025 Consolidated revenue growth as reported 7 % Adjustments: Impact of acquisitions (1) % Impact of foreign currency — % Consolidated revenue growth, organic constant currency 7 % Employer Services revenue growth as reported 7 % Adjustments: Impact of acquisitions (1) % Impact of foreign currency — % Employer Services revenue growth, organic constant currency 6 % Note: Numbers may not foot due to rounding.
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 a vailable to us under the revolving credit agreements.
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 $10.6 billion available to us under the revolving credit agreements.
Our financial condition remains solid at June 30, 2024 and we have sufficient liquidity.
Our financial condition remains solid at June 30, 2025 and we have sufficient liquidity.
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. Capital Resources and Client Fund Obligations We have $3.0 billion of senior unsecured notes with maturity dates in 2025, 2028, and 2030.
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. Capital Resources and Client Fund Obligations We have $4.0 billion of senior unsecured no tes with maturity dates in 2028, 2030, 2032, and 2034.
In addition to the obligations described above, we had obligations for the remittance of funds relating to our payroll and payroll tax filing services. As of June 30, 2024, the obligations relating to these matters, which are expected to be paid in fiscal 2025, total $39,503.9 million, and were recorded in client funds obligations on our Consolidated Balance Sheets.
In addition to the obligations described above, we had obligations for the remittance of funds relating to our payroll and payroll tax filing services. As of June 30, 2025, the obligations relating to these matters, which are expected to be paid in fiscal 2026, 39 total $31,343.3 million, and were recorded in client funds obligations on our Consolidated Balance Sheets.
Separately, ADP Indemnity paid a p remium of $276 million in July 2024 to enter into a reinsurance agreement with Chubb to cover substantially all losses incurred by ADP Indemnity for the fiscal 2025 policy year.
Separately, ADP Indemnity paid a p remium of $278.0 million in July 2025 to enter into a reinsurance agreement with Chubb to cover substantially all losses incurred by ADP Indemnity for the fiscal 2026 policy year.
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 is performing as expected through June 30, 2024. In addition, we own U.S. government securities which primarily include debt directly issued by Federal Farm Credit Banks and Federal Home Loan Banks.
We own AAA-rated senior tranches of primarily fixed rate auto loan, credit card, and device payment plan agreement receivables, secured predominantly by prime collateral. All collateral on asset-backed securities is performing as expected through June 30, 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.
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 37 with an accordion feature under which the aggregate com mitment can be increased by $ 500 million , subject to the availability of additional commitments.
In addition, we have a five-year $3.5 billion credit facility and a five-year $2.5 billion credit facility maturing in June 2029 and June 2030, respectively, each with an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments.
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.
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 fixed-income securities are classified as available-for-sale securities.
We purchased approximately 5.1 million shares of our common stock at an average price per share of $244.04 during fiscal 2024, as compared to purchases of 4.9 million shares at an average price per share of $227.30 during fiscal 2023. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program.
We purchased approximately 4.4 million shares of our common stock at an average price per share of $289.11 during fiscal 2025, as compared to purchases of 5.1 million shares at an average price per share of $244.04 during fiscal 2024. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program.
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 4 of our Consolidated Financial Statements for a description of our corporate investments and funds held for clients. Capital expenditures for fiscal 2024 were $211.7 million, as compared to $206.0 million for fiscal 2023.
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 5 of our Consolidated Financial Statements for a description of our corporate investments and funds held for clients. Capital expenditures in fiscal 2025 were $176.8 million, as compared to $211.7 million in fiscal 2024.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2024, cash and cash equivalent s were $2.9 billion, which were primarily invested in time deposits and money market funds.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2025, cash and cash equivalent s were $3.3 billion, which were primarily invested in time deposits and money market funds.
We have a $4.55 billion, 364-day credit agreement that matures in June 2025 with a one-year term-out option.
We have a $4.6 billion, 364-day credit agreement that matures in June 2026 with a one-year term-out option.
ADP Indemnity recorded a pre-tax benefit of approximately $3 million in fiscal 2024 and a pre-tax benefit of approximately $73 million in fiscal 2023, which were primarily the results of less favorable actuarial loss development in workers’ compensation reserves.
ADP Indemnity recorded a pre-tax benefit of approximately $10 million in fiscal 2025 and a pre-tax benefit of approximately $3 million in fiscal 2024, which were primarily the results of more favorable actuarial loss development in workers’ compensation reserves.
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 obligations. We have $7.3 billion available to us on a committed basis under these reverse repurchase agreements.
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 obligations.
We had $37,996.1 million of cas h and cash e quivalents and marketable securities to satisfy such obligations recorded in funds held for clients on our Consolidated Balance Sheets as of June 30, 2024.
We had $30,985.7 million of cas h and cash e quivalents and marketable securities to satisfy such obligations recorded in funds held for clients on our Consolidated Balance Sheets as of June 30, 2025.
Our financial condition remains solid at June 30, 2024 and we remain well positioned to support our associates and our clients. 29 RESULTS AND ANALYSIS OF CONSOLIDATED OPERATIONS Total Revenues For the year ended June 30, respectively: Years Ended June 30, 2024 2023 Total Revenues $ 19,202.6 $ 18,012.2 YoY Growth 7 % 9 % YoY Growth, Organic Constant Currency 6 % 10 % Revenues in fiscal 2024 increased due to new business started from New Business Bookings, an increase in zero-margin benefits pass-throughs, an increase in our pays per control, continued strong client retention, an increase in interest on funds held for clients, and an increase in pricing.
Our financial condition remains solid at June 30, 2025 and we remain well positioned to support our associates and our clients. 29 RESULTS AND ANALYSIS OF CONSOLIDATED OPERATIONS Total Revenues For the year ended June 30, respectively: Years Ended June 30, 2025 2024 Total Revenues $ 20,560.9 $ 19,202.6 YoY Growth 7 % 7 % YoY Growth, Organic Constant Currency 7 % 6 % Revenues increased in fiscal 2025 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.
Details of the reverse repurchase agreements are as follows: Years ended June 30, 2024 2023 Average outstanding balances $ 1,828.6 $ 1,279.9 Weighted average interest rates 5.5 % 4.3 % We vary the maturities of our committed credit facilities to limit the refinancing risk of any one facility.
Details of the reverse repurchase agreements are as follows: Years ended June 30, 2025 2024 Average outstanding balances (in billions) $ 2.9 $ 1.8 Weighted average interest rates 4.8 % 5.5 % We vary the maturities of our committed credit facilities to limit the refinancing risk of any one facility.
Contractual Obligations Our contractual obligations at June 30, 2024 relate primarily to operating leases (Note 6) and other arrangements recorded in our balance sheet or disclosed in the notes to our financial statements, including benefit plan obligations (Note 10), liabilities for uncertain tax positions (Note 11), purchase obligations (Note 12), debt obligations (Note 9) and $200.1 million of interest payments on our debt, of which $64.3 million is expected to be paid within one year.
Contractual Obligations Our contractual obligations at June 30, 2025 relate primarily to operating leases (Note 7) and other arrangements recorded in our balance sheet or disclosed in the notes to our financial statements, including benefit plan obligations (Note 11), liabilities for uncertain tax positions (Note 12), purchase obligations (Note 13), debt obligations (Note 10) and $875.0 million of interest payments on our debt, of which $121.5 million is expected to be paid within one year.
Details regarding our overall investment portfolio are as follows: Years ended June 30, 2024 2023 Average investment balances at cost: Corporate investments $ 7,397.1 $ 6,293.9 Funds held for clients 35,369.5 34,142.8 Total $ 42,766.6 $ 40,436.7 Average interest rates earned exclusive of realized losses/(gains) on: Corporate investments 3.3 % 2.4 % Funds held for clients 2.9 % 2.4 % Total 3.0 % 2.4 % Net realized losses on available-for-sale securities 5.9 14.7 39 As of June 30: Net unrealized pre-tax losses on available-for-sale securities $ (1,515.8) $ (2,206.9) Total available-for-sale securities at fair value $ 31,207.5 $ 29,764.9 We are exposed to interest rate risk in relation to securities that mature, as the proceeds from maturing securities are reinvested.
Details regarding our overall investment portfolio are as follows: Years ended June 30, 2025 2024 Average investment balances at cost: Corporate investments $ 9,246.6 $ 7,397.1 Funds held for clients 37,631.2 35,369.5 Total $ 46,877.8 $ 42,766.6 Average interest rates earned exclusive of realized losses/(gains) on: Corporate investments 3.5 % 3.3 % Funds held for clients 3.2 % 2.9 % Total 3.2 % 3.0 % Net realized losses on available-for-sale securities 1.7 5.9 As of June 30: Net unrealized pre-tax losses on available-for-sale securities $ (425.7) $ (1,515.8) Total available-for-sale securities at fair value $ 33,777.7 $ 31,207.5 We are exposed to interest rate risk in relation to securities that mature, as the proceeds from maturing securities are reinvested.
All of our fixed-income securities are classified as available-for-sale securities. 38 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.
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.
The annualized interest rate earned on our entire portfolio increased from 2.4% for fiscal 2023 to 3.0% for fiscal 2024.
The annualized interest rate earned on our entire portfolio increased from 3.0% in fiscal 2024 to 3.2% in fiscal 2025.
Adjusted Provision for Income Taxe s The adjusted effective tax rate in fiscal 2024 and 2023 was 23.0% and 23.1%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.
Adjusted Provision for Income Taxes The adjusted effective tax rate in fiscal 2025 and 2024 was 23.2% and 23.0%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.
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, together with our $10.3 billion of comm itted credit facilities and our ability to use corporate liquidity when necessary to meet short-term funding requirements related to client funds obligations.
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 ($7.5 billion of which is available on a committed basis in the U.S. as of June 30, 2025) , together with our $10.6 billion of comm itted credit facilities and our ability to use corporate liquidity when necessary to meet short-term funding requirements related to client funds obligations.
Our 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 securiti es.
See Note 10 of our Consolidated Financial Statements for a description of our senior unsecured notes. Our 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.
These risks and uncertainties, along with the risk factors discussed under “Item 1A. - Risk Factors”, 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.
Risk Factors”, 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.
Earnings before Income Taxes Employer Services' earnings before income taxes increased in fiscal 2024 due to increased revenues discussed above, partially offset by increases in expenses.
Earnings before income taxes increased in fiscal 2025 due to the increases in total revenues, partially offset by the increases in total expenses discussed above.
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, charges related to our broad-based transformation initiative and workforce optimization. Provision for Income Taxes The effective tax rate in fiscal 2024 and 2023 was 23.0% and 23.1%, respectively.
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.
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.
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. During fiscal 2025, we continued to make meaningful progress on our Strategic Priorities.
At June 30, 2024, ADP Indemnity had total assets of $684.4 million to satisfy the actuarially estimated unpaid losses of $611.5 million for the policy years since July 1, 2003. ADP Indemnity paid claims of $1.1 million and $0.8 million, net of insurance recoveries, in fiscal 2024 and 2023, respectively.
As of June 30, 2025, ADP Indemnity had total assets of $725.4 million to satisfy the actuarially estimated unpaid losses of $665.7 million for the policy years since July 1, 2003. ADP Indemnity paid claims of $6.3 million and $1.1 million, net of insurance recoveries, in fiscal 2025 and 2024, respectively.
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.
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.
We expect capital expenditures in fiscal 2025 to be between $200 million and $225 million.
We expect capital expenditures in fiscal 2026 to be between $225.0 million and $250.0 million.
Highlights from the year ended June 30, 2024 include: • Revenue growth of 7% to $19,202.6 million; 6% organic constant currency • Earnings before income taxes margin expansion of 70 bps, and adjusted EBIT margin expansion of 70 bps • Diluted and adjusted diluted earnings per share ("EPS") growth of 11% and 12%, to $9.10 and $9.18, respectively • Cash returned via shareholder friendly actions of $3.4B, including $2.2B of dividends and $1.2B of share repurchases For fiscal 2024, we delivered solid revenue growth of 7%, 6% on organic constant currency.
Highlights from the year ended June 30, 2025 include: • Revenue growth of 7% to $20,560.9 million; 7% growth on an organic constant currency • Earnings before income taxes margin expansion of 50 bps, and adjusted EBIT margin expansion of 50 bps • Diluted and adjusted diluted earnings per share ("EPS") growth of 10% and 9%, respectively, to $9.98 and $10.01, respectively • Cash returned via shareholder friendly actions of $3.7B, including $2.4B of dividends and $1.3B of share repurchases For fiscal 2025, we delivered strong revenue growth of 7% both on a reported and organic constant currency basis.
Other (Income)/Expense, net Years ended June 30, 2024 2023 $ Change Interest income on corporate funds $ (241.3) $ (149.5) $ 91.8 Realized losses on available-for-sale securities, net 5.9 14.7 8.8 Impairment of assets — 2.1 2.1 Gain on sale of assets (17.1) — 17.1 Non-service components of pension income, net (34.2) (50.8) (16.6) Other (income)/expense, net $ (286.7) $ (183.5) $ 103.2 Interest income on corporate funds increased in fiscal 2024, as compared to fiscal 2023, due to higher average interest rates of 3.3% for the year ended June 30, 2024, as compared to 2.4% for the year ended June 30, 2023, coupled with higher average investment balances of $7.4 billion in fiscal 2024 as compared to $6.3 billion in fiscal 2023.
Other (Income)/Expense, net Years ended June 30, 2025 2024 $ Change Interest income on corporate funds $ (319.5) $ (241.3) $ 78.2 Realized losses on available-for-sale securities, net 1.7 5.9 4.2 Gain on sale of assets (5.0) (17.1) (12.1) Non-service components of pension income, net (31.3) (34.2) (2.9) Other income, net $ (354.1) $ (286.7) $ 67.4 Interest income on corporate funds increased in fiscal 2025 due to higher average investment balances of $9.2 billion as compared to $7.4 billion in fiscal 2024, coupled with an increase in average interest rates of 20 basis points, as compared to fiscal 2024.
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 8 of our Consolidated Financial Statements for a description of our short-term financing including commercial paper.
Please see “Quantitative and Qualitative Disclosures about Market Risk” for a further discussion of the risks related to our client funds extended investment strategy.
Net cash flows used in investing activities changed due to the timing of proceeds and purchases of corporate and client funds marketable securities of $1,117.5 million.
Net cash flows used in investing activities changed due to the acquisition of WorkForce Software with a net cash disbursement of $1,158.3 million and timing of the net proceeds and purchases of corporate and client funds marketable securities of $523.0 million.
Total Expenses Years Ended June 30, 2024 2023 % Change Costs of revenues: Operating expenses $ 9,050.1 $ 8,657.4 5 % Research and development 955.7 844.8 13 % Depreciation and amortization 470.9 451.2 4 % Total costs of revenues 10,476.7 9,953.4 5 % Selling, general and administrative expenses 3,778.9 3,551.4 6 % Interest expense 361.4 253.3 43 % Total expenses $ 14,617.0 $ 13,758.1 6 % For the year ended June 30: Operating expenses increased due to an increase in our PEO Services zero-margin benefits pass-through costs to $3,975.9 million from $3,800.9 million for the years ended June 30, 2024 and 2023, respectively.
Total Expenses Years Ended June 30, 2025 2024 % Change Costs of revenues: Operating expenses $ 9,622.7 $ 9,050.1 6 % Research and development 988.6 955.7 3 % Depreciation and amortization 486.0 470.9 3 % Total costs of revenues 11,097.3 10,476.7 6 % Selling, general and administrative expenses 4,051.7 3,778.9 7 % Interest expense 455.9 361.4 26 % Total expenses $ 15,604.9 $ 14,617.0 7 % For the year ended June 30: Operating expenses increased in fiscal 2025 due to an increase of $313.1 million of PEO Services zero-margin benefits pass-through costs to $4,289.0 million in fiscal 2025 from $3,975.9 million in fiscal 2024.
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.
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.
ANALYSIS OF REPORTABLE SEGMENTS Revenues Years Ended June 30, % Change 2024 2023 As Reported Organic Constant Currency Employer Services $ 12,980.8 $ 12,042.6 8 % 7 % PEO Services 6,233.6 5,984.2 4 % 4 % Other (11.8) (14.6) n/m n/m $ 19,202.6 $ 18,012.2 7 % 6 % Earnings before Income Taxes Years Ended June 30, % Change 2024 2023 As Reported Employer Services $ 4,555.5 $ 3,974.2 15 % PEO Services 921.5 977.3 (6) % Other (604.7) (513.9) n/m $ 4,872.3 $ 4,437.6 10 % 32 Margin Years Ended June 30, 2024 2023 YoY Growth Employer Services 35.1 % 33.0 % 210 bps PEO Services 14.8 % 16.3 % (150) bps n/m - not meaningful Employer Services Revenues Revenues increased due to new business started from New Business Bookings, an increase in our pays per control of 2%, continued strong client retention, an increase in interest earned on funds held for clients, and an increase in pricing.
For fiscal 2025, adjusted net earnings and adjusted diluted EPS reflect the changes in components described above. 32 ANALYSIS OF REPORTABLE SEGMENTS Revenues Years Ended June 30, % Change 2025 2024 As Reported Organic Constant Currency Employer Services $ 13,883.1 $ 12,980.8 7 % 6 % PEO Services 6,690.4 6,233.6 7 % 7 % Other (12.6) (11.8) n/m n/m $ 20,560.9 $ 19,202.6 7 % 7 % Earnings before Income Taxes Years Ended June 30, % Change 2025 2024 As Reported Employer Services $ 5,008.5 $ 4,555.5 10 % PEO Services 950.5 921.5 3 % Other (648.9) (604.7) n/m $ 5,310.1 $ 4,872.3 9 % Margin Years Ended June 30, 2025 2024 YoY Growth Employer Services 36.1 % 35.1 % 100 bps PEO Services 14.2 % 14.8 % (60) bps n/m - not meaningful Employer Services Revenues Employer Services' revenues increased in fiscal 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, the impact from the WorkForce Software acquisition, and an increase in the volume of our pays per control of 1%, as compared to fiscal 2024.
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.
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.
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 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, AA-rated and AAA-rated securities it is 10 years.
Net cash flows used in financing activities changed due to a net increase in the cash flow from client funds obligations of $13,715.7 million, which is due to the timing of impounds from our clients and payments to our clients' employees and other payees, a net increase in cash received from the Internal Revenue Service as of June 30, 2024 to be refunded to our clients, a net increase in proceeds related to reverse repurchase agreements, offset by an increase in dividends paid, and an increase in repurchases of common stock in fiscal 2024.
Net cash flows used in financing activities changed due to a net decrease in the cash flow from client funds obligations of $9,288.1 million, which is due to the timing of impounds from our clients and payments to our clients' employees and other payees, a net increase in cash distributed to our clients that was received from the Internal Revenue Service, and a net increase in payments related to reverse repurchase agreements, partially offset by net proceeds from the issuance and redemption of debt.
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. EXECUTIVE OVERVIEW We are a leading global provider of cloud-based Human Capital Management (“HCM”) technology solutions to employers around the world.
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 nearest comparable GAAP financial measures.
In June 2024, the company increased its U.S. short-term commercial paper program to provide for the issuance of up to $10.3 billion from $9.7 billion in aggregate maturity value. Our c ommercial paper program is rated A-1+ by Standard and Poor’s, Prime-1 (“P-1”) by Moody’s and F1+ by Fitch. These ratings denote the highest quality commercial paper securities.
This commercial paper program provides for the issuance of up to $10.6 billion in aggregate maturity value. Our commercial paper program is rated A-1+ by Standard and 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.
Margin Employer Services' margin increased due to contributions from client funds interest revenues discussed above, and operating efficiencies for costs of servicing our clients on growing revenue, partially offset by investments and costs to develop, support, and maintain our new and existing products.
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.
See Note 10 of our Consolidated Financial Statements for further details on non-service components of pension income, net. In fiscal 2024, the Company recognized a gain of $17.1 million, in relation to the sale of buildings and land.
See Note 11 of our Consolidated Financial Statements for further details on non-service components of pension income, net. In fiscal 2025, the gain on sale of assets of $5.0 million related to sales of buildings.
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.
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.
PEO average worksite employees increased 2% for the year ended June 30, 2024, as compared to the year ended June 30, 2023. Additionally, our strong ES new business bookings performance resulted in growth of 7% in fiscal 2024, and ES client revenue retention was 92% driven by continued improvement in our client satisfaction scores.
PEO average worksite employees increased 3% for the year ended June 30, 2025, as compared to the year ended June 30, 2024. Additionally, our ES new business bookings grew 3% in fiscal 2025, and ES client revenue retention was 92.1%. Our strong retention stems in part from our company-wide client satisfaction scores reaching new record highs for the year.
We believe these results are largely attributable to improvements made to our platforms and service over multiple years. 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.
These impressive client satisfaction results were broad-based and are a testament to the product investments we are making to improve the client experience. 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.
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.
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.
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.
EXECUTIVE OVERVIEW As a global leader in HR and payroll solutions, ADP continuously aims to solve complex business challenges for our clients and their workers. Our Human Capital Management ("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.
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 all other interest income and expense.
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, severance costs, non-recurring gains and losses, the elimination of intercompany transactions, and all other interest income and expense. 34 Non-GAAP Financial Measures 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.
(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. 35 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 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.
Sensitivity of Estimate to Change While the Company considers all of its tax positions fully supportable, the Company is occasionally challenged by various tax authorities regarding the amount of taxes due.
Sensitivity of Estimate to Change While the Company considers all of its tax positions fully supportable, the Company is occasionally challenged by various tax authorities regarding the amount of taxes due. If certain pending tax matters settle within the next twelve months, the total amount of unrecognized tax benefits may increase or decrease for all open tax years and jurisdictions.
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.
See Note 9 of our Consolidated Financial Statements for a description of our short-term financing including commercial paper. 37 Operating, Investing and Financing Cash Flows 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, 2025 2024 $ Change Cash provided by (used in): Operating activities $ 4,939.7 $ 4,157.6 $ 782.1 Investing activities (3,035.0) (1,389.0) (1,646.0) Financing activities (6,973.4) (1,431.7) (5,541.7) Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents 37.3 (22.4) 59.7 Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents $ (5,031.4) $ 1,314.5 $ (6,345.9) Net cash flows provided by operating activities increased due to growth in our business, and net favorable changes in the components of operating assets and liabilities, as compared to fiscal 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. 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 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation.” 42
Biggest changeItem 7A. 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 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 43

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