AUTOMATIC DATA PROCESSING INC
For the period ended Dec 31, 2024. Filed Jan 30, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Jan 30, 2025
ADP$303.35-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0000008670-24-000030
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-01-30.
0000008670-25-000007
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 111 current paragraphs.
61 unchanged; 37 reworded; 10 added; 6 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
During the second quarter, we continued to make meaningful progress on our Strategic Priorities. We announced a partnership that brings together Fiserv’s preeminent small business solutions, specifically Clover® and CashFlow Central℠, with RUN, our industry-leading small business payroll and HR solution. Additionally, we started to integrate the WorkForce Software acquisition, which closed in October, into our global HCM ecosystem. Lastly, since the first quarter introduction of ADP Lyric HCM, our flexible, intelligent, and human-centric Global HCM platform, we have experienced a meaningful increase in ADP Lyric's new business activity. During the second quarter, we also achieved a major milestone by increasing our dividend for the 50 th consecutive year.
Current report
•Closed the WorkForce Software acquisition in October and started the integration efforts
Current report
For the three andsix months ended December 31, respectively:
Current report
Total revenues for the three months ended December 31, 2024 increased due to new business started from New Business Bookings, strong client retention, an increase in pricing, an increase in zero-margin benefits pass-throughs, an increase in our pays per control and the impact from the WorkForce Software acquisition.
Current report
Interest expense increased for the six months ended December 31, 2024 primarily due to a higher volume of average commercial paper borrowings of $4.7 billion and reverse repurchase borrowings of $3.7 billion, as compared to $4.0 billion and $1.9 billion, respectively, for the six months ended December 31, 2023, partially offset by a decrease in average interest rates of 30 basis points for commercial paper and reverse repurchase borrowings.
Current report
For the three andsix months ended December 31:
Current report
The adjusted effective tax rate for the three months ended December 31, 2024 and 2023 was 23.6% and 23.2%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.
Current report
The adjusted effective tax rate for the six months ended December 31, 2024 and 2023 was 23.1% and 22.3%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.
Current report
For the three andsix months ended December 31:
Current report
Employer Services' margin increase for the three and six months ended December 31, 2024, respectively, 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 acquisition related expenses.
Removed paragraphs (6)
Previous report
During the first quarter we continued to make meaningful progress on our strategic priorities. We continuously aim to offer solutions that solve our clients’ complex business challenges. As part of this approach, in October 2024, we acquired WorkForce Software, a premier workforce management solutions provider that specializes in supporting large, global enterprises. Additionally, in September, we introduced ADP Lyric HCM, our flexible, intelligent and human-centric Global HCM platform. This is a unique offering, combining global HR, global payroll, and global service to adapt to a variety of structures and workflows and offer employers a human-centric approach to managing their people. Finally, we continued to invest in generative AI capabilities to enhance the experience of our clients and empower our associates. During the first quarter, we expanded access to our robust generative AI-based service tools which are designed to bring speed to our service interactions and improve the client experience.
Previous report
•Acquired WorkForce Software for approximately $1.2 billion in cash
Previous report
For thethree months ended September 30, respectively:
Previous report
For thethree months ended September 30:
Previous report
For thethree months ended September 30:
Previous report
Employer Services' margin increased for the three months ended September 30, 2024, due to contributions from client funds interest revenues discussed above, operating efficiencies for costs of servicing our clients on growing revenue, and a decrease in research and development costs.
Reworded paragraphs (37)
Previous wording
Highlights from the three months ended September 30, 2024 include:
Current wording
Highlights from the six months ended December 31, 2024 include:
Previous wording
•Revenue growth of 7% to $4,832.7 million; 7% organic constant currency
Current wording
•Revenue growth of 8% to $9,881.1 million; 7% organic constant currency
Previous wording
•Earnings before income taxes margin expansion of 140 bps, and adjusted EBIT margin expansion of 130 bps
Current wording
•Earnings before income taxes margin expansion of 90 bps, and adjusted EBIT margin expansion of 90 bps
Previous wording
•Diluted and adjusted diluted earnings per share ("EPS") growth of 13%, to $2.34 and 12%, to $2.33, respectively.
Current wording
•Diluted and adjusted diluted earnings per share ("EPS") growth of 12%, to $4.69, respectively
Previous wording
•Cash returned via shareholder friendly actions of $940M, including $570M of dividends and $370M of share repurchases
Current wording
•Cash returned via shareholder friendly actions of $1,790M, including $1,145M of dividends and $645M of share repurchases
Previous wording
For the three months ended September 30, 2024, we delivered solid revenue growth of 7%, on a reported and organic constant currency basis. 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 three months ended September 30, 2024 as compared to the three months ended September 30, 2023. PEO average worksite employees increased 3% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.
Current wording
For the six months ended December 31, 2024, we delivered solid revenue growth of 8%, 7% organic constant currency. Our pays per control metric, which represents the number of employees on ADP clients' payrolls in the United States when measured on a same-store-sales basis for a subset of clients ranging from small to large businesses, grew 2% for the six months ended December 31, 2024 as compared to the six months ended December 31, 2023. PEO average worksite employees increased 3% for the six months ended December 31, 2024, as compared to the six months ended December 31, 2023.
Previous wording
Total revenues for the three months ended September 30, 2024 increased due to new business started from New Business Bookings, strong client retention, an increase in pricing, an increase in zero-margin benefits pass-throughs, and an increase in our pays per control.
Current wording
Total revenues for the six months ended December 31, 2024 increased due to new business started from New Business Bookings, strong client retention, an increase in pricing, an increase in zero-margin benefits pass-throughs, and an increase in our pays per control.
Previous wording
Total revenues for the three months ended September 30, 2024 include interest on funds held for clients of $253.3 million, as compared to $201.7 million for the three months ended September 30, 2023. The increase in the interest earned on funds held for clients resulted from an increase in our average interest rate earned to 3.1% for the three months ended September 30, 2024, as compared to 2.6% for the three months ended September 30, 2023, and an increase in our average client funds balances of 5.3% to $32.8 billion for the three months ended September 30, 2024.
Current wording
Total revenues for the three months ended December 31, 2024 include interest on funds held for clients of $272.8 million, as compared to $225.3 million for the three months ended December 31, 2023. The increase in the interest earned on funds held for clients resulted from an increase in our average interest rate earned to 3.1% for the three months ended December 31, 2024, as compared to 2.8% for the three months ended December 31, 2023, and an increase in our average client funds balances of 8.1% to $35.3 billion for the three months ended December 31, 2024.
Previous wording
For the three months ended September 30, 2024, operating expenses increased due to higher PEO Services zero-margin benefits pass-through costs of $976.7 million to $1,049.2 million for the three months ended September 30, 2024. Additionally, for the three months ended September 30, 2024 operating expenses increased by $24.6 million due to higher service and implementation costs in support of our growing revenue.
Current wording
For the three months ended December 31, 2024, operating expenses increased due to an increase of $84.5 million of PEO Services zero-margin benefits pass-through costs from $970.7 million to $1,055.2 million. Additionally, for the three months ended December 31, 2024 operating expenses increased by $36.1 million due to higher service and implementation costs in support of our growing revenue.
Previous wording
Research and development expenses decreased for the three months ended September 30, 2024 due to efficiencies from workforce optimization efforts initiated in the prior year, and an increase in the capitalizable spend related to the integration of GenAI into our products as compared to the prior year.
Current wording
Research and development expenses increased for the three and six months ended December 31, 2024 due to increased investments and costs to develop, support, and maintain our new and existing products and the impact from the WorkForce Software acquisition, partially offset by efficiencies from workforce optimization efforts initiated in the prior year and an increase in the capitalizable spend related to the integration of GenAI into our products, as compared to the prior year.
Previous wording
Depreciation and amortization expenses decreased for the three months ended September 30, 2024 due to lower amortization of customer contracts and lists, partially offset by amortization of new investments in purchased software and internally developed software primarily for our next-gen products.
Current wording
Depreciation and amortization expenses increased for the three and six months ended December 31, 2024 due to the impact from the WorkForce Software acquisition and amortization of new investments in internally developed software primarily for our next-gen products and purchased software, partially offset by lower amortization of customer contracts and lists.
Previous wording
Selling, general and administrative expenses increased for three months ended September 30, 2024 primarily due to increases in selling and marketing expenses of $31.1 million as a result of investments in our sales organization, and an increase from acquisition and debt issuance related costs.
Current wording
Selling, general and administrative expenses increased for the three and six months ended December 31, 2024 primarily due to increases in selling and marketing expenses of $39.0 million and $73.5 million, respectively, as a result of investments in our sales organization, and an increase from acquisition related costs.
Previous wording
Interest expense increased for the three months ended September 30, 2024 primarily due to a higher volume of average commercial paper borrowings of $4.8 billion and reverse repurchase borrowings of $3.8 billion, as compared to $4.1 billion and $1.4 billion, respectively, for the three months ended September 30, 2023.
Current wording
Interest expense increased for the three months ended December 31, 2024 primarily due to a higher volume of average commercial paper borrowings of $4.5 billion and reverse repurchase borrowings of $3.7 billion, as compared to $3.9 billion and $2.4 billion, respectively, for the three months ended December 31, 2023, partially offset by a decrease in average interest rates of 60 basis points for commercial paper and reverse repurchase borrowings.
Previous wording
Interest income on corporate funds increased due to higher average interest rates of 3.4% for the three months ended September 30, 2024, as compared to 2.6% for the three months ended September 30, 2023, coupled with higher average investment balances of $10.7 billion for the three months ended September 30, 2024, as compared to $7.1 billion for the three months ended September 30, 2023. See Note 11 of our Consolidated Financial Statements for further details on non-service components of pension income, net.
Current wording
Interest income on corporate funds increased due to higher average investment balances of $10.0 billion and $10.3 billion for the three and six months ended December 31, 2024, respectively, as compared to $7.8 billion and $7.5 billion for the three and six months ended December 31, 2023, respectively, coupled with higher average interest rates of 3.4% for each period, as compared to 2.9% and 2.8% for the three and six months ended December 31, 2023, respectively. See Note 12 of our Consolidated Financial Statements for further details on non-service components of pension income, net.
Previous wording
Earnings before income taxes increased for the three months ended September 30, 2024, due to the components discussed above.
Current wording
Earnings before income taxes increased for the three and six months ended December 31, 2024, due to the components discussed above.
Previous wording
Margin increased for the three months ended September 30, 2024, due to contributions from client funds interest revenues discussed above, increased interest income on corporate funds, operating efficiencies for costs of servicing our clients on growing revenue, and a decrease in research and development costs, partially offset by increased interest expense.
Current wording
EBIT Margin increased for the three and six months ended December 31, 2024, due to contributions from client funds interest revenues discussed above, increased interest income on corporate funds, and operating efficiencies for costs of servicing our clients on growing revenue, partially offset by increased interest expense and acquisition related expenses.
Previous wording
Adjusted EBIT and Adjusted EBIT margin exclude interest income and interest expense that are not related to our client funds extended investment strategy, legal settlements, and net charges related to our broad-based transformation initiatives and the impact of net severance charges as applicable, in the respective periods.
Current wording
Adjusted EBIT and Adjusted EBIT margin exclude interest income and interest expense that are not related to our client funds extended investment strategy, legal settlements, and net charges related to our broad-based transformation initiatives, in the applicable periods.
Previous wording
The adjusted effective tax rate for the three months ended September 30, 2024 and 2023 was 22.6% and 21.4%, respectively. The increase in the effective tax rate is primarily due to lower reserves for uncertain tax positions and a valuation allowance release in the three months ended September 30, 2023.
Current wording
The effective tax rate for the three months ended December 31, 2024 and 2023 was 23.6% and 23.2%, respectively. The increase in the effective tax rate is primarily due to a benefit for adjustments to prior year tax liabilities in the three months ended December 31, 2023, partially offset by a higher excess tax benefit on stock-based compensation in the three months ended December 31, 2024.
Previous wording
The effective tax rate for the three months ended September 30, 2024 and 2023 was 22.6% and 21.4%, respectively. The increase in the effective tax rate is primarily due to lower reserves for uncertain tax positions and a valuation allowance release in the three months ended September 30, 2023.
Current wording
The effective tax rate for the six months ended December 31, 2024 and 2023 was 23.1% and 22.3%, respectively. The increase in the effective tax rate is primarily due to a benefit for adjustments to prior year tax liabilities, lower reserves for uncertain tax positions and a valuation allowance release in the six months ended December 31, 2023.
Previous wording
For the three months ended September 30, 2024, net earnings reflect the changes described above in our earnings before income taxes and our effective tax rate.
Current wording
For the three and six months ended December 31, 2024, net earnings reflect the changes described above in our earnings before income taxes and our effective tax rate.
Previous wording
For the three months ended September 30, 2024, in addition to the increase in net earnings, diluted EPS increased as a result of the impact of fewer shares outstanding resulting from the repurchase of approximately 1.4 million shares during the three months ended September 30, 2024, and 1.0 million shares during the three months ended September 30, 2023, partially offset by the issuances of shares under our employee benefit plans.
Current wording
For the three months ended December 31, 2024, 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 0.9 million shares during the three months ended December 31, 2024, and 1.1 million shares during the three months ended December 31, 2023, partially offset by the issuances of shares under our employee benefit plans.
Previous wording
Revenues increased for the three months ended September 30, 2024 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, and an increase in our pays per control of 2%.
Current wording
Revenues increased for the three and six months ended December 31, 2024 due to new business started from New Business Bookings, strong client retention, an increase in pricing, an increase in interest earned on funds held for clients, an increase in our pays per control of 1% and 2%, respectively, and the impact from the WorkForce Software acquisition.
Previous wording
Employer Services' earnings before income taxes increased 15% for the three months ended September 30, 2024, 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 increased selling expenses.
Current wording
Employer Services' earnings before income taxes increased 11% and 13% for the three and six months ended December 31, 2024, respectively, 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 increased selling expenses.
Previous wording
PEO Services' revenue increased for the three months ended September 30, 2024, due to increase in zero-margin benefits pass-throughs, and increase in average worksite employees of 3%, as compared to the three months ended September 30, 2023.
Current wording
PEO Services' revenue increased for the three and six months ended December 31, 2024, due to the increase in zero-margin benefits pass-throughs, and an increase in average worksite employees of 3% for each period, as compared to the three and six months ended December 31, 2023.
Previous wording
PEO Services' earnings before income taxes increased 1% for the three months ended September 30, 2024 due to increased revenues discussed above, partially offset by increases in selling expenses, and zero-margin benefits pass-through costs as compared to the three months ended September 30, 2023.
Current wording
PEO Services' earnings before income taxes decreased 1% and remained flat for the three and six months ended December 31, 2024, respectively, due to increased revenues discussed above, partially offset by increases in zero-margin benefits pass-through costs, operating costs related to workers' compensation and state unemployment insurance, and selling expenses, as compared to the three and six months ended December 31, 2023.
Previous wording
PEO Services' margin decreased for the three months ended September 30, 2024 due to increases in zero-margin benefits pass-through costs, operating costs related to workers' compensation and less favorable actuarial loss development in workers’ compensation reserves in ADP Indemnity.
Current wording
PEO Services' margin decreased for the three and six months ended December 31, 2024 due to increases in zero-margin benefits pass-through costs, operating costs related to workers' compensation and state unemployment insurance, and selling expenses.
Previous wording
Additionally, starting in fiscal year 2013, ADP Indemnity paid premiums to enter into reinsurance arrangements with ACE American Insurance Company, a wholly-owned subsidiary of Chubb Limited (“Chubb”), to cover substantially all losses incurred by the Company up to the $1 million per occurrence related to the workers' compensation and employer's liability deductible reimbursement insurance protection for PEO Services' worksite employees. Each of these reinsurance arrangements limits our overall exposure incurred up to a certain limit. The Company believes the likelihood of ultimate losses exceeding this limit is remote. ADP Indemnity recorded a pre-tax benefit of approximately $4.8 million for the three months ended September 30, 2024, as compared to approximately $6.2 million for the three months ended September 30, 2023, which was primarily a result of less favorable actuarial loss development in workers’ compensation reserves. In July 2024, 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 on terms substantially similar to the fiscal 2024 reinsurance policy.
Current wording
Additionally, starting in fiscal year 2013, ADP Indemnity paid premiums to enter into reinsurance arrangements with ACE American Insurance Company, a wholly-owned subsidiary of Chubb Limited (“Chubb”), to cover substantially all losses incurred by the Company up to the $1 million per occurrence related to the workers' compensation and employer's liability deductible reimbursement insurance protection for PEO Services' worksite employees. Each of these reinsurance arrangements limits our overall exposure incurred up to a certain limit. The Company believes the likelihood of ultimate losses exceeding this limit is remote. ADP Indemnity recorded a pre-tax (loss)/benefit of approximately $(0.8) million and $4.1 million for the three and six months ended December 31, 2024, respectively, as compared to approximately $(1.7) million and $4.5 million for the three and six months ended December 31, 2023, respectively. The pre-tax loss for the three months ended December 31, 2024 was primarily a result of more favorable actuarial loss development in workers’ compensation reserves as compared to December 31, 2023. The pre-tax benefit for the six months ended December 31, 2024 was primarily a result of less favorable actuarial loss development in workers’ compensation reserves as compared to December 31, 2023. In July 2024, 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 on terms substantially similar to the fiscal 2024 reinsurance policy.
Previous wording
At September 30, 2024, cash and cash equivalents were $2.1 billion, which were primarily invested in time deposits and money market funds.
Current wording
At December 31, 2024, cash and cash equivalents were $2.2 billion, which were primarily invested in time deposits and money market funds.
Previous wording
Our cash flows from operating, investing, and financing activities, as reflected in the Statements of Consolidated Cash Flows for the three months ended September 30, 2024 and 2023, respectively, are summarized as follows:
Current wording
Our cash flows from operating, investing, and financing activities, as reflected in the Statements of Consolidated Cash Flows for the six months ended December 31, 2024 and 2023, respectively, are summarized as follows:
Previous wording
Net cash flows provided by operating activities increased due to favorable changes in the components of working capital and an increase in growth in our business, as compared to the three months ended September 30, 2023.
Current wording
Net cash flows provided by operating activities increased due to favorable changes in the components of working capital and an increase in growth in our business, as compared to the six months ended December 31, 2023.
Previous wording
Net cash flows used in investing activities changed due to the timing of purchases and proceeds of corporate and client funds marketable securities of $1,426.7 million.
Current wording
Net cash flows used in investing activities changed due to the acquisition of Workforce Software with a cash disbursement of $1,160.6 million and the timing of purchases and proceeds of corporate and client funds marketable securities of $1,664.3 million.
Previous wording
Net cash flows used in financing activities changed due to a net decrease in the cash flow from client funds obligations of $9,495.6 million, which is due to the timing of impounds from our clients and payments to our clients' employees and other payees, along with a net decrease in cash received from the Internal Revenue Service as of September 30, 2024, to be refunded to our clients, offset by proceeds from commercial paper borrowing and issuance of debt.
Current wording
Net cash flows used in financing activities changed due to a net increase in the cash flow from client funds obligations of $3,668.5 million, which is due to the timing of impounds from our clients and payments to our clients' employees and other payees, along with proceeds from the issuance of debt, offset by a net decrease in cash distributed from the Internal Revenue Service as of December 31, 2024, which was refunded to our clients, repurchases of common stock, dividends paid, and proceeds related to reverse repurchase agreements.
Previous wording
From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions. We purchased approximately 1.4 million shares of our common stock at an average price per share of$259.47 during the three months ended September 30, 2024, as compared to purchases of 1.0 million shares at an average price per share of $242.26 during the three months ended September 30, 2023.
Current wording
From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions. We purchased approximately 2.4 million shares of our common stock at an average price per share of$274.42 during the six months ended December 31, 2024, as compared to purchases of 2.1 million shares at an average price per share of $238.29 during the six months ended December 31, 2023.
Previous wording
Our U.S. short-term funding requirements primarily related to client funds are sometimes obtained on an unsecured basis through the issuance of commercial paper, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. This commercial paper program provides for the issuance of up to $10.3 billion in aggregate maturity value. Our commercial paper program is rated A-1+ by Standard & Poor’s, Prime-1 (“P-1”) by Moody’s and F1+ by Fitch. These ratings denote the highest quality commercial paper securities. Maturities of commercial paper can range from overnight to up to 364 days. At September 30, 2024, the Company had$4.4 billion of commercial paper outstanding, which was repaid in early October 2024. At June 30, 2024, the Company had no comm ercial paper borrowing outstanding. Details of the borrowings under the commercial paper program are as follows:
Current wording
Our U.S. short-term funding requirements primarily related to client funds are sometimes obtained on an unsecured basis through the issuance of commercial paper, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. This commercial paper program provides for the issuance of up to $10.3 billion in aggregate maturity value. Our commercial paper program is rated A-1+ by Standard & Poor’s, Prime-1 (“P-1”) by Moody’s and F1+ by Fitch. These ratings denote the highest quality commercial paper securities. Maturities of commercial paper can range from overnight to up to 364 days. At December 31, 2024 and June 30, 2024, the Company had no comm ercial paper borrowing outstanding. Details of the borrowings under the commercial paper program are as follows:
Previous wording
Our U.S., Canadian, and United Kingdom short-term funding requirements related to client funds obligations are sometimes obtained on a secured basis through the use of reverse repurchase agreements, which are collateralized principally by government and government agency securities, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. These agreements generally have terms ranging from overnight to up to five business days. We have successfully borrowed through the use of reverse repurchase agreements on an as-needed basis to meet short-term funding requirements related to client funds obligations. We have $7.3 billion available to us on a committed basis under the U.S. reverse repurchase agreements. At September 30, 2024 and June 30, 2024, the Company had $679.1 million and $385.4 million of outstanding obligations related to reverse repurchase agreements which were fully paid in early October 2024 and early July 2024, respectively. Details of the reverse repurchase agreements are as follows:
Current wording
Our U.S., Canadian, and United Kingdom short-term funding requirements related to client funds obligations are sometimes obtained on a secured basis through the use of reverse repurchase agreements, which are collateralized principally by government and government agency securities, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. These agreements generally have terms ranging from overnight to up to five business days. We have successfully borrowed through the use of reverse repurchase agreements on an as-needed basis to meet short-term funding requirements related to client funds obligations. We have $7.3 billion available to us on a committed basis under the U.S. reverse repurchase agreements. At December 31, 2024, the Company had no outstanding obligations related to reverse repurchase agreements. At June 30, 2024, the Company had $385.4 million of outstanding obligations related to reverse repurchase agreements which were fully paid in early July 2024. Details of the reverse repurchase agreements are as follows:
Previous wording
Capital expenditures for the three months ended September 30, 2024 were $55.6 million, as compared to$42.2 million forthe three months ended September 30, 2023. We expect capital expenditures in fiscal 2025 to be between $200 million and $225 million, as compared to $211.7 million in fiscal 2024.
Current wording
Capital expenditures for the six months ended December 31, 2024 were $98.2 million, as compared to$94.0 million forthe six months ended December 31, 2023. We expect capital expenditures in fiscal 2025 to be between $180 million and $200 million, as compared to $211.7 million in fiscal 2024.
Previous wording
We are exposed to interest rate risk in relation to securities that mature, as the proceeds from maturing securities are reinvested. Factors that influence the earnings impact of interest rate changes include, among others, the amount of invested funds and the overall portfolio mix between short-term and long-term investments. This mix varies during the fiscal year and is impacted by daily interest rate changes. The annu alized interest rate earned on our entire portfolio increased from 2.6% for the three months ended September 30, 2023 to 3.2% for the three months ended September 30, 2024. A hypothetical change in both short-term interest rates (e.g., overnight interest rates or the federal funds rate) and intermediate-term interest rates of 25 basis points applied to the estimated average investment balances and any related short-term borrowings would result in approximately a $15 million impact to earnings before income taxes over the ensuing twelve-month period ending September 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 a $7 million impact to earnings before income taxes over the ensuing twelve-month period ending September 30, 2025.
Current wording
We are exposed to interest rate risk in relation to securities that mature, as the proceeds from maturing securities are reinvested. Factors that influence the earnings impact of interest rate changes include, among others, the amount of invested funds and the overall portfolio mix between short-term and long-term investments. This mix varies during the fiscal year and is impacted by daily interest rate changes. The annu alized interest rate earned on our entire portfolio increased from 2.7% for the six months ended December 31, 2023 to 3.2% for the six months ended December 31, 2024. A hypothetical change in both short-term interest rates (e.g., overnight interest rates or the federal funds rate) and intermediate-term interest rates of 25 basis points applied to the estimated average investment balances and any related short-term borrowings would result in approximately a $20 million impact to earnings before income taxes over the ensuing twelve-month period ending December 31, 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 a $9 million impact to earnings before income taxes over the ensuing twelve-month period ending December 31, 2025.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Total revenues for the six months ended December 31, 2024 include interest on funds held for clients of $526.1 million, as compared to $427.1 million for the six months ended December 31, 2023. The increase in the interest earned on funds held for clients resulted from an increase in our average interest rate earned to 3.1% for the six months ended December 31, 2024, as compared to 2.7% for the six months ended December 31, 2023, and an increase in our average client funds balances of 6.7% to $34.0 billion for the six months ended December 31, 2024.
Current report — wording carried from elsewhere
For the six months ended December 31, 2024, operating expenses increased due to an increase of $156.9 million of PEO Services zero-margin benefits pass-through costs from $1,947.5 million to $2,104.4 million. Additionally, for the six months ended December 31, 2024 operating expenses increased by $60.7 million due to higher service and implementation costs in support of our growing revenue.
Current report — wording carried from elsewhere
For the six months ended December 31, 2024, 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 2.4 million shares during the six months ended December 31, 2024, and 2.1 million shares during the six months ended December 31, 2023, partially offset by the issuances of shares under our employee benefit plans.