AUTOMATIC DATA PROCESSING INC
For the period ended Sep 30, 2026. Filed Oct 30, 2026.
View on SEC.govAbout this filing
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.
Sep 30, 2026 · Filed Oct 30, 2026
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 2026-03-31; filed 2026-04-30.
0000008670-26-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-30.
0000008670-26-000044
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 119 previous paragraphs and 101 current paragraphs.
48 unchanged; 49 reworded; 3 added; 18 removed; 4 previous and 1 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 (3)
Current report
During the first quarter, we made meaningful progress against our Strategic Priorities as we continued to leverage our industry-leading data, deep domain expertise, trusted brand, service model, and global scale to help drive the HCM industry's AI transformation. ADP Assist, our cross-platform solution that combines the power of ADP data, expertise, and generative AI to simplify the world of work, became even more deeply embedded in client workflows, adding more than 100,000 clients during the quarter. We also continued to expand the capabilities of ADP Assist agents across key HR and talent processes. For example, the recently launched Recruiting AI Interviewer Agent within ADP Lyric HCM automates call handling, scheduling, and note-taking, enabling recruiters to focus more of their time on engaging and evaluating top candidates. In addition, we were pleased to expand ADP Lyric HCM into key European markets, with availability now extended to companies headquartered in the United Kingdom, France, Germany, and the Netherlands. Finally, we continued deploying AI-powered tools across our sales, service, and research and development functions to enhance the client experience, improve productivity, and further accelerate innovation across the enterprise.
Current report
Employer Services' earnings before income taxes increased for the three months ended September 30, 2026 due to the increase in revenues, discussed above, partially offset by increases in expenses, including $33.6 million in selling and marketing expenses.
Current report
CRITICAL ACCOUNTING ESTIMATES
Removed paragraphs (18)
Previous report
During the third quarter, we made meaningful progress on our Strategic Priorities. We continued to leverage our data advantages, domain expertise, and trusted brand to lead the HCM industry through its AI transformation. Our ADP Assist agents are applying advanced intelligence to real workforce challenges across payroll and HR, and since their launch in January, our clients have seen meaningful time savings for each payroll processed. ADP Lyric HCM is also saving time for our clients, with one company replacing a dozen disparate systems to achieve a leaner payroll operations model. Additionally, we expanded our AI ecosystem by launching a dedicated space within ADP Marketplace for our partner companies’ AI agents. On the service front, we scaled our GenAI capabilities across our service operations, transforming how our client-facing teams engage, serve, and support our clients across the full lifecycle. Finally, we remained focused on benefiting our clients through our global scale by delivering compliant HCM solutions, local expertise, and trusted relationships wherever they operate.
Previous report
Total revenues for the nine months ended March 31, 2026 include interest on funds held for clients of $999.4 million, as compared to $881.3 million for the nine months ended March 31, 2025. The increase in interest earned on funds held for clients resulted from an increase in our average client funds balances of 7.3% to $40.2 billion for the nine months ended March 31, 2026 as compared to the nine months ended March 31, 2025, coupled with an increase in our average interest rate earned to 3.3% for the nine months ended March 31, 2026, as compared to 3.1% for the nine months ended March 31, 2025.
Previous report
Operating expenses increased for the nine months ended March 31, 2026 due to an increase of $232.8 million of PEO Services zero-margin benefits pass-through costs to $3,427.2 million from $3,194.4 million for the nine months ended March 31, 2025. Additionally, for the nine months ended March 31, 2026, operating expenses increased by $159.9 million due to higher service and implementation costs in support of our growing revenue and by $31.9 million due to an increase in costs related to workers' compensation coverage and state unemployment taxes for worksite employees.
Previous report
Depreciation and amortization expenses increased for the nine months ended March 31, 2026 due to the amortization of intangible assets acquired in the WorkForce Software acquisition and 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 report
Interest expense decreased for the nine months ended March 31, 2026 primarily due to a decrease of $23.6 million related to commercial paper and reverse repurchase borrowings as a result of decreases in average interest rates on commercial paper issuances and reverse repurchases of 80 and 70 basis points, respectively, offset by an increase in average reverse repurchase outstanding balances of $0.5 billion, as compared to the nine months ended March 31, 2025. This decrease was partially offset by net increases in interest expense of $20.0 million related to the senior notes issued and redeemed during the year ended June 30, 2025.
Previous report
Interest income on corporate funds increased for the three months ended March 31, 2026 due to higher average investment balances of $7.3 billion as compared to $6.3 billion for the three months ended March 31, 2025, offset by a decrease in average interest rates of 10 basis points, as compared to the three months ended March 31, 2025.
Previous report
Note: Numbers may not foot due to rounding.
Previous report
EBIT Margin increased for the three months ended March 31, 2026 due to contributions from client funds interest revenues, lower amortization of client contracts and lists, and operating efficiencies related to research and development, service, and implementation expenses, partially offset by increased selling and marketing expenses.
Previous report
EBIT Margin increased for the nine months ended March 31, 2026 due to contributions from client funds interest revenues, lower interest expense related to commercial paper and reverse repurchase borrowings, lower amortization of client contracts and lists, and increased interest income on corporate funds, partially offset by increased selling and marketing expenses.
Previous report
The effective tax rate for the nine months ended March 31, 2026 and 2025 was 23.2% and 23.1%, respectively. The increase in the effective tax rate is primarily due to a lower excess tax benefit on stock-based compensation offset by a decrease in uncertain tax positions for the nine months ended March 31, 2026 as compared to the nine months ended March 31, 2025.
Previous report
Employer Services' margin increased for the three months ended March 31, 2026 due to contributions from client funds interest revenues, lower amortization of client contracts and lists, and operating efficiencies related to research and development, service, and implementation expenses, partially offset by increased selling and marketing expenses.
Previous report
Employer Services' margin increased for the nine months ended March 31, 2026 due to contributions from client funds interest revenues, and lower amortization of client contracts and lists, partially offset by increased selling and marketing expenses and the impact from the WorkForce Software acquisition in October 2024.
Previous report
PEO Services' margin decreased for the three months ended March 31, 2026, due to increased selling and marketing expenses, increased operating costs related to state unemployment insurance, a decrease in the pre-tax benefit from ADP Indemnity, and increases in zero-margin benefits pass-through costs, partially offset by increased revenues discussed above.
Previous report
Other
Previous report
(b) Represents a partial reversal of the workforce optimization initiative from fiscal 2024. Severance charges/(reversals) have been taken in the past and not included as an adjustment to get to adjusted results. Unlike severance charges/(reversals) in prior periods, this specific reversal relates to a broad-based, company-wide initiative.
Previous report
(d) In the nine months ended March 31, 2025, this represents a reversal of a legal reserve recorded during the year ended June 30, 2023.
Previous report
Note: Numbers may not foot due to rounding.
Previous report
CRITICAL ACCOUNTING POLICIES
Reworded paragraphs (49)
Previous wording
This document and other written or oral statements made from time to time by Automatic Data Processing, Inc., its subsidiaries and variable interest entity (“ADP” or the “Company”) may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like “outlook,” “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could,” “is designed to” and other words of similar meaning, are forward-looking statements. These statements are based on management’s expectations and assumptions and depend upon or refer to future events or conditions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements or that could contribute to such difference include: ADP's success in obtaining and retaining clients, and selling additional services to clients; the pricing of products and services; the success of our new solutions; our ability to respond successfully to changes in technology, including artificial intelligence; compliance with existing or new legislation or regulations; changes in, or interpretations of, existing legislation or regulations; overall market, political and economic conditions, including interest rate and foreign currency trends and inflation; competitive conditions; our ability to maintain our current credit ratings and the impact on our funding costs and profitability; security or cyber breaches including as a result of artificial intelligence, fraudulent acts, and system interruptions and failures; employment and wage levels; availability of 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. ADP disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. These risks and uncertainties, along with the risk factors discussed under “Item 1A. - Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 (“fiscal 2025”), 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.
Current wording
This document and other written or oral statements made from time to time by Automatic Data Processing, Inc., its subsidiaries and variable interest entity (“ADP” or the “Company”) may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like “outlook,” “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could,” “is designed to” and other words of similar meaning, are forward-looking statements. These statements are based on management’s expectations and assumptions and depend upon or refer to future events or conditions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Forward-looking statements are subject to inherent risks and uncertainties. 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 including as a result of artificial intelligence, fraudulent acts, and system interruptions and failures; employment and wage levels; availability of 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. The factors identified above are not exhaustive. ADP disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. These risks and uncertainties, along with the risk factors discussed under “Item 1A. - Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2026 (“fiscal 2026”), 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.
Previous wording
Highlights from the nine months ended March 31, 2026 include:
Current wording
Highlights from the three months ended September 30, 2026 include:
Previous wording
•Revenue growth of 7% to $16,473.6 million; 6% growth on an organic constant currency basis
Current wording
•Revenue growth of 6% to $5,490.7 million; 6% growth on an organic constant currency basis
Previous wording
•Earnings before income taxes margin expansion of 50 bps, and adjusted EBIT margin expansion of 50 bps
Current wording
•Earnings before income taxes margin expansion of 120 bps, and adjusted EBIT margin expansion of 130 bps
Previous wording
•Diluted and adjusted diluted earnings per share ("EPS") growth of 10% and 9%, to $8.49 and $8.48, respectively
Current wording
•Diluted and adjusted diluted earnings per share ("EPS") growth of 14% and 13%, to $2.83 and $2.82, respectively
Previous wording
•Cash returned via shareholder friendly actions of $3.4B, including $1.9B of dividends and $1.5B of share repurchases
Current wording
•Cash returned via shareholder friendly actions of $1.5B, including $0.7B of dividends and $0.8B of share repurchases
Previous wording
For the nine months ended March 31, 2026, we delivered strong revenue growth of 7%, 6% growth on an 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 Employer Services clients ranging from small to large businesses, grew 1% for the nine months ended March 31, 2026 as compared to the nine months ended March 31, 2025. PEO average worksite employees increased 2% for the nine months ended March 31, 2026, as compared to the nine months ended March 31, 2025.
Current wording
For the three months ended September 30, 2026, we delivered strong revenue growth of 6%, 6% growth on an organic constant currency basis. Our United States pays per control metric, which represents the approximate growth in the number of employees on ADP clients' processed payrolls in the United States when measured on a same-store-sales basis for a subset of Employer Services clients ranging from small to large businesses, grew 2% for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. PEO average worksite employees increased 2% for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025.
Previous wording
Total revenues increased for the three and nine months ended March 31, 2026 due to new business started from new business bookings, strong client retention, an increase in zero-margin benefits pass-throughs, the impact of foreign currency, an increase in pricing, and an increase in interest on funds held for clients.
Current wording
Total revenues increased for the three months ended September 30, 2026 due to new business started from new business bookings, strong client retention, an increase in zero-margin benefits pass-throughs of $97.6 million, an increase in pricing, and an increase in interest on funds held for clients of $42.5 million.
Previous wording
Total revenues for the three months ended March 31, 2026 include interest on funds held for clients of $403.9 million, as compared to $355.2 million for the three months ended March 31, 2025. The increase in interest earned on funds held for clients resulted from an increase in our average client funds balances of 8.5% to $48.3 billion for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, coupled with an increase in our average interest rate earned to 3.3% for the three months ended March 31, 2026, as compared to 3.2% for the three months ended March 31, 2025.
Current wording
Total revenues for the three months ended September 30, 2026 include interest on funds held for clients of $329.3 million, as compared to $286.8 million for the three months ended September 30, 2025. The increase in interest earned on funds held for clients resulted from an increase in our average client funds balances of 5.7% to $36.9 billion for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, coupled with an increase in our average interest rate earned to 3.6% for the three months ended September 30, 2026, as compared to 3.3% for the three months ended September 30, 2025.
Previous wording
Operating expenses increased for the three months ended March 31, 2026 due to an increase of $80.0 million of PEO Services zero-margin benefits pass-through costs to $1,170.0 million from $1,090.0 million for the three months ended March 31, 2025. Additionally, for the three months ended March 31, 2026, operating expenses increased by $50.4 million due to higher service and implementation costs in support of our growing revenue and by $18.9 million due to an increase in costs related to workers' compensation coverage and state unemployment taxes for worksite employees.
Current wording
Operating expenses increased for the three months ended September 30, 2026 primarily due to an increase of $97.6 million in PEO Services zero-margin benefits pass-through costs to $1,228.6 million from $1,131.0 million for the three months ended September 30, 2025. Additionally, operating expenses increased by $10.2 million due to a net increase in costs related to workers' compensation coverage and state unemployment taxes for worksite employees.
Previous wording
Research and development expenses increased for the three months ended March 31, 2026 due to increased costs to develop, support, and maintain our new and existing products.
Current wording
Research and development expenses were flat for the three months ended September 30, 2026 due to increased costs to develop, support, and maintain our new and existing products, offset by an increase in the capitalizable spend related to internally developed software, primarily for our products and solutions.
Previous wording
Depreciation and amortization expenses decreased for the three months ended March 31, 2026 due to lower amortization of customer contracts and lists, partially offset by amortization of investments in internally developed software primarily for our next-gen products, and purchased software.
Current wording
Depreciation and amortization expenses increased for the three months ended September 30, 2026 due to the amortization of investments in internally developed software, primarily for our products and solutions, and customer contracts and lists.
Previous wording
Selling, general and administrative expenses increased for the three and nine months ended March 31, 2026 primarily due to increases in selling and marketing expenses of $63.5 million and $180.4 million, respectively, as a result of investments in our sales organization.
Current wording
Selling, general and administrative expenses increased for the three months ended September 30, 2026 primarily due to increases in selling and marketing expenses of $40.0 million as a result of investments in our sales organization.
Previous wording
Interest expense increased for the three months ended March 31, 2026 primarily due to net increases in interest expense of $3.7 million related to the senior notes issued and redeemed during the year ended June 30, 2025, coupled with an increase of $0.5 million related to commercial paper and reverse repurchase borrowings as a result of increases in average daily commercial paper borrowings and average reverse repurchase outstanding balances of $0.5 billion and $0.2 billion, respectively. This increase was offset by decreases in average interest rates on commercial paper issuances and reverse repurchases of 70 and 30 basis points, respectively, as compared to the three months ended March 31, 2025.
Current wording
Interest expense increased for the three months ended September 30, 2026 primarily due to an increase in interest expense of $12.8 million related to the senior notes issued during the year ended June 30, 2026, coupled with an increase of $0.8 million related to commercial paper and reverse repurchase borrowings as a result of increases in both average daily commercial paper borrowings and average reverse repurchase outstanding balances of $0.8 billion. This increase was offset by decreases in average interest rates on commercial paper issuances and reverse repurchases of 60 and 70 basis points, respectively, as compared to the three months ended September 30, 2025.
Previous wording
Interest income on corporate funds increased for the nine months ended March 31, 2026 due to higher average investment balances of $9.9 billion as compared to $9.0 billion for the nine months ended March 31, 2025, coupled with an increase in average interest rates of 10 basis points, as compared to the nine months ended March 31, 2025.
Current wording
Interest income on corporate funds increased for the three months ended September 30, 2026 due to higher average investment balances of $13.9 billion as compared to $11.4 billion for the three months ended September 30, 2025, coupled with an increase in average interest rates of 30 basis points, as compared to the three months ended September 30, 2025.
Previous wording
During the three and nine months ended March 31, 2026, the Company recognized a net gain of $2.1 million and $4.3 million, respectively, related to investments made through our Corporate Venture Capital arm, ADP Ventures.
Current wording
During the three months ended September 30, 2026, the Company recognized a net gain of $2.9 million related to investments made through its Corporate Venture Capital arm, ADP Ventures.
Previous wording
Earnings before income taxes increased for the three and nine months ended March 31, 2026 due to the increase in total revenues, partially offset by the increase in total expenses discussed above.
Current wording
Earnings before income taxes increased for the three months ended September 30, 2026 due to the increase in total revenues, partially offset by the increase in total expenses discussed above.
Previous wording
Employer Services' earnings before income taxes increased for the three and nine months ended March 31, 2026 due to increased revenues, including contributions from client funds interest, discussed above, partially offset by increased costs of servicing and implementing our clients on growing revenue, and increased selling and marketing expenses.
Current wording
EBIT Margin increased for the three months ended September 30, 2026 due to operating efficiencies for costs of servicing and implementing our clients on growing revenue, increased interest income on corporate funds, and contributions from client funds interest revenues, partially offset by increased zero-margin benefit pass through costs.
Previous wording
extended investment strategy, and net charges, including certain legal matters, broad-based optimization initiatives, and (gains)/losses on ADP Ventures' investments, in the applicable periods.
Current wording
extended investment strategy, and (gains)/losses on ADP Ventures' investments, in the applicable periods.
Previous wording
The effective tax rate for the three months ended March 31, 2026 and 2025 was 23.7% and 23.0%, respectively. The increase in the effective tax rate is primarily due to an increase in uncertain tax positions and a lower excess tax benefit on stock-based compensation in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.
Current wording
The effective tax rate for the three months ended September 30, 2026 and 2025 was 22.7% and 22.5%, respectively. The increase in the effective tax rate is primarily due to higher reserves for uncertain tax positions and a lower excess tax benefit on stock-based compensation primarily offset by an increase in tax credits and a deferred tax benefit for the capitalization of certain foreign research and development expenses in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025.
Previous wording
The adjusted effective tax rate for the three months ended March 31, 2026 and 2025 was 23.7% 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.
Current wording
The adjusted effective tax rate for the three months ended September 30, 2026 and 2025 was 22.7% and 22.5%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.
Previous wording
In addition to the increase in net earnings, diluted EPS increased for the three and nine months ended ended March 31, 2026 as a result of the impact of fewer shares outstanding resulting from share repurchases under our authorized share repurchase program, partially offset by the issuances of shares under our employee benefit plans. The Company repurchased 2.6 million and 1.0 million shares in the three months ended March 31, 2026 and 2025, respectively, and repurchased 5.7 million and 3.4 million shares in thenine months ended March 31, 2026 and 2025, respectively.
Current wording
In addition to the increase in net earnings, diluted EPS increased for the three months ended September 30, 2026 as a result of the impact of fewer shares outstanding resulting from share repurchases under our authorized share repurchase program, partially offset by the issuances of shares under our employee benefit plans. The Company repurchased 2.9 million and 1.2 million shares in thethree months ended September 30, 2026 and 2025, respectively.
Previous wording
Adjusted net earnings and adjusted diluted EPS reflect the changes in the components described above for the three and nine months ended March 31, 2026.
Current wording
For the three months ended September 30, 2026, adjusted net earnings and adjusted diluted EPS reflect the changes in the components described above.
Previous wording
The primary components of “Other” are certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, legal settlements, company-wide severance initiatives, non-recurring gains and losses, the elimination of intercompany transactions, and all other interest income and expense.
Current wording
(a) Other represents certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, legal settlements, company-wide severance initiatives, non-recurring gains and losses, the elimination of intercompany transactions, and interest income and expense.
Previous wording
Employer Services' revenues increased for the three months ended March 31, 2026 due to new business started from new business bookings, strong client retention, the impact of foreign currency, an increase in pricing, an increase in interest earned on funds held for clients, and an increase in our pays per control when measured on a same-store-sales basis of 1%.
Current wording
Employer Services' revenues increased for the three months ended September 30, 2026 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 of $42.1 million, and an increase in our pays per control when measured on a same-store-sales basis of 2%.
Previous wording
PEO Services' revenues increased for the three months ended March 31, 2026 due to the increase in zero-margin benefits pass-throughs, and an increase in average worksite employees of 2%, as compared to the three months ended March 31, 2025.
Current wording
PEO Services' revenues increased for the three months ended September 30, 2026 due to an increase in zero-margin benefits pass-throughs of $97.6 million, coupled with an increase in average worksite employees of 2%, as compared to the three months ended September 30, 2025.
Previous wording
PEO Services' earnings before income taxes decreased for the three and nine months ended March 31, 2026 due to increased selling and marketing expenses, increases in zero-margin benefits pass-through costs, and increased operating costs related to state unemployment insurance, partially offset by increased revenues discussed above.
Current wording
PEO Services' earnings before income taxes increased for the three months ended September 30, 2026 due to the increase in revenues, discussed above, partially offset by increases in expenses, including $97.6 million in zero-margin benefits pass-through costs and a net increase of $10.2 million in operating costs related to worker's compensation coverage and state unemployment insurance.
Previous wording
PEO Services' margin decreased for the nine months ended March 31, 2026, due to increased selling and marketing expenses, increases in zero-margin benefit pass through costs, increased operating costs related to state unemployment insurance, and a decrease in the pre-tax benefit from ADP Indemnity, partially offset by increased revenues discussed above.
Current wording
PEO Services' margin was flat for the three months ended September 30, 2026, primarily due to decreased operating costs related to state unemployment insurance, offset by increased zero-margin benefit pass through costs.
Previous wording
ADP Indemnity provides workers’ compensation and employer's liability deductible reimbursement insurance protection for PEO Services’ worksite employees up to $1 million per occurrence. PEO Services has secured a workers’ compensation and employer’s liability insurance policy that caps the exposure for each claim at $1 million per occurrence and has also secured aggregate stop loss insurance that caps aggregate losses at a certain level in fiscal years 2012 and prior from an admitted and licensed insurance company of AIG. We utilize historical loss experience and actuarial judgment to determine the estimated claim liability, and changes in estimated ultimate incurred losses are included in the PEO segment.
Current wording
ADP Indemnity provides workers’ compensation deductible reimbursement insurance protection for PEO Services’ worksite employees up to $1 million per occurrence. PEO Services has secured a workers’ compensation insurance policy that caps the exposure for each claim at $1 million per occurrence and has also secured aggregate stop loss insurance that caps aggregate losses at a certain level in the year ended June 30, 2012 and prior from an admitted and licensed insurance company of AIG. We utilize historical loss experience and actuarial judgment to determine the estimated claim liability, and changes in estimated ultimate incurred losses are included in the PEO segment.
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 $2.4 million and $4.4 million for the three and nine months ended March 31, 2026, respectively, as compared to approximately $5.6 million and $9.7 million for the three and nine months ended March 31, 2025, respectively, which were primarily the results of less favorable actuarial loss development in workers’ compensation reserves. 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.
Current wording
Additionally, starting in the year ended June 30, 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$1 million per occurrence related to the workers’ compensation 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 actuarial gain of $3.1 million for the three months ended September 30, 2026, as compared to a pre-tax actuarial gain of $4.3 million for the three months ended September 30, 2025, due to less favorable loss development in workers’ compensation reserves. ADP Indemnity paid a premium of $327.8 million in July 2026, to enter into a reinsurance agreement with Chubb to cover substantially all losses incurred by ADP Indemnity for fiscal 2027 policy year on terms substantially similar to the fiscal 2026 reinsurance policy.
Previous wording
(e) The income tax provision was calculated based on the annualized marginal rate in effect during the quarter of the adjustment.
Current wording
(c) The income tax provision was calculated based on the marginal rate in effect during the period of the adjustment.
Previous wording
(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.
Current wording
(d) The adjusted effective tax rate is calculated as our adjusted provision for income taxes divided by the sum of our adjusted net earnings plus our adjusted provision for income taxes.
Previous wording
As of March 31, 2026, cash and cash equivalents were $3.2 billion, which were primarily invested in time deposits and money market funds.
Current wording
As of September 30, 2026, cash and cash equivalents were $3.3 billion, which were primarily invested in time deposits and money market funds.
Previous wording
For corporate liquidity, we expect existing cash, cash equivalents, marketable securities, cash flow from operations together with our $10.6 billionof 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. Our financial condition remains solid at March 31, 2026 and we have sufficient liquidity.
Current wording
For corporate liquidity, we expect existing cash, cash equivalents, marketable securities, cash flow from operations together with our $11.7 billionof 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. Our financial condition remains solid at September 30, 2026 and we have sufficient liquidity.
Previous wording
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 billionof comm itted credit facilities and our ability to use corporate liquidity when necessary to meet short-term funding requirements related to client funds obligations. Please see “Quantitative and Qualitative Disclosures about Market Risk” for a further discussion of the risks related to our client funds extended investment strategy. See Note 10 of our Consolidated Financial Statements for a description of our short-term financing including commercial paper.
Current wording
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, 2026), together with our $11.7 billionof comm itted credit facilities and our ability to use corporate liquidity when necessary to meet short-term funding requirements related to client funds obligations. Please see “Quantitative and Qualitative Disclosures about Market Risk” for a further discussion of the risks related to our client funds extended investment strategy. See Note 9 of our Consolidated Financial Statements for a description of our short-term financing including commercial paper.
Previous wording
Our cash flows from operating, investing, and financing activities, as reflected in the Statements of Consolidated Cash Flows for the nine months ended March 31, 2026 and 2025, 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 three months ended September 30, 2026 and 2025, respectively, are summarized as follows:
Previous wording
Net cash flows provided by operating activities increased due to growth in our business and a net favorable change in the components of operating assets and liabilities primarily due to timing of collections and payments, as compared to the nine months ended March 31, 2025.
Current wording
Net cash flows provided by operating activities increased due to growth in our business, offset by a net unfavorable change in the components of operating assets and liabilities primarily due to timing of collections and payments, as compared to the three months ended September 30, 2025.
Previous wording
Net cash flows used in investing activities changed primarily due to timing of net proceeds and purchases of corporate and client funds marketable securities of $1,359.7 million, offset by a net decrease in acquisitions of businesses, primarily related to the Workforce Software acquisition, with a cash disbursement of $1,165.1 million during the nine months ended March 31, 2025.
Current wording
Net cash flows used in investing activities changed primarily due to timing of net proceeds and purchases of corporate and client funds marketable securities of $1,001.4 million, partially offset by an increase in additions to intangibles of $23.0 million.
Previous wording
Net cash flows provided by/(used in) financing activities changed primarily due to a net increase in the cash flow from client funds obligations of $14,896.8 million, which is due to the timing of impounds from our clients and payments to our clients' employees and other payees, partially offset by net payments of $4,769.5 million related to borrowings under the commercial paper program and a decrease in the net proceeds from the issuance of debt.
Current wording
Net cash flows provided by financing activities changed primarily due to a net increase in the cash flow from client funds obligations of $1,080.9 million, which is due to the timing of impounds from our clients and payments to our clients' employees and other payees, partially offset by a decrease in net proceeds from the issuance of commercial paper and reverse repurchases of $438.5 million and $164.9 million, respectively, coupled with an increase in repurchases of common stock of $392.8 million.
Previous wording
We purchased approximately 5.7 million shares of our common stock at an average price per share of $257.01 during the nine months ended March 31, 2026, as compared to purchases of 3.4 million shares at an average price per share of $283.14 during the nine months ended March 31, 2025. 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.
Current wording
We purchased approximately 2.9 million shares of our common stock at an average price per share of $269.40 during the three months ended September 30, 2026, as compared to purchases of 1.2 million shares at an average price per share of $302.10 during the three months ended September 30, 2025. 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.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Employer Services' margin increased for the three months ended September 30, 2026 due to operating efficiencies for costs of servicing and implementing our clients on growing revenue, coupled with contributions from client funds interest revenues.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Research and development expenses increased for the nine months ended March 31, 2026 due to increased costs to develop, support, and maintain our new and existing products, including the integration costs associated with the WorkForce Software acquisition.
Previous report — wording carried elsewhere
The adjusted effective tax rate for the nine months ended March 31, 2026 and 2025 was 23.2% 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.
Previous report — wording carried elsewhere
Employer Services' revenues increased for the nine months ended March 31, 2026 due to new business started from new business bookings, strong client retention, an increase in pricing, the impact of foreign currency, an increase in interest earned on funds held for clients, and an increase in our pays per control when measured on a same-store-sales basis of 1%.
Previous report — wording carried elsewhere
PEO Services' revenues increased for the nine months ended March 31, 2026 due to the increase in zero-margin benefits pass-throughs, and an increase in average worksite employees of 2%, as compared to the nine months ended March 31, 2025.