The acquisition of WorkForce Software in October 2024 is expected to enhance global HCM capabilities, with the results of WorkForce Software being reported within the Employer Services segment. Research and development expenses increased for the three and nine months ended March 31, 2025 due to the WorkForce Software acquisition.

The acquisition of PEI (Procesamiento Externo de Informacion, S.C.) in Mexico in January 2025 is expected to enhance the experience provided to local and global clients. This acquisition augments ADP's global payroll capabilities.

The Company repurchased 1.0 million and 1.2 million shares in the three months ended March 31, 2025 and 2024, respectively, and repurchased 3.4 million and 3.3 million shares in the nine months ended March 31, 2025 and 2024, respectively. The company received the Board of Directors' approval in November 2022 to repurchase $5 billion of its common stock.

ADP continues to make broad-based improvements to products and overall client experience, resulting in continued improvement in client satisfaction scores. This indicates effective management execution in delivering value to clients.

The company is focused on 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.

The effective tax rate for the three months ended March 31, 2025 decreased to 23.0% from 23.4% due to a benefit for a decrease in uncertain tax position activity and a higher excess tax benefit on stock-based compensation. This indicates effective tax management.

The 10-Q states that there have been no material changes in the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024. This suggests a stable risk environment, but investors should still refer to the 10-K for a comprehensive understanding of the company's risks.

The company is subject to various claims and litigation in the normal course of business. Management believes that the ultimate resolution of these matters will not have a material adverse impact on its financial condition, results of operations, or cash flows.

The company acknowledges inherent risks and uncertainties involving its investment strategy relating to client funds assets, including liquidity risk. However, the company believes it has significantly reduced the risk of not having sufficient funds to satisfy client funds obligations by consistently maintaining access to other sources of liquidity.

ADP is a leading global provider of cloud-based Human Capital Management (HCM) technology solutions. The company continuously seeks to enhance its leading HCM solutions to further support its clients.

ADP focuses on three key Strategic Priorities: Leading with Best-in-Class HCM technology, Providing Unmatched Expertise and Outsourcing Solutions, and Leveraging global scale for the benefit of our clients. Executing on our Strategic Priorities will be critical to enabling our growth in the years ahead.

The integration of WorkForce Software into the global HCM ecosystem is expected to better serve mid-sized and large, global enterprises. This acquisition enhances ADP's competitive positioning in the HCM market.

EBIT Margin decreased for the three months ended March 31, 2025, due to unfavorable impacts from interest expense, acquisition related expenses, and selling and marketing expenses, partially offset by contributions from client funds interest revenues discussed above and operating efficiencies for costs of servicing and implementing our clients on growing revenue.

Operating expenses increased primarily due to an increase of $73.7 million of PEO Services zero-margin benefits pass-through costs from $1,016.3 million to $1,090.0 million. Additionally, for the three months ended March 31, 2025 operating expenses increased by $28.8 million due to higher service and implementation costs in support.

ADP is focused on improving efficiencies and managing costs. For the nine months ended March 31, 2025 operating expenses increased primarily due to an increase of $230.7 million of PEO Services zero-margin benefits pass-through costs from $2,963.7 million to $3,194.4 million.

Research and development expenses increased for the three and nine months ended March 31, 2025 due to the WorkForce Software acquisition, and increased costs to develop, support, and maintain our new and existing products. This indicates a commitment to innovation and technological advancement.

There was an increase in the capitalizable spend related to the integration of GenAI into our products, as compared to the prior year. This shows a commitment to integrating new technologies into existing products.

ADP continued to make broad-based improvements to its products and overall client experience, resulting in continued improvement in client satisfaction scores. This indicates a focus on innovation and customer satisfaction.

Cash returned via shareholder friendly actions of $2.8B, including $1.8B of dividends and $1.0B of share repurchases; including increasing our dividend for the 50th consecutive year. This demonstrates a commitment to returning capital to shareholders.

Capital expenditures for the nine months ended March 31, 2025 were $139.9 million, as compared to $151.6 million for the nine months ended March 31, 2024. We expect capital expenditures in fiscal 2025 to be between $180.0 million and $200.0 million, as compared to $211.7 million in fiscal 2024.

The company closed the WorkForce Software acquisition in October and progressed on integration efforts. This indicates a strategic allocation of capital towards acquisitions for growth.

The increase in the interest earned on funds held for clients resulted from an increase in our average client funds balances of 6.7% and an increase in our average interest rate earned to 3.2%. This highlights the impact of the market environment on ADP's financial performance.

Our pays per control metric, which represents the number of employees on ADP clients' payrolls in the United States, grew 1% for the nine months ended March 31, 2025 as compared to the nine months ended March 31, 2024. This indicates the impact of economic conditions on employment levels.

Total revenues for the three months ended March 31, 2025 increased 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, partially offset by the impact of foreign currency.