ADP acquired WorkForce Software in October 2024, a premier workforce management solutions provider, and Procesamiento Externo de Información, S.C. (PEI) in February 2025, a Mexican payroll and HCM expertise provider. These acquisitions strengthen ADP's global footprint and enterprise solution suite.

The company launched ADP Lyric HCM in September 2024, a unified global HCM solution designed for adaptability and personalized experiences. This is part of ADP's strategy to lead with best-in-class HCM technology and address evolving client needs.

ADP is expanding its offerings in markets with exciting growth opportunities like Japan and Saudi Arabia, alongside enhancing its distribution network for small businesses. This aligns with the strategic priority of leveraging global scale to benefit clients.

Employer Services client revenue retention reached 92.1% in fiscal 2025, with company-wide client satisfaction scores achieving new record highs. This demonstrates effective management of product investments aimed at improving the client experience.

Management's focus on operational efficiencies for servicing and implementing clients on growing revenue contributed to the 50 basis point increase in EBIT margin in fiscal 2025. This indicates effective cost management alongside revenue growth.

Selling and marketing expenses increased by $184.4 million in fiscal 2025, reflecting management's investment in its sales organization. This strategic spending supports new business bookings, which grew 3% in Employer Services for FY25.

ADP faces a wide range of complex U.S. and foreign laws and regulations, including GDPR, CPRA, and the EU Artificial Intelligence Act. Failure to comply or changes in these laws could lead to substantial costs, penalties, and reputational damage, requiring continuous enhancement of compliance programs.

The global environment is increasingly hostile, with attacks on information technology systems growing in frequency, complexity, and sophistication, including those using AI. ADP continues to invest significant resources to enhance cybersecurity controls and remediate vulnerabilities, acknowledging the potential for material adverse effects from breaches.

Political, economic, and social factors, including changes in employment levels, interest rates, and inflation, could negatively impact ADP's business. Clients may reduce spending on HCM services or renegotiate contracts, and the company may not be able to offset rising operating costs with price increases.

ADP asserts its position as a global leader in HR and payroll solutions, serving over 1.1 million clients and 42 million workers in over 140 countries. The company believes it is one of the largest providers of HCM solutions in the world, despite intense competition.

ADP leverages its industry's largest and deepest HCM dataset, with over 1.1 million clients, to power AI-driven solutions like ADP Assist. This unique data, combined with leading-edge technology and service excellence, is cited as a primary competitive advantage.

The HCM industry is highly competitive, with ADP facing rivals ranging from other outsourcing companies and ERP providers to financial institutions and clients' in-house HR systems. Competition is based on product quality, service, technology accessibility, breadth of offerings, and price.

Operating expenses increased by $572.6 million in fiscal 2025, including a $313.1 million increase in PEO Services zero-margin benefits pass-through costs and $137.3 million in higher service and implementation costs. Despite these increases, operational efficiencies contributed to margin expansion.

ADP is deploying AI tools across its sales, service, and research and development functions to enhance the client experience and drive internal productivity gains. This strategic use of AI is expected to automate tedious tasks and elevate human potential.

Depreciation and amortization increased by 3% in fiscal 2025 to $486.0 million, driven by the WorkForce Software acquisition and amortization of investments in internally developed software for next-gen products. This reflects ongoing investment in core operational infrastructure.

Research and development expenses increased to $988.6 million in fiscal 2025, up from $955.7 million in fiscal 2024 and $844.8 million in fiscal 2023. These investments are directed towards new product development, existing technology maintenance, and generative AI initiatives.

ADP is actively rolling out ADP Assist, a generative AI-powered cross-platform solution, to transform data into insights for HR, payroll, time, talent, benefits, recruitment, analytics, reporting, and compliance. This includes validating payroll information and simplifying report creation.

ADP emphasizes its vast and granular HCM dataset, derived from over 1.1 million clients and 42 million workers, as critical for harnessing AI power. This data is key to delivering smarter, more tailored HCM agents and differentiating ADP in the market.

ADP returned $3.7 billion to shareholders in fiscal 2025, comprising $2.4 billion in dividends and $1.3 billion in share repurchases. The company repurchased approximately 4.4 million shares at an average price of $289.11 per share during the fiscal year.

The company utilized $1,158.3 million in net cash for the WorkForce Software acquisition, demonstrating a commitment to growth through M&A. This investment expands ADP's global HCM ecosystem and workforce management solutions.

As of June 30, 2025, ADP held $3.3 billion in cash and cash equivalents and has access to $10.6 billion in committed credit facilities. This strong liquidity position is deemed adequate to meet operating, investing, and financing activities, including future acquisitions and capital expenditures.

ADP has established an active AI & Data Ethics Committee and an interdisciplinary working group to provide guidance on compliance with ethical principles for AI, ML, and data usage. This demonstrates a commitment to accountability, transparency, and privacy in AI development.

ADP is committed to upholding fair and equitable pay, making pay decisions based on skills, job-related experience, market value, and performance. The company has incorporated regular pay equity reviews into its compensation decisions and does not ask candidates for salary history in most countries.

The company offers competitive benefits, health and wellness programs (including physical and mental health initiatives), and extensive training and mentorship. These initiatives aim to attract, develop, and retain top talent, fostering a diverse and inclusive environment where associates can thrive.

Interest income on funds held for clients increased to $1,189.1 million in fiscal 2025, up from $1,024.7 million in fiscal 2024. This was driven by an increase in the average interest rate earned to 3.2% (from 2.9% in FY24) and a 6.4% increase in average client funds balances to $37.6 billion.

The company operates in a complex regulatory environment, with new and evolving laws globally concerning privacy, data protection, and AI (e.g., GDPR, CPRA, EU AI Act). These regulations impose new obligations and could lead to increased compliance costs or restrictions on business operations.

ADP acknowledges that a slowdown in the economy, changes in employment levels, and inflationary pressures could negatively impact its business. Clients may react to worsening conditions by reducing spending on HCM services or seeking to renegotiate contracts, potentially affecting revenue and financial results.