Item 1. Financial Statements

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Item 1. Financial Statements

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Earnings

(In millions, except per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2025		2024		2025		2024

REVENUES:
Revenues, other than interest on funds held for clients and PEO revenues	$	3,298.3	$	3,114.8	$	6,501.7	$	6,122.0
Interest on funds held for clients	308.6		272.8		595.5		526.1
PEO revenues (A)	1,752.4		1,660.8		3,437.3		3,233.0
TOTAL REVENUES	5,359.3		5,048.4		10,534.5		9,881.1

EXPENSES:
Costs of revenues:
Operating expenses	2,509.0		2,376.1		4,970.6		4,661.9
Research and development	257.8		239.5		509.0		472.1
Depreciation and amortization	122.9		126.9		246.2		242.2
TOTAL COSTS OF REVENUES	2,889.7		2,742.5		5,725.8		5,376.2

Selling, general, and administrative expenses	1,068.1		1,006.1		2,074.4		1,932.8
Interest expense	124.1		129.6		259.5		267.4
TOTAL EXPENSES	4,081.9		3,878.2		8,059.7		7,576.4

Other (income)/loss, net	(105.8)		(91.1)		(215.9)		(192.8)

EARNINGS BEFORE INCOME TAXES	1,383.2		1,261.3		2,690.7		2,497.5

Provision for income taxes	321.2		298.1		615.6		578.0






NET EARNINGS	$	1,062.0	$	963.2	$	2,075.1	$	1,919.5



BASIC EARNINGS PER SHARE	$	2.63	$	2.36	$	5.13	$	4.71



DILUTED EARNINGS PER SHARE	$	2.62	$	2.35	$	5.12	$	4.69

Basic weighted average shares outstanding	403.8		407.6		404.4		407.7
Diluted weighted average shares outstanding	404.7		409.0		405.5		409.3

(A) Professional Employer Organization (“PEO”) revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes of $20,546.9 million and $19,420.8 million for the three months ended December 31, 2025 and 2024, respectively, and $39,081.3 million and $36,614.4 million for the six months ended December 31, 2025 and 2024, respectively.

See notes to the Consolidated Financial Statements.

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Comprehensive Income

(In millions)

(Unaudited)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2025		2024		2025		2024

Net earnings	$	1,062.0	$	963.2	$	2,075.1	$	1,919.5

Other comprehensive income/(loss):
Currency translation adjustments	3.9		(101.0)		(11.6)		(51.8)

Unrealized net gains/(losses) on available-for-sale securities	107.5		(423.8)		323.2		440.5
Tax effect	(22.7)		94.2		(71.0)		(103.6)
Reclassification of realized net (gains)/losses on available-for-sale securities to net earnings	0.3		0.6		(1.2)		0.8
Tax effect	—		(0.1)		0.3		(0.1)

Unrealized gains/(losses) on cash flow hedging activities	—		—		—		(12.5)
Tax effect	—		—		—		3.1
Amortization of unrealized (gains)/losses on cash flow hedging activities	1.6		1.4		3.0		2.5
Tax effect	(0.4)		(0.3)		(0.7)		(0.6)



Reclassification of pension liability adjustment to net earnings	1.1		0.7		2.3		1.8
Tax effect	(0.3)		(0.2)		(0.6)		(0.5)




Other comprehensive income/(loss), net of tax	91.0		(428.5)		243.7		279.6
Comprehensive income/(loss)	$	1,153.0	$	534.7	$	2,318.8	$	2,199.1

See notes to the Consolidated Financial Statements.

Automatic Data Processing, Inc. and Subsidiaries

Consolidated Balance Sheets

(In millions, except per share amounts)

(Unaudited)


	December 31,		June 30,
	2025		2025
Assets
Current assets:
Cash and cash equivalents	$	2,424.7	$	3,347.8
Short-term marketable securities (A)	45.7		4,498.8
Accounts receivable, net of allowance for doubtful accounts of $47.5 and $47.1, respectively	3,408.5		3,579.1
Other current assets	1,083.1		840.8


Total current assets before funds held for clients	6,962.0		12,266.5
Funds held for clients	67,510.1		30,985.7
Total current assets	74,472.1		43,252.2


Property, plant and equipment, net	622.7		655.4
Operating lease right-of-use asset	405.7		374.1
Deferred contract costs	3,109.1		3,154.1
Other assets	1,113.1		1,057.0
Goodwill	3,294.2		3,273.5
Intangible assets, net	1,622.5		1,603.0
Total assets	$	84,639.4	$	53,369.3
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	143.1	$	169.1
Accrued expenses and other current liabilities	2,478.1		3,092.4
Accrued payroll and payroll-related expenses	721.3		973.1
Dividends payable	680.5		620.6
Short-term deferred revenues	261.7		262.8
Obligations under reverse repurchase agreements (A)	45.8		38.4
Obligations under commercial paper borrowings	—		4,769.5


Income taxes payable	197.3		9.1

Total current liabilities before client funds obligations	4,527.8		9,935.0
Client funds obligations	67,613.7		31,343.3
Total current liabilities	72,141.5		41,278.3
Long-term debt	3,976.4		3,974.7
Operating lease liabilities	347.6		321.2
Other liabilities	1,051.2		1,058.3
Deferred income taxes	349.5		163.6
Long-term deferred revenues	380.2		385.2
Total liabilities	78,246.4		47,181.3

Commitments and contingencies (Note 14)

Stockholders' equity:
Preferred stock, $1.00 par value: authorized, 0.3 shares; issued, none	—		—
Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 638.7 shares at December 31, 2025 and June 30, 2025; outstanding, 403.0 and 405.3 shares at December 31, 2025 and June 30, 2025, respectively	63.9		63.9
Capital in excess of par value	2,936.8		2,788.3
Retained earnings	25,992.6		25,240.6
Treasury stock - at cost: 235.7 and 233.4 shares at December 31, 2025 and June 30, 2025, respectively	(21,960.6)		(21,021.4)
Accumulated other comprehensive income/(loss)	(639.7)		(883.4)
Total stockholders’ equity	6,393.0		6,188.0
Total liabilities and stockholders’ equity	$	84,639.4	$	53,369.3

(A) As of December 31, 2025, $45.7 million of short-term marketable securities and $0.1 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements. As of June 30, 2025, $38.4 million of short-term marketable securities have been pledged as collateral under the Company's reverse repurchase agreements (see Note 10).

See notes to the Consolidated Financial Statements.

A****utomatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Cash Flows

(In millions)

(Unaudited)


	Six Months Ended
	December 31,
	2025		2024

Cash Flows from Operating Activities:
Net earnings	$	2,075.1	$	1,919.5
Adjustments to reconcile net earnings to cash flows provided by operating activities:
Depreciation and amortization	292.3		289.7
Amortization of deferred contract costs	598.1		565.9

Deferred income taxes	119.1		32.5
Stock-based compensation expense	131.9		139.7

Bad debt expense	22.5		23.1
Net pension (income)/loss	(7.7)		(9.8)

Net accretion of discounts and amortization of premiums on available-for-sale securities	(45.4)		(31.5)





Other	4.2		4.7
Changes in operating assets and liabilities:
Decrease/(increase) in accounts receivable	145.9		(94.7)
Increase in deferred contract costs	(556.4)		(565.3)
Increase in other assets	(350.1)		(271.0)
(Decrease)/increase in accounts payable	(25.0)		82.4
Decrease in accrued expenses and other liabilities	(629.3)		(110.5)


Net cash flows provided by operating activities	1,775.2		1,974.7

Cash Flows from Investing Activities:
Purchases of corporate and client funds marketable securities	(5,652.0)		(3,990.7)
Proceeds from the sales and maturities of corporate and client funds marketable securities	3,436.1		2,524.1

Capital expenditures	(73.2)		(98.2)
Additions to intangibles	(209.1)		(175.7)
Acquisitions of businesses, net of cash acquired	(22.9)		(1,160.6)
Proceeds from the sale of property, plant, and equipment and other assets	—		3.3
Other	(18.4)		(4.5)





Net cash flows used in investing activities	(2,539.5)		(2,902.3)

Cash Flows from Financing Activities:
Net increase in client funds obligations	36,273.1		9,090.4

Net cash distributed from the Internal Revenue Service	(1.2)		(487.6)
Payments of debt	(0.5)		(0.6)
Proceeds from the issuance of debt	—		988.9
Settlement of cash flow hedges	—		(12.5)
Repurchases of common stock	(881.8)		(644.9)
Net (repurchases)/proceeds from stock-based compensation plans and stock purchase plan	(40.0)		38.6

Dividends paid	(1,256.0)		(1,145.1)
Net (payments)/proceeds related to reverse repurchase agreements	18.5		(344.7)
Net (payments)/proceeds related to commercial paper	(4,769.5)		—



Net cash flows provided by financing activities	29,342.6		7,482.5

Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents	28.8		(36.7)

Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents	28,607.1		6,518.2

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period	5,054.6		10,086.0
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	33,661.7	$	16,604.2



Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Consolidated Balance Sheets
Cash and cash equivalents	$	2,424.7	$	2,216.4
Restricted cash and restricted cash equivalents included in funds held for clients (A)	31,237.0		14,387.8
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	33,661.7	$	16,604.2

Supplemental disclosures of cash flow information:
Cash paid for interest	$	253.9	$	249.5
Cash paid for income taxes, net of income tax refunds	$	303.7	$	583.5

(A) See Note 7 for a reconciliation of restricted cash and restricted cash equivalents in funds held for clients on the Consolidated Balance Sheets.

See notes to the Consolidated Financial Statements.

Automatic Data Processing, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

(Tabular dollars in millions, except per share amounts or where otherwise stated)

(Unaudited)

Note 1. Basis of Presentation

The accompanying Consolidated Financial Statements and footnotes thereto of Automatic Data Processing, Inc., its subsidiaries and variable interest entity (“ADP” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Intercompany balances and transactions have been eliminated in consolidation. The Consolidated Financial Statements and footnotes thereto are unaudited. In the opinion of the Company’s management, the Consolidated Financial Statements reflect all adjustments, which are of a normal recurring nature, that are necessary for a fair presentation of the Company’s interim financial results.

The Company has a grantor trust, which holds the majority of the funds provided by its clients pending remittance to employees of those clients, tax authorities, and other payees. The Company is the sole beneficial owner of the trust. The trust meets the criteria in Accounting Standards Codification (“ASC”) 810, “Consolidation” to be characterized as a variable interest entity (“VIE”). The Company has determined that it has a controlling financial interest in the trust because it has both (1) the power to direct the activities that most significantly impact the economic performance of the trust (including the power to make all investment decisions for the trust) and (2) the right to receive benefits that could potentially be significant to the trust (in the form of investment returns) and, therefore, consolidates the trust. Further information on these funds and the Company’s obligations to remit to its clients’ employees, tax authorities, and other payees is provided in Note 7, “Corporate Investments and Funds Held for Clients.”

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the assets, liabilities, revenues, expenses, and other comprehensive income that are reported in the Consolidated Financial Statements and footnotes thereto. Actual results may differ from those estimates. Interim financial results are not necessarily indicative of financial results for a full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 (“fiscal 2025”). Certain amounts from the prior year's financial statements have been reclassified in order to conform to the current year's presentation.

Note 2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

None.

Recently Issued Accounting Pronouncements


Standard	Description	Effective Date	Effect on Financial Statements or Other Significant Matters


ASU 2025-06 Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software	This update modernizes the accounting guidance for internal-use software costs and requires capitalization of software costs to begin when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended.	July 1, 2028 (fiscal 2029)	The Company is assessing this guidance and has not yet determined the impact of ASU 2025-06 on its consolidated results of operations, financial condition, or cash flows.
ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses	This update improves financial reporting by requiring enhanced disclosures of the expense captions in the Income Statement within the Notes to the financial statements.	June 30, 2028 (fiscal 2028)	The Company is assessing this guidance. The adoption will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, or cash flows.
ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures	This update enhances the transparency and decision usefulness of income tax disclosures to better assess how an entity’s operations and related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows.	June 30, 2026 (fiscal 2026)	The Company is assessing this guidance. The adoption will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, or cash flows.

Note 3. Revenue

Based upon similar operational and economic characteristics, the Company’s revenues are disaggregated as follows: Human Capital Management (“HCM”), HR Outsourcing (“HRO”), and Global Solutions (“Global”), with separate disaggregation for PEO zero-margin benefits pass-through revenues and client fund interest revenues. The Company believes these revenue categories depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors.

The following tables provide details of the Company's revenues and includes a reconciliation to the Company’s reportable segments:



	Three Months Ended				Six Months Ended
	December 31,				December 31,
Types of Revenues	2025		2024		2025		2024
HCM	$	2,235.9	$	2,131.9	$	4,391.5	$	4,157.3
HRO, excluding PEO zero-margin benefits pass-throughs	979.3		943.2		1,890.8		1,808.4
PEO zero-margin benefits pass-throughs	1,126.2		1,055.2		2,257.2		2,104.4
Global	709.3		645.3		1,399.5		1,284.9
Interest on funds held for clients	308.6		272.8		595.5		526.1
Total Revenues	$	5,359.3	$	5,048.4	$	10,534.5	$	9,881.1

Reconciliation of disaggregated revenue to our reportable segments for the three months ended December 31, 2025:


Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	2,238.5	$	—	$	(2.6)	$	2,235.9
HRO, excluding PEO zero-margin benefits pass-throughs	353.8		626.2		(0.7)		979.3
PEO zero-margin benefits pass-throughs	—		1,126.2		—		1,126.2
Global	709.3		—		—		709.3
Interest on funds held for clients	305.8		2.8		—		308.6
Total Segment Revenues	$	3,607.4	$	1,755.2	$	(3.3)	$	5,359.3

Reconciliation of disaggregated revenue to our reportable segments for the three months ended December 31, 2024:


Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	2,134.4	$	—	$	(2.5)	$	2,131.9
HRO, excluding PEO zero-margin benefits pass-throughs	338.5		605.6		(0.9)		943.2
PEO zero-margin benefits pass-throughs	—		1,055.2		—		1,055.2
Global	645.3		—		—		645.3
Interest on funds held for clients	270.3		2.5		—		272.8
Total Segment Revenues	$	3,388.5	$	1,663.3	$	(3.4)	$	5,048.4

Reconciliation of disaggregated revenue to our reportable segments for the six months ended December 31, 2025:


Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	4,396.7	$	—	$	(5.2)	$	4,391.5
HRO, excluding PEO zero-margin benefits pass-throughs	712.3		1,180.1		(1.6)		1,890.8
PEO zero-margin benefits pass-throughs	—		2,257.2		—		2,257.2
Global	1,399.5		—		—		1,399.5
Interest on funds held for clients	590.1		5.4		—		595.5
Total Segment Revenues	$	7,098.6	$	3,442.7	$	(6.8)	$	10,534.5

Reconciliation of disaggregated revenue to our reportable segments for the six months ended December 31, 2024:


Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	4,162.0	$	—	$	(4.7)	$	4,157.3
HRO, excluding PEO zero-margin benefits pass-throughs	681.3		1,128.6		(1.5)		1,808.4
PEO zero-margin benefits pass-throughs	—		2,104.4		—		2,104.4
Global	1,284.9		—		—		1,284.9
Interest on funds held for clients	521.3		4.8		—		526.1
Total Segment Revenues	$	6,649.5	$	3,237.8	$	(6.2)	$	9,881.1

Contract Balances

The timing of revenue recognition for our HCM, HRO and Global Solutions is consistent with the invoicing of clients, as invoicing occurs in the period the services are provided. Therefore, the Company does not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing.

Changes in deferred revenues related to set up fees for the six months ended December 31, 2025 were as follows:


Contract Liability
Contract liability, July 1, 2025	$	520.2
Recognition of revenue included in beginning of year contract liability	(72.7)
Contract liability, net of revenue recognized on contracts during the period	66.1
Currency translation adjustments	1.0
Contract liability, December 31, 2025	$	514.6

Note 4. Acquisition

In October 2024, the Company acquired WorkForce Software, a premier workforce management solutions provider that specializes in supporting large, global enterprises, utilizing cash on hand. The results of WorkForce Software are reported within the Company’s Employer Services segment. Pro forma information has not been presented because the effect of the acquisition is not material to the Company's consolidated financial results.

The following table reconciles the purchase price to the cash paid for the acquisition, net of cash acquired:


Purchase price	$	1,170.8
Less: cash acquired	(12.5)
Cash paid for acquisition of business, net of cash acquired	$	1,158.3

The acquisition was accounted for using the acquisition method of accounting. The Company recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess recorded to goodwill. The purchase price allocation for WorkForce Software is as follows:


Cash	$	12.5
Accounts receivable, net of allowance for doubtful accounts	20.0
Identifiable intangible assets (1)	292.0
Goodwill	885.8
Deferred income taxes, net of valuation allowance	45.9
All other assets	14.8
Total assets acquired	$	1,271.0

Deferred revenue	$	39.6

All other liabilities	60.6
Total liabilities assumed	$	100.2
Total net assets acquired	$	1,170.8

(1) Intangible assets are recorded at estimated fair value, as determined by management based on available information which includes an estimated valuation by an independent third party. The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to the future cash flows. The estimated fair value of intangible assets and related useful lives as included in the purchase price allocation include:


	Estimated Fair Value		Estimated Useful Life (in years)
Technology	$	115.0	7
Customer/Partner relationships	$	170.0	8
Tradename	$	7.0	4

The goodwill recorded as a result of the WorkForce Software transaction represents future economic benefits the Company expects to achieve as a result of the acquisition, including expected synergies along with the value of the assembled workforce. None of the goodwill resulting from the acquisition is tax deductible.

Note 5. Earnings per Share (“EPS”)


	Basic		Effect of Employee Stock Option Shares	Effect of Employee Restricted Stock Shares	Diluted
Three Months Ended December 31, 2025
Net earnings	$	1,062.0			$	1,062.0
Weighted average shares (in millions)	403.8		0.4	0.5	404.7
EPS	$	2.63			$	2.62
Three Months Ended December 31, 2024
Net earnings	$	963.2			$	963.2
Weighted average shares (in millions)	407.6		0.6	0.8	409.0
EPS	$	2.36			$	2.35

Six Months Ended December 31, 2025
Net earnings	$	2,075.1			$	2,075.1
Weighted average shares (in millions)	404.4		0.4	0.7	405.5
EPS	$	5.13			$	5.12
Six Months Ended December 31, 2024
Net earnings	$	1,919.5			$	1,919.5
Weighted average shares (in millions)	407.7		0.7	0.9	409.3
EPS	$	4.71			$	4.69

Shares that could potentially dilute basic EPS in the future include outstanding share-based compensation awards, which are discussed in Note 12. For the three and six months ended December 31, 2025, there were 0.6 million and 0.4 million shares excluded from the calculation of diluted EPS, respectively, because their inclusion would have been anti-dilutive. For the three and six months ended December 31, 2024, there were no shares excluded from the calculation of diluted EPS.

Note 6. Other (Income)/Expense, Net


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2025		2024		2025		2024
Interest income on corporate funds	$	(96.8)	$	(83.9)	$	(198.3)	$	(175.5)


Realized (gains)/losses on available-for-sale securities, net	0.3		0.6		(1.2)		0.8

Gain on sale of assets	—		—		—		(2.4)




Non-service components of pension income, net (see Note 12)	(7.1)		(7.8)		(14.2)		(15.7)
Net (gain)/loss on ADP Ventures' investments	(2.2)		—		(2.2)		—
Other (income)/loss, net	$	(105.8)	$	(91.1)	$	(215.9)	$	(192.8)

Note 7. Corporate Investments and Funds Held for Clients

Corporate investments and funds held for clients at December 31, 2025 and June 30, 2025 were as follows:


	December 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value (A)
Type of issue:
Money market securities, cash and other cash equivalents	$	33,661.7	$	—	$	—	$	33,661.7
Available-for-sale securities:
Corporate bonds	17,695.5		156.4		(276.2)		17,575.7
U.S. Treasury securities	10,893.0		114.2		(17.7)		10,989.5
Asset-backed securities	2,074.6		30.7		(8.4)		2,096.9
Canadian government obligations and Canadian government agency obligations	1,719.3		13.9		(23.9)		1,709.3
Canadian provincial bonds	1,131.7		15.3		(20.4)		1,126.6
U.S. government agency securities	905.4		4.6		(63.6)		846.4

Other securities	2,003.0		14.3		(42.9)		1,974.4

Total available-for-sale securities	36,422.5		349.4		(453.1)		36,318.8

Total corporate investments and funds held for clients	$	70,084.2	$	349.4	$	(453.1)	$	69,980.5

(A) Included within available-for-sale securities are corporate investments with fair values of $45.7 million and funds held for clients with fair values of $36,273.1 million. All available-for-sale securities are included in Level 2 of the fair value hierarchy.


	June 30, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value (B)
Type of issue:
Money market securities, cash and other cash equivalents	$	5,054.6	$	—	$	—	$	5,054.6
Available-for-sale securities:
Corporate bonds	17,515.2		108.7		(420.2)		17,203.7
U.S. Treasury securities	8,416.8		85.6		(43.7)		8,458.7
Canadian government obligations and Canadian government agency obligations	1,972.0		16.4		(32.4)		1,956.0
Asset-backed securities	1,837.8		22.6		(15.5)		1,844.9
U.S. government agency securities	1,328.5		2.3		(80.0)		1,250.8
Canadian provincial bonds	1,155.8		13.8		(27.7)		1,141.9

Other securities	1,977.3		7.2		(62.8)		1,921.7

Total available-for-sale securities	34,203.4		256.6		(682.3)		33,777.7

Total corporate investments and funds held for clients	$	39,258.0	$	256.6	$	(682.3)	$	38,832.3

(B) Included within available-for-sale securities are corporate investments with fair values of $4,498.8 million and funds held for clients with fair values of $29,278.9 million. All available-for-sale securities were included in Level 2 of the fair value hierarchy.

For a description of the fair value hierarchy and the Company's fair value methodologies, including the use of an independent third-party pricing service, see Note 1 “Summary of Significant Accounting Policies” in the Company's Annual Report on Form 10-K for fiscal 2025. The Company concurred with and did not adjust the prices obtained from the independent pricing service. The Company had no available-for-sale securities included in Level 1 or Level 3 at December 31, 2025.

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2025, are as follows:


	December 31, 2025
	Securities in Unrealized Loss Position Less Than 12 Months				Securities in Unrealized Loss Position Greater Than 12 Months				Total
	Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value
Corporate bonds	$	(2.5)	$	861.0	$	(273.7)	$	8,816.4	$	(276.2)	$	9,677.4
U.S. Treasury securities	(2.0)		711.9		(15.7)		1,264.6		(17.7)		1,976.5
Asset-backed securities	(0.2)		58.7		(8.2)		392.7		(8.4)		451.4
Canadian government obligations and Canadian government agency obligations	(1.8)		198.2		(22.1)		657.2		(23.9)		855.4
Canadian provincial bonds	(0.1)		55.5		(20.3)		535.0		(20.4)		590.5
U.S. government agency securities	(0.1)		10.4		(63.5)		666.7		(63.6)		677.1

Other securities	(0.1)		29.1		(42.8)		991.2		(42.9)		1,020.3
	$	(6.8)	$	1,924.8	$	(446.3)	$	13,323.8	$	(453.1)	$	15,248.6

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of June 30, 2025, are as follows:


	June 30, 2025
	Securities in Unrealized Loss Position Less Than 12 Months				Securities in Unrealized Loss Position Greater Than 12 Months				Total
	Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value
Corporate bonds	$	(5.4)	$	690.4	$	(414.8)	$	10,218.8	$	(420.2)	$	10,909.2
U.S. Treasury securities	(0.8)		732.2		(42.9)		1,801.7		(43.7)		2,533.9
Canadian government obligations and Canadian government agency obligations	(1.4)		219.2		(31.0)		870.2		(32.4)		1,089.4
Asset-backed securities	(0.2)		101.4		(15.3)		481.4		(15.5)		582.8
U.S. government agency securities	(0.1)		8.0		(79.9)		1,093.8		(80.0)		1,101.8
Canadian provincial bonds	(0.8)		44.3		(26.9)		588.8		(27.7)		633.1

Other securities	(1.5)		168.4		(61.3)		1,130.2		(62.8)		1,298.6
	$	(10.2)	$	1,963.9	$	(672.1)	$	16,184.9	$	(682.3)	$	18,148.8

At December 31, 2025, Corporate bonds include investment-grade debt securities with a wide variety of issuers, industries, and sectors, primarily carrying credit ratings of A and above, and have maturities ranging from January 2026 through December 2035.

At December 31, 2025, asset-backed securities include AAA-rated senior tranches of securities with predominantly prime collateral primarily comprised of fixed-rate auto loan, credit card, and device payment plan agreement receivables with fair values of $894.9 million, $644.3 million, and $313.7 million, respectively. These securities are collateralized by the cash flows of the underlying pools of receivables. The primary risk associated with these securities is the collection risk of the underlying receivables. All collateral on such asset-backed securities has performed as expected through December 31, 2025.

At December 31, 2025, U.S. government agency securities primarily include debt directly issued by Federal Farm Credit Banks and Federal Home Loan Banks with fair values of $636.1 million and $137.2 million, respectively. U.S. government agency securities represent senior, unsecured, non-callable debt that primarily carry ratings of Aa1 by Moody's, and AA+ by Standard & Poor's, with maturities ranging from July 2026 through December 2035.

At December 31, 2025, other securities primarily include AA-rated United Kingdom Gilt securities of $648.7 million, municipal bonds, diversified with a variety of issuers, with credit ratings of A and above with fair values of $549.9 million, commercial mortgage-backed securities of $387.0 million, and AAA-rated supranational bonds of $232.9 million.

Classification of corporate investments on the Consolidated Balance Sheets is as follows:


	December 31,		June 30,
	2025		2025
Corporate investments:
Cash and cash equivalents	$	2,424.7	$	3,347.8
Short-term marketable securities	45.7		4,498.8

Total corporate investments	$	2,470.4	$	7,846.6

Funds held for clients represent assets that, based upon the Company's intent, are restricted for use solely for the purposes of satisfying the obligations to remit funds relating to the Company’s payroll and payroll tax filing services, which are classified as client funds obligations on our Consolidated Balance Sheets.

Funds held for clients have been invested in the following categories:


	December 31,		June 30,
	2025		2025
Funds held for clients:
Restricted cash and cash equivalents held to satisfy client funds obligations	$	31,237.0	$	1,706.8
Restricted short-term marketable securities held to satisfy client funds obligations	7,584.8		3,155.7
Restricted long-term marketable securities held to satisfy client funds obligations	28,688.3		26,123.2
Total funds held for clients	$	67,510.1	$	30,985.7

Client funds obligations represent the Company's contractual obligations to remit funds to satisfy clients' payroll, tax, and other payee payment obligations and are recorded on the Consolidated Balance Sheets at the time that the Company impounds funds from clients. The client funds obligations represent liabilities that will be repaid within one year of the balance sheet date. The Company has reported client funds obligations as a current liability on the Consolidated Balance Sheets totaling $67,613.7 million and $31,343.3 million at December 31, 2025 and June 30, 2025, respectively. The Company has classified funds held for clients as a current asset since these funds are held solely for the purpose of satisfying the client funds obligations. Of the Company’s funds held for clients at December 31, 2025 and June 30, 2025, $61,953.0 million and $27,355.2 million, respectively, are held in the grantor trust. The liabilities held within the trust are intercompany liabilities to other Company subsidiaries and eliminate in consolidation.

The Company has reported the cash flows related to the purchases of corporate and client funds marketable securities and related to the proceeds from the sales and maturities of corporate and client funds marketable securities on a gross basis in the investing section of the Statements of Consolidated Cash Flows. The Company has reported the cash and cash equivalents related to client funds investments with original maturities of ninety days or less, within the beginning and ending balances of cash, cash equivalents, restricted cash, and restricted cash equivalents. The Company has reported the cash flows related to the cash received from and paid on behalf of clients on a net basis within net increase / (decrease) in client funds obligations in the financing activities section of the Statements of Consolidated Cash Flows.

All available-for-sale securities were rated as investment grade at December 31, 2025.

Expected maturities of available-for-sale securities at December 31, 2025 are as follows:


One year or less	$	7,630.4
One year to two years	4,675.5
Two years to three years	6,606.4
Three years to four years	5,167.3
After four years	12,239.2
Total available-for-sale securities	$	36,318.8

Note 8. Leases

The Company records leases on the Consolidated Balance Sheets as operating lease right-of-use ("ROU") assets, records the current portion of operating lease liabilities within accrued expenses and other current liabilities and, separately, records long-term operating lease liabilities. The difference between total ROU assets and total lease liabilities is primarily attributable to prepayments of our obligations and the recognition of various lease incentives.

The Company has entered into operating lease agreements for facilities and equipment. The Company's leases have remaining lease terms of up to approximately eleven years.

The components of operating lease expense were as follows:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2025		2024		2025		2024
Operating lease cost	$	31.4	$	27.3	$	61.9	$	54.8
Short-term lease cost	0.3		0.2		0.7		0.5
Variable lease cost	5.8		4.6		11.5		11.2
Total operating lease cost	$	37.5	$	32.1	$	74.1	$	66.5

The following table provides supplemental cash flow information related to the Company's leases:


	Six Months Ended
	December 31,
	2025		2024
Cash paid for operating lease liabilities	$	64.9	$	59.3
Operating lease ROU assets obtained in exchange for new operating lease liabilities	$	89.8	$	31.7

Other information related to our operating lease liabilities is as follows:


	December 31,			June 30,
	2025			2025
Weighted-average remaining lease term (in years)	6			6
Weighted-average discount rate	3.9		%	3.6		%
Current operating lease liability	$	107.0		$	100.8

As of December 31, 2025, maturities of operating lease liabilities are as follows:


Six months ending June 30, 2026	$	62.6
Twelve months ending June 30, 2027	113.4
Twelve months ending June 30, 2028	91.1
Twelve months ending June 30, 2029	67.2
Twelve months ending June 30, 2030	49.1
Thereafter	126.3
Total undiscounted lease obligations	509.7
Less: Imputed interest	(55.1)
Net lease obligations	$	454.6

Note 9. Goodwill and Intangible Assets, net

Changes in goodwill for the six months ended December 31, 2025 are as follows:


	Employer Services		PEO Services		Total
Balance at June 30, 2025	$	3,268.7	$	4.8	$	3,273.5
Additions and other adjustments	22.2		—		22.2
Currency translation adjustments	(1.5)		—		(1.5)

Balance at December 31, 2025	$	3,289.4	$	4.8	$	3,294.2

Components of intangible assets, net, are as follows:


	December 31,		June 30,
	2025		2025
Intangible assets:
Software and software licenses	$	4,259.6	$	4,103.6
Customer contracts and lists	1,451.5		1,429.4
Other intangibles	250.1		249.8
	5,961.2		5,782.8
Less accumulated amortization:
Software and software licenses	(2,948.6)		(2,830.3)
Customer contracts and lists	(1,145.1)		(1,105.6)
Other intangibles	(245.0)		(243.9)
	(4,338.7)		(4,179.8)
Intangible assets, net	$	1,622.5	$	1,603.0

Other intangibles consist primarily of purchased rights, purchased content, trademarks and trade names (acquired directly or through acquisitions). All intangible assets have finite lives and, as such, are subject to amortization. The weighted average remaining useful life of the intangible assets is 6 years (6 years for software and software licenses, 5 years for customer contracts and lists, and 3 years for other intangibles). Amortization of intangible assets was $95.8 million and $100.7 million for the three months ended December 31, 2025 and 2024, respectively, and $191.3 million and $189.7 million for the six months ended December 31, 2025 and 2024, respectively.

Estimated future amortization expenses of the Company's existing intangible assets are as follows:


	Amount
Six months ending June 30, 2026	$	220.5
Twelve months ending June 30, 2027	$	348.3
Twelve months ending June 30, 2028	$	263.4
Twelve months ending June 30, 2029	$	228.8
Twelve months ending June 30, 2030	$	187.3
Twelve months ending June 30, 2031	$	141.8

Note 10. Short-term Financing

The Company has a $4.6 billion, 364-day credit agreement that matures in June 2026 with a one year term-out option. The Company also has a $3.5 billion, five year credit facility that matures in June 2029 that contains an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments. In addition, the Company also has a $2.5 billion five year credit facility maturing in June 2030 that contains an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments. The interest rate applicable to committed borrowings is tied to SOFR, the effective federal funds rate, or the prime rate depending on the notification provided by the Company to the syndicated financial institutions prior to borrowing. The Company is also required to pay facility fees on the credit agreements. The primary uses of the credit facilities are to provide liquidity to the commercial paper program and funding for general corporate purposes, if necessary. The Company had no borrowings through December 31, 2025 under the credit agreements.

The Company's U.S. short-term funding requirements related to client funds are sometimes obtained on an unsecured basis through the issuance of commercial paper, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. This commercial paper program provides for the issuance of up to $10.6 billion in aggregate maturity value. The Company’s 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. As of December 31, 2025 the company had no commercial paper outstanding. As of June 30, 2025 the Company had $4.8 billion of commercial paper outstanding, which was repaid in early July 2025. Details of the borrowings under the commercial paper program are as follows:


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2025			2024			2025			2024
Average daily borrowings (in billions)	$	4.4		$	4.5		$	4.5		$	4.7
Weighted average interest rates	4.0		%	4.8		%	4.2		%	5.1		%
Weighted average maturity (approximately in days)	2 days			2 days			2 days			2 days

The Company’s 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. As of December 31, 2025 and June 30, 2025, the Company had $45.8 million and $38.4 million of outstanding obligations related to reverse repurchase agreements, respectively. The Company has $7.5 billion available on a committed basis under the U.S. reverse repurchase agreements. Details of the reverse repurchase agreements are as follows:


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2025			2024			2025			2024
Average outstanding balances (in billions)	$	4.3		$	3.7		$	4.4		$	3.7
Weighted average interest rates	4.1		%	4.8		%	4.3		%	5.0		%

Note 11. Debt

The Company issued four series of fixed-rate notes with staggered maturities of 7 and 10 years at the time of issuance totaling $4.0 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, semi-annually.

The principal amounts and associated effective interest rates of the Notes and other debt as of December 31, 2025 and June 30, 2025, are as follows:


Debt instrument	Effective Interest Rate	December 31, 2025		June 30, 2025


Fixed-rate 1.700% notes due May 15, 2028	1.85%	1,000.0		1,000.0
Fixed-rate 1.250% notes due September 1, 2030	1.83%	1,000.0		1,000.0
Fixed-rate 4.750% notes due May 8, 2032	4.95%	1,000.0		1,000.0
Fixed-rate 4.450% notes due September 9, 2034	4.75%	1,000.0		1,000.0
Other		2.4		2.9
		4,002.4		4,002.9
Less: current portion (a)		(1.1)		(1.0)
Less: unamortized discount and debt issuance costs		(24.9)		(27.2)
Total long-term debt		$	3,976.4	$	3,974.7

(a) - Current portion of long-term debt as of December 31, 2025 is included within accrued expenses and other current liabilities on the Consolidated Balance Sheets.

The effective interest rates for the Notes include the interest on the Notes and amortization of the discount and debt issuance costs.

As of December 31, 2025, the fair value of the Notes, based on Level 2 inputs, was $3,860.7 million. For a description of the fair value hierarchy and the Company's fair value methodologies, including the use of an independent third-party pricing service, see Note 1 “Summary of Significant Accounting Policies” in the Company's Annual Report on Form 10-K for fiscal 2025.

Note 12. Employee Benefit Plans

A. Stock-based Compensation Plans

The Company's share-based compensation plan consists of stock options, time-based restricted stock, time-based restricted stock units, performance-based restricted stock, and performance-based restricted stock units. The Company also offers an employee stock purchase plan for eligible employees. Beginning in September 2022, the Company discontinued granting stock options, time-based restricted stock and performance-based restricted stock. Any such future awards granted September 2022 and after will be grants of time-based restricted stock units and/or performance-based restricted stock units, depending on employee eligibility. Time-based restricted stock unit awards and performance-based restricted stock unit awards granted to employees with a home country of the United States are settled in stock, and awards granted to employees with a home country outside the United States are generally settled in cash.

The Company currently utilizes treasury stock to satisfy stock option exercises, issuances under the Company's employee stock purchase plan, and restricted stock awards. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program. The Company repurchased 1.9 million and 0.9 million shares in the three months ended December 31, 2025 and 2024, respectively, and repurchased 3.2 million and 2.4 million shares in the six months ended December 31, 2025 and 2024, respectively. 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.

The following table represents pre-tax stock-based compensation expense for the three and six months ended December 31, 2025 and 2024, respectively:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2025		2024		2025		2024
Operating expenses	$	8.5	$	9.2	$	17.1	$	18.3
Selling, general and administrative expenses	55.3		59.6		96.7		101.9
Research and development	9.4		10.3		18.1		19.5
Total stock-based compensation expense	$	73.2	$	79.1	$	131.9	$	139.7

B. Pension Plans

The components of net pension (income)/expense were as follows:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2025		2024			2025		2024
Service cost – benefits earned during the period	$	2.0	$	1.5		$	4.0	$	3.0
Interest cost on projected benefits	21.7		21.9			43.4		43.7
Expected return on plan assets	(28.3)		(29.0)			(56.6)		(58.0)
Net amortization and deferral	0.7		0.7			1.5		1.5

Net pension (income)/expense	$	(3.9)	$	(4.9)		$	(7.7)	$	(9.8)

Note 13. Income Taxes

The effective tax rate for the three months ended December 31, 2025 and 2024 was 23.2% and 23.6%, respectively. The decrease in the effective tax rate is primarily due to lower reserves for uncertain tax positions and a benefit for adjustments to prior year tax liabilities partially offset by a lower excess tax benefit on stock-based compensation in the three months ended December 31, 2025.

The effective tax rate for the six months ended December 31, 2025 and 2024 was 22.9% and 23.1%, respectively. The decrease in the effective tax rate is primarily due to lower reserves for uncertain tax positions partially offset by the cost of an intercompany transfer of certain assets and a lower excess tax benefit on stock-based compensation in the six months ended December 31, 2025.

Note 14. Commitments and Contingencies

As of December 31, 2025, the Company has purchase commitments of approximately $2,332.5 million, including obligations related to software license agreements, third-party software services and purchase and maintenance agreements on our software, equipment, and other assets, of which $194.8 million relates to the six months ending June 30, 2026, $1,032.7 million relates to the years ending June 30, 2027 through 2028, $987.0 million relates to the years ending June 30, 2029 through 2031, and the remaining relates to fiscal years thereafter.

In May 2020, a putative class action complaint was filed against ADP, TotalSource and related defendants in the U.S. District Court, District of New Jersey. The complaint asserts violations of the Employee Retirement Income Security Act of 1974 (“ERISA”) in connection with the ADP TotalSource Retirement Savings Plan’s fiduciary administrative and investment decision-making. The complaint seeks statutory and other unspecified monetary damages, injunctive relief and attorney’s fees. The Company is unable to estimate any reasonably possible loss, or range of loss, with respect to this matter. The Company is vigorously defending against this lawsuit.

The Company is subject to various claims, litigation, and regulatory compliance matters in the normal course of business. When a loss is considered probable and reasonably estimable, the Company records a liability in the amount of its best estimate for the ultimate loss. Management currently believes that the resolution of these claims, litigation and regulatory compliance matters against us, individually or in the aggregate, will not have a material adverse impact on our consolidated results of operations, financial condition or cash flows. These matters are subject to inherent uncertainties and management's view of these matters may change in the future.

It is not the Company’s business practice to enter into off-balance sheet arrangements. In the normal course of business, the Company may enter into contracts in which it makes representations and warranties that relate to the performance of the Company’s services and products. The Company does not expect any material losses related to such representations and warranties.

Note 15. Stockholders' Equity

Changes in stockholders' equity by component are as follows:


	Three Months Ended
	December 31, 2025
	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		AOCI		Total
Balance at September 30, 2025	$	63.9	$	2,868.0	$	25,622.4	$	(21,449.8)	$	(730.7)	$	6,373.8
Net earnings	—		—		1,062.0		—		—		1,062.0
Other comprehensive income/(loss)	—		—		—		—		91.0		91.0
Stock-based compensation expense	—		66.3		—		—		—		66.3
Issuances relating to stock compensation plans	—		2.5		—		0.4		—		2.9
Treasury stock acquired (1.9 million shares repurchased)	—		—		—		(511.2)		—		(511.2)
Dividends declared ($1.70 per share)	—		—		(691.8)		—		—		(691.8)

Balance at December 31, 2025	$	63.9	$	2,936.8	$	25,992.6	$	(21,960.6)	$	(639.7)	$	6,393.0


	Three Months Ended
	December 31, 2024
	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		AOCI		Total
Balance at September 30, 2024	$	63.9	$	2,528.6	$	24,001.2	$	(20,144.9)	$	(1,100.2)	$	5,348.6
Net earnings	—		—		963.2		—		—		963.2
Other comprehensive income/(loss)	—		—		—		—		(428.5)		(428.5)
Stock-based compensation expense	—		70.2		—		—		—		70.2
Issuances relating to stock compensation plans	—		20.8		—		6.5		—		27.3
Treasury stock acquired (0.9 million shares repurchased)	—		—		—		(273.9)		—		(273.9)
Dividends declared ($1.54 per share)	—		—		(628.8)		—		—		(628.8)

Balance at December 31, 2024	$	63.9	$	2,619.6	$	24,335.6	$	(20,412.3)	$	(1,528.7)	$	5,078.1


	Six Months Ended
	December 31, 2025
	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		AOCI		Total
Balance at June 30, 2025	$	63.9	$	2,788.3	$	25,240.6	$	(21,021.4)	$	(883.4)	$	6,188.0
Net earnings	—		—		2,075.1		—		—		2,075.1
Other comprehensive income/(loss)	—		—		—		—		243.7		243.7
Stock-based compensation expense	—		123.6		—		—		—		123.6
Issuances relating to stock compensation plans	—		24.9		—		35.7		—		60.6
Treasury stock acquired (3.2 million shares repurchased)	—		—		—		(974.9)		—		(974.9)
Dividends declared ($3.24 per share)	—		—		(1,323.1)		—		—		(1,323.1)

Balance at December 31, 2025	$	63.9	$	2,936.8	$	25,992.6	$	(21,960.6)	$	(639.7)	$	6,393.0


	Six Months Ended
	December 31, 2024
	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		AOCI		Total
Balance at June 30, 2024	$	63.9	$	2,406.9	$	23,622.2	$	(19,737.1)	$	(1,808.3)	$	4,547.6
Net earnings	—		—		1,919.5		—		—		1,919.5
Other comprehensive income/(loss)	—		—		—		—		279.6		279.6
Stock-based compensation expense	—		125.0		—		—		—		125.0
Issuances relating to stock compensation plans	—		87.7		—		56.2		—		143.9
Treasury stock acquired (2.4 million shares repurchased)	—		—		—		(731.4)		—		(731.4)
Dividends declared ($2.94 per share)	—		—		(1,206.1)		—		—		(1,206.1)

Balance at December 31, 2024	$	63.9	$	2,619.6	$	24,335.6	$	(20,412.3)	$	(1,528.7)	$	5,078.1

Note 16. Reclassifications out of Accumulated Other Comprehensive Income/(Loss) (“AOCI”)

Changes in AOCI by component are as follows:


	Three Months Ended
	December 31, 2025
	Currency Translation Adjustment		Net Gains/Losses on Available-for-sale Securities			Cash Flow Hedging Activities			Pension Liability			Accumulated Other Comprehensive Income/(Loss)
Balance at September 30, 2025	$	(305.3)	$	(172.7)		$	(26.6)		$	(226.1)		$	(730.7)
Other comprehensive income/(loss) before reclassification adjustments	3.9		107.5			—			—			111.4
Tax effect	—		(22.7)			—			—			(22.7)
Reclassification adjustments to net earnings	—		0.3		(A)	1.6		(C)	1.1		(B)	3.0
Tax effect	—		—			(0.4)			(0.3)			(0.7)

Balance at December 31, 2025	$	(301.4)	$	(87.6)		$	(25.4)		$	(225.3)		$	(639.7)


	Three Months Ended
	December 31, 2024
	Currency Translation Adjustment		Net Gains/Losses on Available-for-sale Securities			Cash Flow Hedging Activities			Pension Liability			Accumulated Other Comprehensive Income/(Loss)
Balance at September 30, 2024	$	(329.6)	$	(511.3)		$	(28.6)		$	(230.7)		$	(1,100.2)
Other comprehensive income/(loss) before reclassification adjustments	(101.0)		(423.8)			—			—			(524.8)
Tax effect	—		94.2			—			—			94.2
Reclassification adjustments to net earnings	—		0.6		(A)	1.4		(C)	0.7		(B)	2.7
Tax effect	—		(0.1)			(0.3)			(0.2)			(0.6)

Balance at December 31, 2024	$	(430.6)	$	(840.4)		$	(27.5)		$	(230.2)		$	(1,528.7)


	Six Months Ended
	December 31, 2025
	Currency Translation Adjustment		Net Gains/Losses on Available-for-sale Securities			Cash Flow Hedging Activities			Pension Liability			Accumulated Other Comprehensive Income/(Loss)
Balance at June 30, 2025	$	(289.8)	$	(338.9)		$	(27.7)		$	(227.0)		$	(883.4)
Other comprehensive income/(loss) before reclassification adjustments	(11.6)		323.2			—			—			311.6
Tax effect	—		(71.0)			—			—			(71.0)
Reclassification adjustments to net earnings	—		(1.2)		(A)	3.0		(C)	2.3		(B)	4.1
Tax effect	—		0.3			(0.7)			(0.6)			(1.0)

Balance at December 31, 2025	$	(301.4)	$	(87.6)		$	(25.4)		$	(225.3)		$	(639.7)


	Six Months Ended
	December 31, 2024
	Currency Translation Adjustment		Net Gains/Losses on Available-for-sale Securities			Cash Flow Hedging Activities			Pension Liability			Accumulated Other Comprehensive Income/(Loss)
Balance at June 30, 2024	$	(378.8)	$	(1,178.0)		$	(20.0)		$	(231.5)		$	(1,808.3)
Other comprehensive income/(loss) before reclassification adjustments	(51.8)		440.5			(12.5)			—			376.2
Tax effect	—		(103.6)			3.1			—			(100.5)
Reclassification adjustments to net earnings	—		0.8		(A)	2.5		(C)	1.8		(B)	5.1
Tax effect	—		(0.1)			(0.6)			(0.5)			(1.2)

Balance at December 31, 2024	$	(430.6)	$	(840.4)		$	(27.5)		$	(230.2)		$	(1,528.7)

(A) Reclassification adjustments out of AOCI are included within Other (income)/loss, net, on the Statements of Consolidated Earnings.

(B) Reclassification adjustments out of AOCI are included in Net pension (income)/expense (see Note 12).

(C) Reclassification adjustments out of AOCI are included in Interest expense on the Statements of Consolidated Earnings (see Note 11).

Note 17**. Interim Financial Data by Segment**

Based upon similar economic and operational characteristics, the Company’s strategic business units have been aggregated into the following two reportable segments: Employer Services and PEO Services. Certain revenues and expenses are charged to the reportable segments at a standard rate for management reasons. Other costs are recorded based on management responsibility.

The Company's Chief Operating Decision Maker ("CODM") is the Chief Executive Officer. For each reportable segment, the CODM uses earnings before income taxes, including plan-to-actual and forecast-to-actual results, to assess segment performance and allocate resources (including personnel and capital resources) amongst its strategic business units. The CODM does not review assets at the reportable segment level, hence segment disclosure relating to total assets has not been provided.

The following tables present the Company's revenues, significant segment expenses, and earnings before income taxes by reportable segment:


Three Months Ended December 31, 2025	Employer Services		PEO Services		Total
Revenues from external customers	$	3,298.3	$	1,752.4	$	5,050.7
Interest on funds held for clients	305.8		2.8		308.6
Intercompany revenues	3.3		—		3.3
Total segment revenues	3,607.4		1,755.2		5,362.6

Reconciliation of revenues:
Intercompany eliminations					(3.3)
Total consolidated revenues					$	5,359.3

Less segment expenses: (a)
Selling and marketing	578.1		104.2
Zero-margin benefits pass-through costs	—		1,126.2
Worker's compensation coverage and state unemployment taxes	—		158.5
Other segment expenses (b)	1,750.5		113.4
Total segment earnings before income taxes	1,278.8		252.9		1,531.7

Reconciliation of earnings before income taxes:
Other (c)					(148.5)
Total consolidated earnings before income taxes					$	1,383.2


Three Months Ended December 31, 2024	Employer Services		PEO Services		Total
Revenues from external customers	$	3,114.8	$	1,660.8	$	4,775.6
Interest on funds held for clients	270.3		2.5		272.8
Intercompany revenues	3.4		—		3.4
Total segment revenues	3,388.5		1,663.3		5,051.8

Reconciliation of revenues:
Intercompany eliminations					(3.4)
Total consolidated revenues					$	5,048.4

Less segment expenses: (a)
Selling and marketing	531.6		91.1
Zero-margin benefits pass-through costs	—		1,055.2
Worker's compensation coverage and state unemployment taxes	—		156.1
Other segment expenses (b)	1,673.9		109.2
Total segment earnings before income taxes	1,183.0		251.7		1,434.7

Reconciliation of earnings before income taxes:
Other (c)					(173.4)
Total consolidated earnings before income taxes					$	1,261.3


Six Months Ended December 31, 2025	Employer Services		PEO Services		Total
Revenues from external customers	$	6,501.7	$	3,437.3	$	9,939.0
Interest on funds held for clients	590.1		5.4		595.5
Intercompany revenues	6.8		—		6.8
Total segment revenues	7,098.6		3,442.7		10,541.3

Reconciliation of revenues:
Intercompany eliminations					(6.8)
Total consolidated revenues					$	10,534.5

Less segment expenses: (a)
Selling and marketing	1,130.5		195.5
Zero-margin benefits pass-through costs	—		2,257.2
Worker's compensation coverage and state unemployment taxes	—		293.4
Other segment expenses (b)	3,460.5		224.9
Total segment earnings before income taxes	2,507.6		471.7		2,979.3

Reconciliation of earnings before income taxes:
Other (c)					(288.6)
Total consolidated earnings before income taxes					$	2,690.7


Six Months Ended December 31, 2024	Employer Services		PEO Services		Total
Revenues from external customers	$	6,122.0	$	3,233.0	$	9,355.0
Interest on funds held for clients	521.3		4.8		526.1
Intercompany revenues	6.2		—		6.2
Total segment revenues	6,649.5		3,237.8		9,887.3

Reconciliation of revenues:
Intercompany eliminations					(6.2)
Total consolidated revenues					$	9,881.1

Less segment expenses: (a)
Selling and marketing	1,036.9		172.1
Zero-margin benefits pass-through costs	—		2,104.4
Worker's compensation coverage and state unemployment taxes	—		280.4
Other segment expenses (b)	3,265.3		203.6
Total segment earnings before income taxes	2,347.3		477.3		2,824.6

Reconciliation of earnings before income taxes:
Other (c)					(327.1)
Total consolidated earnings before income taxes					$	2,497.5

(a) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. Intercompany expenses are included in the amounts shown.

(b) Other segment expenses for both reportable segments include operating, research and development, depreciation and amortization, and other general and administrative expenses.

(c) Other represents certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, legal settlements, severance costs, non-recurring gains and losses, the elimination of intercompany transactions, and interest income and expense.

The following table presents the Company's depreciation and amortization included in earnings before income taxes for each reportable segment:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2025		2024		2025		2024
Employer Services	$	130.5	$	133.3	$	261.6	$	253.9
PEO Services	0.5		1.7		1.2		3.4
Other	14.6		16.0		29.5		32.4
Total depreciation and amortization	$	145.6	$	151.0	$	292.3	$	289.7

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