Company: ADP
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0000008670-25-000047
Chunk: 50

Company: AUTOMATIC DATA PROCESSING INC
Filing Date: 2025-10-31
Form: 10-Q
Item: Part I, Item 1
Chunk 50
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 income, net$(110.1)$(101.7)$8.4 

Interest income on corporate funds increased for the three months ended September 30, 2025 due to higher average investment balances of $11.4 billion as compared to $10.7 billion for the three months ended September 30, 2024, coupled with an increase in average interest rates of 20 basis points, as compared to the three months ended September 30, 2024. 

See Note 12 of our Consolidated Financial Statements for further details on non-service components of pension income, net. 

Earnings Before Income Taxes ("EBIT") and Adjusted EBIT 

Three Months EndedSeptember 30,20252024YoY GrowthEBIT$1,307.5 $1,236.2 6 %  EBIT Margin25.3 %25.6 %(30) bpsAdjusted EBIT$1,318.3 $1,232.5 7 %  Adjusted EBIT Margin25.5 %25.5 %0 bps

Earnings before income taxes increased for the three months ended September 30, 2025, due to the increase in total revenues, partially offset by the increase in total expenses discussed above.

EBIT Margin decreased for the three months ended September 30, 2025, due to increased selling and marketing expenses and costs of servicing and implementing our clients on growing revenue, partially offset by contributions from client fund interest revenues discussed above and interest expense.

Adjusted EBIT and Adjusted EBIT margin exclude interest income and interest expense that are not related to our client funds

extended investment strategy, and net charges, including certain legal settlements, in the applicable periods.

Provision for Income Taxes

The effective tax rate for the three months ended September 30, 2025 and 2024 was 22.5% and 22.6%, respectively. The decrease in the effective tax rate is primarily due to lower reserves for uncertain tax positions primarily offset by the cost of an intercompany transfer of certain assets and a lower excess tax benefit on stock-based compensation in the three months ended September 30, 2025.

Adjusted Provision for Income Taxes

The adjusted effective tax rate for the three months ended September 30, 2025 and 2024 was 22.5% and 22.6%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax