Company: ADP
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000008670-25-000015
Chunk: 121

Company: AUTOMATIC DATA PROCESSING INC
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 8
Chunk 121
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 interest income on corporate funds, and operating efficiencies for costs of servicing and implementing our clients on growing revenue, partially offset by increased interest expense and acquisition related expenses.

Adjusted EBIT and Adjusted EBIT margin exclude interest income and interest expense that are not related to our client funds extended investment strategy, legal settlements, and net charges related to our broad-based transformation initiatives, in the applicable periods. 

Provision for Income Taxes

The effective tax rate for the three months ended March 31, 2025 and 2024 was 23.0% and 23.4%, respectively. The decrease in the effective tax rate is primarily due to a benefit for a decrease in uncertain tax position activity and a higher excess tax benefit on stock-based compensation in the three months ended March 31, 2025, partially offset by the benefits of an intercompany transfer of certain assets in the three months ended March 31, 2024.

The effective tax rate for the nine months ended March 31, 2025 and 2024 was 23.1% and 22.7%, respectively. The increase in the effective tax rate is primarily due to a benefit for adjustments to prior year tax liabilities and a valuation allowance release in the nine months ended March 31, 2024.

Adjusted Provision for Income Taxes

The adjusted effective tax rate for the three months ended March 31, 2025 and 2024 was 23.0% and 23.4%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.

The adjusted effective tax rate for the nine months ended March 31, 2025 and 2024 was 23.1% and 22.7%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.

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Net Earnings and Diluted EPS, Unadjusted and Adjusted

For the three and nine months ended March 31:

Three Months EndedNine Months EndedMarch 31,March 31,20252024YoY Growth20252024YoY GrowthNet earnings  $1,249.5 $1,184.9 5 %$3,169.0 $2,922.7 8 %Diluted EPS  $3.06 $2.88 6 %$7.75 $7.07 10 %Adjusted net earnings  $1,249.6