Company: ADP
Filing Date: 2025-08-06
Form Type: 10-K
Source: 0000008670-25-000037
Chunk: 67

Company: AUTOMATIC DATA PROCESSING INC
Filing Date: 2025-08-06
Form: 10-K
Item: Item 7
Chunk 67
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Y GrowthEBIT$5,310.1 $4,872.3 9 %  EBIT Margin25.8 %25.4 %50 bpsAdjusted EBIT$5,347.1 $4,890.1 9 %  Adjusted EBIT Margin26.0 %25.5 %50 bps

Note: Numbers may not foot due to rounding.

Earnings before income taxes increased in fiscal 2025 due to the increases in total revenues, partially offset by the increases in total expenses discussed above.  

EBIT Margin increased in fiscal 2025 due to contributions from client funds interest revenues, discussed above, 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, and net charges, including certain legal matters, gain on sale of assets, and broad-based optimization initiatives, in the applicable periods.

31

Provision for Income Taxes

The effective tax rate in fiscal 2025 and 2024 was 23.2% and 23.0%, respectively. The increase in the effective tax rate is primarily due to higher reserves for uncertain tax positions in fiscal 2025 and a valuation allowance release in fiscal 2024 offset by an increase in the excess tax benefit on stock-based compensation in fiscal 2025. Refer to Note 12, Income Taxes, within the Notes to the Consolidated Financial Statements for further discussion.

Adjusted Provision for Income Taxes

The adjusted effective tax rate in fiscal 2025 and 2024 was 23.2% and 23.0%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.

Net Earnings and Diluted EPS, Unadjusted and Adjusted

For the year ended June 30, respectively:

Years EndedJune 30,20252024YoY GrowthNet earnings  $4,079.7 $3,752.0 9 %Diluted EPS  $9.98 $9.10 10 %Adjusted net earnings$4,092.0 $3,784.5 8 %Adjusted diluted EPS$10.01 $9.18 9 %

For fiscal 2025, in addition to the increase in net earnings, diluted EPS increased