ADP(US:ADP)2025-10-31 16:09Financial Performance - Total revenues for the three months ended September 30, 2025, increased by 7% to $5,175.2 million, with 6% growth on an organic constant currency basis[88]. - Adjusted diluted earnings per share grew by 7% to $2.49, driven by a reduction in shares outstanding due to share repurchases[103]. - Net earnings for the three months ended September 30, 2025, were $1,013.0 million, reflecting a 6% increase from $956.3 million in 2024[120]. - EBIT for the three months ended September 30, 2025, was $1,307.5 million, reflecting a 6% increase year-over-year[98]. - Adjusted EBIT increased to $1,318.3 million, a 7% rise from $1,232.5 million in the previous year, with an adjusted EBIT margin of 25.5%[120]. Revenue Breakdown - Employer Services revenue increased by 7% to $3,491.2 million, while PEO Services revenue also grew by 7% to $1,687.5 million[106]. - Employer Services revenue increased to $1,228.8 million for the three months ended September 30, 2025, up 6% from $1,164.3 million in 2024[108]. - PEO Services revenue rose to $1,687.5 million, a 7% increase from $1,574.5 million in the prior year, driven by a 2% increase in average worksite employees[112]. Expenses and Margins - Total expenses for the three months ended September 30, 2025, rose by 8% to $3,977.8 million, primarily due to increased operating expenses and selling, general, and administrative expenses[91]. - Employer Services margin decreased by 50 basis points to 35.2% due to increased selling and marketing expenses[111]. - PEO Services margin decreased by 140 basis points to 13.0% due to higher operating costs related to state unemployment insurance[114]. Shareholder Returns - Cash returned to shareholders amounted to $1.0 billion, including $0.6 billion in dividends and $0.4 billion in share repurchases[89]. - The company repurchased approximately 1.2 million shares at an average price of $302.10 during the quarter, compared to 1.4 million shares at $259.47 in the same period last year[131]. Cash Flow and Liquidity - Operating cash flows decreased to $642.3 million, down from $824.4 million in the prior year, primarily due to unfavorable changes in operating assets and liabilities[128]. - Net cash flows provided by operating activities decreased by $182.1 million to $642.3 million for the three months ended September 30, 2025, compared to $824.4 million in 2024[128]. - The company has $10.6 billion in committed credit facilities and sufficient liquidity to meet operational needs[126]. Investments and Capital Expenditures - Capital expenditures for the three months ended September 30, 2025, were $44.9 million, down from $55.6 million in the same period in 2024, with expected capital expenditures for fiscal 2026 between $225 million and $250 million[136]. - Average investment balances at cost for corporate investments were $11.39 billion and for funds held for clients were $34.93 billion for the three months ended September 30, 2025[143]. - The total available-for-sale securities at fair value amounted to $35.65 billion as of September 30, 2025, with net unrealized pre-tax losses of $211.5 million[143]. Interest and Debt Management - Interest on funds held for clients increased to $286.8 million, up from $253.3 million, due to a 6.5% rise in average client funds balances[89][90]. - The company maintains a strategy to average through an interest rate cycle by laddering the maturities of investments out to five years for the extended portfolio and ten years for the long portfolio[140]. - The company has $4.0 billion of senior unsecured notes maturing in 2028, 2030, 2032, and 2034, and may revisit the long-term debt market for refinancing and growth investments[132].