What changed in this filing

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Item 1. Financial Statements

2025-01-30 compared with 2024-11-01 · 224 added, 162 removed, 503 unchanged (43% of the section changed)

4 unchanged sentences

(In millions, except per share amounts)

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Revenues, other than interest on funds held

19 unchanged sentences

Diluted weighted average shares outstanding 409.0 412.5 409.3 414.0

(A) Professional Employer Organization (“PEO”) revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes of $ 17,193.6 million and $ 15,994.6 million for the three months ended September 30, 2024 and 2023, respectively.

(A) Professional Employer Organization (“PEO”) revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes of $ 19,420.8 million and $ 18,379.2 million for the three months ended December 31, 2024 and 2023, respectively, and $ 36,614.4 million and $ 34,373.8 million for the six months ended December 31, 2024 and 2023, respectively.

See notes to the Consolidated Financial Statements.

3 unchanged sentences

(In millions)

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Net earnings $ 963.2 $ 878.4 $ 1,919.5 $ 1,737.8

18 unchanged sentences

(In millions, except per share amounts)

September 30, June 30,

December 31, June 30,

Current assets:

Cash and cash equivalents $ 2,216.4 $ 2,913.4

Short-term marketable securities (A) 5,242.2 384.0

Accounts receivable, net of allowance for doubtful accounts of $ 50.3 and $ 52.2 , respectively

4 unchanged sentences

Total current assets 54,254.4 45,542.5

Long-term marketable securities (A) 940.6 —

Long-term receivables, net of allowance for doubtful accounts of $ 0.2 and $ 0.1 , respectively

14 unchanged sentences

Obligations under reverse repurchase agreements (A) — 385.4

Obligations under commercial paper borrowing 4,375.4 —

Short-term debt 1,000.5 1.1

16 unchanged sentences

authorized, 1,000.0 shares;

issued, 638.7 shares at September 30, 2024 and June 30, 2024;

outstanding, 407.7 and 408.1 shares at September 30, 2024 and June 30, 2024, respectively

issued, 638.7 shares at December 31, 2024 and June 30, 2024;

outstanding, 406.9 and 408.1 shares at December 31, 2024 and June 30, 2024, respectively

Capital in excess of par value 2,619.6 2,406.9

1 unchanged sentence

Treasury stock - at cost:

231.0 and 230.6 shares at September 30, 2024 and June 30, 2024, respectively

231.8 and 230.6 shares at December 31, 2024 and June 30, 2024, respectively

( 20,412.3 ) ( 19,737.1 )

2 unchanged sentences

Total liabilities and stockholders’ equity $ 64,096.7 $ 54,362.7

(A ) As of September 30, 2024, $ 578.6 million of short-term marketable securities, $ 98.8 million of long-term marketable securities and $ 1.7 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements.

As of June 30, 2024, $ 384.0 million of short-term marketable securities and $ 1.4 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements (see Note 9).

(A ) As of June 30, 2024, $ 384.0 million of short-term marketable securities and $ 1.4 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements (see Note 10).

See notes to the Consolidated Financial Statements.

3 unchanged sentences

(In millions)

Three Months Ended

September 30,

Six Months Ended

Cash Flows from Operating Activities:

10 unchanged sentences

Changes in operating assets and liabilities:

(Increase)/Decrease in accounts receivable 115.4 ( 107.9 )

Increase in accounts receivable ( 94.7 ) ( 382.3 )

Increase in deferred contract costs ( 565.3 ) ( 538.0 )

13 unchanged sentences

Cash Flows from Financing Activities:

Net decrease in client funds obligations ( 10,870.5 ) ( 1,374.9 )

Net increase in client funds obligations 9,090.4 5,421.9

Net cash distributed from the Internal Revenue Service ( 487.6 ) —

6 unchanged sentences

Net proceeds related to reverse repurchase agreements ( 344.7 ) ( 51.0 )

Net proceeds of commercial paper borrowings 4,375.4 —

Net cash flows used in financing activities ( 6,491.5 ) ( 1,903.7 )

Net cash flows provided by financing activities 7,482.5 3,816.1

Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents ( 36.7 ) 10.6

34 unchanged sentences

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

ASU 2024-03 Disaggregation of Income Statement Expenses (Subtopic 220-40) 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, and cash flows.

ASU 2023-09 Income Taxes (Topic 740):

10 unchanged sentences

Human Capital Management (“HCM”), HR Outsourcing (“HRO”), and Global Solutions (“Global”), with separate disaggregation for PEO zero-margin benefits pass-through revenues and client funds 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 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 revenue by our business pillars, and include a reconciliation to the Company’s reportable segments:

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

Types of Revenues 2024 2023 2024 2023

5 unchanged sentences

Total Revenues $ 5,048.4 $ 4,668.0 $ 9,881.1 $ 9,180.3

Reconciliation of disaggregated revenue to our reportable segments for the three months ended September 30, 2024:

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

Types of Revenues Employer Services PEO Other Total

5 unchanged sentences

Total Segment Revenues $ 3,388.5 $ 1,663.3 $ ( 3.4 ) $ 5,048.4

Reconciliation of disaggregated revenue to our reportable segments for the three months ended September 30, 2023:

Reconciliation of disaggregated revenue to our reportable segments for the three months ended December 31, 2023:

Types of Revenues Employer Services PEO Other Total

5 unchanged sentences

Total Segment Revenues $ 3,125.2 $ 1,546.1 $ ( 3.3 ) $ 4,668.0

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

Reconciliation of disaggregated revenue to our reportable segments for the six months ended December 31, 2023:

Types of Revenues Employer Services PEO Other Total

HCM $ 3,894.0 $ — $ ( 4.6 ) $ 3,889.4

HRO, excluding PEO zero-margin benefits pass-throughs 638.5 1,064.3 ( 2.4 ) 1,700.4

PEO zero-margin benefits pass-throughs — 1,947.5 — 1,947.5

Global 1,215.9 — — 1,215.9

Interest on funds held for clients 423.2 3.9 — 427.1

Total Segment Revenues $ 6,171.6 $ 3,015.7 $ ( 7.0 ) $ 9,180.3

Contract Balances

1 unchanged sentence

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 three months ended September 30, 2024 were as follows:

Changes in deferred revenues related to set up fees for the six months ended December 31, 2024 were as follows:

Contract Liability

3 unchanged sentences

Currency translation adjustments ( 10.8 )

Contract liability, September 30, 2024 $ 494.5

Contract liability, December 31, 2024 $ 471.8

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 will be 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 $ 1,173.1

cash acquired ( 12.5 )

Cash paid for acquisition of business, net of cash acquired $ 1,160.6

The preliminary allocation of the purchase price is based upon estimates and assumptions that are subject to change within the measurement period, which is one year from the acquisition date.

The primary areas of the purchase price allocation that are not yet finalized relate to the measurement of certain assets and liabilities, including identifiable intangible assets, and the finalization of net working capital items included in the purchase price allocation.

Accordingly, the measurement period for such purchase price allocations will end when the information becomes available but will not exceed twelve months from the date of acquisition.

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 preliminary purchase price allocation for WorkForce Software is as follows:

Accounts receivable, net of allowance for doubtful accounts 20.0

Identifiable intangible assets (1) 417.0

Goodwill 846.4

All other assets 21.9

Total assets acquired $ 1,317.8

Deferred revenue $ 39.6

Deferred income taxes 46.6

All other liabilities 58.5

Total liabilities assumed $ 144.7

Total net assets acquired $ 1,173.1

(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 estimated purchase price allocation include:

Estimated Fair Value Estimated Useful Life

Technology $ 200.0 7

Customer/Partner relationships $ 210.0 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.

Earnings per Share (“EPS”)

1 unchanged sentence

Shares Diluted

Three Months Ended September 30, 2024

Three Months Ended December 31, 2024

Net earnings $ 963.2 $ 963.2

1 unchanged sentence

EPS $ 2.36 $ 2.35

Three Months Ended September 30, 2023

Three Months Ended December 31, 2023

Net earnings $ 878.4 $ 878.4

1 unchanged sentence

EPS $ 2.14 $ 2.13

For the three months ended September 30, 2024 and 2023, there were no stock options excluded from the calculation of diluted earnings per share due to anti-dilution.

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

Six Months Ended December 31, 2023

Net earnings $ 1,737.8 $ 1,737.8

Weighted average shares (in millions) 411.4 0.9 1.7 414.0

EPS $ 4.22 $ 4.20

For the three and six months ended December 31, 2024, there were no stock options excluded from the calculation of diluted earnings per share due to anti-dilution.

For the three months ended December 31, 2023, there were 0.1 million stock options excluded from the calculation of diluted earnings per share due to anti-dilution.

For the six months ended December 31, 2023, there were no stock options excluded from the calculation of diluted earnings per share due to anti-dilution.

Other (Income)/Expense, Net

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Interest income on corporate funds $ ( 83.9 ) $ ( 56.9 ) $ ( 175.5 ) $ ( 103.4 )

4 unchanged sentences

Corporate Investments and Funds Held for Clients

Corporate investments and funds held for clients at September 30, 2024 and June 30, 2024 were as follows:

September 30, 2024

Corporate investments and funds held for clients at December 31, 2024 and June 30, 2024 were as follows:

December 31, 2024

Losses Fair Market Value (A)

13 unchanged sentences

Total corporate investments and funds held for clients $ 50,698.6 $ 66.1 $ ( 1,140.6 ) $ 49,624.1

(A) Included within available-for-sale securities are corporate investments with fair values of $ 6,182.8 million and funds held for clients with fair values of $ 27,490.3 million.

(A) Included within available-for-sale securities are funds held for clients with fair value of $ 33,019.9 million.

There are no corporate investments included within available-for-sale securities at December 31, 2024.

All available-for-sale securities were included in Level 2 of the fair value hierarchy.

17 unchanged sentences

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 2024.

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 September 30, 2024.

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 September 30, 2024, are as follows:

September 30, 2024

The Company had no available-for-sale securities included in Level 1 or Level 3 at December 31, 2024.

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, 2024, are as follows:

December 31, 2024

Securities in Unrealized Loss Position Less Than 12 Months Securities in Unrealized Loss Position Greater Than 12 Months Total

26 unchanged sentences

$ ( 66.8 ) $ 5,560.0 $ ( 1,479.9 ) $ 22,249.9 $ ( 1,546.7 ) $ 27,809.9

At September 30, 2024, 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 October 2024 through September 2034.

At September 30, 2024, asset-backed securities include AAA-rated senior tranches of securities with predomi nantly prime collateral of fixed-rate auto loan, credit card, and equipment lease receivables with fair values of $ 759.5 million, $ 486.8 million, and $ 189.5 million, respectively.

These securities are collateralized by the cash flow s of the underlying pools of receivables.

At December 31, 2024, 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 2025 through September 2034.

At December 31, 2024, asset-backed securities include AAA-rated senior tranches of securities with predomi nantly prime collateral of fixed-rate auto loan, credit card, and equipment lease receivables with fair values of $ 751.9 million, $ 480.1 million, and $ 167.5 million, respectively.

These securities are collateralized by the cash flow s of the underlying pools of

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 September 30, 2024.

At September 30, 2024, U.S.

All collateral on such asset-backed securities has performed as expected through December 31, 2024 .

At December 31, 2024, U.S.

government a gency securities primarily include debt directly issued by Federal Farm Credit Banks and Federal Home Loan Banks with fair values of $ 960.2 million and $ 480.0 million, respectively.

government agency securities represent senior, unsecured, non-callable debt that primarily carry ratings of Aaa by Moody's, and AA+ by Standard & Poor's, with maturities ranging from October 2024 through August 2034.

At September 30, 2024, U.S.

At December 31, 2024, U.S.

government agency commercial mortgage-backed securities of $ 453.0 million include those issued by Federal Home Loan Mortgage Corporation and Federal National Mortgage Association.

At September 30, 2024, other securities primarily include municipal bonds, diversified with a variety of issuers, with credit ratings of A and above with fair val ues of $ 543.2 million, AA-rated United Kingdom Gilt securities of $ 313.0 million, and AAA-rated supranational bonds of $ 218.3 million.

At December 31, 2024, other securities primarily include municipal bonds, diversified with a variety of issuers, with credit ratings of A and above with fair val ues of $ 523.7 million, AA-rated United Kingdom Gilt securities of $ 293.9 million, and AAA-rated supranational bonds of $ 213.0 million.

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

September 30, June 30,

December 31, June 30,

Corporate investments:

Cash and cash equivalents $ 2,216.4 $ 2,913.4

Short-term marketable securities 5,242.2 384.0

Long-term marketable securities 940.6 —

Short-term marketable securities (a) — 384.0

Long-term marketable securities (b) — —

Total corporate investments $ 2,216.4 $ 3,297.4

(a) - Short-term marketable securities are included within Other current assets on the Consolidated Balance Sheets.

(b) - Long-term marketable securities are included within Other assets on the Consolidated Balance Sheets.

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:

September 30, June 30,

December 31, June 30,

Funds held for clients:

5 unchanged sentences

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 totalin g $ 28,720.9 million and $ 39,503.9 million at September 30, 2024 and June 30, 2024, respectively.

The Company has reported client funds obligations as a current liability on the Consolidated Balance Sheets totalin g $ 48,482.2 million and $ 39,503.9 million at December 31, 2024 and June 30, 2024, 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 September 30, 2024 and June 30, 2024, $ 25,338.3 million and $ 34,940.0 million, respectively, are held in the grantor trust.

Of the Company’s funds held for clients at December 31, 2024 and June 30, 2024, $ 43,112.4 million and $ 34,940.0 million, respectively, are held in the grantor trust.

The liabilities held within the trust are intercompany liabilities to other Company subsidiaries and are eliminated in consolidation.

1 unchanged sentence

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 September 30, 2024.

Expected maturities of available-for-sale securities at September 30, 2024 are as follows:

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, 2024.

Expected maturities of available-for-sale securities at December 31, 2024 are as follows:

One year or less $ 6,807.9

9 unchanged sentences

The components of operating lease expense were as follows:

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Operating lease cost $ 27.3 $ 32.2 $ 54.8 $ 66.2

3 unchanged sentences

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

Three Months Ended

September 30,

Six Months Ended

Cash paid for operating lease liabilities $ 59.3 $ 63.6

1 unchanged sentence

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

September 30, June 30,

December 31, June 30,

Weighted-average remaining lease term (in years) 5 5

1 unchanged sentence

Current operating lease liability $ 94.6 $ 92.2

As of September 30, 2024, maturities of operating lease liabilities are as follows:

Nine months ending June 30, 2025 $ 82.4

As of December 31, 2024, maturities of operating lease liabilities are as follows:

Six months ending June 30, 2025 $ 55.2

Twelve months ending June 30, 2026 100.1

7 unchanged sentences

Goodwill and Intangible Assets, net

Changes in goodwill for the three months ended September 30, 2024 are as follows:

Changes in goodwill for the six months ended December 31, 2024 are as follows:

Services Total

Balance at June 30, 2024 $ 2,348.8 $ 4.8 $ 2,353.6

Additions and other adjustments 846.4 — 846.4

Currency translation adjustments ( 16.1 ) — ( 16.1 )

Balance at September 30, 2024 $ 2,364.2 $ 4.8 $ 2,369.0

Balance at December 31, 2024 $ 3,179.1 $ 4.8 $ 3,183.9

Components of intangible assets, net, are as follows:

September 30, June 30,

December 31, June 30,

Intangible assets:

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All intangible assets have finite lives and, as such, are subject to amortization.

The weighted average remaining useful life of the intangible assets is 5 years ( 6 years for software and software licenses, 3 years for customer contracts and lists, and 1 year for other intangibles).

Amortization of intangible assets was $ 89.0 million and $ 95.7 million for the three months ended September 30, 2024 and 2023, respectively.

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 4 years for other intangibles).

Amortization of intangible assets was $ 100.7 million and $ 94.5 million for the three months ended December 31, 2024 and 2023, respectively, and $ 189.7 million and $ 190.2 million for the six months ended December 31, 2024 and 2023, respectively.

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

Nine months ending June 30, 2025 $ 327.7

Six months ending June 30, 2025 $ 253.2

Twelve months ending June 30, 2026 $ 362.3

10 unchanged sentences

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 September 30, 2024 under the credit agreements.

The Company had no borrowings through December 31, 2024 under the credit agreements.

The Company's U.S.

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Maturities of commercial paper can range from overnight to up to 364 days.

At September 30, 2024, the Company had $ 4.4 billion of commercial paper outstanding, which was repaid in early October 2024.

At June 30, 2024, the Company had no commercial paper borrowing outstanding.

At December 31, 2024 and June 30, 2024, the Company had no commercial paper borrowing outstanding.

Details of the borrowings under the commercial paper program are as follows:

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Average daily borrowings (in billions) $ 4.5 $ 3.9 $ 4.7 $ 4.0

Weighted average interest rates 4.8 % 5.4 % 5.1 % 5.3 %

Weighted average maturity (approximately in days) 2 days 2 days

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.

At September 30, 2024 and June 30, 2024, the Company had $ 679.1 million and $ 385.4 million of outstanding obligations related to reverse repurchase agreements.

All outstanding reverse repurchase obligations matured and were fully paid in early October 2024 and early July 2024, respectively.

At December 31, 2024, the Company had no outstanding obligations related to reverse repurchase agreements.

At June 30, 2024, the Company had $ 385.4 million of outstanding obligations related to reverse repurchase agreements which were fully paid in early July 2024.

The Company has $ 7.3 billion available on a committed basis under the U.S.

1 unchanged sentence

Details of the reverse repurchase agreements are as follows:

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Average outstanding balances (in billions) $ 3.7 $ 2.4 $ 3.7 $ 1.9

2 unchanged sentences

The Notes are senior unsecured obligations, and interest is payable in arrears, semi-annually.

During the three months ended September 30, 2024, the Company issued $ 1.0 billion of senior notes due in 2034 bearing a fixed interest rate of 4.450 %.

During the first quarter ended September 30, 2024, the Company issued $ 1.0 billion of senior notes due in 2034 bearing a fixed interest rate of 4.450 %.

In connection with the senior notes issuance, the Company terminated several derivative contracts in place to hedge exposure in changes in benchmark interest rates for the senior notes issued with an aggregate notional amount totaling $ 1.0 billion (of which $ 400.0 million were executed during the three months ended September 30, 2024 and $ 600.0 million were executed on the day of issuance).

Since these derivative contracts were classified as cash flow hedges, the unamortized loss of $ 12.5 million was deferred in accumulated other comprehensive income and will be amortized to earnings over the life of the issued Notes as the interest payments are made.

The principal amounts and associated effective interest rates of the Notes and other debt as of September 30, 2024 and June 30, 2024, are as follows:

Debt instrument Effective Interest Rate September 30, 2024 June 30, 2024

The principal amounts and associated effective interest rates of the Notes and other debt as of December 31, 2024 and June 30, 2024, are as follows:

Debt instrument Effective Interest Rate December 31, 2024 June 30, 2024

Fixed-rate 3.375 % notes due September 15, 2025

12 unchanged sentences

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

As of September 30, 2024, the fair value of the Notes, based on Level 2 inputs, was $ 3,779.3 million.

As of December 31, 2024, the fair value of the Notes, based on Level 2 inputs, was $ 3,688.6 million.

1 unchanged sentence

Stock-based Compensation Plans

Stock-based compensation consists of the following:

The Company's share-based compensation consists of stock options, time-based restricted stock, time-based restricted stock units, performance-based restricted stock, and performance-based restricted stock units.

3 unchanged sentences

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 for awards granted to employees with a home country outside the United States are generally settled in cash.

• Restricted Stock.

• Time-Based Restricted Stock Units.

Time-based restricted stock units generally vest ratably over 3 years.

Awards are generally forfeited if the employee ceases to be employed by the Company prior to vesting.

Time-based restricted stock unit awards granted to employees with a home country of the United States are settled in stock and cannot be transferred during the vesting period.

Time-based restricted stock unit awards granted to employees with a home country outside the United States are generally settled in cash and cannot be transferred during the vesting period.

Compensation expense relating to the issuance of share-settled units

is measured based on the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period.

Compensation expense relating to the issuance of cash-settled units is recorded over the vesting period and is initially based on the fair value of the award on the grant date and is subsequently remeasured at each reporting date during the vesting period based on the change in the ADP stock price.

Dividend cash equivalents are paid on share-settled units, and dividend cash equivalents are not paid on cash-settled units.

• Performance-Based Restricted Stock Units.

Performance-based restricted stock units generally vest over a one to three year performance period and a subsequent service period of up to 38 months.

Under these programs, the Company communicates “target awards” at the beginning of the performance period with possible payouts at the end of the performance period ranging from 0 % to 200 % of the “target awards.” Awards are generally forfeited if the employee ceases to be employed by the Company prior to vesting.

Performance-based restricted stock units cannot be transferred and are settled in either cash or stock, depending on the employee's home country.

Compensation expense relating to the issuance of performance-based restricted stock units settled in cash is recognized over the vesting period initially based on the fair value of the award on the grant date with subsequent adjustments to the number of units awarded during the performance period based on probable and actual performance against targets.

In addition, compensation expense is remeasured at each reporting period during the vesting period based on the change in the ADP stock price.

Compensation expense relating to the issuance of performance-based restricted stock units settled in stock is recorded over the vesting period based on the fair value of the award on the grant date with subsequent adjustments to the number of units awarded based on the probable and actual performance against targets.

Dividend equivalents are paid on awards under the performance-based restricted stock unit program.

• Employee Stock Purchase Plan.

The Company offers an employee stock purchase plan that allows eligible employees to purchase shares of common stock at a price equal to 95 % of the market value for the Company's common stock on the last day of the offering period.

This plan has been deemed non-compensatory and, therefore, no compensation expense has been recorded.

The Company currently utilizes treasury stock to satisfy stock option exercises, issuances under the Company's employee stock purchase plan, and restricted stock awards.

The Company currently utilizes treasury stock to satisfy stock option exercises, issuances under the Company's employee stock purchase plan, and restricted stock units.

From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program.

The Company repurchased 1.4 million and 1.0 million shares in the three months ended September 30, 2024 and 2023, respectively.

The Company repurchased 0.9 million and 1.1 million shares in the three months ended December 31, 2024 and 2023, respectively, and repurchased 2.4 million and 2.1 million shares in the six months ended December 31, 2024 and 2023.

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 months ended September 30, 2024 and 2023, respectively:

Three Months Ended

September 30,

The following table represents pre-tax stock-based compensation expense for the three and six months ended December 31, 2024 and 2023, respectively:

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Operating expenses $ 9.2 $ 7.4 $ 18.3 $ 14.8

2 unchanged sentences

Total stock-based compensation expense $ 79.1 $ 73.6 $ 139.7 $ 132.4

During the three months ended September 30, 2024, the following activity occurred under the Company’s existing plans.

Stock Options:

(in thousands) Weighted

Average Price

Options outstanding at July 1, 2024 2,042 $ 159

Options granted — $ —

Options exercised ( 498 ) $ 162

Options forfeited/cancelled — $ —

Options outstanding at September 30, 2024 1,544 $ 158

Time-Based Restricted Stock and Time-Based Restricted Stock Units:

Number of Shares

(in thousands) Number of Units

(in thousands)

Restricted shares/units outstanding at July 1, 2024 124 1,053

Restricted shares/units granted — 578

Restricted shares/units vested ( 114 ) ( 418 )

Restricted shares/units forfeited — ( 11 )

Restricted shares/units outstanding at September 30, 2024 10 1,202

Performance-Based Restricted Stock and Performance-Based Restricted Stock Units:

Number of Shares

(in thousands) Number of Units

(in thousands)

Restricted shares/units outstanding at July 1, 2024 88 753

Restricted shares/units granted — 293

Restricted shares/units vested ( 58 ) ( 293 )

Restricted shares/units forfeited ( 2 ) ( 2 )

Restricted shares/units outstanding at September 30, 2024 28 751

Pension Plans

The components of net pension income were as follows:

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Service cost – benefits earned during the period $ 1.5 $ 1.3 $ 3.0 $ 2.6

2 unchanged sentences

Net amortization and deferral 0.7 0.8 1.5 1.5

Net pension (income)/expense $ ( 4.9 ) $ ( 5.8 )

The effective tax rate for the three months ended September 30, 2024 and 2023 was 22.6 % and 21.4 %, respectively.

The increase in the effective tax rate is primarily due to lower reserves for uncertain tax positions and a valuation allowance release in the three months ended September 30, 2023.

Net pension income $ ( 4.9 ) $ ( 5.8 ) $ ( 9.8 ) $ ( 11.6 )

The effective tax rate for the three months ended December 31, 2024 and 2023 was 23.6 % and 23.2 %, respectively.

The increase in the effective tax rate is primarily due to a benefit for adjustments to prior year tax liabilities in the three months ended December 31, 2023, partially offset by a higher excess tax benefit on stock-based compensation in the three months ended December 31, 2024.

The effective tax rate for the six months ended December 31, 2024 and 2023 was 23.1 % and 22.3 %, respectively.

The increase in the effective tax rate is primarily due to a benefit for adjustments to prior year tax liabilities, lower reserves for uncertain tax positions and a valuation allowance release in the six months ended December 31, 2023.

Commitments and Contingencies

15 unchanged sentences

Three Months Ended

September 30, 2024

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

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

6 unchanged sentences

— — ( 628.8 ) — — ( 628.8 )

Balance at September 30, 2024 $ 63.9 $ 2,528.6 $ 24,001.2 $ ( 20,144.9 ) $ ( 1,100.2 ) $ 5,348.6

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

Three Months Ended

September 30, 2023

December 31, 2023

Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock AOCI Total

Balance at September 30, 2023 $ 63.9 $ 2,188.7 $ 22,455.4 $ ( 18,767.4 ) $ ( 2,467.8 ) $ 3,472.8

Net earnings — — 878.4 — — 878.4

Other comprehensive income — — — — 722.6 722.6

Stock-based compensation expense — 67.6 — — — 67.6

Issuances relating to stock compensation plans — 6.6 — 0.3 — 6.9

Treasury stock acquired ( 1.1 million shares repurchased)

— — — ( 252.0 ) — ( 252.0 )

Dividends declared ($ 1.40 per share)

— — ( 576.7 ) — — ( 576.7 )

Balance at December 31, 2023 $ 63.9 $ 2,262.9 $ 22,757.1 $ ( 19,019.1 ) $ ( 1,745.2 ) $ 4,319.6

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

7 unchanged sentences

— — ( 1,206.1 ) — — ( 1,206.1 )

Balance at September 30, 2023 $ 63.9 $ 2,188.7 $ 22,455.4 $ ( 18,767.4 ) $ ( 2,467.8 ) $ 3,472.8

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, 2023

Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock AOCI Total

Balance at June 30, 2023 $ 63.9 $ 2,102.3 $ 22,118.0 $ ( 18,469.3 ) $ ( 2,305.8 ) $ 3,509.1

Net earnings — — 1,737.8 — — 1,737.8

Other comprehensive income — — — — 560.6 560.6

Stock-based compensation expense — 121.7 — — — 121.7

Issuances relating to stock compensation plans — 38.9 — 49.7 — 88.6

Treasury stock acquired ( 2.1 million shares repurchased)

— — — ( 599.5 ) — ( 599.5 )

Dividends declared ($ 2.65 per share)

— — ( 1,098.7 ) — — ( 1,098.7 )

Balance at December 31, 2023 $ 63.9 $ 2,262.9 $ 22,757.1 $ ( 19,019.1 ) $ ( 1,745.2 ) $ 4,319.6

Reclassifications out of Accumulated Other Comprehensive Income (“AOCI”)

1 unchanged sentence

Three Months Ended

September 30, 2024

December 31, 2024

Currency Translation Adjustment Net Gains/Losses on Available-for-sale Securities Cash Flow Hedging Activities Pension Liability Accumulated Other Comprehensive (Loss) /Income

Balance at June 30, 2024 $ ( 378.8 ) $ ( 1,178.0 ) $ ( 20.0 ) $ ( 231.5 ) $ ( 1,808.3 )

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 )

2 unchanged sentences

Tax effect — ( 0.1 ) ( 0.3 ) ( 0.2 ) ( 0.6 )

Balance at September 30, 2024 $ ( 329.6 ) $ ( 511.3 ) $ ( 28.6 ) $ ( 230.7 ) $ ( 1,100.2 )

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

Three Months Ended

September 30, 2023

December 31, 2023

Currency Translation Adjustment Net Gains/Losses on Available-for-sale Securities Cash Flow Hedging Activities Pension Liability Accumulated Other Comprehensive (Loss) /Income

Balance at September 30, 2023 $ ( 385.4 ) $ ( 1,824.6 ) $ ( 22.5 ) $ ( 235.3 ) $ ( 2,467.8 )

Other comprehensive income/(loss) before reclassification adjustments 53.9 860.5 — — 914.4

Tax effect — ( 194.9 ) — — ( 194.9 )

Reclassification adjustments to net earnings — 2.0 (A) 1.1 (C) 0.9 (B) 4.0

Tax effect — ( 0.5 ) ( 0.2 ) ( 0.2 ) ( 0.9 )

Balance at December 31, 2023 $ ( 331.5 ) $ ( 1,157.5 ) $ ( 21.6 ) $ ( 234.6 ) $ ( 1,745.2 )

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 (Loss) /Income

Balance at June 30, 2024 $ ( 378.8 ) $ ( 1,178.0 ) $ ( 20.0 ) $ ( 231.5 ) $ ( 1,808.3 )

3 unchanged sentences

Tax effect — ( 0.1 ) ( 0.6 ) ( 0.5 ) ( 1.2 )

Balance at September 30, 2023 $ ( 385.4 ) $ ( 1,824.6 ) $ ( 22.5 ) $ ( 235.3 ) $ ( 2,467.8 )

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

Six Months Ended

December 31, 2023

Currency Translation Adjustment Net Gains/Losses on Available-for-sale Securities Cash Flow Hedging Activities Pension Liability Accumulated Other Comprehensive (Loss) /Income

Balance at June 30, 2023 $ ( 340.8 ) $ ( 1,705.6 ) $ ( 23.3 ) $ ( 236.1 ) $ ( 2,305.8 )

Other comprehensive income/(loss) before reclassification adjustments 9.3 709.9 — — 719.2

Tax effect — ( 164.8 ) — — ( 164.8 )

Reclassification adjustments to net earnings — 4.0 (A) 2.2 (C) 1.9 (B) 8.1

Tax effect — ( 1.0 ) ( 0.5 ) ( 0.4 ) ( 1.9 )

Balance at December 31, 2023 $ ( 331.5 ) $ ( 1,157.5 ) $ ( 21.6 ) $ ( 234.6 ) $ ( 1,745.2 )

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

8 unchanged sentences

Segment Results:

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Employer Services $ 3,388.5 $ 3,125.2 $ 6,649.5 $ 6,171.6

3 unchanged sentences

Earnings before Income Taxes

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2024 2023 2024 2023

Employer Services $ 1,183.0 $ 1,061.9 $ 2,347.3 $ 2,070.4

2 unchanged sentences

$ 1,261.3 $ 1,143.8 $ 2,497.5 $ 2,236.6

Subsequent Events

In October 2024, the Company acquired WorkForce Software, a premier workforce management solutions provider that specializes in supporting large, global enterprises, for approximately $ 1.2 billion in cash.

The results of WorkForce Software will be reported within the Company’s Employer Services segment.

The Company has not yet finalized the purchase price allocation for this acquisition.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements