ADP · 10-K · 2026A · Full report

Interest Rate Environment

AUTOMATIC DATA PROCESSING INC · 2026-08-05 · Importance 48 · Surprise 40 · From source text

Interest on funds held for clients increased $165.7 million to $1,354.8 million in fiscal 2026. Average client funds balances increased 7.4% to $40.4 billion, while the average interest rate earned rose to 3.4% from 3.2%. Higher average corporate investment balances of $10.4 billion and a 10-basis-point increase in average interest rates also increased corporate interest income by $51.5 million.

Key facts

• Total interest on funds held for clients in fiscal 2026: $1,354.8 million, compared to $1,189.1 million in fiscal 2025 source
• Interest expense for fiscal 2026: $459.3 million versus $455.9 million in fiscal 2025 source
• Interest expense increased primarily due to net increases of $25.3 million related to senior notes issued in fiscal 2026 and 2025 source
• Interest expense decreased by $22.8 million related to commercial paper and reverse repurchase borrowings due to lower average interest rates of 80 and 70 basis points, respectively source
• Average interest rate earned on client funds in fiscal 2026: 3.4%, versus 3.2% in fiscal 2025 source
• Increase in interest earned on funds held for clients contributed $165.7 million to total revenues in fiscal 2026 source
• Employer Services revenues increased partly due to an increase in interest earned on funds held for clients of $164.1 million source

Impact estimates