ADP's payroll float model generates substantial recurring interest income because clients pre-fund payroll obligations that ADP holds and invests before disbursement. This float grows automatically with client payrolls and employment levels, creating a capital-light earnings stream that compounds as balances rise. The thesis depends on ADP retaining the right to invest these funds and earning a positive spread versus funding costs.
the thesis · admitted · the reason above is the thesis, not printed twice
no findingread · nothing bore on it
It held on this filing. No finding was written because nothing in it bore on the reason — the sentences it was read against are below.
the evidence · every sentence checkedseven sentences · whole, uncut
the claims it rests on
“Client funds obligations totaled $44,415.5 million as of June 30, 2026, up from $31,343.3 million as of June 30, 2025”
“The Company impounds funds from clients prior to remitting to employees, tax authorities, and other payees”
“Average client funds balances increased 7.4% to $40.4 billion in fiscal 2026”
“Interest on funds held for clients was $1,354.8 million in fiscal 2026 versus $1,189.1 million in fiscal 2025”
“Average interest rate earned increased to 3.4% in fiscal 2026 from 3.2% in fiscal 2025”
what it was checked against
float mechanics and impounding
“Client funds obligations represent the Company's contractual obligations to remit funds to satisfy clients' payroll, tax and other payee payment obligations and are recorded as a liability at the time that the Company impounds funds from clients (i.e., money movement).”
client funds balance size
“The Company has reported client funds obligations as a current liability in the consolidated financial statements totaling $44,415.5 million as of June 30, 2026.”