Core Insights - Paychex reported a 10% total revenue growth in Q4 2025, driven by the Paycor acquisition, with a full-year revenue growth of 6% and adjusted diluted EPS growth of 6% [1] - The integration of Paycor exceeded management expectations, leading to raised cost synergy targets and guidance for fiscal 2026 projecting total revenue growth of 16.5%-18.5% [2] Integration and Market Strategy - The Paycor acquisition added over 50,000 clients, contributing approximately 12-13 percentage points to consolidated revenue growth in fiscal 2026 [3] - Paychex Flex targets companies with up to 99 employees, while Paycor focuses on enterprises with over 100 employees, and SurePayroll serves the smallest businesses [4] Cost Synergy and Operational Efficiency - Management raised cost synergy expectations for fiscal 2026 to $90 million, with most actions completed shortly after the acquisition [5][6] - Adjusted operating income margins, excluding Paycor, expanded by 110 basis points in Q4 and by 250 basis points for the full year, indicating operational discipline [5] Channel Ecosystem and Revenue Synergies - Over half of new business originates from channel partners, with initial cross-sell achievements validating the combined referral-driven go-to-market framework [7] - The Paychex Partner Plus program has enrolled over 1,000 brokers, fostering relationships and expanding the referral network [8] Future Outlook - For fiscal 2026, management projects total revenue growth of 16.5%-18.5%, with significant contributions from the Paycor acquisition and expected growth in various segments [9] - Most cost synergy actions have been executed, balancing incremental cost reductions and investments for long-term growth [10]

Core Insights - Paychex, Inc. (PAYX) reported strong fourth-quarter fiscal 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate [1][10] - The company's shares have increased by 33.4% over the past year, outperforming the industry and the Zacks S&P 500 composite [2] Financial Performance - Fiscal fourth-quarter earnings were $1.19 per share, a 6.3% increase year-over-year, and total revenues reached $1.4 billion, up 10% from the previous year [1][10] - Management Solutions segment revenues grew by 12% year-over-year to $1 billion, driven by Paycor's acquisition and higher revenues per client [3][10] - Revenues from Professional Employer Organization (PEO) and Insurance Solutions were $340.3 million, a 4% increase from the year-ago quarter [4] - Service revenues increased by 10% year-over-year to $1.4 billion, surpassing projections [5] - EBITDA decreased by 1% year-over-year to $518.2 million, while operating income fell by 11% to $431.1 million, with an operating margin of 30.2% [6] Balance Sheet & Cash Flow - At the end of the fourth quarter, the company had cash and cash equivalents of $1.6 billion, with long-term debt totaling $4.5 billion [7] - Cash generated from operating activities was $394 million, and capital expenditures amounted to $60.5 million [7] Future Guidance - Paychex anticipates revenue growth of 16.5-18.5% for fiscal year 2025 and has raised its forecast for interest on funds held for clients to $190-$200 million [8][10]

Core Viewpoint - Paychex reported quarterly earnings of $1.19 per share, exceeding the Zacks Consensus Estimate of $1.18 per share, and showing an increase from $1.12 per share a year ago, indicating a positive earnings surprise of +0.85% [1] Financial Performance - The company achieved revenues of $1.43 billion for the quarter ended May 2025, surpassing the Zacks Consensus Estimate by 0.87% and up from $1.3 billion year-over-year [2] - Over the last four quarters, Paychex has consistently exceeded consensus EPS estimates and revenue estimates [2] Stock Performance - Paychex shares have increased approximately 8.6% since the beginning of the year, outperforming the S&P 500's gain of 3.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.22 on revenues of $1.56 billion, and for the current fiscal year, it is $5.38 on revenues of $6.58 billion [7] - The outlook for the Internet - Software industry, where Paychex operates, is favorable, ranking in the top 22% of over 250 Zacks industries, suggesting potential for outperformance [8]

Financial Data and Key Metrics Changes - Total revenue for Q4 increased by 10% to $1.4 billion, while excluding Paycor, total revenue increased by 3% [20] - For the full fiscal year 2025, total revenue grew by 6% to $5.6 billion [23] - Adjusted diluted earnings per share increased by 6% to $1.19 in Q4, while diluted earnings per share decreased by 22% to $0.82 [22] - Adjusted operating income margins for Q4 were 40.4%, an increase of approximately 20 basis points [22] Business Line Data and Key Metrics Changes - Management Solutions revenue increased by 12% to $1 billion for Q4, driven by the addition of Paycor and higher revenue per client [21] - PEO and Insurance Solutions revenue increased by 4% to $340 million for Q4, supported by growth in average PEO worksite employees [21] - Interest on funds held for clients increased by 18% to $45 million for Q4, primarily due to the inclusion of Paycor balances [21] Market Data and Key Metrics Changes - The number of clients served increased to approximately 800,000, with HR outsourcing worksite employees rising to 2.5 million [6] - Client retention rates improved year over year, indicating strong value provided to clients [6] Company Strategy and Development Direction - The company aims to strategically accelerate investments for future growth while focusing on cost synergies of approximately $90 million in fiscal year 2026 [7][26] - The HCM platforms will be segmented, with Paychex Flex targeting companies with up to 99 employees and Paycor focusing on enterprises with over 100 employees [9] - The company is committed to enhancing operational efficiency and maintaining industry-leading operating margins [6][24] Management's Comments on Operating Environment and Future Outlook - The management noted a mix of optimism and uncertainty in the market, with small businesses remaining fundamentally healthy despite external pressures [16][17] - The company expects total revenue growth for fiscal year 2026 to be in the range of 16.5% to 18.5%, with Management Solutions projected to grow by 20% to 22% [26] - Management expressed confidence in achieving revenue synergies and highlighted the importance of cross-selling opportunities [11][90] Other Important Information - The company returned over $1.5 billion to shareholders through cash dividends and share repurchases during the fiscal year [25] - The financial position remains strong, with cash and investments totaling $1.7 billion and total borrowings of approximately $5 billion [24] Q&A Session Summary Question: Can you discuss the distractions related to the sales force integration and its impact on Q4? - Management acknowledged that they made strategic decisions to complete changes quickly to minimize disruption, and they do not expect significant spillover effects into Q1 [33][37] Question: What factors contributed to the deceleration in organic Management Solutions growth from Q3 to Q4? - Management noted softer checks and a mix issue with smaller client sizes, along with MPP enrollment headwinds impacting growth [42][44] Question: How does the company plan to reaccelerate organic client growth? - The company will focus on organic client growth of 1% to 3% while driving product penetration and maintaining pricing strength [49][50] Question: What is the outlook for Paycor's growth in fiscal 2026? - Management expects Paycor to be a strong double-digit grower, with some conservatism in guidance to ensure deliverability [59] Question: Can you clarify the impact of recent bankruptcies and financial distress on the company? - Management indicated that while there were increases in bankruptcies, the impact on revenue was minimal, particularly at the lower end of the client base [72][84]

Financial Data and Key Metrics Changes - Total revenue for Q4 increased by 10% to $1.4 billion; excluding Paycor, total revenue increased by 3% [21] - For the full fiscal year 2025, total revenue grew by 6% to $5.6 billion [24] - Adjusted diluted earnings per share increased by 6% to $1.19 in Q4, while diluted earnings per share decreased by 22% to $0.82 [23] - Adjusted operating income margins for Q4 were 40.4%, an increase of approximately 20 basis points [23] Business Line Data and Key Metrics Changes - Management Solutions revenue increased by 12% to $1 billion in Q4, driven by the addition of Paycor and higher revenue per client [22] - PEO and Insurance Solutions revenue increased by 4% to $340 million, supported by growth in average PEO worksite employees [22] - Interest on funds held for clients increased by 18% to $45 million in Q4, primarily due to the inclusion of Paycor balances [22] Market Data and Key Metrics Changes - The number of clients served increased to approximately 800,000, with HR outsourcing worksite employees rising to 2.5 million [6] - Client retention rates improved year over year, indicating strong value provided to clients [5] Company Strategy and Development Direction - The company is focused on integrating Paycor and enhancing customer experience while maintaining industry-leading operating margins [5] - A strategic decision was made to accelerate investments for future growth, particularly in technology and sales capabilities [7][54] - The company aims to achieve approximately $90 million in cost synergies in fiscal year 2026, with additional synergy opportunities identified [6][90] Management's Comments on Operating Environment and Future Outlook - The management noted a mix of optimism and uncertainty in the market, with small businesses remaining fundamentally healthy despite external pressures [17] - The company expects total revenue growth in fiscal year 2026 to be between 16.5% and 18.5%, with Management Solutions projected to grow by 20% to 22% [27] - Management expressed confidence in navigating the current macro environment and emphasized the importance of operational efficiency [26][19] Other Important Information - The company has completed key integration activities post-Paycor acquisition and is now operating as one entity [4] - A comprehensive territory assessment and reassignment review across sales teams has been completed to align with market segments [9] Q&A Session Summary Question: Can you discuss the distractions related to the sales force integration and its impact on Q4? - Management acknowledged that the sales transformation was planned prior to the acquisition and all changes were made in Q4 to minimize future disruptions [33][34] Question: What are the expectations for organic growth versus cross-selling? - Management indicated a focus on 1% to 3% organic client growth while emphasizing product penetration and disciplined growth strategies [50] Question: How is the integration of Paycor's sales team progressing? - Management reported that they retained a significant portion of Paycor's sales and marketing organization and are fully staffed, with plans to continue investing in sales [62] Question: What is the outlook for Paycor's growth in fiscal year 2026? - Management expects Paycor to be a strong double-digit grower, with some conservatism in guidance to ensure deliverability [59] Question: How will the company balance capital allocation between shareholder returns and debt reduction? - Management stated that the primary focus remains on investing in the business, with dividends being the main method of returning excess cash to shareholders [76]

Jim Cramer breaks down why he's keeping an eye on shares of Paychex. ...

PRESS RELEASE OF PAYCHEX, INC. DATED JUNE 25, 2025 Paychex, Inc. Reports Fourth Quarter and Full Year 2025 Results Rochester, N.Y. (June 25, 2025) - Paychex, Inc. (Nasdaq: PAYX) (the "Company," "Paychex," "we," "our," or "us") today reported results for the fiscal quarter ended May 31, 2025 (the "fourth quarter") and fiscal year ended May 31, 2025 ("fiscal 2025"). Results compared with the same period last year are as follows: | | | | Fourth Quarter | | | | Fiscal Year | | | | --- | --- | --- | --- | --- | ...

Financial Performance - Total revenue for Q4 FY25 reached $1.427 billion, a 10% increase compared to $1.295 billion in Q4 FY24 [7, 10] - Adjusted operating income for Q4 FY25 was $577 million, an 11% increase from $521 million in Q4 FY24 [7] - Adjusted diluted EPS for Q4 FY25 was $1.19, a 6% increase compared to $1.12 in Q4 FY24 [7] - For the full fiscal year 2025, total revenue grew by 6% to $5.5717 billion [32] - Adjusted diluted EPS for the full fiscal year 2025 increased by 6% to $4.98 [17, 32] Revenue Breakdown and Key Drivers - Management Solutions revenue in Q4 FY25 increased by 12% to $1.042 billion [10] - PEO & Insurance Solutions revenue in Q4 FY25 increased by 4% to $340 million [10] - Interest on Funds Held for Clients revenue in Q4 FY25 increased by 18% to $45 million [10] Fiscal Year 2026 Outlook - The company anticipates total revenue growth of 16.5% - 18.5% for fiscal year 2026 [30] - Management Solutions revenue is expected to grow by 20% - 22% in fiscal year 2026 [30] - PEO & Insurance Solutions revenue is projected to increase by 6% - 8% in fiscal year 2026 [30] - Interest on Funds Held for Clients revenue is estimated to be between $190 million and $200 million for fiscal year 2026 [30]

October 2024 Forward-Looking Statements Certain written statements in this presentation may contain, and members of management may from time to time make or discuss statements which constitute, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, all matters that are not historical facts. Forward-looking statements are not assurances of future performance. Instead, t ...

Core Insights - Paychex, Inc. (PAYX) is set to release its fourth-quarter fiscal 2025 results on June 25, with a history of positive earnings surprises, averaging 1.7% above the Zacks Consensus Estimate over the past four quarters [1] Revenue Expectations - The consensus estimate for Paychex's Q4 fiscal 2025 revenues is $1.4 billion, reflecting a 9.3% increase year-over-year, driven by segmental growth [2][9] - Management Solutions revenues are projected at $979 million, indicating a 5.2% rise year-over-year, supported by an increasing number of clients and higher revenues per client due to pricing and product penetration [3][9] - PEO and insurance solution revenues are expected to reach $340.9 million, a 4.4% increase from the same quarter last year, attributed to a rise in the average number of worksite employees [4][9] Earnings Projections - The Zacks Consensus Estimate for earnings is $1.19 per share, representing a 6.3% increase from the previous year, with strong margins anticipated to support the bottom line [5] - Paychex has an Earnings ESP of -1.27% and a Zacks Rank of 3, indicating that the model does not predict a definitive earnings beat this time [6][7]