Filing Information This chapter presents the company's quarterly report filing information, including the reporting period, corporate details, and registrant status - The document is a Quarterly Report on Form 10-Q for the quarterly period ended **August 31, 2025**[1](index=1&type=chunk)[2](index=2&type=chunk) - **Paychex, Inc.** is a Delaware corporation, with its principal executive offices in Rochester, NY[2](index=2&type=chunk)[3](index=3&type=chunk) Registrant Status and Stock Information | Metric | Value | | :------------------------------------ | :-------------------- | | Filer Status | Large accelerated filer | | Common Stock Trading Symbol | PAYX | | Exchange Registered | Nasdaq Global Select Market | | Common Stock Outstanding (as of Aug 31, 2025) | 359,894,143 shares | PART I. FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's discussion and analysis of financial condition and operations [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Paychex, Inc.'s unaudited consolidated financial statements for the three months ended August 31, 2025, covering income, balance sheets, equity, and cash flows [Consolidated Statements of Income and Comprehensive Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Consolidated Statements of Income and Comprehensive Income (YoY Change) | Metric | For the three months ended August 31, 2025 (Millions) | For the three months ended August 31, 2024 (Millions) | Change (%) | | :---------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :--------- | | **Revenue:** | | | | | Management Solutions | $1,163.3 | $961.7 | 21.0% | | PEO and Insurance Solutions | $329.1 | $319.3 | 3.1% | | Total service revenue | $1,492.4 | $1,281.0 | 16.5% | | Interest on funds held for clients | $47.6 | $37.5 | 26.9% | | Total revenue | $1,540.0 | $1,318.5 | 16.8% | | **Expenses:** | | | | | Cost of service revenue | $413.8 | $380.0 | 8.9% | | Selling, general and administrative expenses | $584.3 | $391.8 | 49.1% | | Total expenses | $998.1 | $771.8 | 29.3% | | Operating income | $541.9 | $546.7 | (0.9%) | | Interest expense | $(68.2) | $(9.6) | 610.4% | | Other income, net | $23.8 | $20.0 | 19.0% | | Income before income taxes | $497.5 | $557.1 | (10.7%) | | Income taxes | $113.7 | $129.7 | (12.4%) | | Net income | $383.8 | $427.4 | (10.2%) | | Other comprehensive income, net of tax | $28.7 | $64.8 | (55.7%) | | Comprehensive income | $412.5 | $492.2 | (16.2%) | | Basic earnings per share | $1.07 | $1.19 | (10.1%) | | Diluted earnings per share | $1.06 | $1.18 | (10.2%) | [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (QoQ Change) | Metric | August 31, 2025 (Millions) | May 31, 2025 (Millions) | Change (%) | | :------------------------------------------ | :------------------------- | :------------------------ | :--------- | | **Assets:** | | | | | Cash and cash equivalents | $809.0 | $1,628.6 | (50.3%) | | Corporate investments | $861.9 | $34.5 | 2398.3% | | Funds held for clients | $4,927.4 | $4,813.3 | 2.4% | | Total current assets | $9,040.0 | $8,916.5 | 1.4% | | Total assets | $16,663.0 | $16,564.1 | 0.6% | | **Liabilities:** | | | | | Client fund obligations | $4,948.4 | $4,867.0 | 1.7% | | Total current liabilities | $7,128.7 | $6,956.3 | 2.5% | | Long-term borrowings, net of debt issuance costs | $4,550.3 | $4,548.4 | 0.0% | | Total liabilities | $12,692.4 | $12,436.1 | 2.1% | | **Stockholders' Equity:** | | | | | Total stockholders' equity | $3,970.6 | $4,128.0 | (3.8%) | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Consolidated Statements of Stockholders' Equity (QoQ Change) | Metric | Balance as of May 31, 2025 (Millions) | For the three months ended August 31, 2025 (Millions) | Balance as of August 31, 2025 (Millions) | | :------------------------------------------ | :------------------------------------ | :---------------------------------------------------- | :----------------------------------- | | Total Stockholders' Equity | $4,128.0 | | $3,970.6 | | Net income | | $383.8 | | | Unrealized gains on securities, net of tax | | $24.3 | | | Cash dividends declared ($1.08 per share) | | $(389.0) | | | Repurchases of common shares | | $(160.1) | | | Stock-based compensation costs | | $26.8 | | | Foreign currency translation adjustment | | $4.4 | | | Activity related to equity-based plans | | $(47.6) | | - The company repurchased **1.1 million common shares** for **$160.1 million** during the three months ended August 31, 2025, at a weighted-average price of **$145.59 per share**[15](index=15&type=chunk) - Cash dividends declared were **$1.08 per share**, totaling **$389.0 million** for the three months ended August 31, 2025[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (YoY Change) | Activity | For the three months ended August 31, 2025 (Millions) | For the three months ended August 31, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :---------------- | | Net cash provided by operating activities | $718.4 | $546.1 | $172.3 | | Net cash used in investing activities | $(1,302.7) | $(110.0) | $(1,192.7) | | Net cash used in financing activities | $(515.4) | $(485.0) | $(30.4) | | Net change in cash, restricted cash, and equivalents | $(1,099.7) | $(48.9) | $(1,050.8) | | Cash, restricted cash, and equivalents, end of period | $1,634.6 | $1,848.1 | $(213.5) | - Investing activities for the three months ended August 31, 2025, included **$3,731.9 million** in purchases of AFS securities and **$2,547.3 million** in proceeds from sales and maturities of AFS securities[17](index=17&type=chunk) - Financing activities for the three months ended August 31, 2025, included **$389.1 million** in dividends paid and **$160.1 million** in repurchases of common shares[17](index=17&type=chunk) [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note A: Description of Business, Basis of Presentation, and Significant Accounting Policies](index=7&type=section&id=Note%20A:%20Description%20of%20Business,%20Basis%20of%20Presentation,%20and%20Significant%20Accounting%20Policies) Paychex, Inc. is a human capital management (HCM) company offering HR, employee benefits, insurance, and payroll processing services across the U.S. and parts of Europe, operating as a single segment - Paychex is an industry-leading human capital management (HCM) company providing technology and advisory services in HR, employee benefit solutions, insurance, and payroll processing across the U.S. and parts of Europe, with operations also in India[19](index=19&type=chunk) - The company reports as **one segment**[19](index=19&type=chunk) Stock-Based Compensation Costs (YoY Change) | Metric | For the three months ended August 31, 2025 (Millions) | For the three months ended August 31, 2024 (Millions) | | :-------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Stock-based compensation costs | $26.8 | $16.5 | - Recently issued ASUs (2023-09, 2024-03, 202

Core Insights - Paychex, Inc. reported earnings per share (EPS) of $1.22, slightly exceeding estimates of $1.21, and achieved revenue of $1.54 billion, surpassing expectations [2][6] - Despite positive earnings and revenue results, the company's share price declined by 6.2% due to increased expenses, overshadowing an upward revision to its annual earnings forecast [2][6] Financial Metrics - The company's price-to-earnings (P/E) ratio is approximately 26.78, indicating how the market values its earnings [3][6] - The price-to-sales ratio stands at about 7.96, reflecting the market's valuation of its revenue [3] - The enterprise value to sales ratio is around 8.57, suggesting the market's view of the company's total value in relation to its sales [3] - The enterprise value to operating cash flow ratio is approximately 24.34, showing the company's valuation in relation to its cash flow from operations [4] - Paychex has an earnings yield of about 3.73%, providing insight into the return on investment [4] - The debt-to-equity ratio is approximately 1.22, indicating the proportion of debt used to finance the company's assets relative to shareholders' equity [4][6] - The current ratio is about 1.28, demonstrating the company's ability to cover short-term liabilities with short-term assets [5]

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

On October 5, 2024, I last covered Paychex, Inc. (NASDAQ: PAYX ), when the stock traded at $137.88, appearing slightly overvalued with an expected return potential of 8.5%. I rated the stock a Hold based onI have a masters degree in Analytics from Northwestern University and a bachelors degree in Accounting. I have worked in the investment arena for over 10 years starting as an analyst and working my way up to a management role. Dividend investing is a personal hobby and I look forward to sharing my thought ...

On October 5, 2024, I last covered Paychex, Inc. (NASDAQ: PAYX ), when the stock traded at $137.88, appearing slightly overvalued with an expected return potential of 8.5%. I rated the stock a Hold based onI have a masters degree in Analytics from Northwestern University and a bachelors degree in Accounting. I have worked in the investment arena for over 10 years starting as an analyst and working my way up to a management role. Dividend investing is a personal hobby and I look forward to sharing my thought ...

Core Viewpoint - Paychex's shares experienced a decline following the release of its fiscal first-quarter results, primarily due to revenue meeting expectations and a steady revenue outlook despite an improved earnings forecast [1][3][4] Financial Performance - Total revenue increased by 17% year over year to approximately $1.54 billion, aligning with Wall Street consensus [3] - Adjusted earnings per share (EPS) reached $1.22, slightly surpassing consensus forecasts [3] Guidance and Market Reaction - Management raised its fiscal 2026 adjusted EPS growth outlook to a range of 9% to 11%, up from 8.5% to 10.5%, while maintaining the revenue growth range at 16.5% to 18.5% [4] - The combination of improved EPS guidance but unchanged revenue outlook may have contributed to the stock's sell-off [4] Valuation and Market Position - Paychex trades at a trailing price-to-earnings multiple in the mid-20s, which is considered fair for a stable, cash-generative payroll and HR platform [5] - The business model remains attractive due to sticky clients, recurring revenue, and pricing power related to compliance complexity [6] Dividend Yield - Shareholders currently benefit from a dividend yield of approximately 3.4% [8]

Core Insights - Job growth among U.S. small businesses with fewer than 50 employees remains largely unchanged over the last year [1] - The Small Business Jobs Index, a key component of the Paychex report, has fluctuated just over a half percentage point over the last 12 months [1] - Hourly earnings are experiencing growth [1]

Core Insights - Paychex reported revenue of $1.54 billion for the quarter ended August 2025, reflecting a year-over-year increase of 16.8% and a slight revenue surprise of +0.22% over the Zacks Consensus Estimate [1] - The earnings per share (EPS) for the quarter was $1.22, up from $1.16 in the same quarter last year, resulting in an EPS surprise of +0.83% compared to the consensus estimate of $1.21 [1] Revenue Breakdown - Management Solutions revenue was $1.16 billion, slightly below the average estimate of $1.17 billion from six analysts, but showed a year-over-year increase of +21% [4] - Interest on funds held for clients generated $47.6 million, exceeding the estimated $43.75 million, with a year-over-year change of +26.9% [4] - Total service revenue reached $1.49 billion, slightly below the $1.5 billion estimate, marking a +16.5% increase year-over-year [4] - PEO and Insurance Services revenue was $329.1 million, compared to the average estimate of $333.29 million, reflecting a +3.1% year-over-year change [4] Stock Performance - Paychex shares have returned -7.8% over the past month, contrasting with the Zacks S&P 500 composite's +3.2% change, indicating potential underperformance in the near term [3]

Core Insights - Paychex reported quarterly earnings of $1.22 per share, exceeding the Zacks Consensus Estimate of $1.21 per share, and showing an increase from $1.16 per share a year ago, resulting in an earnings surprise of +0.83% [1] - The company achieved revenues of $1.54 billion for the quarter ended August 2025, surpassing the Zacks Consensus Estimate by 0.22% and up from $1.32 billion year-over-year [2] - Paychex has consistently surpassed consensus EPS estimates over the last four quarters [2] Earnings Performance - The earnings surprise for the previous quarter was +0.85%, with actual earnings of $1.19 per share compared to an expected $1.18 [1] - The current consensus EPS estimate for the upcoming quarter is $1.26, with projected revenues of $1.57 billion, and for the current fiscal year, the EPS estimate is $5.45 on revenues of $6.54 billion [7] Stock Performance and Outlook - Paychex shares have declined approximately 8.3% since the beginning of the year, contrasting with the S&P 500's gain of 13.3% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future due to unfavorable estimate revisions prior to the earnings release [6] Industry Context - The Internet - Software industry, to which Paychex belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable environment for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Viewpoint - Paychex, Inc. is a leading provider of human capital management solutions, focusing on small and medium-sized businesses, with a competitive landscape that includes major players like ADP [1] Group 1: Price Target and Analyst Sentiment - The consensus price target for Paychex has decreased from $150.86 to $140, indicating a cautious outlook from analysts [2][6] - Citigroup analyst Peter Christiansen has set a higher price target of $145, reflecting some optimism ahead of the earnings report [2][6] Group 2: Earnings Expectations - Paychex is expected to report a 16.6% year-over-year revenue increase in its upcoming first-quarter earnings, driven by strong performance across its segments and contributions from Paycor [3][6] - Some analysts, including CNBC's Jim Cramer, suggest that Paychex may lack the ideal factors for an earnings beat [3] Group 3: Employment Trends - The Paychex Small Business Employment Watch indicates stable job growth among U.S. small businesses, with a slight increase in the Small Business Jobs Index [4][6] - Despite stable job growth, hourly earnings for small business workers have remained below expectations, reflecting broader economic conditions [4][6] Group 4: Stock Performance and Market Indicators - Since the last earnings report, Paychex's stock has increased by 3.8%, with a positive outlook supported by Citigroup's price target of $145 [5][6] - Investors are closely monitoring the upcoming earnings release and other economic indicators, such as the nonfarm payroll report, to gauge future performance [5]