Paychex(PAYX) - 2026 Q1 - Quarterly Report

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][2] - Paychex, Inc. is a Delaware corporation, with its principal executive offices in Rochester, NY[2][3] 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) 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 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 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 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] - Cash dividends declared were $1.08 per share, totaling $389.0 million for the three months ended August 31, 2025[15] Consolidated Statements of Cash Flows 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] - 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] Notes to Consolidated Financial Statements Note A: Description of Business, Basis of Presentation, and Significant Accounting Policies 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] - The company reports as one segment[19] 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