Paychex(US:PAYX)2025-12-19 13:36Financial Performance - Total revenue for the second quarter increased to $1.6 billion, representing an 18% growth year-over-year[4] - Adjusted operating income grew 21% to $649.0 million for the second quarter, while operating income increased 6% to $571.9 million[4] - Diluted earnings per share decreased 4% to $1.10, but adjusted diluted earnings per share increased 11% to $1.26 for the second quarter[6] - Total revenue for the three months ended November 30, 2025, was $1,557.6 million, an 18% increase compared to $1,316.9 million for the same period in 2024[23] - Management Solutions revenue increased by 21% to $1,166.4 million for the three months ended November 30, 2025, compared to $962.9 million in 2024[23] - Total service revenue for the six months ended November 30, 2025, was $2,995.7 million, reflecting a 17% increase from $2,561.8 million in 2024[23] - Net income for the three months ended November 30, 2025, was $395.4 million, a decrease of 4% from $413.4 million in 2024[23] - Net income for the six months ended November 30, 2025, was $779.2 million, a decrease of 7.3% from $840.8 million in the same period of 2024[29] Expenses and Margins - Total expenses increased 27% to $985.7 million for the second quarter, primarily due to acquisition-related costs[4] - Total expenses for the three months ended November 30, 2025, were $985.7 million, a 27% increase compared to $778.8 million in 2024[23] - Operating margin for the second quarter was 36.7%, down from 40.9% in the prior year period[4] Cash Flow and Investments - Cash flow from operations was $1.2 billion for the six months ended November 30, 2025[10] - Net cash provided by operating activities increased to $1,163.3 million, up from $841.1 million, reflecting a significant improvement in cash flow[29] - Total cash, restricted cash, and equivalents at the end of the period amounted to $1,873.4 million, compared to $1,659.0 million at the end of the previous period[29] - Net cash used in investing activities was $926.4 million, a substantial increase from $302.7 million in the prior period, primarily due to higher purchases of AFS securities[29] Shareholder Returns - Dividends paid increased to $777.0 million from $706.2 million, indicating a commitment to returning value to shareholders[29] - The company repurchased common shares totaling $286.6 million, significantly higher than $104.5 million in the previous period, reflecting a strategy to enhance shareholder value[29] Assets and Liabilities - Cash and cash equivalents as of November 30, 2025, were $1,485.6 million, down from $1,628.6 million as of May 31, 2025[26] - Total assets as of November 30, 2025, were $16,518.9 million, slightly down from $16,564.1 million as of May 31, 2025[26] - Total liabilities increased to $12,638.8 million as of November 30, 2025, compared to $12,436.1 million as of May 31, 2025[26] Strategic Initiatives - Management Solutions revenue rose 21% to $1.2 billion, with the acquisition of Paycor contributing approximately 17% to this growth[7] - Interest on funds held for clients increased 51% to $54.3 million due to higher average investment balances from the Paycor acquisition[7] - AI-powered technologies are being deployed to enhance workforce management, with recent advancements in payroll automation and advisory tools[2] - Adjusted diluted earnings per share is anticipated to grow in the range of 10% to 11% for fiscal 2026[17] Risk Management - The provision for credit losses remained stable at $12.2 million, compared to $12.4 million, indicating effective risk management[29] - The company experienced a net change in client fund obligations of $17.7 million, down from $26.3 million, suggesting a shift in client fund management[29]