Paychex (PAYX) Reports Q1 Earnings: What Key Metrics Have to Say

Core Insights - Paychex reported $1.32 billion in revenue for the quarter ended August 2024, a year-over-year increase of 2.5% and a surprise of +0.31% over the Zacks Consensus Estimate of $1.31 billion [1] - The EPS for the same period was $1.16, compared to $1.14 a year ago, with an EPS surprise of +1.75% over the consensus estimate of $1.14 [1] Financial Performance Metrics - Average investment balance for funds held for clients was $4.29 billion, exceeding the three-analyst average estimate of $4.21 billion [3] - Average interest rates earned on funds held for clients were 3.5%, above the three-analyst average estimate of 3.3% [3] - Average investment balance for corporate cash equivalents and investments was $1.62 billion, below the two-analyst average estimate of $1.75 billion [3] - Average interest rates earned on corporate cash equivalents and investments were 4.9%, compared to the 5.1% average estimate based on two analysts [3] - Revenue from Management Solutions was $961.70 million, slightly above the six-analyst average estimate of $959.10 million, reflecting a year-over-year change of +0.7% [3] - Revenue from interest on funds held for clients was $37.50 million, exceeding the six-analyst average estimate of $36.37 million, with a year-over-year change of +14.7% [3] - Total service revenue was $1.28 billion, matching the six-analyst average estimate, representing a year-over-year change of +2.2% [3] - Revenue from PEO and Insurance Services was $319.30 million, slightly above the six-analyst average estimate of $318.88 million, with a year-over-year change of +7.2% [3] Stock Performance - Shares of Paychex have returned +2.3% over the past month, compared to the Zacks S&P 500 composite's +2.2% change [4] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [4]