Paychex Q3 Earnings & Revenues Surpass Estimates, Increase Y/Y

Core Insights - Paychex, Inc. (PAYX) reported strong third-quarter fiscal 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate [1][2] Financial Performance - Fiscal third-quarter earnings were $1.49 per share, an 8$1.5 billion, surpassing the consensus estimate by a small margin and reflecting a 4.8% year-over-year growth [2] - Revenue from the Management Solutions segment increased by 5% year over year to $1.1 million, meeting expectations [5] - Professional employer organization (PEO) and Insurance Solutions revenues were$365.4 million, up 6% from the previous year, but fell short of the expected $372.6 million [5] - Service revenues grew by 5$1.5 billion, aligning with projections [6] - Interest on funds held for clients decreased by 2% year over year to $42.9 million, exceeding the forecast of$38.4 million [6] - EBITDA was reported at $734.9 million, a 6$755.1 million [6] - Operating income rose by 6% year over year to $691.8 million, missing the projection of$707.6 million [6] - The operating margin improved to 45.8%, up 70 basis points from the previous year, surpassing the estimate of 42.8% [6] Balance Sheet & Cash Flow - At the end of the third quarter, cash and cash equivalents stood at $1.6 billion, up from$1.2 billion in the previous quarter [7] - Long-term debt was reported at $799 million, slightly higher than$798.9 million in the second quarter [7] - Cash generated from operating activities amounted to $716 million, with capital expenditures totaling$48.7 million [8] Guidance - For fiscal 2025, Paychex anticipates interest on funds held for clients to be between $145 million and$155 million, and other income to be between $30 million and$35 million [9]