Financial Data and Key Metrics Changes - Total revenue increased by 17% year-over-year to $1.5 billion [14] - Adjusted diluted EPS grew by 5% to $1.22, while diluted EPS decreased by 10% to $1.06 [15] - Total expenses rose by 29% to $998 million, primarily due to the Paycor acquisition [15] - Cash flow from operations was $718 million for the first quarter [15] - The company returned $549 million to shareholders through dividends and share repurchases [15] Business Line Data and Key Metrics Changes - Management Solutions revenue increased by 21% to $1.2 billion, driven by the addition of Paycor and higher revenue per client [14] - PEO and Insurance Solutions revenue grew by 3% to $329 million, supported by an increase in average PEO worksite employees [14] - Interest on funds held for clients rose by 27% to $48 million due to the inclusion of Paycor balances [14] Market Data and Key Metrics Changes - The PEO business experienced mid-single-digit worksite employee growth, with strong demand and retention performance [11] - The small business employment environment remains stable, with no signs of recession and moderating wage inflation [11][12] Company Strategy and Development Direction - The integration of Paycor is on track, with targeted revenue synergies and cost synergies expected to exceed initial estimates [4][5] - The company is focusing on cross-selling opportunities, particularly in retirement, ASO, and PEO solutions to Paycor's client base [5][6] - The Partner Plus program for brokers has seen nearly double enrollment, indicating strong momentum in referral channels [7][8] - New product offerings, such as Bill Pay Powered by BILL, aim to enhance service delivery for small and mid-sized businesses [8][9] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the resilience of small businesses and expects renewed business confidence due to clarity on tariffs, taxes, and inflation [11][12] - The company anticipates total revenue growth for fiscal 2026 to be between 16.5% and 18.5%, with Management Solutions expected to grow by 20%-22% [16][17] - Adjusted operating income margin is projected to be approximately 43% [16] Other Important Information - The company has launched AI-driven tools to enhance client experiences and operational efficiency [9][10] - The integration of Paycor is expected to provide additional growth opportunities and improve overall service offerings [4][5] Q&A Session Summary Question: Update on demand environment and employer size segments - Demand remains consistent with historical trends, with increased activity and solid RPO bookings [20][21] Question: Paycor recurring revenue growth - Recurring revenue growth for Paycor is expected to be double digits for the full year, with Q1 performance in line with expectations [22][23] Question: PEO environment characterization - PEO continues to perform well with mid-single-digit worksite employee growth and record retention [25][26] Question: Direct expenses and SG&A comparison - Direct expenses showed strong leverage, while SG&A expenses were impacted by integration costs [31][32] Question: Paycor integration and recurring revenue - Integration is progressing well, with high retention rates and strong sales performance [38][39] Question: EPS increase drivers - EPS guidance was raised due to strong retention and confidence in achieving cost and revenue synergies [47][48] Question: PEO market competitiveness - The competitive environment remains stable, with a focus on value proposition rather than aggressive pricing [59][60] Question: Bill.com partnership and customer profile - The partnership aims to enhance payment capabilities for small businesses, integrating with existing platforms [65][66] Question: Regulatory environment impact - The company does not expect significant impacts from regulatory changes, with small businesses remaining resilient [82][83]

Summary of Key Points from the Conference Call on Small Nucleic Acid Drugs Industry Overview - The small nucleic acid drug industry focuses on innovative therapies that degrade mRNA, making previously undruggable targets viable, particularly in cancer treatment [1][2][3] - Small nucleic acid drugs include various forms such as ASO (Antisense Oligonucleotides), siRNA (small interfering RNA), and miRNA (microRNA), each with distinct development challenges and therapeutic prospects [1][4] Core Insights and Arguments - **Clinical Advantages**: Small nucleic acid drugs can target previously inaccessible drug targets, especially in cancer, and have a longer half-life (up to six months in the liver), making them advantageous for chronic disease management [2][3] - **Delivery Technology**: The industry is seeing a shift towards innovative delivery systems, including third-generation systems (antibodies, peptides, fatty acids) to enhance liver and extrahepatic delivery [1][6][14] - **Market Competition**: Domestic companies are employing differentiated designs to navigate patent protections, with firms like Alnylam and Arrowhead leading in specific therapeutic areas [1][8][17] - **Therapeutic Areas**: Key focus areas include cardiovascular diseases, metabolic disorders, and central nervous system (CNS) diseases, with ongoing clinical trials showing promising results [2][17][18] Important but Overlooked Content - **Cost Challenges**: Despite the potential of small nucleic acid drugs, high production costs remain a significant barrier to replacing traditional oral medications [3][22] - **Safety and Efficacy**: While ASO has a lower barrier to entry, it raises safety concerns due to its mechanism of action. In contrast, siRNA offers higher safety and efficacy but requires advanced delivery technologies [5][6] - **Future Trends**: The future of the small nucleic acid sector will likely focus on delivery technology innovations and structural modifications to enhance drug efficacy and reduce competition [11][12] - **Clinical Data Validation**: Chinese companies need to validate their technologies through clinical data to establish competitive advantages and build robust patent barriers [15][20] Conclusion The small nucleic acid drug industry is poised for growth, driven by innovative delivery technologies and the ability to target previously undruggable diseases. However, challenges such as cost, safety, and the need for clinical validation remain critical for future success.

Financial Data and Key Metrics Changes - Total revenue for Q4 increased by 10% to $1.4 billion, while excluding Paycor, total revenue increased by 3% [20] - For the full fiscal year 2025, total revenue grew by 6% to $5.6 billion [23] - Adjusted diluted earnings per share increased by 6% to $1.19 in Q4, while diluted earnings per share decreased by 22% to $0.82 [22] - Adjusted operating income margins for Q4 were 40.4%, an increase of approximately 20 basis points [22] Business Line Data and Key Metrics Changes - Management Solutions revenue increased by 12% to $1 billion for Q4, driven by the addition of Paycor and higher revenue per client [21] - PEO and Insurance Solutions revenue increased by 4% to $340 million for Q4, supported by growth in average PEO worksite employees [21] - Interest on funds held for clients increased by 18% to $45 million for Q4, primarily due to the inclusion of Paycor balances [21] Market Data and Key Metrics Changes - The number of clients served increased to approximately 800,000, with HR outsourcing worksite employees rising to 2.5 million [6] - Client retention rates improved year over year, indicating strong value provided to clients [6] Company Strategy and Development Direction - The company aims to strategically accelerate investments for future growth while focusing on cost synergies of approximately $90 million in fiscal year 2026 [7][26] - The HCM platforms will be segmented, with Paychex Flex targeting companies with up to 99 employees and Paycor focusing on enterprises with over 100 employees [9] - The company is committed to enhancing operational efficiency and maintaining industry-leading operating margins [6][24] Management's Comments on Operating Environment and Future Outlook - The management noted a mix of optimism and uncertainty in the market, with small businesses remaining fundamentally healthy despite external pressures [16][17] - The company expects total revenue growth for fiscal year 2026 to be in the range of 16.5% to 18.5%, with Management Solutions projected to grow by 20% to 22% [26] - Management expressed confidence in achieving revenue synergies and highlighted the importance of cross-selling opportunities [11][90] Other Important Information - The company returned over $1.5 billion to shareholders through cash dividends and share repurchases during the fiscal year [25] - The financial position remains strong, with cash and investments totaling $1.7 billion and total borrowings of approximately $5 billion [24] Q&A Session Summary Question: Can you discuss the distractions related to the sales force integration and its impact on Q4? - Management acknowledged that they made strategic decisions to complete changes quickly to minimize disruption, and they do not expect significant spillover effects into Q1 [33][37] Question: What factors contributed to the deceleration in organic Management Solutions growth from Q3 to Q4? - Management noted softer checks and a mix issue with smaller client sizes, along with MPP enrollment headwinds impacting growth [42][44] Question: How does the company plan to reaccelerate organic client growth? - The company will focus on organic client growth of 1% to 3% while driving product penetration and maintaining pricing strength [49][50] Question: What is the outlook for Paycor's growth in fiscal 2026? - Management expects Paycor to be a strong double-digit grower, with some conservatism in guidance to ensure deliverability [59] Question: Can you clarify the impact of recent bankruptcies and financial distress on the company? - Management indicated that while there were increases in bankruptcies, the impact on revenue was minimal, particularly at the lower end of the client base [72][84]