Financial Data and Key Metrics Changes - Total revenue increased by 17% year-over-year to $1.5 billion [13] - Management Solutions revenue rose by 21% to $1.2 billion, driven by the addition of Paycor and higher revenue per client [13] - PEO and Insurance Solutions revenue grew by 3% to $329 million, supported by an increase in average PEO worksite employees [13] - Total expenses increased by 29% to $998 million, primarily due to the Paycor acquisition [14] - Adjusted diluted EPS increased by 5% to $1.22, while diluted EPS decreased by 10% to $1.06 [14][15] Business Line Data and Key Metrics Changes - Management Solutions revenue growth was significantly influenced by Paycor, contributing approximately 17% to the overall growth [13] - PEO business showed mid-single-digit worksite employee growth, with strong demand and record retention [11][25] - Interest on funds held for clients increased by 27% to $48 million due to the inclusion of Paycor balances [14] Market Data and Key Metrics Changes - The small business employment environment remains stable, with no signs of recession and moderate wage inflation [11][12] - The demand environment is consistent, with increased activity and solid RPO bookings, particularly in the micro segment [19] Company Strategy and Development Direction - The integration of Paycor is on track, with targeted revenue synergies and cost synergies expected to reach approximately $90 million [4][14] - The company is focusing on cross-selling opportunities, particularly in retirement, ASO, and PEO solutions to Paycor's client base [5] - New marketing campaigns and partnerships, such as the CPA Partner Pro portal and BillPay powered by Bill.com, are aimed at expanding service offerings [8][9] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the macro environment, citing renewed business confidence due to clarity on tariffs, taxes, and inflation [12] - The company expects total revenue growth for fiscal 2026 to be between 16.5% and 18.5%, with adjusted diluted EPS growth now expected to be between 9% and 11% [15][16] - The PEO model is seen as a key growth driver, allowing small businesses to offer competitive benefits [11] Other Important Information - The company has launched AI-driven tools to enhance client experiences and operational efficiency, including generative AI solutions for HR guidance [10][92] - Paychex was recognized by Newsweek as one of America's greatest companies and most admired workplaces, highlighting the importance of company culture [12] 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 across segments [19] Question: Paycor recurring revenue growth expectations - Recurring revenue for Paycor is expected to grow in double digits for the full year, aligning with expectations [21] Question: PEO environment characterization - The PEO business continues to perform well, with mid-single-digit worksite employee growth and record retention [25][26] Question: Direct expenses and operating expenses outlook - Direct expenses showed strong leverage, with ongoing operating expenses expected to remain consistent with current trends [32] Question: Impact of regulatory environment on business - The small business market remains resilient, with stability in employment and wage inflation below 3% [104]

Core Insights - Paychex, Inc. (PAYX) is set to release its fourth-quarter fiscal 2025 results on June 25, with a history of positive earnings surprises, averaging 1.7% above the Zacks Consensus Estimate over the past four quarters [1] Revenue Expectations - The consensus estimate for Paychex's Q4 fiscal 2025 revenues is $1.4 billion, reflecting a 9.3% increase year-over-year, driven by segmental growth [2][9] - Management Solutions revenues are projected at $979 million, indicating a 5.2% rise year-over-year, supported by an increasing number of clients and higher revenues per client due to pricing and product penetration [3][9] - PEO and insurance solution revenues are expected to reach $340.9 million, a 4.4% increase from the same quarter last year, attributed to a rise in the average number of worksite employees [4][9] Earnings Projections - The Zacks Consensus Estimate for earnings is $1.19 per share, representing a 6.3% increase from the previous year, with strong margins anticipated to support the bottom line [5] - Paychex has an Earnings ESP of -1.27% and a Zacks Rank of 3, indicating that the model does not predict a definitive earnings beat this time [6][7]

Group 1 - Automatic Data Processing (ADP) is a US-centric payroll company that provides Human Capital Management (HCM) solutions and HR Outsourcing services [1] - The company has benefited from high-interest rates, generating interest income from over $30 billion in client funds held [1]

Financial Data and Key Metrics Changes - Total revenue for the third quarter increased by 5% to $1.5 billion, with a 6% growth excluding the impact of the discontinued ERTC program [22][24] - Diluted earnings per share rose by 4% to $1.43, while adjusted diluted earnings per share grew by 8% to $1.49 [24] - Adjusted operating margins increased by approximately 180 basis points to 46.9% due to improved productivity and cost discipline [24] Business Line Data and Key Metrics Changes - Management Solutions revenue increased by 5% to $1.1 billion, driven by growth in the number of clients and higher revenue per client [23] - PEO and Insurance Solutions revenue grew by 6% to $365 million, primarily due to an increase in average worksite employees [23] - Interest on funds held for clients decreased by 2% to $43 million, attributed to lower average interest rates [23] Market Data and Key Metrics Changes - Client retention improved, with losses down across all employee size segments, and revenue retention remained above pre-pandemic levels [14] - The pace of U.S. job growth has moderated, with customer employment levels softer than expected due to weather-related challenges and lower bonus checks [19][44] - Year-to-date checks per client remained flat compared to the prior year, indicating stable labor market conditions [19] Company Strategy and Development Direction - The company is focused on integrating the acquisition of Paycor, which is expected to strengthen its competitive position and enhance its HCM portfolio [10][11] - Plans to operate Paycor as a standalone business unit while leveraging synergies to achieve cost efficiencies exceeding $80 million [13][29] - Continued investments in automation and technology are aimed at boosting efficiency and driving innovation in HR solutions [9][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the acquisition of Paycor and its potential to be accretive to adjusted earnings per share next fiscal year [29] - The macro environment remains stable, with strong retention performance and improvements in client losses year over year [84] - Management acknowledged the challenges posed by natural disasters and economic fluctuations but remains confident in the company's value proposition [19][83] Other Important Information - The company was named one of Fortune's most innovative companies for the third consecutive year, reflecting its commitment to becoming a digitally driven HR leader [15] - The company has made significant progress in integrating Paycor and is focused on ensuring a smooth transition for clients and employees [60] Q&A Session Summary Question: Updates on preference between ASO and PEO models - Management noted that both ASO and PEO models are performing strongly, with no significant switch in preference observed [35][37] Question: Client hiring lower than expected - Management indicated that hiring was broadly based, with some specific impacts from natural disasters in California [43] Question: Expectations for revenue synergies from Paycor acquisition - Management is optimistic about revenue synergies but emphasized the need to finalize integration before providing detailed guidance [56][58] Question: Changes in demand environment - Management reported consistent demand levels, with strong bookings and a solid pipeline going into Q4 [82] Question: Pricing power in a potential macro downturn - Management expressed confidence in their pricing power, indicating that they can maintain strong revenue per client even in downturns [96][98]