In This Article:
-
Total Revenue Growth: 5% in the third quarter; 6% excluding the impact of the discontinued ERTC program.
-
Diluted Earnings Per Share: Increased 4% to $1.43 per share.
-
Adjusted Diluted Earnings Per Share: Grew 8% to $1.49 per share.
-
Adjusted Operating Margins: Increased by 180 basis points compared to the prior year.
-
Management Solutions Revenue: Increased 5% to $1.1 billion.
-
PEO and Insurance Solutions Revenue: Increased 6% to $365 million.
-
Interest on Funds Held for Clients: Decreased 2% to $43 million.
-
Total Expenses: Increased 1% to $801 million, excluding one-time costs related to the pending Paycor acquisition.
-
Operating Income: Grew 6% to $692 million with an operating margin of 45.8%.
-
Cash, Restricted Cash, and Total Corporate Investments: $1.7 billion as of February 28, 2025.
-
Total Borrowings: Approximately $817 million as of February 28, 2025.
-
Cash Flow from Operations: $1.6 billion in the first three quarters of the year.
-
Return to Shareholders: $1.2 billion in the form of cash dividends and share repurchases during the first three quarters.
-
12-Month Rolling Return on Equity: 45%.
Release Date: March 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Paychex Inc (NASDAQ:PAYX) reported a 5% increase in total revenue for the third quarter, with a 6% growth excluding the impact of the discontinued ERTC program.
-
Diluted earnings per share increased by 4%, and adjusted diluted earnings per share grew by 8% during the quarter.
-
The acquisition of Paycor is expected to strengthen Paychex Inc (NASDAQ:PAYX)'s competitive position and is anticipated to be accretive to adjusted earnings per share next fiscal year.
-
Client retention has improved over last year's performance, with retention in HR outsourcing solutions remaining near record levels.
-
Paychex Inc (NASDAQ:PAYX) was named one of Fortune's Most Innovative Companies for the third consecutive year, highlighting its commitment to innovation and technology.
Negative Points
-
The expiration of the ERTC program continues to present a revenue headwind, impacting overall revenue growth.
-
Enrollment in the specialty Florida at-risk medical plan decreased year-over-year, affecting pass-through revenue.
-
Interest on funds held for clients decreased by 2% due to lower average interest rates.
-
The macro environment presents challenges, with U.S. job growth moderating and customer employment levels softer than expected.
-
The acquisition of Paycor involves significant integration efforts and potential risks related to change management and achieving expected synergies.