Paychex Reports 4% Revenue Growth in Q3

Paychex, Inc. has reported sustained growth in revenue and earnings for the third fiscal quarter ended February 29, 2024. The company's total revenue increased to $1.4 billion, marking a 4% growth over the prior year period. Operating income grew by 6% to $649.8 million, with operating margin also expanding by approximately 80 basis points to 45.1%.

Diluted earnings per share and adjusted diluted earnings per share both increased by 7%, reaching $1.38 for the quarter. For the nine months ended February 29, 2024, total revenue increased by 5% to $4.0 billion, operating income increased by 7% to $1.7 billion, and diluted earnings per share increased by 9% to $3.62 per share.

The company's financial position and cash flow generation remained strong during the first nine months of the fiscal year, with cash, restricted cash, and total corporate investments amounting to $1.8 billion. Paychex also returned value to stockholders by paying cumulative dividends of $2.67 per share totaling $962.5 million and repurchasing 1.5 million shares of common stock for $169.2 million.

In terms of non-GAAP financial measures, adjusted net income and adjusted diluted earnings per share both showed a 7% increase for the quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 6% to $694.6 million for the quarter and by 6% to $1,823.8 million for the nine months ended February 29, 2024.

Looking ahead, Paychex has updated its business outlook for the fiscal year ending May 31, 2024, anticipating management solutions revenue to grow in the range of 3.5% to 4.0% and total revenue to grow in the range of 5% to 6%. Additionally, other income, net is anticipated to be in the range of $40 million to $45 million.

Paychex, Inc. (NASDAQ: PAYX) serves approximately 740,000 customers in the U.S. and Europe and pays one out of every 12 American private sector employees. The company's commitment to helping businesses succeed and its focus on environmental, social, and governance ("ESG") efforts are evident in its sustained growth and financial performance.

Today the company's shares have moved -0.4% to a price of $121.18. For more information, read the company's full 8-K submission here.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.