PAYX Reports 20% Revenue Growth

By Chris Stiles • Wednesday, March 25 13:33 • Permanent Link

Paychex reported fiscal third-quarter revenue of $1.81 billion, up 20% from $1.51 billion a year earlier, as operating income rose 14% to $792.0 million from $691.8 million.

Adjusted operating income climbed 22% to $863.2 million from $708.5 million. Adjusted diluted earnings per share increased 15% to $1.71 from $1.49, while diluted EPS rose 9% to $1.56 from $1.43.

The company’s management solutions revenue increased 23% to $1.4 billion, with Paycor contributing about 19 percentage points to that growth. PEO and insurance solutions revenue rose 9% to $397.5 million. Interest on funds held for clients jumped 33% to $56.8 million.

Expenses increased 24% to $1.0 billion, outpacing revenue growth. Operating margin narrowed to 43.8% from 45.8%, though adjusted operating margin improved to 47.7% from 46.9%.

Interest expense increased to $68.1 million from $22.6 million, a rise of $45.5 million, reflecting debt issued to finance the Paycor acquisition.

For the first nine months of fiscal 2026, revenue increased 18% to $4.91 billion from $4.14 billion. Operating income rose 7% to $1.91 billion, while adjusted operating income increased 19% to $2.14 billion.

Nine-month diluted EPS slipped 1% to $3.71 from $3.76, but adjusted diluted EPS increased 11% to $4.19 from $3.79. Operating margin fell to 38.8% from 42.9%, while adjusted operating margin edged up to 43.6% from 43.3%.

Net income for the nine months declined 2% to $1.34 billion from $1.36 billion, while adjusted net income rose 10% to $1.51 billion from $1.37 billion.

Paychex said cash, restricted cash, and total corporate investments totaled $1.8 billion at Feb. 28, 2026, with borrowings of $5.0 billion. Cash flow from operations was $2.0 billion for the nine-month period.

The company returned $1.2 billion through dividends, or $3.24 per share, and repurchased 2.9 million shares for $361.6 million during the nine months. Following these announcements, the company's shares moved 0.61%, and are now trading at a price of $111.18. For more information, read the company's full 8-K submission here.

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