Paychex started fiscal 2027 with higher revenue, stronger margins, and double-digit earnings growth.
For the quarter ended August 31, 2026, total revenue rose 6% to $1.63 billion from $1.54 billion a year earlier. Operating income increased 14% to $619.2 million from $541.9 million, lifting operating margin to 38.0% from 35.2%.
Adjusted operating income climbed 9% to $684.7 million from $626.7 million, and adjusted operating margin improved to 42.0% from 40.7%.
Diluted earnings per share rose 14% to $1.21 from $1.06. Adjusted diluted earnings per share increased 10% to $1.34 from $1.22.
By business line, management solutions revenue grew 4% to $1.2 billion, helped by higher revenue per client from price realization and product penetration. PEO and insurance solutions revenue jumped 12% to $367.6 million, driven by growth in average PEO worksite employees and higher PEO insurance volumes. Interest on funds held for clients increased 5% to $49.8 million as average interest rates rose.
Cash flow from operations totaled $413.5 million in the quarter. Paychex ended the period with $1.0 billion in cash, restricted cash, and total corporate investments, and $4.6 billion in long-term borrowings, net of debt issuance costs.
The company paid dividends of $1.19 per share, or $424.1 million in total, during the quarter.
Paychex also raised its full-year outlook for PEO and insurance solutions revenue growth to 7% to 8% from 6% to 7%, and lifted its forecast for interest on funds held for clients to $200 million to $210 million from $195 million to $205 million. The company left its total revenue growth outlook at 5% to 6%, management solutions revenue growth at 5% to 6%, adjusted operating margin at about 44%, and adjusted diluted earnings per share growth at 7% to 9%. Following these announcements, the company's shares moved -7.92%, and are now trading at a price of $105.46. For the full picture, make sure to review PAYCHEX INC's 8-K report.
