01—Abstract
Summary
Summary of the 10-K filed July 11, 2025. Cited figures are marked; the original filing is the authoritative source.
Paychex, Inc. (PAYX) reported fiscal 2025 (year ended May 31, 2025) total revenue of $5.57 billiona, up 6% from $5.28 billion in fiscal 2024, while operating income rose 2% to $2.21 billion and net income declined 2% to $1.66 billion.
Diluted earnings per share were $4.58b versus $4.67 a year earlier. Adjusted diluted EPS, a non-GAAP measure, was $4.98, up 6%. Results were affected by the April 14, 2025 acquisition of Paycor HCM, Inc. for total purchase consideration of about $4.1 billion, which was funded by $4.2 billion of fixed-rate corporate bonds, and by $162.3 million of acquisition-related costs.
Interest expense rose to $105.4 millionc from $37.3 million, and the expiration of the Employee Retention Tax Credit program lowered ancillary revenue. Management Solutions revenue was $4.07 billion, up 5%, and PEO and Insurance Solutions revenue was $1.34 billion, up 6%. Paychex served approximately 800,000 clients as of May 31, 2025, and client retention remained in the range of 82% to 83%.
Dividends paid to stockholders were $1.45 billiond, representing approximately 87% of fiscal 2025 net income. Cash provided by operating activities was $1.90 billion. The balance sheet shows total assets of $16.56 billion and long-term debt of $4.55 billion net of issuance costs, compared with $10.38 billion and $798.6 million a year earlier.
Goodwill rose to $4.51 billion and intangible assets to $1.95 billion, both mainly from Paycor. The company disclosed covenants requiring a maximum leverage ratio of 3.5:1.0 and a minimum interest coverage ratio of 2.0:1.0, and stated it was in compliance as of May 31, 2025.
02—Key points
Key Highlights
- Total revenue rose 6% to $5.57 billion, while net income fell 2% to $1.66 billion and diluted EPS fell to $4.58 from $4.67.
- Adjusted operating income rose 7% to $2.37 billion and adjusted diluted EPS rose 6% to $4.98, excluding acquisition-related costs and the prior-year cost optimization initiatives.
- The Paycor acquisition closed April 14, 2025 for about $4.1 billion, financed by $4.2 billion of fixed-rate corporate bonds; acquisition-related costs were $162.3 million in fiscal 2025.
- Interest expense increased to $105.4 million from $37.3 million, mainly due to the incremental acquisition debt.
- Management Solutions revenue grew 5% to $4.07 billion, and PEO and Insurance Solutions revenue grew 6% to $1.34 billion.
- Dividends paid were $1.45 billion, about 87% of net income, with $4.02 per share declared in fiscal 2025; $296.0 million remained under the repurchase authorization.
- Client base reached approximately 800,000 with retention of 82% to 83%; the company disclosed it had no material cybersecurity incidents affecting it as of May 31, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2025, Paychex kept $0.30.
- Revenue$5.57B100.0%
- Cost of revenue−$1.54B27.6%
- Gross profit$4.03B72.4%
- Operating costs−$1.82B32.7%
- Operating income$2.21B39.6%
- Interest, other & tax−$550.4M9.9%
- Net income$1.66B29.7%
Where FY2025 revenue went
$5.57B- SG&A: $1.82B, 33% of revenue
- Net income: $1.66B, 30% of revenue
- Cost of revenue: $1.54B, 28% of revenue
- Interest, other & tax: $550.4M, 9.9% of revenue
Kept 30% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2025filed July 11, 2025Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $5.57B$5.28B | +5.6% |
| Cost of Revenue | $1.54B$1.48B | +4.1% |
| Gross Profit | $4.03B$3.80B | +6.1% |
| SG&A Expenses | $1.82B$1.62B | +12.2% |
| Operating Expenses | $3.36B$3.10B | +8.4% |
| Operating Income | $2.21B$2.17B | +1.5% |
| Net Income | $1.66B$1.69B | −2.0% |
| EPS (Basic) | $4.60$4.69 | −1.9% |
| EPS (Diluted) | $4.58$4.67 | −1.9% |
| Shares Outstanding (Basic) | 360.20M360.30M | 0.0% |
| Shares Outstanding (Diluted) | 362.00M362.10M | 0.0% |
05—Questions
Frequently Asked Questions
How did Paychex perform financially in fiscal 2025?
Total revenue increased 6% to $5.57 billion. Operating income rose 2% to $2.21 billion, and net income declined 2% to $1.66 billion, with diluted EPS of $4.58 compared with $4.67 in fiscal 2024. Adjusted diluted EPS, a non-GAAP measure, increased 6% to $4.98.
What was the Paycor acquisition and how was it financed?
On April 14, 2025, Paychex completed its acquisition of Paycor HCM, Inc. for total purchase consideration of approximately $4.1 billion, of which $4.06 billion was paid in cash. The company financed it by issuing $4.2 billion of fixed-rate corporate bonds. The acquisition is intended to enhance Paychex's upmarket capabilities and expand its AI-driven HCM solutions.
What are the main factors pressuring earnings?
The filing cites acquisition-related costs of $162.3 million, interest expense that rose to $105.4 million from $37.3 million, and the expiration of the Employee Retention Tax Credit program, which reduced ancillary services revenue. Compensation-related expenses rose 2%, largely from the Paycor acquisition, and PEO direct insurance costs rose 10%.
How strong is the company's balance sheet and liquidity?
Cash, restricted cash and total corporate investments were $1.7 billion at May 31, 2025. Short-term borrowings were $18.6 million and long-term borrowings were $5.0 billion, with $2.0 billion of unused credit facility capacity. Operating cash flow was $1.90 billion. The company stated it was in compliance with its debt covenants, which include a maximum leverage ratio of 3.5:1.0 and a minimum interest coverage ratio of 2.0:1.0.
What is the company's capital return policy?
Dividends paid totaled $1.45 billion in fiscal 2025, or $4.02 per share declared, representing about 87% of net income. The company repurchased 0.8 million shares for $104.0 million during fiscal 2025, and $296.0 million remained available under the program that expires May 31, 2027. Dividends remain subject to the discretion of the Board.
06—Continue