01—Abstract
Summary
Summary of the 10-K filed July 17, 2026. Cited figures are marked; the original filing is the authoritative source.
Paychex, Inc. reported fiscal 2026 (year ended May 31, 2026) total revenue of $6.5 billiona, up 17% from $5.57 billion in fiscal 2025, with Paycor, acquired April 14, 2025, contributing approximately 12% to total revenue growth.
Operating income rose 14% to $2.51 billionb, but operating margin declined to 38.6% from 39.6%, reflecting $304.2 million of acquisition-related costs. Adjusted operating income, a non-GAAP measure, was $2.81 billion, up 19%, with adjusted operating margin of 43.2% versus 42.5% in the prior year. Net income was $1.76 billion, up 6%, and diluted EPS was $4.89, up 7%; adjusted diluted EPS was $5.51, up 11%.
Interest expense more than doubled to $269.5 millionc from $105.4 million, driven by the $4.2 billion of Corporate Bonds issued in April 2025 to fund the Paycor acquisition. Operating cash flow was $2.56 billion, compared with $1.90 billion a year earlier. Dividends paid totaled $1.59 billion, about 90% of net income, and the company repurchased 5.6 million shares for $611.0 million.
The Board approved a new $1.0 billiond repurchase program with no expiration date on January 16, 2026. Management highlights its WISE AI engine, which now powers approximately 600 AI features and agents, and approximately 840,000 total customers, of which about 800,000 are payroll clients.
Total long-term borrowings were $4.6 billion at May 31, 2026, and unused credit facility capacity was $2.0 billion. The auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion with a critical audit matter on PEO workers' compensation insurance reserves, which totaled $237.7 million.
02—Key points
Key Highlights
- Total revenue of $6.5 billion, up 17%; Management Solutions revenue of $4.9 billion rose 20%, and PEO and Insurance Solutions revenue of $1.4 billion rose 7%.
- Operating income of $2.51 billion, up 14%; operating margin fell to 38.6% from 39.6%, while adjusted operating margin rose to 43.2% from 42.5%.
- Net income of $1.76 billion, up 6%; diluted EPS of $4.89, up 7%; adjusted diluted EPS of $5.51, up 11%.
- Interest expense rose to $269.5 million from $105.4 million, mainly from the April 2025 Corporate Bonds issued to finance the Paycor acquisition.
- Net cash provided by operating activities was $2.56 billion, up from $1.90 billion; dividends paid were $1.59 billion, or $4.43 per share.
- Repurchased 5.6 million shares for $611.0 million; a new $1.0 billion buyback program with no expiration was approved January 16, 2026.
- Acquisition-related costs were $304.2 million, including $242.0 million of amortization of Paycor intangibles.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2026, Paychex kept $0.27.
- Revenue$6.51B100.0%
- Cost of revenue−$1.67B25.7%
- Gross profit$4.84B74.3%
- Operating costs−$2.33B35.7%
- Operating income$2.51B38.6%
- Interest, other & tax−$750.4M11.5%
- Net income$1.76B27.0%
Where FY2026 revenue went
$6.51B- SG&A: $2.33B, 36% of revenue
- Net income: $1.76B, 27% of revenue
- Cost of revenue: $1.67B, 26% of revenue
- Interest, other & tax: $750.4M, 12% of revenue
Kept 27% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2026filed July 17, 2026Financial Statements
FY2026 against FY2025
| Line item | FY2026FY2025 | Change |
|---|---|---|
| Revenue | $6.51B$5.57B | +16.9% |
| Cost of Revenue | $1.67B$1.54B | +8.7% |
| Gross Profit | $4.84B$4.03B | +20.0% |
| SG&A Expenses | $2.33B$1.82B | +27.6% |
| Operating Expenses | $4.00B$3.36B | +19.0% |
| Operating Income | $2.51B$2.21B | +13.7% |
| Net Income | $1.76B$1.66B | +6.2% |
| EPS (Basic) | $4.90$4.60 | +6.5% |
| EPS (Diluted) | $4.89$4.58 | +6.8% |
| Shares Outstanding (Basic) | 358.90M360.20M | −0.4% |
| Shares Outstanding (Diluted) | 360.00M362.00M | −0.6% |
05—Questions
Frequently Asked Questions
How did the Paycor acquisition affect Paychex's fiscal 2026 results?
Paycor, acquired April 14, 2025, contributed approximately 12% to total revenue growth and about 15% to Management Solutions revenue growth. It also drove higher compensation, depreciation and amortization, and acquisition-related costs of $304.2 million, which reduced reported operating margin to 38.6%.
Why did interest expense increase so significantly?
Interest expense rose $164.1 million to $269.5 million, primarily due to the issuance of incremental debt in April 2025 to finance the Paycor acquisition. Long-term borrowings were $4.6 billion at May 31, 2026.
What are the key non-GAAP adjustments management presents?
Adjusted operating income ($2.81 billion, up 19%) and adjusted diluted EPS ($5.51, up 11%) exclude acquisition-related costs. Adjusted net income also excludes a discrete tax windfall from employee stock-based compensation. Management states these measures are not GAAP and should not be used in isolation.
How is Paychex returning capital to shareholders?
Dividends paid totaled $1.59 billion, or $4.43 per share, representing approximately 90% of net income. The company also repurchased 5.6 million shares for $611.0 million at a weighted-average price of $108.81, and its Board approved a new $1.0 billion repurchase authorization with no expiration date.
What does the filing say about the company's AI strategy and risks?
WISE, the AI-powered intelligence engine, powers approximately 600 AI features and agents. The filing lists AI-related risks, including inaccurate outputs, regulatory and litigation exposure, and intellectual property uncertainty, and notes that management maintains AI policies and human-in-the-loop oversight.
06—Continue