01—Abstract
Summary
Summary of the 10-Q filed December 22, 2025. Cited figures are marked; the original filing is the authoritative source.
Paychex, Inc. reported results for the second quarter and six months ended November 30, 2025.
Total revenue rose to $1,557.6 milliona for the quarter, up from $1,316.9 million, and to $3,097.6 million for the six months, up from $2,635.4 million, with the filing citing 18% growth for both periods. Management Solutions revenue grew 21% for both periods, and the filing attributes about 17% of that growth to Paycor, acquired April 14, 2025. Net income was $395.4 million for the quarter versus $413.4 million a year earlier, and diluted EPS was $1.10 versus $1.14.
Operating income rose 6% to $571.9 million, while interest expense increased to $68.5 millionb for the quarter, primarily from debt issued to finance the Paycor acquisition. The filing also presents adjusted, non-GAAP measures. Adjusted diluted EPS was $1.26 for the quarter, up 11%, and $2.48 for the six months, up 8%.
These exclude acquisition-related costs of $77.1 millionc for the quarter and $161.9 million for the six months, including $121.0 million of intangible amortization for the six months. Cash flow from operations was $1,163.3 million for the six months, compared with $841.1 million a year earlier. Dividends paid were $777.0 million, and share repurchases totaled $286.6 million.
At November 30, 2025, total assets were $16,518.9 milliond, long-term borrowings were $4,552.2 million, and stockholders' equity was $3,880.1 million. The company had about $2.0 billion of unused credit facility capacity. The filing notes that the Federal Reserve lowered the Federal Funds rate to a range of 3.50% to 3.75% effective December 11, 2025.
02—Key points
Key Highlights
- Total revenue of $1,557.6 million for the quarter, up 18% from $1,316.9 million, and $3,097.6 million for the six months, up 18%.
- Management Solutions revenue rose 21% to $1,166.4 million for the quarter, with Paycor contributing approximately 17% of revenue growth.
- GAAP net income fell 4% to $395.4 million for the quarter, with diluted EPS of $1.10 versus $1.14, as acquisition-related costs of $77.1 million weighed on SG&A.
- Adjusted diluted EPS (non-GAAP) was $1.26 for the quarter, up 11%, and $2.48 for the six months, up 8%.
- Interest expense rose to $68.5 million for the quarter from $9.5 million, reflecting debt issued to finance the Paycor acquisition.
- Interest on funds held for clients rose 51% to $54.3 million for the quarter, driven by higher average balances from Paycor and realized gains from portfolio repositioning.
- Operating cash flow was $1,163.3 million for the six months versus $841.1 million a year earlier; the company paid $777.0 million in dividends and repurchased $286.6 million of stock.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Paychex kept $0.25.
- Revenue$1.56B100.0%
- Cost of revenue−$412.2M26.5%
- Gross profit$1.15B73.5%
- Operating costs−$573.5M36.8%
- Operating income$571.9M36.7%
- Interest, other & tax−$176.5M11.3%
- Net income$395.4M25.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed December 22, 2025Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $1.56B$1.32B | +18.3% |
| Cost of Revenue | $412.20M$379.10M | +8.7% |
| Gross Profit | $1.15B$937.80M | +22.1% |
| SG&A Expenses | $573.50M$399.70M | +43.5% |
| Operating Expenses | $985.70M$778.80M | +26.6% |
| Operating Income | $571.90M$538.10M | +6.3% |
| Net Income | $395.40M$413.40M | −4.4% |
| EPS (Basic) | $1.10$1.15 | −4.3% |
| EPS (Diluted) | $1.10$1.14 | −3.5% |
| Shares Outstanding (Basic) | 359.40M360.00M | −0.2% |
| Shares Outstanding (Diluted) | 360.40M361.70M | −0.4% |
05—Questions
Frequently Asked Questions
How did Paychex's revenue perform in the second quarter of fiscal 2026?
Total revenue was $1,557.6 million, up 18% from $1,316.9 million a year earlier. Total service revenue was $1,503.3 million, up 17%, with Management Solutions up 21% and PEO and Insurance Solutions up 6%. The filing attributes the Management Solutions growth partly to the Paycor acquisition, which contributed approximately 17% of that segment's growth.
Why did GAAP net income decline despite revenue growth?
Net income was $395.4 million versus $413.4 million a year earlier. Total expenses rose 27% to $985.7 million, including $77.1 million of acquisition-related costs and higher compensation, other expenses, and depreciation and amortization. Interest expense also rose to $68.5 million from $9.5 million after the Paycor financing.
What adjusted measures does the company present, and how do they differ from GAAP?
The company presents adjusted operating income, adjusted net income, adjusted diluted EPS, EBITDA, and adjusted EBITDA as non-GAAP measures. For the quarter, adjusted diluted EPS was $1.26 and adjusted operating income was $649.0 million, both excluding acquisition-related costs. The filing states these measures are not substitutes for GAAP results.
How is the company funding its debt and liquidity needs?
At November 30, 2025, the company had $18.2 million of short-term borrowings and $4,552.2 million of long-term borrowings on the balance sheet. The filing states approximately $2.0 billion remained available under unsecured credit facilities. Corporate bonds totaling $4.2 billion and Senior Notes totaling $0.8 billion were issued to finance the Paycor acquisition.
What did the company return to shareholders during the six months?
Dividends paid totaled $777.0 million, or $2.16 per share declared for the six months. The company also repurchased 2.1 million shares for $286.6 million, at a weighted-average price of $134.43 per share, under a $400.0 million program that expires May 31, 2027.
06—Continue