How did Paychex perform in the third quarter of fiscal 2025?

Total revenue rose 5% to $1,509.0 million and operating income increased 6% to $691.8 million. Diluted EPS was $1.43, up 4%, and adjusted diluted EPS was $1.49, up 8%.

What is the status of the Paycor acquisition?

Paychex entered a definitive agreement to acquire Paycor HCM, Inc. on January 7, 2025. The Hart-Scott-Rodino waiting period expired on February 27, 2025, and the acquisition is expected to close in April 2025, subject to other customary closing conditions.

Did the Paycor deal affect reported results?

Yes. Third-quarter total expenses included acquisition-related costs, and the company recorded $16.7 million of such costs in SG&A and $13.2 million in other (expense)/income, net. Excluding the acquisition-related costs, total expenses rose 1% to $800.5 million.

What changed in the fiscal 2025 outlook?

PEO and Insurance Solutions revenue is now anticipated to grow 6.0% to 6.5%, and adjusted operating margin is now expected to be approximately 43%. Other guidance items were unchanged, and the outlook excludes the pending Paycor acquisition.

How much did Paychex return to stockholders?

In the first nine months of fiscal 2025, Paychex paid cumulative dividends of $2.94 per share totaling $1.1 billion and repurchased 828,855 shares of common stock for $104.0 million.

PAYX 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed March 26, 2025. Cited figures are marked; the original filing is the authoritative source.

Paychex, Inc. furnished a press release under Item 2.02 reporting results for its third quarter and first nine months of fiscal 2025, ended February 28, 2025.

Total revenue for the quarter was $1,509.0 million^a, up 5% from $1,439.3 million, while operating income rose 6% to $691.8 million. Adjusted operating income grew 9% to $708.5 million, and diluted earnings per share increased 4% to $1.43, with adjusted diluted EPS up 8% to $1.49. Management attributed the period's results partly to the expiration of the Employee Retention Tax Credit program in the prior-year period, which weighed on ancillary revenue and operating income.

Operating margin was 45.8% for the quarter versus 45.1% a year earlier, and adjusted operating margin was 46.9%. For the nine months, total revenue increased 4% to $4.1 billion^b, operating income rose 5% to $1.8 billion, and diluted EPS increased 4% to $3.76. The company reported cash flow from operations of $1.6 billion, cash and investments of $1.7 billion, and borrowings of $816.6 million.

It paid cumulative dividends of $2.94^c per share totaling $1.1 billion and repurchased 828,855 shares for $104.0 million during the period. Third-quarter results include $16.7 million of acquisition-related costs tied to the pending Paycor HCM, Inc. acquisition.

Paychex entered into a definitive agreement on January 7, 2025 to acquire Paycor, with the Hart-Scott-Rodino waiting period having expired and closing expected in April 2025. Management updated fiscal 2025 guidance, now anticipating PEO and Insurance Solutions revenue growth of 6.0%^d to 6.5% and adjusted operating margin of approximately 43%; the outlook excludes the Paycor acquisition.

02—Key points

Key Highlights

Third-quarter total revenue rose 5% to $1,509.0 million; Management Solutions revenue increased 5% to $1,100.7 million and PEO and Insurance Solutions revenue increased 6% to $365.4 million.
Third-quarter diluted EPS increased 4% to $1.43, and adjusted diluted EPS increased 8% to $1.49.
Operating margin was 45.8% for the quarter versus 45.1% a year earlier; adjusted operating margin was 46.9%.
Nine-month total revenue increased 4% to $4.1 billion and diluted EPS increased 4% to $3.76.
Pending Paycor acquisition: definitive agreement signed January 7, 2025, HSR waiting period expired, closing expected April 2025.
Fiscal 2025 guidance updated: PEO and Insurance Solutions revenue growth of 6.0% to 6.5% and adjusted operating margin of approximately 43%, excluding Paycor.
Stockholder returns for the nine months included $1.1 billion in cumulative dividends ($2.94 per share) and $104.0 million in share repurchases.

03—Questions

Frequently Asked Questions

How did Paychex perform in the third quarter of fiscal 2025?
Total revenue rose 5% to $1,509.0 million and operating income increased 6% to $691.8 million. Diluted EPS was $1.43, up 4%, and adjusted diluted EPS was $1.49, up 8%.
What is the status of the Paycor acquisition?
Paychex entered a definitive agreement to acquire Paycor HCM, Inc. on January 7, 2025. The Hart-Scott-Rodino waiting period expired on February 27, 2025, and the acquisition is expected to close in April 2025, subject to other customary closing conditions.
Did the Paycor deal affect reported results?
Yes. Third-quarter total expenses included acquisition-related costs, and the company recorded $16.7 million of such costs in SG&A and $13.2 million in other (expense)/income, net. Excluding the acquisition-related costs, total expenses rose 1% to $800.5 million.
What changed in the fiscal 2025 outlook?
PEO and Insurance Solutions revenue is now anticipated to grow 6.0% to 6.5%, and adjusted operating margin is now expected to be approximately 43%. Other guidance items were unchanged, and the outlook excludes the pending Paycor acquisition.
How much did Paychex return to stockholders?
In the first nine months of fiscal 2025, Paychex paid cumulative dividends of $2.94 per share totaling $1.1 billion and repurchased 828,855 shares of common stock for $104.0 million.

04—Continue

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