01—Abstract
Summary
Summary of the 8-K filed September 30, 2025. Cited figures are marked; the original filing is the authoritative source.
Paychex, Inc. (Nasdaq: PAYX) furnished a press release under Item 2.02 reporting results for the first quarter of fiscal 2026, the three months ended August 31, 2025.
Total revenue rose 17% to $1,540.0 milliona, driven by Management Solutions revenue growth of 21% to $1,163.3 million, which the company says was boosted by the Paycor HCM acquisition completed in April 2025. Paycor contributed approximately 17% to Management Solutions revenue growth. PEO and Insurance Solutions revenue increased 3% to $329.1 million.
Profitability was mixed. GAAP operating income fell 1% to $541.9 millionb and diluted EPS declined 10% to $1.06, reflecting $84.8 million of acquisition-related costs and interest expense that rose to $68.2 million from $9.6 million. Excluding those costs, adjusted operating income grew 15% to $626.7 million and adjusted diluted EPS rose 5% to $1.22.
Total expenses increased 29%c, mainly from Paycor-related compensation, amortization of intangibles and higher technology and selling investments. Management raised its adjusted diluted EPS growth outlook for fiscal 2026 to 9% to 11%, with other guidance unchanged.
Cash flow from operations was $718.4 milliond, and the company paid $389.1 million in dividends and repurchased $160.1 million of stock during the quarter. Borrowings totaled $5.0 billion as of August 31, 2025.
02—Key points
Key Highlights
- Total revenue up 17% to $1,540.0 million; Management Solutions up 21% to $1,163.3 million, with Paycor contributing approximately 17% to that growth.
- GAAP operating income down 1% to $541.9 million; operating margin 35.2% versus 41.5% a year earlier.
- Adjusted operating income up 15% to $626.7 million, excluding $84.1 million of Paycor acquisition-related costs in SG&A.
- GAAP diluted EPS down 10% to $1.06; adjusted diluted EPS up 5% to $1.22.
- Interest expense rose to $68.2 million from $9.6 million, primarily from incremental debt used to finance the Paycor acquisition.
- Fiscal 2026 adjusted diluted EPS growth outlook raised to 9% to 11%; other guidance unchanged.
- Operating cash flow of $718.4 million; dividends of $389.1 million and share repurchases of $160.1 million in the quarter.
03—Questions
Frequently Asked Questions
What drove the revenue growth in the quarter?
Total revenue rose 17% to $1,540.0 million. Management Solutions revenue increased 21% to $1,163.3 million, with the Paycor acquisition contributing approximately 17% to that growth, along with higher revenue per client. PEO and Insurance Solutions revenue grew 3% to $329.1 million.
Why did GAAP earnings decline while adjusted earnings rose?
GAAP diluted EPS fell 10% to $1.06 and operating income fell 1% to $541.9 million. The company's adjustments exclude $84.8 million of acquisition-related costs, including $61.1 million of amortization of Paycor intangibles, $18.7 million of Paycor compensation and integration costs, and $5.0 million of other acquisition costs. On that adjusted basis, adjusted diluted EPS rose 5% to $1.22.
Did management change its full-year guidance?
Yes, in part. Adjusted diluted EPS growth for fiscal 2026 is now expected in the range of 9% to 11%. The company states that its other fiscal 2026 guidance remains unchanged, and that the outlook excludes acquisition-related costs.
How did higher costs and debt affect the quarter?
Total expenses rose 29% to $998.1 million, driven by Paycor-related compensation and intangible amortization and higher technology and marketing investments. Interest expense increased $58.6 million to $68.2 million due to debt issued to finance the Paycor acquisition. Borrowings were $5.0 billion as of August 31, 2025.
04—Continue