How did Paychex perform in the third quarter of fiscal 2026?

Total revenue increased 20% to $1.81 billion and operating income increased 14% to $792.0 million. Diluted EPS rose 9% to $1.56, and adjusted diluted EPS rose 15% to $1.71.

What drove the revenue growth?

Management Solutions revenue increased 23% to $1.35 billion, with the Paycor HCM acquisition, completed in April 2025, contributing approximately 19% to that growth. PEO and Insurance Solutions revenue rose 9% to $397.5 million, and interest on funds held for clients rose 33% to $56.8 million.

Why did GAAP operating margin decline?

Total expenses rose 24% to $1.0 billion, driven by compensation costs and amortization of intangible assets from the Paycor acquisition, plus higher technology, selling and marketing investments. The company excluded $71.0 million of Paycor acquisition-related costs from its adjusted operating income.

What is the company's guidance update?

Interest on funds held for clients for fiscal 2026 is now anticipated to be in the range of $200 million to $210 million. The company stated that all other aspects of its fiscal 2026 guidance remain consistent with its prior outlook.

How much did Paychex return to shareholders?

During the nine months, Paychex paid cumulative dividends of $3.24 per share totaling $1.2 billion and repurchased 2.9 million shares for $361.6 million.

PAYX 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed March 25, 2026. Cited figures are marked; the original filing is the authoritative source.

Paychex, Inc. (Nasdaq: PAYX) furnished an 8-K under Item 2.02 on March 25, 2026, attaching a press release reporting results for the three and nine months ended February 28, 2026 (third quarter of fiscal 2026).

Total revenue rose 20% to $1.81 billion^a for the quarter and 18% to $4.91 billion for the nine months. Operating income rose 14% to $792.0 million for the quarter, while nine-month operating income rose 7% to $1.91 billion. Diluted earnings per share increased 9% to $1.56 for the quarter but fell 1% to $3.71 for the nine months.

Management attributed much of the growth to the acquisition of Paycor HCM, Inc., which was completed in April 2025 and contributed approximately 19% to Management Solutions revenue growth year over year. On a non-GAAP basis, adjusted operating income grew 22% to $863.2 million^b for the quarter and 19% to $2.14 billion for the nine months, and adjusted diluted earnings per share rose 15% to $1.71 for the quarter and 11% to $4.19 for the nine months. The company excluded $71.0 million of Paycor acquisition-related costs from the quarterly adjusted figures.

Operating margin declined to 43.8% from 45.8% in the quarter, and to 38.8% from 42.9% for the nine months, while adjusted operating margin rose to 47.7% for the quarter from 46.9%. Interest expense increased to $68.1 million^c for the quarter, primarily from debt issued to finance the Paycor acquisition. The company reported $1.8 billion of cash, restricted cash and corporate investments and $5.0 billion of borrowings as of February 28, 2026, along with nine-month operating cash flow of $2.0 billion.

It returned over $1.5 billion^d to shareholders during the fiscal year to date, including $1.2 billion in dividends and repurchases of 2.9 million shares for $361.6 million. Management updated its fiscal 2026 outlook to anticipate interest on funds held for clients of $200 million to $210 million, with all other guidance unchanged.

02—Key points

Key Highlights

Third-quarter total revenue rose 20% to $1.81 billion, with Management Solutions revenue up 23% to $1.35 billion.
Paycor acquisition contributed approximately 19% to Management Solutions revenue growth year over year.
Quarterly GAAP diluted EPS rose 9% to $1.56; adjusted diluted EPS rose 15% to $1.71.
Nine-month GAAP diluted EPS fell 1% to $3.71, while adjusted diluted EPS increased 11% to $4.19.
GAAP operating margin for the quarter fell to 43.8% from 45.8%, while adjusted operating margin rose to 47.7% from 46.9%.
Interest expense rose to $68.1 million for the quarter, driven by debt issued to finance the Paycor acquisition.
Over $1.5 billion returned to shareholders fiscal year to date; fiscal 2026 interest on funds held for clients guidance updated to $200 million to $210 million.

03—Questions

Frequently Asked Questions

How did Paychex perform in the third quarter of fiscal 2026?
Total revenue increased 20% to $1.81 billion and operating income increased 14% to $792.0 million. Diluted EPS rose 9% to $1.56, and adjusted diluted EPS rose 15% to $1.71.
What drove the revenue growth?
Management Solutions revenue increased 23% to $1.35 billion, with the Paycor HCM acquisition, completed in April 2025, contributing approximately 19% to that growth. PEO and Insurance Solutions revenue rose 9% to $397.5 million, and interest on funds held for clients rose 33% to $56.8 million.
Why did GAAP operating margin decline?
Total expenses rose 24% to $1.0 billion, driven by compensation costs and amortization of intangible assets from the Paycor acquisition, plus higher technology, selling and marketing investments. The company excluded $71.0 million of Paycor acquisition-related costs from its adjusted operating income.
What is the company's guidance update?
Interest on funds held for clients for fiscal 2026 is now anticipated to be in the range of $200 million to $210 million. The company stated that all other aspects of its fiscal 2026 guidance remain consistent with its prior outlook.
How much did Paychex return to shareholders?
During the nine months, Paychex paid cumulative dividends of $3.24 per share totaling $1.2 billion and repurchased 2.9 million shares for $361.6 million.

04—Continue

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