Paychex Q1 2024 Earnings Report
Key Takeaways
Paychex reported a strong start to fiscal year 2024, with a 7% increase in total revenue and an 11% increase in adjusted diluted earnings per share. Demand for Paychex's solutions remains strong as businesses seek technology and expertise to navigate the changing business environment.
Total revenue increased by 7% and adjusted diluted earnings per share increased by 11%.
Management Solutions revenue increased 6% due to growth in clients served and higher revenue per client.
PEO and Insurance Solutions revenue increased 5% due to growth in worksite employees and higher state unemployment insurance revenue.
Interest on funds held for clients increased 83% due to higher average interest rates and investment balances.
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Paychex Revenue by Segment
Forward Guidance
Paychex has updated its business outlook for the fiscal year ending May 31, 2024, incorporating current assumptions and market conditions.
Positive Outlook
- Interest on funds held for clients is now expected to be in the range of $140 million to $150 million.
- Adjusted diluted earnings per share is now anticipated to grow in the range of 9% to 11%.
- Other aspects of our guidance for fiscal 2024 remain unchanged from what we provided previously.
- Small and mid-sized businesses remain resilient in navigating the broader macro-economic environment.
- Small businesses are hiring workers at a moderate level and wage inflation continues to normalize along with overall inflation.
Challenges Ahead
- Changes in the macroeconomic environment could alter guidance.
- Our ability to keep pace with changes in technology or provide timely enhancements to our solutions and support.
- The possibility of cyberattacks, security vulnerabilities or Internet disruptions, including data security and privacy leaks, and data loss and business interruptions.
- The impact of macroeconomic factors on the U.S. and global economy, and in particular on our small- and medium-sized business clients.
- Volatility in the political and economic environment, including rising inflation.
Revenue & Expenses
Visualization of income flow from segment revenue to net income