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Feb 28, 2022
Paychex Q3 2022 Earnings Report
Paychex reported strong third-quarter results with revenue climbing 15% and diluted earnings per share increasing 23%.
Key Takeaways
Paychex reported a strong third quarter with double-digit growth in both revenue and earnings, driven by progress against key initiatives and a record quarter for new sales revenue. The company is focused on helping businesses navigate the complex HR landscape with its technology solutions.
Revenue climbed 15% due to strong sales performance and high levels of client retention.
Diluted earnings per share increased 23% as a result of double-digit revenue growth.
Management Solutions revenue increased by 13%, driven by growth in client bases and enhanced price realization.
PEO and Insurance Solutions revenue increased by 21%, primarily due to the increase in average worksite employees and growth in average wages per worksite employee.
Paychex
Paychex
Paychex Revenue by Segment
Revenue by Segment
Management Solutions Revenue
CapyFin.comPEO & Insurance Revenue
CapyFin.comClient Funds Interest Revenue
CapyFin.com Forward Guidance
Paychex updated its fiscal year 2022 guidance, incorporating current assumptions and market conditions, with anticipated growth in revenue and adjusted diluted earnings per share.
Positive Outlook
- Management Solutions revenue is now anticipated to grow in the range of 12% to 13%.
- PEO and Insurance Solutions revenue is now anticipated to grow in the range of 13% to 14%.
- Total revenue is now anticipated to grow in the range of 12% to 13%.
- Adjusted EBITDA margin is anticipated to be in the range of 44% to 45%.
- Adjusted diluted earnings per share is now anticipated to grow in the range of 22.5% to 23%.
Challenges Ahead
- Changes in the macroeconomic environment could alter the guidance.
- Adjusted operating margin is anticipated to be approximately 40%.
- Other expense, net is now anticipated to be approximately $15 million.
- The effective income tax rate for fiscal 2022 is anticipated to be approximately 24%.
- Unspecified aspects of guidance for fiscal 2022 remain unchanged from what was provided previously.
Revenue & Expenses
Visualization of income flow from segment revenue to net income