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Paychex
🇺🇸 NASDAQ:PAYX
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•
Feb 29, 2024

Paychex Q3 2024 Earnings Report

Paychex reported sustained growth in revenue and earnings for Q3 2024.

Key Takeaways

Paychex reported a 4% increase in total revenue, reaching $1.4 billion, and a 7% increase in diluted earnings per share to $1.38 for the third quarter of fiscal year 2024. The company's operating margin expanded due to ongoing expense discipline, despite moderating small business employment and wage growth.

Total revenue increased by 4% compared to the prior year period, driven by growth in Management Solutions and PEO and Insurance Solutions.

Diluted earnings per share increased by 7% compared to the prior year period.

Operating income grew by 6%, with operating margin expansion of approximately 80 basis points.

The company continues to invest in data, analytics, and AI to improve client retention, upsell efforts, and pricing strategies.

Total Revenue
$1.44B
Previous year: $1.38B
+4.2%
EPS
$1.38
Previous year: $1.29
+7.0%
Operating Margin
45.1%
Gross Profit
$1.06B
Previous year: $1.01B
+5.1%
Cash and Equivalents
$1.69B
Previous year: $1.32B
+28.6%
Free Cash Flow
$631M
Previous year: $573M
+10.1%
Total Assets
$13B
Previous year: $10.6B
+22.8%

Paychex

Paychex

Paychex Revenue by Segment

Forward Guidance

Paychex updated its business outlook for the fiscal year ending May 31, 2024, incorporating current assumptions and market conditions.

Positive Outlook

  • Management Solutions revenue is now anticipated to grow in the range of 3.5% to 4.0%.
  • Total revenue is now anticipated to grow in the range of 5% to 6%.
  • Other income, net is now anticipated to be in the range of $40 million to $45 million.
  • Other aspects of our guidance for fiscal 2024 remain unchanged from what we provided previously.
  • The company is focusing its ESG efforts on actions it can take to create positive impact.

Challenges Ahead

  • Changes in the macroeconomic environment could alter our guidance.
  • Our ability to keep pace with changes in technology or provide timely enhancements to our solutions and support.
  • Software defects, undetected errors, and development delays for our solutions.
  • The possibility of cyberattacks, security vulnerabilities or Internet disruptions, including data security and privacy leaks, and data loss and business interruptions.
  • The possibility of failure of our business continuity plan during a catastrophic event.

Revenue & Expenses

Visualization of income flow from segment revenue to net income

Company Overview

Full financial data and analysis

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