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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.
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.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
Analyze how earnings announcements historically affect stock price performance
Avg. Return Before/After Earnings
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