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Feb 28
Paychex Q3 2025 Earnings Report
Paychex reported steady revenue and earnings growth in Q3 2025.
Key Takeaways
Paychex, Inc. achieved 5% revenue growth in the third quarter of fiscal 2025, driven by strong performances in management solutions and PEO & insurance solutions segments. The company improved both operating margins and EPS, supported by operational efficiencies and strategic investments in technology.
Revenue increased 5% to $1.509 billion.
Net income rose 4% to $519.3 million.
Diluted EPS grew 4% to $1.43; adjusted EPS up 8% to $1.49.
Operating margin improved to 45.8% and adjusted operating margin to 46.9%.
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 anticipates continued growth in fiscal 2025, with stable margin guidance and growth in PEO and insurance solutions revenue.
Positive Outlook
- PEO and Insurance Solutions revenue expected to grow 6.0% to 6.5%.
- Adjusted operating margin anticipated at approximately 43%.
- Strong customer base growth with nearly 800,000 combined customers post-Paycor acquisition.
- Continued investments in automation, technology, and AI to drive efficiency.
- Revenue growth supported by pricing and product penetration.
Challenges Ahead
- Headwinds from lower ancillary service revenues due to ERTC program expiration.
- Impact of acquisition-related costs on net income and expenses.
- Interest on funds held for clients decreased due to lower interest rates.
- Macroeconomic uncertainties could affect future performance.
- Higher PEO direct insurance costs due to growing worksite employee base.