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May 31, 2024
Paychex Q4 2024 Earnings Report
Paychex reported solid financial results, with revenue growth and operating margin expansion.
Key Takeaways
Paychex reported a 5% increase in total revenue to $1.3 billion for the fourth quarter. Diluted earnings per share increased by 8% to $1.05, while adjusted diluted earnings per share increased by 15% to $1.12. The company's performance reflects its ability to navigate changing market conditions and deliver value to clients through innovative HR technology and advisory solutions.
Total revenue increased by 5% to $1.3 billion, driven by growth in Management Solutions and PEO & Insurance Solutions, partially offset by a lower contribution from ERTC service.
Management Solutions revenue grew by 3% to $930.3 million, driven by client growth and higher product penetration.
PEO and Insurance Solutions revenue increased by 9% to $326.6 million, driven by growth in average PEO worksite employees and increased insurance revenues.
Operating income grew by 6% to $481.8 million, with an operating margin of 37.2%.
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 total revenue growth in the range of 4.0% to 5.5% and adjusted diluted earnings per share growth in the range of 5% to 7% for fiscal year 2025.
Positive Outlook
- Total revenue is anticipated to grow in the range of 4.0% to 5.5%.
- Adjusted diluted earnings per share is anticipated to grow in the range of 5% to 7%.
- Management Solutions revenue is anticipated to grow in the range of 3.0% to 4.0%.
- PEO and Insurance Solutions revenue is anticipated to grow in the range of 7.0% to 9.0%.
- Operating margin is anticipated to be in the range of 42% to 43%.
Challenges Ahead
- Changes in the macroeconomic environment could alter our guidance.
- Small and mid-size businesses continue to face a challenging operating environment due to complex regulations.
- Small and mid-size businesses continue to face a tight labor market.
- Small and mid-size businesses continue to face inflationary pressures.
- The effective income tax rate for fiscal 2025 is anticipated to be in the range of 24% to 25%.
Revenue & Expenses
Visualization of income flow from segment revenue to net income