Paychex Q3 revenue beats expectations on Paycor acquisition

Overview

• US human capital management firm's fiscal Q3 revenue grew 20%, beating analyst expectations

• Adjusted EPS for fiscal Q3 rose 15%, beating analyst expectations

• Quarterly growth driven by Paycor acquisition and higher revenue per client

Outlook

• Paychex expects fiscal 2026 interest on funds held for clients of $200 mln to $210 mln

• Company maintains all other aspects of fiscal 2026 guidance from prior outlook

• Paychex says changes in macroeconomic environment could alter its guidance

Result Drivers

• PAYCOR ACQUISITION - Acquisition of Paycor drove Management Solutions revenue growth and increased client count

• HIGHER REVENUE PER CLIENT - Higher revenue per client driven by Paycor's upmarket client base, price realization, and product penetration

• PEO AND INSURANCE GROWTH - PEO and Insurance Solutions revenue increased due to growth in average PEO worksite employees and higher insurance revenues

Company press release: ID:nBw6b2b4ja

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 15 "hold" and 3 "sell" or "strong sell"

• The average consensus recommendation for the employment services peer group is "buy."

• Wall Street's median 12-month price target for Paychex Inc is $114.00, about 25.8% above its March 24 closing price of $90.61

• The stock recently traded at 16 times the next 12-month earnings vs. a P/E of 20 three months ago

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