Paychex beats quarterly estimates on strong demand for payroll services

March 25 (Reuters) - Payroll firm Paychex PAYX.O beat third-quarter earnings estimates on Wednesday, helped by strong demand for its payroll and human resources services, despite small-business clients being cautious on spending.

Shares of the Rochester, New York-based company, which have fallen more than 19% this year, rose nearly 3% in premarket trading following the results.

Increasing state-level compliance requirements for paid leave, retirement mandates and transparency in wage reporting have made in-house payroll increasingly risky for small firms, boosting demand for Paychex's services.

Paychex provides payroll processing, HR and benefits administration primarily for small- and medium-sized businesses.

The company's revenue rose 20% to $1.81 billion in the third quarter from a year ago, beating analysts' average estimate of $1.79 billion, according to data compiled by LSEG.

Adjusted profit came in at $1.71 per share for the three months ended February 28, compared with estimates of $1.67 apiece.

Management solutions, Paychex's largest segment, reported a 23% rise in quarterly revenue, helped by an increased number of clients and higher revenue per client on the back of cloud-based payroll firm Paycor's customer base.

Paychex acquired Paycor for about $4.1 billion in cash last year, adding to its product portfolio Paycor's software that automates routine tasks and reduces compliance risk.

Paychex on Wednesday raised its annual forecast for interest on funds held for clients, which is the interest the company earns by investing client payroll and tax funds before they are paid out to employees or tax authorities.

It expects the interest to be between $200 million and $210 million, up from its previous forecast range of $190 million to $200 million.