Paychex Q4 Earnings & Revenues Surpass Estimates, Increase Y/Y

Paychex, Inc. PAYX has reported impressive fourth-quarter fiscal 2025 results, wherein earnings and revenues beat the Zacks Consensus Estimate.

PAYX’s fiscal fourth-quarter earnings of $1.19 per share beat the Zacks Consensus Estimate by a slight margin and increased 6.3% from the year-ago quarter. Total revenues of $1.4 billion surpassed the consensus estimate by a slight margin and gained 10% from the year-ago quarter.

The company’s shares have risen 33.4% in a year compared with the 35.2% and 11% rallies of the industry and the Zacks S&P 500 composite, respectively.

PAYX’s Quarterly Performance

Revenues from the Management Solutions segment increased 12% year over year to $1 billion, beating our estimate of $979 million. Paycor's buyout and higher revenues per client, resulting from price realization and product penetration, facilitated this growth.

Professional employer organization (“PEO”) and Insurance Solutions’ revenues were $340.3 million, up 4% from the year-ago quarter. The figure met our estimate. Growth in the number of average PEO worksite employees and a surge in PEO insurance revenues contributed to this segment’s growth.

Service revenues gained 10% year over year to $1.4 billion, exceeding our projection of $1.3 billion. Interest on funds held for clients rose 18% from the year-ago quarter to $45.2 million, surpassing our estimation of $37.4 million.

EBITDA of $518.2 million dropped 1% from the year-ago quarter, missing our estimate of $657.9 million. Operating income decreased 11% year over year to $431.1 million, missing our projection of $615.4 million. The operating margin was 30.2%, down 700 basis points from the year-ago quarter. The reported figure beat our estimate of 43.5%.

Balance Sheet & Cash Flow of Paychex

The company exited the fourth quarter of fiscal 2025 with cash and cash equivalents of $1.6 billion, flat with the preceding quarter. The long-term debt totaled $4.5 billion compared with $799 million in the third quarter of fiscal 2025.

Cash generated from operating activities amounted to $394 million, while the capital expenditure totaled $60.5 million.

PAYX’S FY25 Guidance

Paychex expects revenues to grow 16.5-18.5%. The management raised its expectation for interest on funds held for clients to $190-$200 million compared with the preceding quarter’s view of $145-$155 million.

The company carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshots

Fiserv, Inc. FI registered mixed first-quarter 2025 results.

FI’s adjusted earnings per share of $2.14 beat the consensus mark by 2.9% and gained 13.8% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Adjusted revenues of $4.8 billion missed the consensus estimate by 1.6% but gained 5.5% on a year-over-year basis.

FactSet FDS reported the results for the third quarter of fiscal 2025.

FDS’s earnings per share of $4.27 missed the consensus mark by a slight margin and decreased 2.3% from the year-ago quarter. Revenues of $585.5 million beat the Zacks Consensus Estimate by a slight margin and gained 5.9% from the year-ago quarter.

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This article originally published on Zacks Investment Research (zacks.com).

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