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Paychex Q2 Earnings & Revenues Surpass Estimates, Increase Y/Y

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Paychex, Inc. (PAYX - Free Report) has reported impressive second-quarter fiscal 2025 results, wherein earnings and revenues beat the Zacks Consensus Estimate.

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PAYX’s earnings of $1.1 per share beat the Zacks Consensus Estimate by 1.8% and increased 5.6% from the year-ago quarter. Total revenues of $1.3 billion outpaced the consensus estimate by a slight margin and gained 4.8% from the year-ago quarter.

The company’s shares have gained 17.5% in the year-to-date period, underperforming the 23.3% and 25.7% rallies of the industry and the Zacks S&P 500 composite, respectively.

Paychex, Inc. Price, Consensus and EPS Surprise

 

Paychex, Inc. Price, Consensus and EPS Surprise

Paychex, Inc. price-consensus-eps-surprise-chart | Paychex, Inc. Quote

PAYX’s Quarterly Performance

Revenues from the Management Solutions segment increased 3% year over year to $962.9 million, beating our estimate of $955.5 million. Professional employer organization (“PEO”) and Insurance Solutions’ revenues were $317.9 million, up 7% from the year-ago quarter. The figure missed our estimate of $319.4 million.

Service revenues gained 5% year over year to $1.3 billion, meeting our estimate. Interest on funds held for clients jumped 15% from the year-ago quarter to $36.1 million, missing our projection of $36.8 million.

EBITDA of $579.1 million gained 5% from the year-ago quarter, missing our estimate of $581.3 million. Operating income increased 6% year over year to $538.1 million, surpassing our projection by a slight margin. The operating margin was 40.9%, up 70 basis points from the year-ago quarter. The reported figure missed our estimate of 41%.

Balance Sheet & Cash Flow of Paychex

The company exited the second quarter of fiscal 2025 with cash and cash equivalents of $1.2 billion compared with $1.5 billion in the preceding quarter. The long-term debt totaled $798.9 million compared with $798.7 in first-quarter fiscal 2025.

Cash generated from operating activities amounted to $295 million, while the capital expenditure totaled $47 million.

PAYX’S FY25 Guidance

Paychex expects interest on funds held for clients to be $145-$155 million. PAYX anticipates other income of $30-$35 million.

Paychex carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshots of PAYX’s Peers

Insperity, Inc. (NSP - Free Report) reported mixed third-quarter 2024 results.

NSP’s adjusted earnings (excluding 32 cents from non-recurring items) of 39 cents per share outpaced the consensus estimate by 21.9% but decreased 73.3% year over year. Revenues of $1.6 billion missed the Zacks Consensus Estimate slightly but increased from the year-ago quarter.

Republic Services, Inc. (RSG - Free Report) posted mixed third-quarter 2024 results.

RSG’s earnings per share (excluding 1 cent from non-recurring items) of $1.8 outpaced the Zacks Consensus Estimate by 11.7% and grew 17.5% from the year-ago quarter. Revenues of $4.1 billion missed the consensus mark by a slight margin but increased 6.5% on a year-over-year basis.


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