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Paychex Reports In-Line First-Quarter Revenue, Affirms Full-Year Outlook

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Paychex Reports In-Line First-Quarter Revenue, Affirms Full-Year Outlook

Paychex (PAYX) reported fiscal first-quarter revenue growth in line with market expectations, while management reiterated its full-year outlook amid a tough comparison in the ongoing three-month period.

Revenue in the quarter ended Aug. 31 rose 6% year over year to $1.63 billion, matching the FactSet-polled consensus. Adjusted per-share earnings improved to $1.34 from $1.22 a year earlier, and surpassed Wall Street's estimate of $1.32.

For fiscal 2027, the human resources software provider continues to anticipate growth of 7% to 9% for adjusted EPS and 5% to 6% for revenue. Analysts are looking for non-GAAP EPS of $5.96, implying a year-over-year increase of 8.2%. The Street is projecting a full-year revenue jump of 5.4% to $6.87 billion.

Paychex's second-quarter revenue is likely to grow in line with the first-quarter rate, Chief Financial Officer Bob Schrader said during an earnings conference call, according to a FactSet transcript.

"Second-quarter revenue and earnings growth reflect a difficult comparison to prior year," Schrader said, pointing to factors including realized gains that it recorded in the fiscal second quarter of last year.

The full-year outlook "assumes the current macro environment, including stable demand and flat employment levels," Schrader told analysts.

Last month, RBC Capital Markets projected a "modest beat" for Paychex's first-quarter results, with the PEO segment seen potentially delivering higher revenue growth than expected.

Shares of the company declined 7.2% intraday Wednesday. The stock has fallen about 5% so far this year.

First-quarter revenue in the management solutions segment rose 4% to $1.21 billion as revenue per client grew. Sales in the professional employer organization and insurance solutions division gained 12% to $367.6 million mainly due to an increase in the number of average PEO worksite employees and increased insurance volume.

In July, Paychex rival ADP (ADP) reported above-consensus fourth-quarter results. Last month, Paycom Software (PAYC) posted 10% annual revenue growth for the second quarter.

Price: $106.71, Change: $-7.82, Percent Change: -6.83%

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