Paychex (PAYX) Q3 2025 earnings summary

Executive summary

• Total revenue grew 5% year-over-year to $1.51 billion in Q3 FY25, with adjusted diluted EPS up 8% to $1.49 and adjusted operating income up 9%.

• Client and revenue retention improved to near record levels, with increased product penetration across HCM solutions and strong performance in both Management Solutions and PEO and Insurance Solutions.

• Entered a definitive agreement to acquire Paycor HCM for $4.1 billion, expected to close in April 2025, with anticipated cost synergies exceeding $80 million and accretive impact to adjusted EPS next fiscal year.

• Returned $1.2 billion to shareholders year-to-date via dividends and share repurchases.

• Innovation remains a focus, with new AI-powered HR copilot and Paychex Perks marketplace launched, and recognition for innovation and ethics by Fortune and Ethisphere.

Financial highlights

• Q3 FY25 total revenue: $1.51 billion, up 5% year-over-year; nine-month revenue: $4.14 billion, up 4%.

• Management Solutions revenue: $1.1 billion, up 5%; PEO and Insurance Solutions: $365.4 million, up 6%.

• Q3 operating income: $691.8 million, up 6%; adjusted operating income: $708.5 million, up 9%; adjusted EBITDA: $751.6 million, up 8%.

• Q3 diluted EPS: $1.43, up 4%; adjusted diluted EPS: $1.49, up 8%.

• Cash, restricted cash, and investments: $1.7 billion as of February 28, 2025; free cash flow for fiscal YTD: $1.43 billion.

Outlook and guidance

• Fiscal 2025 total revenue expected to grow 4%-5.5%, with adjusted diluted EPS growth of 5%-7% (excluding Paycor).

• Including Paycor, Q4 FY25 revenue growth expected at 10%-12%, with neutral impact to adjusted EPS.

• Adjusted operating income margin projected at approximately 43%.

• Fiscal 2025 PEO and Insurance Solutions revenue expected to grow 6.0%-6.5%.