Paychex (PAYX) Q3 2025 earnings summary

Executive summary

• Third quarter revenue grew 5% year-over-year to $1.51 billion, with adjusted EPS up 8% and adjusted operating income up 9%, reflecting efficiency gains from automation and technology investments.

• Client and revenue retention improved to near record levels, with increased product penetration across HCM solutions.

• Announced definitive agreement to acquire Paycor for $4.1 billion, expected to close in April 2025, enhancing SaaS HCM platform offerings and expanding the customer base.

• Returned $1.2 billion to shareholders in the first nine months via dividends and share repurchases.

Financial highlights

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

• Management Solutions revenue grew 5% to $1.1 billion; PEO and Insurance Solutions revenue increased 6% to $365.4 million, driven by client growth and higher revenue per client.

• Q3 operating income rose 6% to $691.8 million; adjusted operating income increased 9% to $708.5 million.

• Q3 adjusted EBITDA was $751.6 million, up 8% year-over-year.

• Cash, restricted cash, and investments totaled $1.7 billion as of February 28, 2025.

Outlook and guidance

• Fiscal 2025 revenue expected to grow 4%-5.5%, with adjusted diluted EPS growth at 5%-7% and adjusted operating margin projected at approximately 43%.

• Management Solutions revenue expected to grow 3%-4%; PEO and Insurance Solutions guided to 6%-6.5%.

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

• Guidance excludes impact from the pending Paycor acquisition for full-year fiscal 2025.