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Paychex has raised its dividend every year since 2020 and the cash flow math still works, but something in the payout structure signals the easy years of outsized raises may be behind it.

Paychex (NASDAQ:PAYX | PAYX Price Prediction) declared a quarterly dividend of $1.19 per share on October 15, 2026. That works out to an indicated $4.76 per share per year. The stock goes ex-dividend on October 26, and the payment lands November 25. With shares at $111.20, the forward yield is about 4.3%. Our view: the payout is safe. The buffer is smaller than it used to be, though, so future increases will probably track earnings growth rather than exceed it.

Cash Flow Covers the Check With Room to Spare In fiscal 2026, operating cash flow totaled $2.56 billion, and capital spending totaled $234.9 million. That left roughly $2.32 billion in free cash flow. Dividends of $1.59 billion used about 68% of it. Earnings leave less room. The dividend took about 90% of net income, and the new $4.76 rate equals about 86% of fiscal 2026 EPS of $5.51. Add the $611 million spent on buybacks, and Paychex returned about 95% of its free cash flow to shareholders.

The first quarter of fiscal 2027 looked tighter on paper. Operating cash flow was $413.5 million, while dividends cost $424.1 million. CFO Bob Schrader put the shortfall down to “the timing of client and corporate tax payments.” Paychex’s quarterly cash flow swings a lot. The February quarter brought in $812.5 million. Schrader also made the company’s priorities clear:

“We continue to focus on the drivers of long-term shareholder returns within our control, including strong earnings growth, sustained dividend growth, and disciplined capital deployment.”

Paycor Debt Is the Pressure Point Paychex took on $5.0 billion in borrowings to buy Paycor. At the end of the quarter, it had about $4.6 billion in total borrowings against roughly $1 billion in cash and corporate investments. Total liabilities were $11.96 billion, compared with equity of $3.71 billion. Management never described the debt as a limit on the dividend. CEO John Gibson said:

“We continue to operate from a position of financial strength supported by our durable recurring revenue, strong cash generation, and disciplined investment.”

How Paychex Stacks Up Against ADP and Paycom Automatic Data Processing (NASDAQ:ADP) paid $2,626.3 million in fiscal 2026 dividends. That was about 50% of its free cash flow, and ADP still had room to spend $2,083.3 million on buybacks. ADP also guides for faster adjusted EPS growth: 9% to 11%, compared with 7% to 9% at Paychex. Paycom Software (NYSE:PAYC) pays a small dividend and leans on buybacks. Last quarter it spent $345.9 million on repurchases, compared with $17.9 million in dividends. Of the three, Paychex offers the most income, but ADP has more room to keep paying.

A Dividend Record Built on Steady Raises Paychex has paid quarterly dividends without a break since 1999. The record has one pause: the payout stayed at $0.62 through 2020. After that, it rose each year to $0.66, $0.79, $0.89, $0.98, $1.08, and $1.19. The latest raise was about 10%.

What to Watch Before the Next Raise Fiscal 2027 guidance assumes “flat employment levels.” Gibson called the job market “low fire, low hire” and said the company is “still not seeing any signs of a recession.” Keep an eye on PEO benefits enrollment in October and January, which management cited as a reason for keeping the outlook conservative. Wall Street is cautious too: 15 analysts rate the stock a hold, and the shares are down 8.26% over the past year. Free cash flow covers the $4.76 dividend easily, and the warning signs we flag when a payout is actually at risk (we laid out all seven in a free report) are not flashing here. A payout that already eats up this much of earnings, though, points to increases that stay in line with EPS growth from here.

Contact [email protected] for any questions or corrections.

Paychex Plunges, Providing the Entry Investors Have Been Waiting ForPaychex NASDAQ: PAYX held its 2026 Annual Meeting of Stockholders virtually on Oct. 15, with shareholders voting on director elections, executive compensation, auditor ratification and a shareholder proposal related to special meetings.

Chairman Martin Mucci said the virtual format was intended to enable more stockholders to attend regardless of location. Approximately 356 million common shares were outstanding and eligible to vote as of the Aug. 17 record date, and about 91% of outstanding shares were represented at the meeting in person or by proxy, establishing a quorum.

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Paychex Stock Looks Beaten Down, But Not BrokenMucci also thanked Kara Wilson, who is not seeking re-election, for her 10 years of service on Paychex’s board.

Shareholder Proposals and Board Recommendations
Shareholders considered the election of 10 board nominees: Mucci, Thomas Bonadio, Joseph Doody, John Gibson, J. Michael Hansen, Pamela Joseph, Theresa Payton, Kevin Price, Joseph Tucci and Joseph Velli. The board recommended that shareholders vote in favor of each nominee.

The Late-Stage Bull Market Is a Buying Opportunity for TechThe company also sought advisory approval of named executive officer compensation, commonly called a “say-on-pay” vote. Mucci said approximately 96% of votes cast on the proposal in the prior year supported executive compensation. The board again recommended a vote in favor, saying the program aligns executive compensation with shareholder interests.

In addition, the board recommended ratification of PricewaterhouseCoopers as Paychex’s independent registered public accounting firm for the fiscal year ending May 31, 2027.

The final ballot item was a shareholder proposal titled “Attainable Shareholder Right to Call for a Special Shareholder Meeting.” The board recommended shareholders vote against the measure.

John Chevedden, a private investor and the proposal’s proponent, argued that Paychex’s current requirement for more than 50% of outstanding shares to call a special meeting makes the right difficult to use because some shareholders do not vote. He said the threshold could require support from more than 60% of shares voted at an annual meeting.

Chevedden also said shareholder engagement was not a substitute for an attainable right to call a special meeting, arguing that engagement alone cannot bring an important matter to a shareholder vote. He urged shareholders to support the proposal.

Management Addresses Stock Split Questions
During the question-and-answer session, President and Chief Executive Officer John Gibson said Paychex’s board regularly discusses stock splits and other methods of returning value to shareholders.

Gibson said a stock split does not alter the company’s fundamental value or a shareholder’s proportional ownership, instead increasing the number of shares while lowering the price per share proportionally. He added that fractional-share investing options reduce the need for a split and that such actions carry costs.

“We certainly understand the interest in this topic, and we will continue to evaluate it periodically with other options to return value to our shareholders,” Gibson said.

AI Strategy and Governance
Gibson described artificial intelligence as an important area of focus for Paychex, both for innovation and for governance and oversight. He said the company has been using and investing in AI models and tools for some time.

According to Gibson, Paychex believes its proprietary data, scale as a human capital management and HR advisory provider, mission-critical platforms and client expertise position it to benefit from AI. The company is using the technology to deliver more personalized insights, automate routine work and help clients make more informed decisions, he said.

Gibson highlighted the company’s SixFifty compliance product, which he said helps clients navigate employment-law compliance and complete related workflows. He also cited the launch of WISE Hire, an AI-agent-based recruiting tool designed to assist with sourcing, screening and candidate outreach. Gibson said WISE was recognized as one of HR Tech’s top HR products of the year.

He said Paychex expects AI capabilities over time to support revenue through differentiation, new solutions and customer relationships, while also improving retention and operational efficiency. The board oversees the company’s AI approach, including ethical use and governance practices, he added.

Board Independence
Responding to a question regarding board independence, Gibson said Joseph Tucci serves as Paychex’s independent lead director. He said seven of the company’s nine current directors are independent and that the board has determined its current chairman and committee-leadership structure is appropriate.

Paychex said it will report final voting results in a Form 8-K filing with the Securities and Exchange Commission within four business days of the meeting.

About Paychex (NASDAQ:PAYX)Paychex, Inc NASDAQ: PAYX provides payroll, human resources and employee benefits solutions for businesses of varying sizes. Its services are designed to help employers manage workforce administration, compliance and employee-related processes through integrated software and professional support.

The company's offerings include payroll processing, time and attendance tracking, human resources administration, recruiting and onboarding tools, benefits administration, retirement services, workers' compensation and business insurance solutions.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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Key Takeaways Paychex stock gained 17.7% in six months, supported by AI innovation, recurring revenues and cost discipline.PAYX's AI automation and Paycor integration boost payroll efficiency, enterprise bookings and cross-selling.Paychex's Q1 fiscal 2027 revenues rose 6%, while adjusted EPS grew 10% and operating margin reached 42%.
Paychex (PAYX - Free Report) stock has gained 17.7% over the past six months compared with the industry’s 22.9% growth. The Zacks S&P 500 Composite gained 10.7% during the same period.

Six-Month Share Price Performance
                                                                    Image Source: Zacks Investment Research

Let us delve deeper into the factors contributing to the company’s strong performance.

AI-Driven Innovation to Boost Growth & MarginsPaychex is leveraging artificial intelligence (AI) to expand its offerings, enhance service delivery and improve efficiency. Its WISE platform uses more than 50 trillion proprietary data points to streamline payroll and HR workflows. In a pilot covering more than 50,000 businesses, WISE helped prevent approximately 90% of targeted payroll errors. The company has deployed more than 2,000 AI agents and features, increasing automated payroll processing by nearly 20% from January through August 2026. New offerings such as WISE Hire and WISE Pro drive revenue growth, while greater automation supports productivity and margin expansion.

Paycor Integration Boosts PAYX Cross-Selling OpportunitiesThe Paycor acquisition has expanded Paychex's enterprise reach and cross-selling opportunities across HR, benefits and advisory solutions. Its One Paychex strategy supports broader product adoption and higher customer value. In first-quarter fiscal 2027, enterprise bookings grew at a double-digit rate, while broker referrals rose 43% year over year. The rollout of Paychex Perks to approximately 2.5 million Paycor employees further expands cross-selling potential. Continued revenue synergies, wider distribution and improving sales productivity support long-term growth.

PAYX’s Recurring Revenues & Cost Discipline Support MarginsPaychex's recurring revenue model, improving client retention and pricing power underpin its earnings growth. In first-quarter fiscal 2027, revenues rose 6% to $1.6 billion, while adjusted EPS increased 10% to $1.34. Adjusted operating margin expanded 130 basis points to 42%, aided by productivity gains and cost discipline. Management reaffirmed its fiscal 2027 revenue growth outlook of 5-6% and adjusted operating margin target of approximately 44%. Continued pricing gains, higher product penetration and AI-driven efficiencies should support sustained profitability and earnings growth.

PAYX’s Cash Generation Supports Shareholder Returns  Paychex's consistent cash generation supports dividends and disciplined capital allocation. In fiscal 2026, operating cash flow reached $2.6 billion and free cash flow totaled $2.3 billion, with $2.2 billion returned to shareholders. In first-quarter fiscal 2027, the company paid $424.1 million in dividends, while operating cash flow reached $413.5 million despite tax payment timing effects. Continued earnings growth and prudent capital deployment should sustain long-term shareholder returns.

PAYX’s Zacks Rank & Stocks to ConsiderPaychex currently carries a Zacks Rank #3 (Hold) at present. 

A couple of better-ranked stocks in the broader Computer and Technology sector are Cisco Systems, Inc. (CSCO - Free Report) and CoStar Group, Inc. (CSGP - Free Report) .

Cisco Systems carries a Zacks Rank #2 (Buy) at present. It has a long-term earnings growth expectation of 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CSCO beat earnings estimates in each of the trailing four quarters, delivering an earnings surprise of 2.6%, on average.

CoStar Group also holds a Zacks Rank of 2 at present. It has a long-term earnings growth expectation of 36.6%.

CSGP beat earnings estimates in each of the trailing four quarters, with an average earnings surprise of 21.2%.

Paychex just posted a dividend yield that makes income investors stop and stare, but a closer look at Q1 cash flow and two underappreciated risks raises a question the company has not fully answered yet.

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Paychex (NASDAQ:PAYX | PAYX Price Prediction) stock has fallen 16.11% over the past month to $102.10. The slide came even though fiscal Q1 2027 adjusted EPS of $1.34 beat the $1.32 consensus. At that price, the annualized forward dividend of $4.76 yields roughly 4.66%. When a market leader yields that much, investors start asking whether the payout can hold.

Recurring Payroll Revenue Funds the Payout Paychex sells payroll, HR and benefits outsourcing to small and mid-sized businesses. Clients run payroll every pay period, so the revenue repeats. That repeat revenue is what pays the dividend. On the Q1 call, management said:

“Our business fundamentals remain strong. We continue to operate from a position of financial strength supported by our durable recurring revenue, strong cash generation, and disciplined investment.”

Management added, “We continue to get price realization. Retention continues to improve.” PEO and Insurance Solutions revenue rose 12% to $367.6M, and PEO retention hit a record.

An 89% Payout Ratio Looks Scary Until You Check the Cash Trailing dividends of $4.54 against GAAP EPS of $5.10 put the payout ratio near 89%. Automatic Data Processing (NASDAQ:ADP) pays $6.64 on $10.94 of EPS, about 61%, for a 2.55% yield. Workday (NASDAQ:WDAY) pays no dividend. It puts its cash back into growth and trades at 38 times trailing earnings, compared with Paychex at 20.

In fiscal 2026, operating cash flow of $2.5567B minus capex of $234.9M left $2.32B in free cash flow. Dividends of $1.5896B used about 68% of it, and Paychex still bought back 5.6M shares for $611.0M. Capex has stayed below operating cash flow in every fiscal year since 2007. Our view: the high payout ratio is what an asset-light, recurring-revenue model can safely carry, so we read it as a sign of strength.

The record backs that up, with one warning. The quarterly dividend rose from $0.62 in 2020 to $1.19, and the latest raise was about 10%. But the payment stayed flat at $0.31 from 2009 through 2011. In a severe recession, Paychex froze the dividend rather than cutting it.

Two Risks Most Holders Underrate Client head count. Part of Paychex’s revenue depends on how many people its clients employ. In a downturn, existing clients shrink even if none of them leave. Fiscal 2027 guidance assumes flat employment levels, and management called the job market “low fire, low hire.”

Interest on client funds. Paychex collects payroll cash before it pays it out and earns interest while it holds the money. That income was $49.8M in Q1, and full-year guidance is $200-210M, which reflects the most recent 25 basis point Fed hike. When the Fed cuts rates, this income shrinks almost dollar for dollar. Borrowing adds pressure too: the Paycor deal added $5.0B in debt, and total borrowings were about $4.6 billion at quarter end.

Verdict: Durable, With a Cash Flow Tripwire The dividend is dependable. Expect future raises to slow toward the 7-9% adjusted EPS growth guidance rather than repeat double-digit jumps. Q1 operating cash flow of $413.5M fell short of $424.1M in dividends, and management blamed the timing of client and corporate tax payments. If cumulative operating cash flow for the first six months still trails cumulative dividends when the fiscal Q2 report comes out in December, the timing explanation stops holding up. The 89% payout ratio would then become a real concern.

Contact [email protected] for any questions or corrections.

Paychex just handed income investors a yield nearly double what ADP offers, but a 14% selloff and a balance sheet carrying billions in acquisition debt raise questions about whether that payout is a bargain or a warning sign.

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ADP or Paychex: which payroll dividend belongs in a retirement portfolio right now? ADP (NASDAQ:ADP | ADP Price Prediction) and Paychex (NASDAQ:PAYX) are the closest thing payroll processing has to a duopoly, and both have long histories of lifting their payouts. ADP pays $1.70 a quarter, a forward annual rate of $6.80. Paychex pays $1.19 a quarter, or $4.76 a year. Paychex shares fell 13.66% over the past week, a stretch that included its September 23 earnings report. That drop makes the income question sharper.

Paychex Pays the Bigger Yield Despite the Smaller Check Share price sets the yield, so the bigger per-share dividend can carry the smaller yield. ADP trades at $261 and yields 2.52%. Paychex, at $99.30, yields 4.48%.

Both raised recently. ADP lifted its quarterly rate from $1.54 to $1.70 beginning with the December 2025 ex-dividend date. Paychex moved from $1.08 to $1.19 starting in May 2026. Part of Paychex’s yield edge comes from pain: shares are down 19.13% over one year. Winner on income: Paychex.

ADP Carries the Safer Dividend and the Cleaner Record ADP earned $11.12 per share in fiscal 2026, well above its forward dividend. Operating cash flow of $5.44 billion covered $2,626.3 million in dividends and still funded $2,083.3 million of buybacks. CFO Peter Hadley reaffirmed a “longstanding commitment to growing our dividend.”

Paychex’s buffer is thinner. Fiscal 2026 EPS of $5.51 stands much closer to its forward rate, and operating cash flow of $2.56 billion supported $1.6 billion in dividends. It also carried about $4.6 billion in debt, a legacy of the Paycor deal.

The dividend record separates them further. ADP’s rate rose in every year of the available history, from $0.07625 in 1999 to $1.70 in 2026. Paychex held its quarterly rate at $0.62 across 2019 and 2020 before moving to $0.66 in 2021. Winner on safety: ADP.

Client Float and Customer Mix Decide Durability Both companies collect payroll cash from employers before paying it out to workers and tax agencies. In that window they invest the money and keep the interest, called float income. ADP earned $355.4 million from it last quarter on a $41.0 billion average balance, and guides to $1.54 billion to $1.56 billion for fiscal 2027. Paychex expects $200 million to $210 million. Falling short-term rates would reduce both streams as maturing holdings roll into lower yields, and ADP has more dollars exposed.

Customer mix cuts the other way. Paychex serves small- to medium-sized businesses, the employers quickest to cut staff when hiring cools. Its guidance assumes flat employment in what management calls a “low fire, low hire” market. ADP spreads across more than 1.1 million clients in over 140 countries, with enterprise and international bookings plus retention of 92.1%. Shareholders have noticed: ADP rose 46.17% over five years versus 7.46% for Paychex. Winner on risk: ADP.

ADP Is the Retirement Holding, Paychex Is the Yield Play ADP is the better income holding if you’re building toward retirement. Its yield starts lower, but a steadier raise record, wider earnings coverage and a diversified client base make each future increase more reliable (that kind of multi-decade raise run is exactly what we screened for in a free Dividend Kings report here). ADP guides to adjusted EPS growth of 9% to 11% in fiscal 2027, above Paychex’s 7% to 9%, giving the dividend more room to compound.

Paychex fits a narrower profile: an investor who needs maximum cash today and accepts integration and employment risk for it. At 18x forward earnings versus 22x for ADP, it is the cheaper stock, and CEO John Gibson says “Paychex has never been better positioned.”

One development would flip the call: Paychex paying down a meaningful piece of its $4.6 billion in debt while holding revenue growth inside its 5% to 6% guide. Investors should look to the next quarterly report, where management expects about 4% revenue growth.

Contact [email protected] for any questions or corrections.

Paychex stock has shed double digits in the past month while the company keeps cutting dividend checks, but a closer look at the cash flow math reveals how much cushion actually stands between shareholders and a cut.

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Paychex shareholders got their latest quarterly check on August 28, 2026, and the question worth asking after a rough month in the stock is whether that check keeps arriving reliably. Shares of Paychex (NASDAQ:PAYX | PAYX Price Prediction) are down 15.36% over the past month and 13.87% over the past year, with the Wall Street Journal flagging on September 23, 2026 that sales growth is slowing. For a retirement-focused income holder, price weakness matters less than payout durability. On that score, the numbers hold up.

Why the Payroll Model Protects the Payout Paychex sells payroll, HR, benefits, and PEO services under recurring contracts. Cash comes in whether client businesses are expanding or holding flat. In fiscal Q1 2027 the company posted revenue of $1.6305 billion, up 5.88% year over year, with Management Solutions rising 4% and PEO and Insurance Solutions rising 12%. GAAP operating margin expanded to 38.0%, up from 35.2% a year ago. CEO John Gibson framed it this way on the September 23 call:

“Our financial position remains strong with cash, restricted cash, and total corporate investments of approximately $1 billion, and total borrowings of approximately $4.6 billion at quarter end.”

Coverage Math Behind the Check In Q1 fiscal 2027, Paychex paid $1.19 per share in dividends, totaling $424.1 million, against net income of $429.7 million and operating cash flow of $413.5 million. Capex ran just $56.1 million. That single quarter looks tight because operating cash flow was down 42.44% year over year on tax-payment timing. Zoom out and the cushion returns: fiscal 2026 generated $2.5567 billion in operating cash flow against a $1.5896 billion dividend payout, with total shareholder returns of $2.2 billion including $611.0 million in buybacks. Adjusted diluted EPS came in at $5.51 for the year.

Raise History and Yield The dividend has stepped up annually in recent years: $0.79 in 2022, $0.89 in 2023, $0.98 in 2024, $1.08 in 2025, and $1.19 in 2026. The trailing 12-month payout sits at $4.54, with an annualized forward figure of $4.76. Against a current price of $106.66, that puts the yield firmly in retirement-income territory.

Where Paychex Sits Versus Peers Automatic Data Processing (NASDAQ:ADP) is the dividend aristocrat benchmark: it paid $2,626.3 million in fiscal 2026 dividends against operating cash flow of $5,441.2 million, a comfortable coverage profile Paychex now roughly mirrors on a relative basis. The other side of the trade is Paycom Software (NYSE:PAYC), which favors buybacks. In Q1 2026 Paycom paid just $17.7 million in dividends while repurchasing $1.060 billion in stock, adding $675.0 million in new long-term debt and watching shareholders’ equity fall 52.73% year over year. Paychex sits between ADP’s fortress and Paycom’s aggression.

Real Risks to Name The revenue base tracks small and mid-size business employment. Management described conditions as “low fire, low hire”, with the customer mix roughly 70% blue- and gray-collar. A downturn in small-business formation would compress the cash flow feeding the dividend. Second, Paychex carries $4.6 billion in borrowings tied to the $5 billion Paycor financing, which competes with dividend-growth capacity. Third, the payout is high relative to earnings, leaving less slack if PEO renewals in October and January or healthcare inflation surprise negatively.

The verdict for income investors: the check is well-supported by recurring revenue, 47% trailing return on equity, and a ~44% adjusted operating margin target. The pace of future raises may cool while debt is worked down, but the payment itself looks durable.

Contact [email protected] for any questions or corrections.

For the quarter ended August 2026, Paychex (PAYX - Free Report) reported revenue of $1.63 billion, up 5.9% over the same period last year. EPS came in at $1.34, compared to $1.22 in the year-ago quarter.

The reported revenue represents a surprise of +0.76% over the Zacks Consensus Estimate of $1.62 billion. With the consensus EPS estimate being $1.33, the EPS surprise was +0.75%.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how Paychex performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

Average interest rates earned (exclusive of net realized gains) - Funds held for clients: 3.7% versus 3.4% estimated by three analysts on average.Average investment Balance - Corporate cash equivalents and investments: $1.24 billion versus $1.6 billion estimated by three analysts on average.Average investment Balance - Funds held for clients: $5.4 billion versus the three-analyst average estimate of $5.51 billion.Average interest rates earned (exclusive of net realized gains) - Corporate cash equivalents and investments: 3.3% versus the three-analyst average estimate of 3.6%.Revenue- Management Solutions: $1.21 billion versus the five-analyst average estimate of $1.22 billion. The reported number represents a year-over-year change of +4.3%.Revenue- Interest on funds held for clients: $49.8 million versus $47.17 million estimated by five analysts on average. Compared to the year-ago quarter, this number represents a +4.6% change.Revenue- Total service revenue: $1.58 billion compared to the $1.57 billion average estimate based on five analysts. The reported number represents a change of +5.9% year over year.Revenue- PEO and Insurance Solutions: $367.6 million versus the five-analyst average estimate of $352.39 million. The reported number represents a year-over-year change of +11.7%.View all Key Company Metrics for Paychex here>>>

Shares of Paychex have returned -8.4% over the past month versus the Zacks S&P 500 composite's +1.3% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

Paychex (PAYX - Free Report) came out with quarterly earnings of $1.34 per share, beating the Zacks Consensus Estimate of $1.33 per share. This compares to earnings of $1.22 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of +0.75%. A quarter ago, it was expected that this payroll processor and human-resources services provider would post earnings of $1.31 per share when it actually produced earnings of $1.32, delivering a surprise of +0.76%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Paychex, which belongs to the Zacks Internet - Software industry, posted revenues of $1.63 billion for the quarter ended August 2026, surpassing the Zacks Consensus Estimate by 0.76%. This compares to year-ago revenues of $1.54 billion. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Paychex shares have added about 2.1% since the beginning of the year versus the S&P 500's gain of 13.4%.

What's Next for Paychex?While Paychex has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Paychex was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.36 on $1.65 billion in revenues for the coming quarter and $5.96 on $6.85 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 34% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Karooooo Ltd. (KARO - Free Report) , has yet to report results for the quarter ended August 2026.

This company is expected to post quarterly earnings of $0.57 per share in its upcoming report, which represents a year-over-year change of +21.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Karooooo Ltd.'s revenues are expected to be $97.72 million, up 28.4% from the year-ago quarter.

Key Takeaways Paychex's WISE powers nearly 600 AI features and agents using more than 26T proprietary data points.Paycor contributed nearly 12% to FY26 top-line growth, while Management Solutions revenues rose 20%.Paychex's ASO and PEO worksite employees rose 6% to 2.6M, while retirement assets grew 19% to $66B. Paychex (PAYX - Free Report) stock has risen 25.9% over the past six months, outpacing the industry's 19.1% advance and the Zacks S&P 500 Composite's 16.7% return.

6-Month Share Price Performance                                                                  Image Source: Zacks Investment Research

The Zacks Consensus Estimate for PAYX’s fiscal 2027 revenues is $6.9 billion, implying 5.3% year-over-year growth. The consensus mark for earnings per share is $6, suggesting an 8.2% year-over-year rise.

For fiscal 2028, the consensus mark for revenues is $7.2 billion, implying 5.6% year-over-year growth. Earnings per share is anticipated to increase 6.4% to $6.34.

Factors That Augur Well for Paychex’s SuccessAI-Backed Technology Powers HCM Platform: Paychex remains committed to investing in technology to enhance productivity, decision-making and customer outcomes. The company’s Workforce Intelligence Strengthened by Expertise (“WISE”) fuels nearly 600 AI features and agents across the company’s solutions and operations.

It draws on more than 26 trillion proprietary data points. It improves automation, customer experience and operational prowess, while bolstering the company’s competitive positioning in the Human Capital Management (“HCM”) market.

Opportunities From Paycor Buyout: Paychex made a solid move by acquiring Paycor HCM, a leading provider of HCM, payroll and talent software, as it expanded PAYX’s presence upmarket, raised cross-sale opportunities and improved its suite of AI-fueled HCM solutions. The buyout contributed nearly 12% to top-line growth in fiscal 2026.

Revenues from Management Solutions increased 20% year over year, aided by Paycor’s upmarket customer base, higher revenue per client, price realization and an uptick in product penetration.

Growth Beyond Payroll: Paychex sustains its relationship with customers and further expands via HR outsourcing, retirement and other solutions. At the end of fiscal 2026, worksite employees served through the Administrative Services Organization (“ASO”) and Professional Employer Organization (“PEO”) solutions rose 6% year over year to 2.6 million, retirement plans gained 4% to 130,000 and retirement assets grew 19% to $66 billion. Perks unique employees purchased escalated to 237,000, up 78% year over year. This broader solution adoption should support top-line diversification and higher customer value.

Risks Faced by PaychexMacroeconomic Headwinds: Paychex serves small and medium-sized businesses, exposing its performance to economic setbacks, inflation, interest rate fluctuations and credit market volatility. Customers facing financial pressure could translate into workforce reduction, business closures, and reduced payroll spending and HR outsourcing solutions, thus pressuring the top line.

Leverage Risk From Acquisition: The Paycor buyout raised Paychex’s debt burden and integration complexity. Acquisitions can result in higher costs, unexpected liabilities, customer attrition and challenges in achieving anticipated synergies. The company issued $4.2 billion in corporate debt to fund the buyout, raising its exposure to interest expenses and financial-covenant requirements.

PAYX’s Zacks Rank & Stocks to ConsiderThe company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Ciena (CIEN - Free Report) and Fortinet (FTNT - Free Report) , each currently carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ciena has a long-term earnings growth expectation of 12%. CIEN delivered a trailing four-quarter earnings surprise of 17.6%, on average.

Fortinet has a long-term earnings growth expectation of 17.3%. FTNT delivered a trailing four-quarter earnings surprise of 20.3%, on average.

Paychex, Inc. (NASDAQ:PAYX) will release its first-quarter earnings report before the opening bell on Wednesday, Sept. 23.

Analysts expect the Rochester, New York-based company to report quarterly earnings of $1.32 per share, up from $1.22 per share in the year-ago period. The consensus estimate for PAYX’s quarterly revenue is $1.63 billion. It reported $1.54 billion last year, according to Benzinga Pro.

On June 24, Paychex reported better-than-expected fourth-quarter earnings.

Paychex shares slipped 0.2% to close at $118.30 on Tuesday.

Benzinga readers can access the latest analyst ratings on the Analyst Stock Ratings page. Readers can sort by stock ticker, company name, analyst firm, rating change or other variables.

Let’s have a look at how Benzinga’s most-accurate analysts have rated the company in the recent period.

Stifel analyst David Grossman maintained a Hold rating and raised the price target from $110 to $130 on Sept. 9, 2026. This analyst has an accuracy rate of 61%. Wells Fargo analyst Jason Kupferberg maintained an Underweight rating and raised the price target from $95 to $111 on Sept. 9, 2026. This analyst has an accuracy rate of 54%. Citigroup analyst Bryan Keane maintained a Buy rating and increased the price target from $140 to $150 on July 30, 2026. This analyst has an accuracy rate of 71%. UBS analyst Kevin Mcveigh maintained a Neutral rating and increased the price target from $105 to $115 on July 22, 2026. This analyst has an accuracy rate of 52%. Morgan Stanley analyst James Faucette maintained an Equal-Weight rating and raised the price target from $107 to $109 on June 30, 2026. This analyst has an accuracy rate of 65%. Trending

Considering buying PAYX stock? Here’s what analysts think:

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WISE agents proactively help prevent payroll errors, enable more consultative service, and increase efficiency across the Paychex enterprise – enhancing customer experiencesResults from more than 50,000 early adopters reinforce the value of WISE across Paychex’s HCM platformsCompany continues to scale WISE based on early adopter success
ROCHESTER, N.Y., Aug. 31, 2026 (GLOBE NEWSWIRE) -- Paychex, Inc. (Nasdaq: PAYX), a leading provider of expert-enabled HR, payroll, and benefits, today shared early results from more than 50,000 businesses using WISE (Workforce Intelligence, Strengthened by Expertise). Early adopter data shows WISE is helping customers proactively prevent payroll errors, resolve service interactions faster, and improve efficiency across the Paychex enterprise — validating the company’s strategy to bring agentic AI into mission-critical workforce workflows.

Preventing Payroll Errors Before They Happen
Recurring payroll issues waste time, create risk, and can undermine employee trust. Companies average a 1.2% payroll error rate, and employees often begin looking for a new job after just two payroll mistakes. As business leaders are increasingly expected to do more with less, persistent demands and expanding priorities leave limited time for manual correction.

With WISE intelligence, Intelligent Pay Cycle continuously monitors the pay cycle for anomalies and proactively flags missing pay data, incomplete time records, and unresolved approvals before they become payroll problems, including:

Enabled proactive payroll management, with nearly 90% of identified time and pay rate errors corrected before payroll run day.Average time to review and resolve direct deposit changes fell from approximately three days to less than two days.

“WISE is not a set of AI features. It’s a shared intelligence engine embedded across our platforms to help customers complete work more efficiently and effectively,” said Ryan Bergstrom, Paychex Chief Product and Technology Officer. “From proactively identifying payroll issues to automating service interactions, WISE is already delivering measurable value at scale for customers and across our operations.”

Based on strong early adoption and validation, payroll intelligence and direct deposit approval capabilities reached general availability across Paychex Flex® users in late July, with missing punch and missing pay rate capabilities rolling out through September.

Driving Efficiency and Increasing Client Satisfaction
Delivered through both email and phone agents, WISE agentic intelligence runs through a customer lifecycle, from payroll pre-flight through post-cycle service. Thoughtfully developed to drive personalization and user confidence, WISE is delivering a faster, more positive client experience:

Across voice and email, WISE agents have handled more than 350,000 workforce conversations, with more than 20% resolved without human involvement.The WISE payroll voice agent operates at nearly 100% accuracy — with more than 40,000 users regularly choosing AI over a live representative.The WISE email agent has handled nearly 300,000 interactions with an average processing time of three minutes – more than 80% faster than human handling. “By automating routine interactions and surfacing issues earlier, WISE enables our service professionals to spend less time on repetitive tasks and more time helping clients solve broader workforce challenges,” Bergstrom added. “That shift from transaction handling to higher-value guidance is one of the most important benefits of our AI strategy.”

Unlocking Insights to Drive Organizational Effectiveness
Paychex continues to expand WISE across its operations to increase efficiency, accelerate service delivery, and enhance the customer experience. Over the past year, the company has equipped sales and service professionals with AI-powered tools that deliver real-time answers to customer questions and help teams respond more quickly and effectively. Paychex is also leveraging AI to modernize implementation workflows, helping new clients onboard faster and more efficiently.

To learn more about WISE and AI at Paychex, visit paychex.com/ai. 

About WISE
WISE (Workforce Intelligence Strengthened by Expertise) is the AI-powered intelligence engine transforming business operations with embedded context-aware intelligence, expert-enabled guidance, and autonomous execution. With Paychex’s five decades of trusted data and human expertise at its core, WISE transforms AI from a passive tool to expert-designed agentic workflows with the ability to complete tasks autonomously, making work faster, smarter, and more efficient.

About Paychex
Paychex, Inc. (Nasdaq: PAYX) provides a comprehensive suite of expert-enabled technology and advisory solutions that help businesses manage HR, payroll, and benefits. Serving approximately 840,000 customers and paying 1 in 11 U.S. private sector workers, Paychex combines scale, trusted expertise, and innovation to help businesses succeed. Built on more than 50 years of workforce experience and one of the industry’s largest proprietary HR datasets, Paychex’s WISE agentic AI engine embeds intelligence directly into workflows to improve productivity, enhance decision-making, and deliver better outcomes. Learn more at paychex.com.

Media Contact
Chelsea Wernick
Public Relations Program Manager
Paychex, Inc.
(585) 216-2974
[email protected]

AssuredPartners Investment Advisors LLC bought a new position in Paychex, Inc. (NASDAQ:PAYX – Free Report) in the second quarter, according to its most recent filing with the Securities and Exchange Commission (SEC). The fund bought 6,237 shares of the business services provider’s stock, valued at approximately $613,000.

A number of other large investors have also modified their holdings of PAYX. Johnson Financial Group Inc. acquired a new position in shares of Paychex in the 2nd quarter valued at $1,021,000. Tocqueville Asset Management L.P. acquired a new stake in Paychex during the 2nd quarter valued at approximately $30,544,000. West Family Investments Inc. acquired a new stake in Paychex during the second quarter worth about $228,000. NewEdge Wealth LLC purchased a new position in shares of Paychex during the 2nd quarter valued at approximately $2,269,000. Finally, Danica Pension Livsforsikringsaktieselskab purchased a new position in Paychex during the second quarter worth approximately $9,157,000. Hedge funds and other institutional investors own 83.47% of the company’s stock.

Analyst Ratings Changes PAYX has been the topic of several research analyst reports. Citigroup raised their price objective on Paychex from $140.00 to $150.00 and gave the company a “buy” rating in a report on Thursday, July 30th. UBS Group increased their target price on Paychex from $105.00 to $115.00 and gave the company a “neutral” rating in a research report on Wednesday, July 22nd. Morgan Stanley lifted their price target on shares of Paychex from $107.00 to $109.00 and gave the company an “equal weight” rating in a research note on Tuesday, June 30th. Stifel Nicolaus boosted their price target on shares of Paychex from $105.00 to $110.00 and gave the stock a “hold” rating in a report on Wednesday, June 17th. Finally, Cantor Fitzgerald restated an “underweight” rating and set a $107.00 price objective on shares of Paychex in a research report on Monday, July 20th. One analyst has rated the stock with a Strong Buy rating, two have issued a Buy rating, ten have issued a Hold rating and four have assigned a Sell rating to the stock. According to data from MarketBeat.com, the stock has an average rating of “Hold” and a consensus price target of $109.20.

Read Our Latest Analysis on Paychex Insider Transactions at Paychex In other Paychex news, CFO Robert L. Schrader sold 2,600 shares of the firm’s stock in a transaction that occurred on Monday, July 20th. The shares were sold at an average price of $115.09, for a total transaction of $299,234.00. Following the sale, the chief financial officer owned 18,547 shares of the company’s stock, valued at approximately $2,134,574.23. This trade represents a 12.29% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. Also, Director Joseph M. Tucci sold 3,907 shares of the firm’s stock in a transaction that occurred on Friday, June 26th. The stock was sold at an average price of $98.25, for a total value of $383,862.75. Following the transaction, the director owned 67,364 shares in the company, valued at $6,618,513. This represents a 5.48% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders own 0.80% of the company’s stock.

Paychex Stock Up 2.1% Shares of NASDAQ:PAYX opened at $122.50 on Thursday. The business has a fifty day moving average of $110.13 and a two-hundred day moving average of $99.70. The stock has a market cap of $43.57 billion, a P/E ratio of 25.05 and a beta of 0.81. The company has a quick ratio of 1.26, a current ratio of 1.26 and a debt-to-equity ratio of 1.22. Paychex, Inc. has a 52-week low of $85.45 and a 52-week high of $141.19.

Paychex (NASDAQ:PAYX – Get Free Report) last released its quarterly earnings results on Wednesday, June 24th. The business services provider reported $1.32 EPS for the quarter, beating the consensus estimate of $1.31 by $0.01. The firm had revenue of $1.61 billion for the quarter, compared to analyst estimates of $1.60 billion. Paychex had a net margin of 27.03% and a return on equity of 50.90%. The business’s revenue for the quarter was up 12.5% compared to the same quarter last year. During the same quarter in the previous year, the company earned $1.19 EPS. Paychex has set its FY 2027 guidance at 5.900-6.010 EPS. On average, research analysts expect that Paychex, Inc. will post 5.96 earnings per share for the current year.

Paychex Dividend Announcement The firm also recently announced a quarterly dividend, which will be paid on Friday, August 28th. Shareholders of record on Tuesday, July 28th will be issued a dividend of $1.19 per share. The ex-dividend date is Tuesday, July 28th. This represents a $4.76 dividend on an annualized basis and a yield of 3.9%. Paychex’s dividend payout ratio is 97.34%.

Paychex Profile (Free Report)

Paychex, Inc, founded in 1971 by B. Thomas “Tom” Golisano and headquartered in Rochester, New York, is a provider of payroll, human resources, and benefits outsourcing solutions for small- and medium-sized businesses. The company’s core services include payroll processing and tax filing, employee benefits administration, retirement services, and workers’ compensation administration, designed to simplify back-office operations and help clients comply with regulatory and tax requirements.

Paychex offers an integrated technology platform, marketed under the Paychex Flex brand, which delivers cloud-based payroll, HR, time and attendance, and reporting tools.

See Also Five stocks we like better than Paychex Bloom Energy’s AI Surge Meets a Valuation Reality Check Target Is Winning Shoppers Back—Can the Rally Reach $180? IonQ’s Space Contract Points to a New Frontier for Quantum Investors Is Apple’s AI Strategy Smarter Than Skeptics Think? Want to see what other hedge funds are holding PAYX? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Paychex, Inc. (NASDAQ:PAYX – Free Report).

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A month has gone by since the last earnings report for Paychex (PAYX - Free Report) . Shares have added about 14.4% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Paychex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Paychex's Q4 Earnings:Paychex, Inc. reported solid fourth-quarter fiscal 2026 results, with adjusted earnings beating the Zacks Consensus Estimate and revenues coming in line. Adjusted earnings of $1.32 per share surpassed the consensus estimate of $1.31 by a slight margin and increased 10.9% from the year-ago quarter. Total revenues of $1.61 billion rose 12.5% year over year and beat the consensus estimate by a slight margin.

The earnings upside was backed by segment growth, Paycor contributions and disciplined expense performance. Management Solutions led the quarter, while PEO and Insurance Solutions, and client fund interest added further support.

PAYX's Management Solutions Powers GrowthManagement Solutions’ revenues increased 14% year over year to $1.18 billion in the fiscal fourth quarter. The segment benefited from higher product penetration and growth in client worksite employees within Human Resources Solutions.

Paycor, acquired in April 2025, contributed about 8 percentage points to Management Solutions revenue growth. The acquisition also supported price realization and higher revenues per client, reflecting Paycor’s upmarket client base.

Management noted that the quarter included a full period of Paycor revenues and expenses compared with a partial period in the prior-year quarter. That comparison helped drive the sharper contribution from the acquired business in the latest quarter.

Paychex's PEO & Client Funds Add SupportProfessional Employer Organization and Insurance Solutions revenues were $369.7 million, up 9% from the year-ago quarter. Growth in the number of average PEO worksite employees supported the segment’s performance.

PEO insurance revenues also increased during the quarter. Interest on funds held for clients rose 15% to $52.2 million, driven by higher average investment balances resulting from the Paycor acquisition.

Total service revenues came in at $1.55 billion, up 12% from the year-ago period. The broad advance across core services showed that growth was not confined to one operating line.

PAYX's Margin Profile Expands in Q4Total expenses were relatively flat year over year at $1 billion. Increases in compensation-related expenses, amortization of intangible assets, technology investments, selling initiatives and marketing spending were offset by lower acquisition-related compensation and professional service costs.

Operating income rose 40% to $604.7 million. The operating margin expanded to 37.7% from 30.2% a year earlier, while the adjusted operating margin improved to 42.1% from 40.4%.

Adjusted operating income increased 17% to $675.8 million. The adjusted figure excludes acquisition-related costs, which were lower than in the prior-year quarter.

Paychex's Profitability Shows Earnings LeverageNet income increased 41% year over year to $420.6 million in the fiscal fourth quarter. Diluted earnings were $1.17 per share, up 43% from the prior-year period.

Adjusted net income rose 10% to $474.6 million. EBITDA increased 39% to $719.1 million, while adjusted EBITDA advanced 17% to $729.7 million, reflecting revenue gains and reduced acquisition-related drag.

Interest expenses increased to $64.7 million from $63.7 million. Other income, net, declined to $14.2 million from $21.9 million due to lower average balances on corporate investments and higher share repurchases in fiscal 2026.

PAYX's Balance Sheet Remains SolidPaychex ended fiscal 2026 with cash, restricted cash and total corporate investments of $1.2 billion. Short-term and long-term borrowings, net of debt issuance costs, totaled $4.6 billion as of May 31, 2026.

Cash flow from operations was $2.6 billion for the fiscal year. The company paid out cumulative dividends of $4.43 per share, totaling $1.6 billion, and repurchased 5.6 million shares for $611 million.

Fiscal 2026 total revenues increased 17% to $6.51 billion. Adjusted diluted earnings advanced 11% to $5.51 per share, whereas adjusted operating income grew 19% to $2.81 billion.

Paychex's FY27 View Points to GrowthFor fiscal 2027, Paychex expects total revenues to grow 5-6%. Management Solutions’ revenues are also projected to rise 5-6%, while PEO and Insurance Solutions revenues are expected to increase 6-7%.

Interest on funds held for clients is expected to be $195-$205 million. The company anticipates an adjusted operating margin of 44%, an effective income tax rate of 24% and adjusted diluted earnings growth of 7-9%.

Paychex also highlighted the launch of WISE, its AI-powered intelligence engine, across HCM platforms and internal operations. Management said that the platform is designed to unlock insights from unstructured data, increase productivity and enhance client outcomes.

Adjusted earnings of 99 cents per share beat the Zacks Consensus Estimate by 4.2% and increased 8.8% on a year-over-year basis. Total revenues of $1.2 billion also beat the Zacks Consensus Estimate by 0.5% and increased 7.4% year over year.

Revenues in Detail     

Revenues from Management Solutions segment increased 8% year over year to $895.3 million. The segment benefited from growth in the number of client employees served for human capital management (HCM) and additional worksite employees for HR Solutions. Also, improved revenue per client on price realization and higher product penetration, strong demand for HR Solutions, retirement, time and attendance solutions and expansion of HCM ancillary services acted as tailwinds.

Professional employer organization (“PEO”) and Insurance Solutions’ revenues were $273.3 million, up 4% from the year-ago quarter’s level. The uptick was owing to growth in the number of average worksite employees. Interest on funds held for clients increased 54% year over year to $21.7 million.

Operating Performance

Operating income increased 7% year over year to $472.3 million. EBITDA of $518.6 million increased 4.7% year over year.

Balance Sheet & Cash Flow

Paychex exited second-quarter fiscal 2022 with cash and cash equivalents of $1.1 billion compared with $1.18 billion reported at the end of the prior quarter. Long-term debt was $797.9 million compared with $797.8 million in the prior quarter. Cash provided by operating activities was $321.6 million in the reported quarter. During the reported quarter, PAYX paid out $284.7 million as dividends.

Fiscal 2023 View Tweaked

Paychex upped its adjusted earnings per share view with respect to year-over-year growth for fiscal 2023. Adjusted EPS is now expected to register 12-14% growth compared with the prior expectation of 11-12% growth. PAYX continues to expect total revenues to register 8% (prior view: 7-8%) growth. Management Solutions’ revenues are expected to grow 7-8% (prior view: 5-7%). PEO and Insurance Solutions’ revenues are expected to grow 5-7% (prior view: 8-10%).

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates revision.

VGM ScoresAt this time, Paychex has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a grade of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Paychex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Delivered Strong Double-Digit Revenue and Earnings GrowthExpanded AI Leadership with the Launch of WISE Workforce Intelligence EngineReturned $2.2 Billion to Shareholders in Fiscal 2026
ROCHESTER, N.Y., June 24, 2026 (GLOBE NEWSWIRE) -- Paychex (Nasdaq: PAYX), a leading provider of expert-enabled HR, payroll, and benefits, today reported results for the fiscal quarter ended May 31, 2026 (the "fourth quarter") of the fiscal year ended May 31, 2026 ("fiscal 2026"). Results compared to the same period last year were as follows:

  Three months ended      Twelve months ended      May 31,      May 31,    In millions, except per share amounts 2026  2025  Change(2)
 2026  2025  Change(2)Total revenue $1,605.5  $1,427.3   12% $6,512.0  $5,571.7   17%Operating income $604.7  $431.1   40% $2,510.5  $2,207.7   14%Adjusted operating income(1) $675.8  $576.7   17% $2,814.7  $2,370.0   19%Diluted earnings per share $1.17  $0.82   43% $4.89  $4.58   7%Adjusted diluted earnings per share(1) $1.32  $1.19   11% $5.51  $4.98   11%                          (1)  Adjusted operating income and adjusted diluted earnings per share are not United States ("U.S.") generally accepted accounting principle ("GAAP") measures. Please refer to the "Non-GAAP Financial Measures" section of this press release for a discussion of non-GAAP measures.
(2)  Percentage changes are calculated based on unrounded numbers.

“We finished fiscal 2026 with strong momentum, delivering double-digit revenue and earnings growth while accelerating organic revenue growth throughout the year,” stated John Gibson, President and Chief Executive Officer. "These results reflect solid execution against two of our strategic priorities, the successful integration of Paycor to advance our upmarket expansion and AI innovation that further differentiates our HCM and advisory solutions. Our durable business model and strong cash generation enabled us to return $2.2 billion to shareholders this fiscal year while continuing to invest in innovation and future growth."

Gibson continued, “As businesses look for a trusted partner to help them manage increasing work and complexity, we believe Paychex is well positioned to deliver differentiated value through the combination of our AI-driven technology and deep advisory expertise. This quarter, we launched WISE, our AI-powered intelligence engine, across our HCM platforms and internal operations, enabling more proactive, autonomous execution. It leverages patent-pending technology to unlock insights from unstructured data to increase productivity and enhance client outcomes.”

Fourth Quarter Business Highlights

Fourth quarter results reflect a full quarter of revenue and expenses from Paycor HCM, Inc. (“Paycor”), acquired in April 2025, compared to a partial-quarter in the prior-year period.

Total revenue increased to $1.6 billion for the fourth quarter, representing growth of 12% over the prior year period. Highlights compared to the prior year period include:

Management Solutions revenue increased 14% to $1.2 billion for the fourth quarter. Paycor, acquired in April 2025, contributed approximately 8% to Management Solutions revenue growth year-over-year. Management Solutions revenue increased due to the following:

Higher product penetration and growth in client worksite employees for Human Resources ("HR") Solutions; andPrice realization and higher revenue per client driven by Paycor's upmarket client base. Professional Employer Organization ("PEO") and Insurance Solutions revenue increased 9% to $369.7 million for the fourth quarter, primarily due to the following:

Growth in the number of average PEO worksite employees; andIncrease in PEO insurance revenues. Interest on funds held for clients increased 15% to $52.2 million for the fourth quarter due to higher average investment balances resulting from the acquisition of Paycor.

Total expenses were relatively flat for the fourth quarter, primarily impacted by the following:

Increases in compensation-related expenses and amortization of intangible assets, primarily driven by the acquisition of Paycor; andHigher technology, selling, and marketing investments driven by the acquisition of Paycor and continued investments in our strategic priorities; offset byLower acquisition-related compensation and other acquisition-related costs, primarily consisting of professional service fees.
Operating income increased 40% to $604.7 million for the fourth quarter. The increase in operating income primarily reflected revenue growth and lower acquisition-related costs compared to the prior year period. Adjusted operating income(1), which excludes acquisition-related costs included in selling, general and administrative expenses, grew 17% to $675.8 million for the fourth quarter. Operating margin (operating income as a percentage of total revenue) was 37.7% for the fourth quarter compared to 30.2% for the prior year period. Adjusted operating margin(1) (adjusted operating income as a percentage of total revenue) was 42.1% for the fourth quarter compared to 40.4% for the prior year period.

Interest expense increased $1.0 million to $64.7 million for the fourth quarter, primarily due to the issuance of incremental debt in April 2025 to finance the acquisition of Paycor. The prior-year period also included acquisition-related financing costs.

Other income, net, decreased $7.7 million to $14.2 million for the fourth quarter, primarily as a result of lower average investment balances on our corporate investments resulting from the repayment of the Company's long-term private placement debt, Senior Notes, Series A, which matured in March 2026, and higher share repurchases in fiscal 2026.

Our effective income tax rate was 24.1% for the fourth quarter and 23.7% for the prior year period. Both periods were affected by the recognition of discrete tax impacts related to employee stock-based compensation payments.

Diluted earnings per share increased 43% to $1.17 per share and adjusted diluted earnings per share(1) increased 11% to $1.32 per share for the fourth quarter.

Fiscal Year Business Highlights

Highlights for fiscal 2026 as compared to the corresponding prior year period are as follows:

Total revenue increased 17% to $6.5 billion.Operating income increased 14% to $2.5 billion and adjusted operating income(1) increased 19% to $2.8 billion.Operating margin was 38.6% for the fiscal year compared to 39.6% for the prior year period. Adjusted operating margin(1) was 43.2% for the fiscal year compared to 42.5% for the prior year period.Diluted earnings per share increased 7% to $4.89 per share. Adjusted diluted earnings per share(1) increased 11% to $5.51 per share. Financial Position and Liquidity

Our financial position and cash flow generation remained strong during fiscal 2026. As of May 31, 2026, we had:

Cash, restricted cash, and total corporate investments of $1.2 billion.Short-term and long-term borrowings, net of debt issuance costs, of $4.6 billion.Cash flow from operations was $2.6 billion for the fiscal year.
Return to Stockholders During Fiscal 2026

Paid cumulative dividends of $4.43 per share totaling $1.6 billion.Repurchased 5.6 million shares of our common stock for $611.0 million. Business Outlook

Our outlook for the fiscal year ending May 31, 2027 ("fiscal 2027") reflects current assumptions and market conditions. Changes in the macroeconomic environment could alter our guidance. Our updated business outlook is as follows:

Total revenue is anticipated to grow in the range of 5% to 6%.Management Solutions revenue is anticipated to grow in the range of 5% to 6%.PEO and Insurance Solutions revenue is anticipated to grow in the range of 6% to 7%.Interest on funds held for clients is expected to be in the range of $195 million to $205 million.Adjusted operating margin(1) is anticipated to be approximately 44%.The effective income tax rate for fiscal 2027 is anticipated to be approximately 24%.Adjusted diluted earnings per share(1) is anticipated to grow in the range of 7% to 9%.
(1) Adjusted operating income, adjusted operating margin, and adjusted diluted earnings per share are not U.S. GAAP measures. Please refer to the "Non-GAAP Financial Measures" section of this press release for a discussion of non-GAAP measures. Forward-looking adjusted operating margin and adjusted diluted earnings per share exclude acquisition-related costs.

Non-GAAP Financial Measures

  Three months ended     Twelve months ended      May 31,     May 31,    $ in millions, except per share amounts 2026  2025  Change 2026  2025  ChangeOperating income $604.7  $431.1   40% $2,510.5  $2,207.7   14%Non-GAAP adjustments:                      Acquisition-related costs(1)  71.1   145.6      304.2   162.3    Adjusted operating income $675.8  $576.7   17% $2,814.7  $2,370.0   19%Adjusted operating margin  42.1%  40.4%     43.2%  42.5%                          Net income $420.6  $297.2   41% $1,760.1  $1,657.3   6%Non-GAAP adjustments:                      Acquisition-related costs(1)  71.1   166.4      304.2   196.3    Income tax benefit for acquisition-related costs  (17.1)  (33.3)     (73.3)  (40.6)   Discrete tax shortfall/(windfall) related to employee stock-based compensation payments(2)  0.0   (0.7)     (6.2)  (10.1)   Adjusted net income $474.6  $429.6   10% $1,984.8  $1,802.9   10%                       Diluted earnings per share(3) $1.17  $0.82   43% $4.89  $4.58   7%Non-GAAP adjustments:                      Acquisition-related costs(1)  0.20   0.46      0.84   0.54    Income tax benefit for acquisition-related costs  (0.05)  (0.09)     (0.20)  (0.11)   Discrete tax shortfall/(windfall) related to employee stock-based compensation payments(2)  0.00   (0.00)     (0.02)  (0.03)   Adjusted diluted earnings per share $1.32  $1.19   11% $5.51  $4.98   11%                       Net income $420.6  $297.2   41% $1,760.1  $1,657.3   6%Non-GAAP adjustments:                      Interest expense  64.7   63.7      269.5   105.4    Interest income on corporate investments  (13.0)  (20.5)     (63.4)  (72.8)   Income taxes  133.6   92.1      550.8   518.6    Depreciation and amortization expense  113.2   85.7      442.6   209.5    EBITDA $719.1  $518.2   39% $2,959.6  $2,418.0   22%Non-GAAP adjustments:                      Acquisition-related costs(1)  10.6   104.9      62.2   121.6    Adjusted EBITDA $729.7  $623.1   17% $3,021.8  $2,539.6   19%                          (1)  Acquisition-related costs included in selling, general and administrative expenses include:

$60.5 million for the fourth quarter and $242.0 million for the twelve months compared to $40.7 million for both corresponding prior-year periods, in amortization of intangibles acquired in the acquisition of Paycor,$10.4 million for the fourth quarter and $52.1 million for the twelve months compared to $70.8 million for both corresponding prior-year periods, in compensation costs related to the acquisition and integration of Paycor, including replacement awards, severance and retention bonuses, and$0.2 million for the fourth quarter and $10.1 million for the twelve months compared to $34.1 million and $50.8 million for corresponding prior-year periods, respectively, in other acquisition-related costs primarily consisting of professional service fees. In addition, acquisition-related costs for the three and twelve months ended May 31, 2025 include $20.8 million and $34.0 million, respectively, reflecting the amortization of financing fees related to debt instruments associated with the financing of the Paycor acquisition and the excluded component of the initial fair value of the interest rate swaption contracts that are included in Interest expense in the Company's Consolidated Statements of Income.

(2)  Net tax shortfall/(windfall) related to employee stock-based compensation payments recognized in income taxes. This item is subject to volatility and will vary based on employee decisions on exercising employee stock options and fluctuations in our stock price, neither of which is within the control of management.

(3)  The calculation of the impact of non-GAAP adjustments on diluted earnings per share is performed on each line independently. The table may not add down by +/- $0.01 due to rounding.

In addition to reporting operating income, operating margin, net income, and diluted earnings per share, which are U.S. GAAP measures, we present adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), and adjusted EBITDA which are non-GAAP measures. We believe these additional measures are indicators of the performance of our core business operations period over period. Adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, EBITDA, and adjusted EBITDA are not calculated through the application of U.S. GAAP and are not required forms of disclosure by the Securities and Exchange Commission ("SEC"). As such, they should not be considered a substitute for the U.S. GAAP measures of operating income, operating margin, net income, and diluted earnings per share, and, therefore, they should not be used in isolation but in conjunction with the U.S. GAAP measures. The use of any non-GAAP measure may produce results that vary from the U.S. GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

Annual Report on Form 10-K ("Form 10-K")

We anticipate filing our Form 10-K before the end of July 2026. Once filed, the report will be accessible via our Investor Relations portal at https://investor.paychex.com. This press release should be read in conjunction with the Form 10-K and the related Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in that Form 10-K.

Webcast Details

The Company will host an Earnings Conference Call on June 24, 2026 at 9:30 a.m. Eastern Time, to discuss these results. The live webcast will be available for replay on our Investor Relations portal at https://investor.paychex.com, where news releases, current financial information, and investor presentations are also accessible.

Contacts

Investor Relations:Media Relations:Rachel WhiteTracy VolkmannHead of Investor RelationsManager, Public Relations(513) 954-7388(585) [email protected]@paychex.com   About Paychex

Paychex, Inc. (Nasdaq: PAYX) provides a comprehensive suite of expert-enabled technology and advisory solutions that help businesses manage HR, payroll, and benefits. Serving approximately 800,000 clients and paying 1 in 11 U.S. private sector workers, Paychex combines scale, trusted expertise, and innovation to help businesses succeed. Built on more than 50 years of workforce experience and one of the industry’s largest proprietary HR datasets, Paychex’s WISE agentic AI platform embeds intelligence directly into workflows to improve productivity, enhance decision-making, and deliver better outcomes. Learn more at paychex.com.

Cautionary Note Regarding Forward-Looking Statements

Certain written statements in this press release may contain, and members of management may from time to time make or discuss statements which constitute, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by such words and phrases as "expect," "outlook," "will," "guidance," "projections," "strategy," "anticipate," "believe," "can," "continue," "could," "future," "may," "possible," "potential," "should," "see," and other similar words or phrases. Forward-looking statements include, without limitation, all matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding operating performance, events, or developments that we expect or anticipate will occur in the future, including statements relating to our outlook, revenue growth, earnings, earnings-per-share growth, and similar projections.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to known and unknown uncertainties, risks, changes in circumstances, and other factors that are difficult to predict, many of which are outside our control. Our actual performance and outcomes, including without limitation, our actual results and financial condition, may differ materially from those indicated in or suggested by the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

our ability to keep pace with changes in technology or provide timely enhancements to our solutions and support;risks related to our use of artificial intelligence ("AI") and new technologies in our business;software defects, undetected errors, and development delays for our solutions;the possibility of cyberattacks, security vulnerabilities or Internet disruptions, including data security and privacy leaks, and data loss and business interruptions;the possibility of failure of our business continuity plan during a catastrophic event;the failure of third-party service providers to perform their functions;the possibility that we may be exposed to additional risks related to our co-employment relationship with our PEO business;changes in health insurance and workers’ compensation insurance rates and underlying claim trends;risks related to acquisitions and the integration and performance of the businesses we acquire;our clients’ failure to reimburse us for payments made by us on their behalf;the effect of changes in government regulations mandating the amount of tax withheld or the timing of remittances;our failure to comply with covenants in our corporate bonds and debt agreements;changes in our credit ratings;changes in governmental regulations, laws, and policies;our ability to comply with U.S., state, and foreign laws and regulations;our compliance with data privacy and AI laws and regulations;our failure to protect our intellectual property rights;potential outcomes related to pending or future litigation matters;the impact of macroeconomic factors on the U.S. and global economy, and in particular on our small- and medium-sized business clients;volatility in the political, market, and economic environment, including inflation and interest rate changes;our ability to attract and retain qualified people; andthe possible effects of negative publicity on our reputation and the value of our brand. Any of these factors, as well as such other factors as discussed in our SEC filings, could cause our actual results to differ materially from our anticipated results. The information provided in this document is based upon the facts and circumstances known as of the date of this press release, and any forward-looking statements made by us in this document speak only as of the date on which they are made. Except as required by law, we undertake no obligation to update these forward-looking statements after the date of issuance of this press release to reflect events or circumstances after such date, or to reflect the occurrence of unanticipated events.

PAYCHEX, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share amounts)               Three months ended     Twelve months ended      May 31,     May 31,      2026  2025  Change(2) 2026  2025  Change(2)Revenue:                      Management Solutions $1,183.6  $1,041.8   14% $4,867.9  $4,067.1   20%PEO and Insurance Solutions  369.7   340.3   9%  1,433.2   1,342.9   7%Total service revenue  1,553.3   1,382.1   12%  6,301.1   5,410.0   16%Interest on funds held for clients(1)  52.2   45.2   15%  210.9   161.7   30%Total revenue  1,605.5   1,427.3   12%  6,512.0   5,571.7   17%Expenses:                      Cost of service revenue  417.3   393.9   6%  1,674.5   1,540.4   9%Selling, general and administrative expenses  583.5   602.3   (3)%  2,327.0   1,823.6   28%Total expenses  1,000.8   996.2   0%  4,001.5   3,364.0   19%Operating income  604.7   431.1   40%  2,510.5   2,207.7   14%Interest expense  (64.7)  (63.7) n/m   (269.5)  (105.4) n/m Other income, net(1)  14.2   21.9   (35)%  69.9   73.6   (5)%Income before income taxes  554.2   389.3   42%  2,310.9   2,175.9   6%Income taxes  133.6   92.1   45%  550.8   518.6   6%Net income $420.6  $297.2   41% $1,760.1  $1,657.3   6%                       Basic earnings per share $1.18  $0.82   44% $4.90  $4.60   7%Diluted earnings per share $1.17  $0.82   43% $4.89  $4.58   7%Weighted-average common shares outstanding  357.6   360.3      358.9   360.2    Weighted-average common shares outstanding, assuming dilution  358.2   362.3      360.0   362.0                            (1)  Further information on interest on funds held for clients and other income, net, and the short- and long-term effects of changing interest rates can be found in our filings with the SEC, including our Quarterly Reports on Form 10-Q and our Annual Report on Form 10-K, as applicable, under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and subheadings "Results of Operations" and "Market Risk Factors." These filings are accessible at https://investor.paychex.com.
(2)  Percentage changes are calculated based on unrounded numbers.

n/m – not meaningful

PAYCHEX, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except per share amounts)
  May 31,   2026  2025 ASSETS        Cash and cash equivalents $1,088.2  $1,628.6 Restricted cash  52.8   47.9 Corporate investments  36.3   34.5 Interest receivable  36.1   27.9 Accounts receivable, net of allowance for credit losses  1,507.6   1,330.5 PEO unbilled receivables, net of advance collections  664.2   616.6 Prepaid income taxes  11.2   38.9 Prepaid expenses and other current assets  384.7   378.3 Current assets before funds held for clients  3,781.1   4,103.2 Funds held for clients  4,832.2   4,813.3 Total current assets  8,613.3   8,916.5 Property and equipment, net of accumulated depreciation  588.9   511.5 Operating lease right-of-use assets, net of accumulated amortization  63.9   63.8 Intangible assets, net of accumulated amortization  1,684.0   1,947.3 Goodwill  4,527.4   4,514.1 Long-term deferred costs  555.8   482.4 Other long-term assets  141.2   128.5 Total assets $16,174.5  $16,564.1          LIABILITIES        Accounts payable $154.8  $129.8 Accrued corporate compensation and related items  162.1   183.9 Accrued worksite employee compensation and related items  844.8   735.8 Short-term debt  —   18.6 Long-term debt, net, current portion  —   399.8 Accrued income taxes  87.8   — Deferred revenue  69.4   69.4 Other current liabilities  637.1   552.0 Current liabilities before client fund obligations  1,956.0   2,089.3 Client fund obligations  4,884.6   4,867.0 Total current liabilities  6,840.6   6,956.3 Accrued income taxes  140.5   119.0 Deferred income taxes  543.3   444.7 Long-term debt, net  4,556.1   4,548.4 Operating lease liabilities  52.2   55.5 Other long-term liabilities  306.7   312.2 Total liabilities  12,439.4   12,436.1          STOCKHOLDERS’ EQUITY        Common stock, $0.01 par value; Authorized: 600.0 shares;
Issued and outstanding: 355.6 shares as of May 31, 2026
and 360.5 shares as of May 31, 2025  3.6   3.6 Additional paid-in capital  1,975.6   1,901.1 Retained earnings  1,805.8   2,277.0 Accumulated other comprehensive loss  (49.9)  (53.7)Total stockholders’ equity  3,735.1   4,128.0 Total liabilities and stockholders’ equity $16,174.5  $16,564.1  PAYCHEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
      Twelve months ended   May 31,   2026  2025 OPERATING ACTIVITIES        Net income $1,760.1  $1,657.3 Adjustments to reconcile net income to net cash provided by operating activities:        Depreciation and amortization  442.6   209.5 Amortization of discounts and premiums on available-for-sale securities, net  (7.6)  23.4 Amortization of deferred contract costs  249.2   236.5 Stock-based compensation costs  96.1   111.8 Provision for/(Benefit from) deferred income taxes  103.7   (15.8)Provision for allowance for credit losses  38.1   24.2 Net realized (gains)/losses on sales of available-for-sale securities  (7.6)  0.4 Net realized losses on disposal of assets  6.2   3.7 Premiums paid on cash flow hedges  —   (19.2)Changes in operating assets and liabilities:        Interest receivable  (8.2)  (3.8)Accounts receivable and PEO unbilled receivables, net  (105.8)  (130.7)Prepaid expenses and other current assets  40.0   (12.0)Accounts payable and other current liabilities  291.4   42.3 Deferred costs  (342.5)  (246.5)Net change in other long-term assets and liabilities  3.9   21.9 Net change in operating lease right-of-use assets and liabilities  (2.9)  (2.1)Net cash provided by operating activities  2,556.7   1,900.9 INVESTING ACTIVITIES        Purchases of available-for-sale securities  (12,226.2)  (14,302.9)Proceeds from sales and maturities of available-for-sale securities  11,517.6   14,292.5 Net change in purchased receivables  (166.1)  (157.3)Purchases of property and equipment  (234.9)  (191.8)Acquisition of businesses, net of cash acquired  (0.4)  (2,967.5)Purchases of other assets  (42.4)  (29.8)Net cash used in investing activities  (1,152.4)  (3,356.8)FINANCING ACTIVITIES        Net change in client fund obligations  17.6   (290.7)Net proceeds from short-term borrowings  (18.8)  — Payments on long-term debt  (400.0)  — Proceeds from the issuance of corporate bonds  —   4,180.9 Dividends paid  (1,589.6)  (1,448.5)Repurchases of common shares  (611.0)  (104.5)Debt issuance costs  —   (47.8)Activity related to equity-based plans  (52.0)  3.8 Net cash (used in)/provided by financing activities  (2,653.8)  2,293.2 Net change in cash, restricted cash, and equivalents  (1,249.5)  837.3 Cash, restricted cash, and equivalents, beginning of fiscal year  2,734.3   1,897.0 Cash, restricted cash, and equivalents, end of fiscal year $1,484.8  $2,734.3          Reconciliation of cash, restricted cash and equivalents        Cash and cash equivalents $1,088.2  $1,628.6 Restricted cash  52.8   47.9 Restricted cash and restricted cash equivalents included in funds held for clients  343.8   1,057.8 Total cash, restricted cash, and equivalents $1,484.8   $2,734.3