Paychex Inc.
06/24/2026 | Press release | Distributed by Public on 06/24/2026 06:39
Paychex Reports Fourth Quarter and Full-Year 2026 Results (Form 8-K)
Paychex Reports Fourth Quarter and Full-Year 2026 Results
•
Delivered Strong Double-Digit Revenue and Earnings Growth
•
Expanded AI Leadership with the Launch of WISE Workforce Intelligence Engine
•
Returned $2.2 Billion to Shareholders in Fiscal 2026
Rochester, N.Y. (June 24, 2026) - 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:
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Three months ended |
Twelve months ended |
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|
May 31, |
May 31, |
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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 |
% |
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(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."
1
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; and
•
Price 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; and
•
Increase 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; and
•
Higher technology, selling, and marketing investments driven by the acquisition of Paycor and continued investments in our strategic priorities; offset by
•
Lower 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.
2
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.
3
Non-GAAP Financial Measures
|
Three months ended |
Twelve months ended |
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|
May 31, |
May 31, |
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|
$ in millions, except per share amounts |
2026 |
2025 |
Change |
2026 |
2025 |
Change |
||||||||||||||||||||||||
|
Operating 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 |
) |
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|
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 |
% |
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(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.
4
(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 White |
Tracy Volkmann |
|
Head of Investor Relations |
Manager, Public Relations |
|
(513) 954-7388 |
(585) 387-6705 |
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.
5
Paychex Inc. published this content on June 24, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on June 24, 2026 at 12:39 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]