# Paychex, Inc. (PAYX) Q1 2026 Financial Results Summary
Rochester, N.Y. (September 30, 2025) – Paychex, Inc. (Nasdaq: PAYX) has released its financial results for the first quarter of the fiscal year ending May 31, 2026. The report outlines a strong start to fiscal 2026, showcasing multiple growth metrics compared to the same period last year.
### Financial Highlights
– **Total Revenue**:
– **Q1 FY 2026**: $1,540.0 million
– **Q1 FY 2025**: $1,318.5 million
– **Change**: **+17%**
– **Operating Income**:
– **Q1 FY 2026**: $541.9 million
– **Q1 FY 2025**: $546.7 million
– **Change**: **-1%**
– **Adjusted Operating Income**:
– **Q1 FY 2026**: $626.7 million
– **Q1 FY 2025**: $546.7 million
– **Change**: **+15%**
– **Diluted Earnings per Share (EPS)**:
– **Q1 FY 2026**: $1.06
– **Q1 FY 2025**: $1.18
– **Change**: **-10%**
– **Adjusted Diluted EPS**:
– **Q1 FY 2026**: $1.22
– **Q1 FY 2025**: $1.16
– **Change**: **+5%**
### Revenue Breakdown by Segment
– **Management Solutions Revenue**:
– **Q1 FY 2026**: $1,163.3 million
– **Q1 FY 2025**: $961.7 million
– **Change**: **+21%** (contributed by approximately **17%** from Paycor acquisition)
– **Professional Employer Organization (PEO) and Insurance Solutions Revenue**:
– **Q1 FY 2026**: $329.1 million
– **Q1 FY 2025**: $319.3 million
– **Change**: **+3%**
– **Interest on Funds Held for Clients**:
– **Q1 FY 2026**: $47.6 million
– **Q1 FY 2025**: $37.5 million
– **Change**: **+27%**
### Expense Analysis
– **Total Expenses**:
– **Q1 FY 2026**: $998.1 million
– **Q1 FY 2025**: $771.8 million
– **Change**: **+29%** (due to increased compensation-related costs and amortization from Paycor acquisition)
– **Operating Margin**:
– **Q1 FY 2026**: 35.2%
– **Q1 FY 2025**: 41.5%
– **Change**: **-6.3 percentage points**
– **Adjusted Operating Margin**:
– **Q1 FY 2026**: 40.7%
– **Q1 FY 2025**: 41.5%
– **Change**: **-0.8 percentage points**
### Net Income
– **Net Income**:
– **Q1 FY 2026**: $383.8 million
– **Q1 FY 2025**: $427.4 million
– **Change**: **-10%**
### Cash Flow and Financial Position
– **Cash, Restricted Cash, and Corporate Investments**:
– **As of August 31, 2025**: $1.7 billion
– **Short-term and Long-term Borrowings**:
– **As of August 31, 2025**: $5.0 billion
– **Cash Flow from Operations**:
– **Q1 FY 2026**: $718.4 million
### Returns to Shareholders
– **Dividends Paid**:
– Total Paid: **$389.1 million**
– Per Share: **$1.08**
– **Share Repurchase**:
– Total Shares Repurchased: **1.1 million**
– Total Cost: **$160.1 million**
### Business Outlook
– **Adjusted Diluted EPS Outlook**: Anticipated growth range of **9% to 11%** for fiscal 2026.
This financial summary highlights the solid performance and strategic growth initiatives of Paychex, particularly through its acquisition of Paycor, which has provided significant revenue contributions.
| For the three months | August 31, 2025 | August 31, 2024 | Change(2) |
|---|---|---|---|
| Revenue: | |||
| Management Solutions | $1,163.3 | $961.7 | 21% |
| PEO and Insurance | 329.1 | 319.3 | 3% |
| Solutions | |||
| Total service revenue | 1,492.4 | 1,281.0 | 17% |
| Interest on funds held | 47.6 | 37.5 | 27% |
| for clients(1) | |||
| Total revenue | 1,540.0 | 1,318.5 | 17% |
| Expenses: | |||
| Cost of service revenue | 413.8 | 380.0 | 9% |
| Selling, general and | |||
| administrative | 584.3 | 391.8 | 49% |
| expenses | |||
| Total expenses | 998.1 | 771.8 | 29% |
| Operating income | 541.9 | 546.7 | (1%) |
| Interest expense | (68.2) | (9.6) | n/m |
| Other income, net(1) | 23.8 | 20.0 | 19% |
| Income before income | 497.5 | 557.1 | (11%) |
| taxes | |||
| Income taxes | 113.7 | 129.7 | (12%) |
| Net income | $383.8 | $427.4 | (10%) |
| Basic earnings per share | $1.07 | $1.19 | (10%) |
| Diluted earnings per | $1.06 | $1.18 | (10%) |
| share | |||
| Weighted-average common | 360.1 | 360.1 | |
| shares | |||
| outstanding | |||
| Weighted-average common | 361.9 | 361.9 | |
| shares | |||
| outstanding, assuming | |||
| dilution |
(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
—
| August 31, 2025 | May 31, 2025 | |
|---|---|---|
| ASSETS | ||
| Cash and cash equivalents | $809.0 | $1,628.6 |
| Restricted cash | 50.4 | 47.9 |
| Corporate investments | 861.9 | 34.5 |
| Interest receivable | 34.0 | 27.9 |
| Accounts receivable, net of allowance | 1,359.3 | 1,330.5 |
| for credit losses | ||
| PEO unbilled receivables, net of advance | 609.4 | 616.6 |
| collections | ||
| Prepaid income taxes | 9.2 | 38.9 |
| Prepaid expenses and other current | 379.4 | 378.3 |
| assets | ||
| Current assets before funds held for | 4,112.6 | 4,103.2 |
| clients | ||
| Funds held for clients | 4,927.4 | 4,813.3 |
| Total current assets | 9,040.0 | 8,916.5 |
| Property and equipment, net of | 525.4 | 511.5 |
| accumulated depreciation | ||
| Operating lease right-of-use assets, net | 64.2 | 63.8 |
| of accumulated amortization | ||
| Intangible assets, net of accumulated | 1,886.8 | 1,947.3 |
| amortization | ||
| Goodwill | 4,523.6 | 4,514.1 |
| Long-term deferred costs | 489.0 | 482.4 |
| Other long-term assets | 134.0 | 128.5 |
| Total assets | $16,663.0 | $16,564.1 |
| LIABILITIES | ||
| Accounts payable | $120.6 | $129.8 |
| Accrued corporate compensation and | 151.7 | 183.9 |
| related items | ||
| Accrued worksite employee compensation | 779.7 | 735.8 |
| and related items | ||
| Short-term borrowings | 18.5 | 18.6 |
| Long-term borrowings, net, current | 399.9 | 399.8 |
| portion | ||
| Deferred revenue | 68.8 | 69.4 |
| Other current liabilities | 641.1 | 552.0 |
| Current liabilities before client fund | 2,180.3 | 2,089.3 |
| obligations | ||
| Client fund obligations | 4,948.4 | 4,867.0 |
| Total current liabilities | 7,128.7 | 6,956.3 |
| Accrued income taxes | 124.9 | 119.0 |
| Deferred income taxes | 518.0 | 444.7 |
| Long-term borrowings, net of debt | 4,550.3 | 4,548.4 |
| issuance costs | ||
| Operating lease liabilities | 52.9 | 55.5 |
| Other long-term liabilities | 317.6 | 312.2 |
| Total liabilities | 12,692.4 | 12,436.1 |
| STOCKHOLDERS’ EQUITY | ||
| Common stock, $0.01 par value; | ||
| Authorized: 600.0 shares; | ||
| Issued and outstanding: 359.9 shares as | 3.6 | 3.6 |
| of August 31, 2025 | ||
| and 360.5 shares as of May 31, 2025 | ||
| Additional paid-in capital | 1,921.8 | 1,901.1 |
| Retained earnings | 2,070.2 | 2,277.0 |
| Accumulated other comprehensive loss | (25.0) | (53.7) |
| Total stockholders’ equity | 3,970.6 | 4,128.0 |
| Total liabilities and stockholders’ | $16,663.0 | $16,564.1 |
| equity |
