Paychex misses Q2 revenue estimates, raises profit outlook

Paychex, Inc. -1.51%

Paychex, Inc.

PAYX

92.18

-1.51%


Overview

  • HCM company reported fiscal Q2 revenue up 18%, slightly missing analyst expectations

  • Adjusted EPS for fiscal Q2 beat analyst expectations, rising 11%

  • Company raised full-year earnings outlook


Outlook

  • Paychex raises full-year earnings outlook with adjusted EPS growth expected at 10%-11%

  • Company maintains other fiscal 2026 guidance unchanged


Result Drivers

  • PAYCOR ACQUISITION - Management Solutions revenue grew 21%, with Paycor contributing approximately 17% to this growth

  • AI TECHNOLOGIES - Expansion of AI capabilities improved operational efficiency and client satisfaction

  • INTEREST INCOME - Interest on funds held for clients increased 51% due to higher average investment balances


Key Details

Metric

Beat/Miss

Actual

Consensus Estimate

Q2 Revenue

Slight Miss*

$1.56 bln

$1.57 bln (13 Analysts)

Q2 Adjusted EPS

Beat

$1.26

$1.23 (15 Analysts)

Q2 EPS

$1.10

Q2 Adjusted Net Income

Slight Beat*

$454.60 mln

$450.56 mln (12 Analysts)

Q2 Adjusted Operating Income

Beat

$649 mln

$638.01 mln (12 Analysts)

Q2 Adjusted Operating Margin

41.70%

*Applies to a deviation of less than 1%; not applicable for per-share numbers.


Analyst Coverage

  • The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 14 "hold" and 3 "sell" or "strong sell"

  • The average consensus recommendation for the employment services peer group is "buy."

  • Wall Street's median 12-month price target for Paychex Inc is $125.22, about 9.6% above its December 18 closing price of $114.24

  • The stock recently traded at 20 times the next 12-month earnings vs. a P/E of 25 three months ago

Press Release: ID:nBw67T8C9a

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact RefinitivNewsSupport@thomsonreuters.com.


(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)

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