Results
Delivered double-digit diluted EPS growth supported by strong PEO and Insurance Solutions revenue growth
Strong expansion of industry-leading operating margins
Corporate events
Advanced AI leadership and launched WISE Hire agentic recruiting solution
Management commentary
"Paychex delivered a solid start to total revenue growth in fiscal 2027, with double-digit PEO and Insurance Solutions revenue and EPS growth underscoring the strength of our advisory solutions, disciplined execution, and continued progress against our strategic priorities," stated John Gibson, President and Chief Executive Officer.
"Our results reflect the durability of our business model, go-to-market investments helping us bring the full breadth of our solutions to more prospects and clients, and the value businesses place on our ability to combine innovative technology with trusted advisory expertise to navigate an increasingly complex workforce, regulatory, and benefits environment."
Gibson continued, "We continued to build meaningful momentum in AI with compelling early adopter results from our award-winning WISE engine and the introduction of WISE Hire, our agentic recruiting solution.
By extending AI-enabled automation and insights across Paychex HCM platforms and into Microsoft business applications where clients already work, we are making these capabilities easier to access and adopt.
Together, we believe these innovations strengthen our competitive position, enhance productivity and client outcomes, and support sustainable growth and long-term shareholder value."
Results
First Quarter Business Highlights
Total revenue increased 6% to $1.6 billion.
4Management Solutions revenue increased 4% to $1.2 billion driven by higher revenue per client resulting from price realization and product penetration.
Professional Employer Organization ("PEO") and Insurance Solutions revenue increased 12% to $367.6 million, primarily due to growth in the number of average PEO worksite employees and increased PEO insurance volumes.
Interest on funds held for clients increased 5% to $49.8 million due to higher average interest rates.
2Operating income grew 14% to $619.2 million, primarily reflecting revenue growth and lower acquisition-related costs, and adjusted operating income grew 9% to $684.7 million.
5Operating margin was 38.0% compared to 35.2% and adjusted operating margin* was 42.0% compared to 40.7%.
7Diluted earnings per share increased 14% to $1.21 and adjusted diluted earnings per share increased 10% to $1.34.
Capital return
Financial Position, Liquidity and Return to Shareholders
Results
Cash, restricted cash, and total corporate investments of $1.0 billion.
Long-term borrowings, net of debt issuance costs, of $4.6 billion.
For the first quarter
Cash flow from operations was $413.5 million.
Capital return
Paid dividends of $1.19 per share totaling $424.1 million.
Outlook
Fiscal 2027 Business Outlook
Our current business outlook reflects current assumptions and market conditions.
Changes in the macroeconomic environment could alter our guidance.
Forward-looking adjusted operating margin and adjusted diluted earnings per share exclude acquisition-related costs.
With consideration of these impacts, we have updated our business outlook as follows:
Fiscal Year 2027 OutlookUpdates
3Total revenue growth5% to 6%No changeGuidance reaffirmed
8Management Solutions revenue growth5% to 6%No changeGuidance reaffirmed
1PEO and Insurance Solutions revenue growth7% to 8%Previously 6% to 7%Guidance raised
Interest on funds held for clients$200 million to $210 millionPreviously $195 million to $205 millionGuidance raised
Adjusted operating margin~44%No changeGuidance reaffirmed
Effective income tax rate~24%No changeGuidance reaffirmed
6Adjusted diluted earnings per share growth7% to 9%No changeGuidance reaffirmed
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