10-K · July 17, 2026
Paychex delivered a strong fiscal 2026 top-line inflection, with revenue up 17% to $6.512 billion and Management Solutions up 20%, principally aided by the Paycor acquisition and its upmarket customer base. The company…
Earnings analysis · 10-Q
PAYX earnings analysis
Filed September 24, 2026 · Our reading of the company's report
The latest report
Paychex delivered solid first-quarter operating performance, with revenue up 6% to $1,630.5 million, operating margin expanding to 38.0%, and GAAP diluted EPS rising 14% to $1.21. PEO and Insurance Solutions was the…
Read full summary
Paychex delivered solid first-quarter operating performance, with revenue up 6% to $1,630.5 million, operating margin expanding to 38.0%, and GAAP diluted EPS rising 14% to $1.21. PEO and Insurance Solutions was the strongest segment, growing 12% to $367.6 million, while Paycor-related costs declined to $65.5 million. Offsetting concerns include a $304.9 million year-over-year decline in operating cash flow to $413.5 million, net investment losses of approximately $151.2 million as of September 23, 2026, and $4.6 billion of long-term borrowings.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $1.21
- Operating margin
- 38.0%
What stood out
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Revenue grew 6% year over year
Total revenue increased 6% year over year to $1,630.5 million from $1,540.0 million, driven by higher revenue per client, product penetration, PEO worksite employees, insurance volumes, and interest rates.
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Operating margin expanded
Operating income rose 14% to $619.2 million from $541.9 million, while GAAP operating margin expanded to 38.0% from 35.2%. Adjusted operating margin increased to 42.0% from 40.7%.
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PEO and Insurance accelerated
PEO and Insurance Solutions revenue increased 12% to $367.6 million from $329.1 million, benefiting from growth in average PEO worksite employees and higher PEO insurance volumes.
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EPS increased 14%
GAAP diluted EPS increased 14% to $1.21 from $1.06, while adjusted diluted EPS increased to $1.34 from $1.22.
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Paycor-related costs declined
Acquisition-related costs declined 23% to $65.5 million from $84.8 million, primarily due to lower Paycor integration compensation and other acquisition-related costs.
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Liquidity remains substantial
The company reported $2.0 billion of available unsecured credit capacity and stated that cash, investments, projected operating cash flow, and financing availability are expected to support operations, technology investment, dividends, repurchases, and debt service for the foreseeable future.
What to watch
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Operating cash flow declined sharply
Net cash provided by operating activities fell to $413.5 million from $718.4 million in the prior-year quarter, a $304.9 million decline. Management attributed the change partly to timing of PEO collections and payroll-tax settlements, lower client tax-refund balances, and lower accrued compensation after fiscal year-end bonus payments.
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Investment portfolio losses widened
The investment portfolio had net unrealized losses of $92.4 million at August 31, 2026, versus $52.5 million at May 31, 2026, and the loss had widened to approximately $151.2 million as of September 23, 2026. The company also reported $3.8 billion of AFS securities below amortized cost.
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Leverage and interest-rate exposure
Long-term borrowings totaled $4.6 billion against $1.0 billion of cash, restricted cash, and corporate investments at August 31, 2026. A 25-basis-point change in short-term interest rates is estimated to affect after-tax earnings by approximately $4.5 million to $5.0 million over twelve months.
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Paycor charges remain material
Paycor-related acquisition costs remained material at $65.5 million, including $56.9 million of amortization of acquired intangibles and $8.5 million of compensation and integration costs.
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AI and regulatory execution risk
The filing identifies AI and new-technology risks, including compliance with data privacy and AI laws and regulations, as potential causes of materially different results; the company also states it is investing in AI-driven technology and advisory solutions, although no dollar amount was disclosed.
Management's outlook
The 10-Q does not provide explicit fiscal 2027 revenue or EPS guidance. It states that the total investment portfolio is expected to average approximately $7.0 billion, with approximately 35% in short-term securities and VRDNs and 65% in AFS securities.
Earlier filings 4
10-Q · March 26, 2026
Paychex, Inc. demonstrated solid financial performance in Q3 2026, with total revenue reaching $1.81 billion, up 20% year-over-year, while diluted EPS improved to $1.56, a 9% increase. The Management Solutions segment,…
10-Q · December 22, 2025
Paychex, Inc. reported a strong Q2 2026 performance with revenue of $1.558 billion, exceeding estimates, and an EPS of $1.26, reflecting a growth of 11% from the prior year. Both Management Solutions and PEO & Insurance…
10-Q · September 30, 2025
Paychex, Inc. reported strong first-quarter results with total revenue of $1.49 billion, a 17% increase year-over-year. The diluted EPS was $1.06, down 10% from the previous year, primarily due to acquisition-related…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.