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Company Research6 Feb 2024
Paychex: From $3,000 and a Vision to Market Leader
Explore Paychex's growth since its inception in 1971 to a leading HCM provider, serving 740,000 SMBs globally and achieving a 1,300x return since its IPO.
Paychex (PAYX) investor relations material
Paychex Q2 2026 earnings summary
Complete event summary combining all related documents: earnings call transcript, report, and slide presentation.Q2 2026 earnings summary19 Dec, 2025
Executive summary
Achieved 18% year-over-year revenue growth in Q2, reaching $1.6 billion, with strong contributions from the Paycor acquisition, organic growth in Management Solutions and PEO, and AI-driven solutions.
Adjusted operating income rose 21% to $649 million, and adjusted diluted EPS increased 11% to $1.26, while net income declined 4% due to higher acquisition-related costs and interest expense.
Integration of Paycor expanded the upmarket client base, enhanced AI/data initiatives, and exceeded synergy targets.
Returned over $1 billion to shareholders year-to-date through dividends and share repurchases.
Announced rollout of advanced AI tools for workforce management and raised full-year adjusted EPS guidance.
Financial highlights
Total revenue rose 18% year-over-year to $1.6 billion; Management Solutions revenue up 21% to $1.2 billion, with Paycor contributing about 17 percentage points.
PEO and Insurance Solutions revenue increased 6% to $336.9 million, driven by worksite employee growth and higher insurance revenues.
Interest on funds held for clients grew 51% to $54.3 million, aided by Paycor balances and investment gains.
Adjusted EBITDA for the quarter was $698.4 million, up 21% year-over-year.
Adjusted operating income margin improved to 41.7%; diluted EPS down 4% to $1.10, but adjusted diluted EPS up 11% to $1.26.
Outlook and guidance
Fiscal 2026 total revenue expected to grow 16.5%–18.5% year-over-year, with adjusted diluted EPS projected to increase 10–11%.
Management Solutions revenue growth guidance: 8.5%–11%; PEO & Insurance Solutions revenue expected to grow 20%–22%.
Adjusted operating income margin anticipated at ~43%; effective tax rate for the year expected at ~24%.
Q3 revenue growth anticipated at ~18%, with adjusted operating margin between 47–48%.
Company anticipates sufficient liquidity and cash flow to support operations, capital investments, dividends, and debt service.
Paycor Q2 acquisition-related costs?
How does AI enhance operational efficiency?
What is the updated FY26 adjusted EPS growth outlook?
Quantify AI's impact on service team capacity
Paycor's revenue per client trends
Impact of client cost-consciousness on bundles
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Q3 202627 Mar, 2026
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Frequently asked questions
Payroll, HR, Benefits, and More
Paychex, Inc. is an American company that specializes in integrated solutions for HR, payroll, benefits, and similar matters. Primarily serving small to medium-sized businesses, Paychex offers a comprehensive suite of products and services that help employers manage their workforce effectively and in line with employees' expectations, as well as with regulatory standards. The company is headquartered in Rochester, New York, and its shares are traded on the Nasdaq.
Started with $3,000
Paychex was founded in 1971 by B. Thomas Golisano. He started the company with just $3,000 and a vision to make payroll outsourcing easy and affordable for small businesses. Initially operating out of a small office in Rochester, New York, Paychex focused on providing payroll services to small businesses.
This market was largely underserved by larger payroll service providers at the time, allowing the company to grow rapidly. By the late 1970s, Paychex had expanded its operations nationwide. Over the years, Paychex evolved its service offerings, incorporating HR, benefits, and insurance services, adapting to the changing needs of its growing client base. Over the years, Paychex has established itself as a major player in human capital management solutions together with names such as ADP, Workday, and Intuit.
Payrolls and HR
At its core, Paychex specializes in payroll processing services, simplifying and automating payroll tasks, tax preparation, and filing for businesses. This includes managing employee payment options like direct deposit and electronic paycards.
Beyond payroll, Paychex also offers a broad spectrum of human resource (HR) services. This encompasses handling essential functions, streamlining the employee onboarding process, and offering comprehensive HR administration and compliance support to ensure businesses comply with labor laws and regulations.
Further reading: Paychex: From $3,000 and a Vision to Market Leader
Other Services
In addition to its payroll services, Paychex provides performance management tools and resources, aiding businesses in evaluating employee performance in conjunction with their strategic goals. The company also offers robust training and development programs, improving employees’ skills and ensuring compliance with industry standards. Recruitment and applicant tracking solutions are another critical aspect of their offerings, optimizing the hiring process and giving recruiters useful tips.
Furthermore, Paychex also offers solutions in benefits administration, including health insurance and retirement plan management, helping businesses construct and offer competitive employee benefits.
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