Paychex (PAYX) Q3 2026 earnings summary

Executive summary

• Achieved strong double-digit revenue and adjusted operating income growth in Q3 FY2026, with revenue up 20% to $1.81 billion and adjusted operating income up 22%, driven by Paycor integration, organic growth, and AI initiatives.

• Expanded client base to approximately 800,000, with industry-leading growth in HR outsourcing and PEO worksite employees.

• Continued investment in AI and technology platforms, enhancing operational efficiency and client experience.

• Returned over $1.5 billion to shareholders year-to-date through dividends and share repurchases.

• Recognized for ethical operations and corporate responsibility, including Ethisphere and United Way awards, and two Lighthouse Tech Awards.

Financial highlights

• Q3 total revenue rose 20% year-over-year to $1.81 billion; Management Solutions revenue up 23% to $1.35–$1.4 billion, with Paycor contributing 19 percentage points to growth.

• PEO and Insurance Solutions revenue increased 9% to $397.5–$398 million, driven by higher worksite employees and insurance revenues.

• Adjusted operating income rose 22% to $863–$863.2 million; adjusted EBITDA up 22% to $913.6–$914 million.

• Adjusted operating income margin increased to 47.7%; diluted EPS up 9% to $1.56, adjusted EPS up 15% to $1.71.

• Free cash flow for the fiscal year-to-date reached $1.81 billion, up 27% year-over-year.

Outlook and guidance

• Fiscal 2026 guidance reaffirmed, with total revenue growth of 16.5%–18.5% and adjusted diluted EPS growth of 10%–11%.

• Interest on funds held for clients for FY2026 expected between $200 million and $210 million.

• Q4 revenue growth expected at ~12% with adjusted operating margin of 41–42%.

• Organic growth rate for the back half of the year expected to be ~6%, with full-year organic growth at ~5%.

• Management comfortable with consensus expectations for FY 2027.