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2h ago

Paychex Raises EPS Guidance on Q1 Beat as Shares Fall on Steady Sales Outlook

The market reacted negatively, reflecting steady sales guidance despite a small EPS raise.

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Overview

  • Fiscal Q1 2026 revenue rose 17% year over year to $1.540 billion, edging past consensus, with adjusted EPS of $1.22 topping the $1.21 estimate.
  • The company lifted fiscal 2026 adjusted EPS guidance to $5.43–$5.53 and reaffirmed its sales outlook at $6.491–$6.602 billion.
  • Management Solutions revenue increased 21% to $1.2 billion, driven by the Paycor acquisition, higher revenue per client, and more worksite employees.
  • GAAP operating income declined 1% to $541.9 million with a 630-basis-point margin contraction, while adjusted operating income rose 15% to $626.7 million and adjusted EBITDA grew 16% to $680.0 million.
  • Paychex reported $1.7 billion in cash and investments, $5.0 billion in total borrowings, and $718.4 million in operating cash flow, while shares traded down about 5% to 7% intraday.