Paychex first-quarter revenue rises to $1.6 billion as diluted EPS climbs 14%
The HR and payroll provider reported higher revenue and operating income for the quarter ended August 31, 2026.
Paychex, Inc. (PAYX) reported financial results Tuesday for its first fiscal quarter ended August 31, 2026, delivering higher revenue, operating income, and earnings per share compared to the same period a year earlier.
Key takeaways
- Total revenue increased 6% to $1.63 billion from $1.54 billion a year earlier.
- Diluted earnings per share rose 14% to $1.21 compared to $1.06.
- Management Solutions revenue grew 4% to $1.21 billion.
- PEO and Insurance Solutions revenue increased 12% to $367.6 million.
- Operating income increased 14% to $619.2 million.
First-quarter results
Here's how the company did:
- Total revenue was $1.63 billion, up 6% from $1.54 billion.
- Diluted earnings per share were $1.21, up 14% from $1.06.
- Adjusted diluted earnings per share were $1.34, up 10% from $1.22.
- Operating income was $619.2 million, up 14% from $541.9 million.
- Adjusted operating income was $684.7 million, up 9% from $626.7 million.
Management Solutions revenue reached $1.21 billion, up from $1.16 billion a year earlier, driven by higher revenue per client resulting from price realization and product penetration. Professional Employer Organization and Insurance Solutions revenue grew to $367.6 million from $329.1 million, supported by growth in 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.
Operating margin was 38.0% compared to 35.2% in the prior-year period. Adjusted operating margin was 42.0% compared to 40.7%. Net income reached $429.7 million, or $1.21 per basic share and $1.21 per diluted share, compared to $383.8 million, or $1.07 per basic share and $1.06 per diluted share, a year earlier.
"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," said John Gibson, President and Chief Executive Officer, in a statement included in the filing.
Gibson added, "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."
Financial position and shareholder returns
As of August 31, 2026, the company held $1.0 billion in cash, restricted cash, and total corporate investments. Long-term borrowings, net of debt issuance costs, stood at $4.6 billion. Cash flow from operations for the first quarter was $413.5 million. The company paid dividends of $1.19 per share, totaling $424.1 million.
Business outlook
The company maintained its fiscal year 2027 business outlook, projecting total revenue growth of 5% to 6%.
Why it matters
The results show steady demand for HR, payroll, and benefits advisory services among small and medium-sized businesses, alongside margin expansion. The filing also highlights ongoing deployment of artificial intelligence capabilities across the platform, including the WISE Hire recruiting solution.
By the numbers
| Metric | Value | Source |
|---|---|---|
| Total revenue | $1,630.5 million | 8-K Exhibit 99.1 |
| Management Solutions revenue | $1,213.1 million | 8-K Exhibit 99.1 |
| PEO and Insurance Solutions revenue | $367.6 million | 8-K Exhibit 99.1 |
| Interest on funds held for clients | $49.8 million | 8-K Exhibit 99.1 |
| Operating income | $619.2 million | 8-K Exhibit 99.1 |
| Adjusted operating income | $684.7 million | 8-K Exhibit 99.1 |
| Net income | $429.7 million | 8-K Exhibit 99.1 |
| Adjusted net income | $479.2 million | 8-K Exhibit 99.1 |
| Diluted earnings per share | $1.21 | 8-K Exhibit 99.1 |
| Adjusted diluted earnings per share | $1.34 | 8-K Exhibit 99.1 |
| Cash flow from operations | $413.5 million | 8-K Exhibit 99.1 |
| Dividends paid per share | $1.19 | 8-K Exhibit 99.1 |
Conference call details
The company scheduled an earnings conference call for September 23, 2026, at 9:30 a.m. Eastern Time to discuss the first-quarter financial results. A live webcast and replay remain accessible on the company's Investor Relations portal.