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Paychex, Inc. (PAYX - Free Report) reported better-than-expected second-quarter fiscal 2022 (ended Nov 30) results.
Adjusted earnings of 99 cents per share beat the Zacks Consensus Estimate by 4.2% and increased 8.8% on a year-over-year basis. Total revenues of $1.2 billion also beat the Zacks Consensus Estimate by 0.5% and increased 7.4% year over year.
Revenues in Detail
Revenues from Management Solutions segment increased 8% year over year to $895.3 million. The segment benefited from growth in the number of client employees served for human capital management (HCM) and additional worksite employees for HR Solutions. Also, improved revenue per client on price realization and higher product penetration, strong demand for HR Solutions, retirement, time and attendance solutions and expansion of HCM ancillary services acted as tailwinds.
Professional employer organization (“PEO”) and Insurance Solutions’ revenues were $273.3 million, up 4% from the year-ago quarter’s level. The uptick was owing to growth in the number of average worksite employees.
Interest on funds held for clients increased 54% year over year to $21.7 million.
Operating income increased 7% year over year to $472.3 million. EBITDA of $518.6 million increased 4.7% year over year.
Balance Sheet & Cash Flow
Paychex exited second-quarter fiscal 2022 with cash and cash equivalents of $1.1 billion compared with $1.18 billion reported at the end of the prior quarter. Long-term debt was $797.9 million compared with $797.8 million in the prior quarter.
Cash provided by operating activities was $321.6 million in the reported quarter. During the reported quarter, PAYX paid out $284.7 million as dividends.
Fiscal 2023 View Tweaked
Paychex upped its adjusted earnings per share view with respect to year-over-year growth for fiscal 2023. Adjusted EPS is now expected to register 12-14% growth compared with the prior expectation of 11-12% growth.
PAYX continues to expect total revenues to register 8% (prior view: 7-8%) growth.
Management Solutions’ revenues are expected to grow 7-8% (prior view: 5-7%). PEO and Insurance Solutions’ revenues are expected to grow 5-7% (prior view: 8-10%).
Omnicom Group Inc. (OMC - Free Report) reported impressive third-quarter 2022 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate.
Earnings of $1.77 per share beat the Zacks Consensus Estimate by 7.9% and increased 7.3% year over year, driven by a solid margin performance. Total revenues of $3.4 billion surpassed the Zacks Consensus Estimate by 3% and increased slightly on a year-over-year basis.
Equifax Inc. (EFX - Free Report) reported stellar third-quarter 2022 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate.
Adjusted earnings (excluding 39 cents from non-recurring items) of $1.73 per share beat the Zacks Consensus Estimate by 5.5% but decreased 6.5% on a year-over-year basis. However, revenues of $1.24 billion beat the Zacks Consensus Estimate by 2.3% and improved 1.8% year over year on a reported basis and 4% on a local-currency basis.
The Interpublic Group of Companies, Inc. (IPG - Free Report) reported better-than-expected third-quarter 2022 results.
Adjusted earnings (excluding a penny from non-recurring items) of 63 cents per share beat the Zacks Consensus Estimate by 6.8%. The bottom line has been flat over the past year. Net revenues of $2.3 billion beat the Zacks Consensus Estimate by 0.3% but declined 9.7% on a year-over-year basis. Total revenues of $2.64 billion increased 3.8% year over year.
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Paychex (PAYX) Q2 Earnings & Revenues Beat, FY23 View Adjusted
Paychex, Inc. (PAYX - Free Report) reported better-than-expected second-quarter fiscal 2022 (ended Nov 30) results.
Adjusted earnings of 99 cents per share beat the Zacks Consensus Estimate by 4.2% and increased 8.8% on a year-over-year basis. Total revenues of $1.2 billion also beat the Zacks Consensus Estimate by 0.5% and increased 7.4% year over year.
Revenues in Detail
Revenues from Management Solutions segment increased 8% year over year to $895.3 million. The segment benefited from growth in the number of client employees served for human capital management (HCM) and additional worksite employees for HR Solutions. Also, improved revenue per client on price realization and higher product penetration, strong demand for HR Solutions, retirement, time and attendance solutions and expansion of HCM ancillary services acted as tailwinds.
Professional employer organization (“PEO”) and Insurance Solutions’ revenues were $273.3 million, up 4% from the year-ago quarter’s level. The uptick was owing to growth in the number of average worksite employees.
Interest on funds held for clients increased 54% year over year to $21.7 million.
Paychex, Inc. Price, Consensus and EPS Surprise
Paychex, Inc. price-consensus-eps-surprise-chart | Paychex, Inc. Quote
Operating Performance
Operating income increased 7% year over year to $472.3 million. EBITDA of $518.6 million increased 4.7% year over year.
Balance Sheet & Cash Flow
Paychex exited second-quarter fiscal 2022 with cash and cash equivalents of $1.1 billion compared with $1.18 billion reported at the end of the prior quarter. Long-term debt was $797.9 million compared with $797.8 million in the prior quarter.
Cash provided by operating activities was $321.6 million in the reported quarter. During the reported quarter, PAYX paid out $284.7 million as dividends.
Fiscal 2023 View Tweaked
Paychex upped its adjusted earnings per share view with respect to year-over-year growth for fiscal 2023. Adjusted EPS is now expected to register 12-14% growth compared with the prior expectation of 11-12% growth.
PAYX continues to expect total revenues to register 8% (prior view: 7-8%) growth.
Management Solutions’ revenues are expected to grow 7-8% (prior view: 5-7%). PEO and Insurance Solutions’ revenues are expected to grow 5-7% (prior view: 8-10%).
Currently, Paychex carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Releases
Omnicom Group Inc. (OMC - Free Report) reported impressive third-quarter 2022 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate.
Earnings of $1.77 per share beat the Zacks Consensus Estimate by 7.9% and increased 7.3% year over year, driven by a solid margin performance. Total revenues of $3.4 billion surpassed the Zacks Consensus Estimate by 3% and increased slightly on a year-over-year basis.
Equifax Inc. (EFX - Free Report) reported stellar third-quarter 2022 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate.
Adjusted earnings (excluding 39 cents from non-recurring items) of $1.73 per share beat the Zacks Consensus Estimate by 5.5% but decreased 6.5% on a year-over-year basis. However, revenues of $1.24 billion beat the Zacks Consensus Estimate by 2.3% and improved 1.8% year over year on a reported basis and 4% on a local-currency basis.
The Interpublic Group of Companies, Inc. (IPG - Free Report) reported better-than-expected third-quarter 2022 results.
Adjusted earnings (excluding a penny from non-recurring items) of 63 cents per share beat the Zacks Consensus Estimate by 6.8%. The bottom line has been flat over the past year. Net revenues of $2.3 billion beat the Zacks Consensus Estimate by 0.3% but declined 9.7% on a year-over-year basis. Total revenues of $2.64 billion increased 3.8% year over year.