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Paychex's Q3 Earnings and Revenues Surpass Estimates, Increase Y/Y
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Key Takeaways
PAYX beat Q3 estimates with EPS of $1.71 and revenues of $1.80B, up 14.8% and 19.9%, respectively, y/y.
Management Solutions rose 23%, while PEO and Insurance revenues grew 9% year over year.
PAYX sees FY'26 revenue growth of 16.5-18.5% and $200-$210M in client fund interest income.
Paychex, Inc. (PAYX - Free Report) reported impressive third-quarter fiscal 2026 results, with both earnings and revenues beating the Zacks Consensus Estimate.
PAYX’s fiscal third-quarter earnings of $1.71 per share beat the Zacks Consensus Estimate by 1.8% and increased 14.8% from the year-ago quarter. Total revenues came in at $1.80 billion, surpassing the consensus estimate by 1.4% and increasing 19.9% from the year-ago quarter.
The company’s shares have lost 20.7% over the past three months compared with the industry’s and the Zacks S&P 500 composite’s 18.3% and 5.6% decline, respectively.
Revenues from the Management Solutions segment improved 23% year over year to $1.35 billion, meeting our estimate.
Professional employer organization (“PEO”) and Insurance Solutions’ revenues were $397.5 million, increasing 9% from the year-ago quarter. The figure surpassed our estimate of $392.8 million.
Service revenues rose 20% year over year to $1.75 billion, beating our estimated figure of $1.74 billion. Interest on funds held for clients grew 33% from the year-ago quarter to $56.8 million, beating our projection of $45.8 million.
EBITDA of $902.9 million increased 23% from the year-ago quarter, exceeding our estimate of $888.9 million. Operating income rose 14% year over year to $792 million, surpassing our forecast of $775.1 million. The operating margin was 43.8%, down 200 basis points from the year-ago quarter. The reported figure beat our estimate of 43.3%.
Balance Sheet & Cash Flow of Paychex
The company exited the third quarter of fiscal 2026 with cash and cash equivalents of $1.74 billion compared with $1.48 billion in the preceding quarter. Long-term debt totaled $4.55 billion, flat compared with the preceding quarter.
Cash generated from operating activities amounted to $812.5 million, while capital expenditure was $51 million.
PAYX’S Updated FY’26 Guidance
Paychex expects revenues to grow 16.5% to 18.5%. Management expects interest on funds held for clients in the range of $200-$210 million.
Trane Technologies (TT - Free Report) reported impressive fourth-quarter 2025 results.TT’s quarterly earnings of $2.86 per share beat the Zacks Consensus Estimate by 1.4% and increased 9.6% from the year-ago quarter’s level.
TT’s total revenues of $5.1 billion surpassed the consensus estimate by 1.3% and rose 5.5% from the year-ago quarter’s figure.
Booz Allen Hamilton (BAH - Free Report) registered mixed results for third-quarter fiscal 2026. BAH’s earnings per share of $1.77 beat the consensus mark by 40.5% and increased 14.2% from the year-ago quarter’s level.
BAH’s revenues of $2.6 billion missed the Zacks Consensus Estimate by 3.9% and were down 10.2% from the year-ago quarter’s figure.
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Paychex's Q3 Earnings and Revenues Surpass Estimates, Increase Y/Y
Key Takeaways
Paychex, Inc. (PAYX - Free Report) reported impressive third-quarter fiscal 2026 results, with both earnings and revenues beating the Zacks Consensus Estimate.
PAYX’s fiscal third-quarter earnings of $1.71 per share beat the Zacks Consensus Estimate by 1.8% and increased 14.8% from the year-ago quarter. Total revenues came in at $1.80 billion, surpassing the consensus estimate by 1.4% and increasing 19.9% from the year-ago quarter.
The company’s shares have lost 20.7% over the past three months compared with the industry’s and the Zacks S&P 500 composite’s 18.3% and 5.6% decline, respectively.
Paychex, Inc. Price, Consensus and EPS Surprise
Paychex, Inc. price-consensus-eps-surprise-chart | Paychex, Inc. Quote
PAYX’s Quarterly Performance
Revenues from the Management Solutions segment improved 23% year over year to $1.35 billion, meeting our estimate.
Professional employer organization (“PEO”) and Insurance Solutions’ revenues were $397.5 million, increasing 9% from the year-ago quarter. The figure surpassed our estimate of $392.8 million.
Service revenues rose 20% year over year to $1.75 billion, beating our estimated figure of $1.74 billion. Interest on funds held for clients grew 33% from the year-ago quarter to $56.8 million, beating our projection of $45.8 million.
EBITDA of $902.9 million increased 23% from the year-ago quarter, exceeding our estimate of $888.9 million. Operating income rose 14% year over year to $792 million, surpassing our forecast of $775.1 million. The operating margin was 43.8%, down 200 basis points from the year-ago quarter. The reported figure beat our estimate of 43.3%.
Balance Sheet & Cash Flow of Paychex
The company exited the third quarter of fiscal 2026 with cash and cash equivalents of $1.74 billion compared with $1.48 billion in the preceding quarter. Long-term debt totaled $4.55 billion, flat compared with the preceding quarter.
Cash generated from operating activities amounted to $812.5 million, while capital expenditure was $51 million.
PAYX’S Updated FY’26 Guidance
Paychex expects revenues to grow 16.5% to 18.5%. Management expects interest on funds held for clients in the range of $200-$210 million.
PAYX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshot
Trane Technologies (TT - Free Report) reported impressive fourth-quarter 2025 results.TT’s quarterly earnings of $2.86 per share beat the Zacks Consensus Estimate by 1.4% and increased 9.6% from the year-ago quarter’s level.
TT’s total revenues of $5.1 billion surpassed the consensus estimate by 1.3% and rose 5.5% from the year-ago quarter’s figure.
Booz Allen Hamilton (BAH - Free Report) registered mixed results for third-quarter fiscal 2026. BAH’s earnings per share of $1.77 beat the consensus mark by 40.5% and increased 14.2% from the year-ago quarter’s level.
BAH’s revenues of $2.6 billion missed the Zacks Consensus Estimate by 3.9% and were down 10.2% from the year-ago quarter’s figure.