Paychex, Inc.

For Q4, total revenue increased 12% year over year to $1.6 billion. Management Solutions revenue grew 14% to $1.2 billion, PEO and Insurance Solutions revenue increased 9% to $370 million, and interest on funds held for clients rose 15% to $52 million. Operating income margin expanded about 750 basis points to 37.7%, adjusted operating margin rose about 170 basis points to 42.1%, diluted EPS increased 43% to $1.17, and adjusted diluted EPS increased 11% to $1.32. For the full year, revenue increased 17% to $6.5 billion; Management Solutions revenue grew 20% to $4.9 billion; PEO and Insurance Solutions revenue increased 7% to $1.4 billion; operating margin was 38.6%; adjusted operating margin increased about 70 basis points to 43.2%; diluted EPS rose 7% to $4.89; and adjusted diluted EPS rose 11% to $5.51. Cash, restricted cash, and total corporate investments were $1.2 billion, total borrowings were about $4.6 billion, operating cash flow increased 35% to $2.6 billion, free cash flow increased 36% to $2.3 billion, and the company returned $2.2 billion to shareholders. For fiscal 2027, Paychex expects total revenue growth of 5% to 6%, Management Solutions growth of 5% to 6%, PEO and Insurance growth of 6% to 7%, interest on funds held for clients of $195 million to $205 million, adjusted operating margin of approximately 44%, an effective tax rate of approximately 24%, and adjusted EPS growth of 7% to 9%. Q1 revenue growth is expected to be consistent with full-year guidance, with adjusted operating margin of 41% to 42%.

John Gibson framed the quarter as evidence that Paychex is executing across several strategic priorities: upmarket expansion, Paycor integration, advisory differentiation, and AI. He said the company is seeing strong retention and booking momentum, record worksite employee retention in ASO and PEO, and continued traction in cross-sell and broker channels. His tone was confident and forward-looking, emphasizing that the infrastructure modernization is complete and that AI, especially WISE, should expand long-term value creation.

Bob Schrader emphasized that the quarter and year reflected strong growth plus margin leverage. He cited Q4 revenue of $1.6 billion, adjusted operating margin of 42.1%, and adjusted EPS of $1.32, then pointed to full-year free cash flow of $2.3 billion and $2.2 billion returned to shareholders through dividends and buybacks. On FY2027, he said growth should be aided by Paycor synergies and technology-driven productivity, while float is a slight headwind, with interest on funds expected to decline about 4% to 5% versus the prior year.

Analysts focused on the path to FY2027 growth, the impact of Paycor, AI monetization, and whether organic growth can sustain its recent acceleration. Management said the Q4 exit rate was in line with guidance, bookings improved each quarter, and the enterprise business saw high single-digit growth across both platforms. They also said AI is already being used internally and in early product soft launches, but monetization is still early, while the larger revenue contribution should come from cross-sell, pricing, and share of wallet.