Paychex Inc.

PAYX
Financial Analysis · Updated May 13, 2026 · Coverage 2026-Q2
Latest Q Revenue
$1.8B
Q3 FY2026 · +19.9% YoY
TTM ROIC
40.1%
FY2025 · Net Income / Total Equity · WACC ~9% · Moat spread +31.1pp

Financial Snapshot

ticker: PAYX step: 04 generated: 2026-05-12 source: quick-research

Paychex Inc. (PAYX) — Financial Snapshot

Income Statement Summary

Note: Paychex fiscal year ends May 31. FY2025 = June 2024–May 2025; Paycor acquired April 2025 (2 months contribution in FY2025).

Metric FY2023 FY2024 FY2025 YoY
Revenue $5.01B $5.28B $5.57B +5.6%
Gross Margin ~72% ~72% ~72% flat
Operating Margin ~40% ~40% ~40% flat
Net Income ~$1.60B ~$1.72B ~$1.70B -1%
EPS (diluted) ~$4.42 ~$4.83 ~$4.80 -1%

FY2025 EPS slightly lower due to Paycor integration/transaction costs. Full-year FY2026 guidance calls for 16.5–18.5% revenue growth (full Paycor contribution + $150M synergy target) and adj. EPS recovery.

Cash Flow & Balance Sheet (FY2025)

Metric Value
Free Cash Flow ~$1.71B
FCF Margin ~31%
Cash & Equivalents ~$1.0B
Total Debt ~$5.5B (includes Paycor financing)
Client Funds Held ~$4–5B (generates float income)

Key Ratios (approximate)

  • P/E: ~20x (adj. FY2026E) | FCF Yield: ~5%
  • EV/EBITDA: ~18x | Operating Margin: ~40%
  • Float Income: ~$300–400M/year at current interest rates (~6–8% of revenue)
  • Dividend Yield: ~3.2% | 10+ consecutive years of dividend increases

Growth Profile

Paychex is a high-quality compounder — organic revenue growth of 5–7% through a combination of SMB employment growth, ARPU expansion, and client adds. The FY2026 step-up to 16.5–18.5% revenue growth is almost entirely Paycor contribution. Structurally, the business generates ~40% operating margins and ~31% FCF margins with minimal capex — a hallmark of software-adjacent recurring revenue businesses. Float income adds ~$300–400M in near-100% margin revenue at current interest rates.

Forward Estimates

  • FY2026 (ending May 2026): Revenue guidance +16.5–18.5% (→ ~$6.5–$6.6B); adj. EPS recovery target; $150M synergies from Paycor
  • FY2026 Outlook: 17% revenue growth posted for quarter ended Aug 2025; full-year FY2026 earnings outlook raised
  • Rate sensitivity: Every 25bps Fed rate cut reduces float income by $30–40M ($0.08 EPS headwind)

Deeper Financial Analysis

The fundamental tier adds 9 additional research dimensions for $PAYX.

Revenue Breakdown
Segment revenue, geographic mix, product-line contribution margins, and cohort dynamics.
Financial Trends
Quarter-over-quarter momentum, leading indicators, and inflection point analysis.
Balance Sheet
Debt structure, liquidity runway, dilution risk, and working capital dynamics.
Capital Allocation
Buyback cadence, M&A appetite, dividend policy, and reinvestment priorities.
Returns on Capital (ROIC)
Multi-year ROIC vs. WACC, marginal returns on reinvestment, sales-to-invested-capital efficiency, and moat spread.
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Paychex Inc. (PAYX) — Financial Analysis | Margin of Insight