Paychex Inc
PAYX
$112.45 0.35%
Exchange: NASDAQ | Sector: Industrials | Industry: Staffing Employment Services
Q2 2025
Published: Dec 19, 2024

Earnings Highlights

  • Revenue of $1.32B up 4.7% year-over-year
  • EPS of $1.14 increased by 5.5% from previous year
  • Gross margin of 71.2%
  • Net income of 413.40M
  • "John Gibson: 'Our PEO business continues to perform exceptionally well, driven by our robust value proposition as evidenced by solid worksite employee growth, record levels of retention and higher overall insurance enrollment.'" - John Gibson
PAYX
Company PAYX

Executive Summary

Paychex delivered solid second quarter results for FY2025, underscoring resilience in a mixed SMB hiring environment. Revenue reached $1.3169B, up 5% year over year, with a 7% rise excluding the 200bp ERTC headwind. PEO and Insurance Solutions grew 7%, Management Solutions rose 3%, and overall earnings benefited from favorable mix and disciplined cost control. Management emphasized a broad HCM platform, expanding AI-enabled capabilities (Premium Plus with GenAI, Recruiting Copilot) and the Paychex Flex Perks employee marketplace as key differentiators driving higher product penetration and retention.

The company reaffirmed full-year guidance, signaling revenue growth of 4-5% for FY2025 and operating margins in the 42-43% range, with Q3 margin expected at 46-47% as the largest operating margin quarter benefits from annual form filings. The fading ERTC headwind is expected to lift topline growth in H2, while Florida MPP enrollment headwinds modulate PEO growth. Cash flow remains ample, with CFO of $295M in the quarter and $841M for the first half, supporting a net cash position and ongoing buybacks. The strategic emphasis on AI-driven analytics, talent solutions, and a broader product suite positions Paychex to improve cross-sell, attach rates, and client lifetime value over time.

Key Performance Indicators

Revenue
Increasing
1.32B
QoQ: -0.12% | YoY: 4.69%
Gross Profit
Increasing
937.80M
71.21% margin
QoQ: -0.07% | YoY: 4.92%
Operating Income
Increasing
538.10M
QoQ: -1.57% | YoY: 6.30%
Net Income
Increasing
413.40M
QoQ: -3.28% | YoY: 5.27%
EPS
Increasing
1.15
QoQ: -3.36% | YoY: 5.50%

Revenue Trend

Margin Analysis

Historical Earnings Comparison

PeriodRevenue ($M)EPS ($)YoY GrowthReport
Q1 2026 1,540.00 1.06 +18.9% View
Q3 2025 1,509.00 1.43 +4.8% View
Q2 2025 1,316.90 1.14 +4.7% View
Q1 2025 1,318.50 1.18 +2.5% View
Q4 2024 1,295.10 1.05 +5.3% View