- Paychex delivered solid Q4 2024 results with revenue of $1.295B, up 5% year over year, driven by growth in Management Solutions and PEO/insurance solutions, while ERTC-related revenue declined as expected. Net income was $379.9M and diluted EPS was $1.05–$1.06, with adjusted EPS up 15% for the quarter. The company cited strong revenue retention and improving worksite employee growth within its PEO and ASO units, plus double-digit growth in retirement services, underscoring a diversified, defensible SMB workflow platform.
- For FY2024, Paychex reported total revenue of $5.3B (+5% YoY) and adjusted diluted EPS of $4.72 (+11% YoY), with operating margins expanding to 41.9% (adjusted) and robust operating cash flow of $1.9B. Net debt stood at a net cash position, and the firm returned $1.5B to shareholders via dividends and buybacks.
- The FY2025 outlook calls for 4%-5.5% total revenue growth (midpoint ~4.75%), excluding the ~200bp headwind from ERTC expiration, and adjusted EPS growth of 5%-7%. Operating margins are guided to 42%-43% for the year, with Q1 revenue growth around 2% and an operating margin of 40%-41%. Management emphasized ongoing AI investments to improve pricing, sales productivity, and client servicing, as well as continued emphasis on PEO/insurance and retirement solutions. The plan assumes no meaningful M&A contribution in FY2025.
- The market environment remains characterized by a tight labor market, inflationary pressures, and a high emphasis on attracting/retaining talent for SMBs. Paychex’s multi-solution platform (ASO, PEO, retirement, insurance, HR tech) positions it to capture demand for outsourcing and advisory services as SMBs navigate regulatory complexity and cost pressures.