Paychex Inc, trading as PCX.DE for a Deutsche Börse listing, delivered a solid QQ1 2026 with revenue of $1.54 billion, up 18.9% year over year and 2.1% quarter over quarter. Gross profit reached $1.126 billion with a gross margin of 73.13%, while operating income stood at $541.9 million, yielding an operating margin of approximately 35.2%. Net income was $383.8 million and earnings per share (GAAP) $1.07, with diluted EPS at $1.06. The company generated strong operating cash flow of $718.4 million and free cash flow of $662.5 million, supporting a robust balance sheet and substantial cash returns to shareholders through dividends ($389.1 million) and share repurchases ($160.1 million). Liquidity remains healthy, with cash and cash equivalents of $809 million and a net debt position of about negative $737.6 million after accounting for total debt of $71.4 million and sizable liquid assets.
The quarter reflects a favorable mix of SMB payroll outsourcing and HCM services, aided by ongoing demand for cloud-based HR and outsourcing solutions. Management commentary remains focused on scaling cloud HR software, expanding geographic reach (US, Europe, India), and cross-selling HR services to SMBs. While top-line momentum is encouraging, margin trajectory will depend on mix shifts toward higher-value services and continued investments in growth initiatives. Near-term catalysts include client renewal velocity, new client acquisitions, and utilization of scalable software platforms to improve cross-sell economics. The lack of formal forward-looking guidance in the provided data necessitates a cautious outlook, but industry tailwinds for cloud-based HR and payroll outsourcing support a constructive longer-term view.