Paychex delivered a robust start to fiscal year 2026, with total revenue up 17% year over year to $1.50 billion, led by Management Solutions (MS) growing 21% on the back of Paycor integration and higher revenue per client. PEO and Insurance Solutions grew 3%, aided by rising average worksite employees. The company reaffirmed its outlook and raised adjusted EPS guidance to grow 9%–11%, citing stronger confidence in cost and revenue synergies from the Paycor deal. Management highlighted a multi-year opportunity to monetize Paycor’s client base through cross-sell (ASO, PEO, retirement), supported by AI-enabled tools and enhanced partner channels. The quarter featured strong working capital generation and meaningful free cash flow, with $718 million of cash flow from operations and a free cash flow of $662.5 million. The beta of the quarter remains the Paycor integration and AI-driven product enhancements, with margin expansion targeted at roughly 43% adjusted operating margin for the year. Near-term risks include at-risk revenue headwinds in the early 2026 period (notably in the PEO/MPP mix in Florida) and the usual integration execution risk as the two organizations operate as one Paychex. Overall, the setup remains favorable for long-term value creation through revenue synergies, cross-selling, and AI-enabled differentiation in a resilient small-business environment.