ROCHESTER, N.Y. - Paychex Inc . (NASDAQ:PAYX) reported better-than-expected first quarter results on Tuesday, as the payroll and human resources company saw continued growth in its core business segments. Shares rose 1.65% following the earnings release.
The company posted adjusted earnings per share of $1.16 for the quarter ended August 31, topping analyst estimates of $1.14. Revenue grew 3% YoY to $1.32 billion, slightly ahead of the $1.31 billion consensus forecast.
"We are off to a solid start in fiscal 2025 with 3% growth in total revenue during the first quarter," said President and CEO John Gibson. He noted that excluding the impact of the expiration of the Employee Retention Tax Credit program and one less payroll processing day, revenue growth was 7%.
Management Solutions revenue, the company's largest segment, increased 1% to $961.7 million. Professional Employer Organization (PEO) and Insurance Solutions revenue rose 7% to $319.3 million, driven by growth in average PEO worksite employees and higher PEO insurance revenues.
Interest on funds held for clients jumped 15% to $37.5 million, benefiting from higher average interest rates and investment balances.
Looking ahead, Paychex updated its fiscal 2025 outlook, now expecting interest on funds held for clients to be between $145 million and $155 million. The company maintained its other previous guidance for the full year.
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