Paychex Reports Strong Earnings Growth in Q2

By Dean Seal

Paychex, a leading human-resources company based in Rochester, N.Y., announced impressive results for its fiscal second quarter. The company experienced a significant increase in sales due to higher prices and an expanded client base.

During the three months ended November 30, Paychex recorded a profit of $392.7 million, surpassing last year's figure of $360.3 million for the same quarter. Earnings per share also showed growth, rising from 99 cents in the year-ago quarter to $1.08. Analysts had predicted earnings per share of $1.07.

Although revenue rose 6% to $1.26 billion, it fell slightly short of analyst projections of $1.27 billion, according to FactSet.

The rise in service revenue can be attributed to several factors. Firstly, an increase in the number of clients utilizing Paychex's suite of human capital management solutions contributed to a 5% growth. Additionally, the company witnessed higher revenue per client and experienced growth in the number of average professional employer organization worksite employees.

However, total expenses saw a 5% increase, primarily due to higher wages, increased direct insurance costs, and investments in technology, sales, and marketing.