Paychex(PAYX) - 2025 Q3 - Quarterly Results

Financial Performance - Total revenue for the third quarter increased to $1.5 billion, representing a growth of 5% compared to the prior year[2] - Operating income grew 6% to $691.8 million, with an adjusted operating income increase of 9% to $708.5 million[5] - Diluted earnings per share increased 4% to $1.43, while adjusted diluted earnings per share rose 8% to $1.49[7] - Management Solutions revenue increased 5% to $1.1 billion, driven by growth in clients and higher revenue per client[9] - Total revenue for the three months ended February 28, 2025, was $1,509.0 million, a 5% increase from $1,439.3 million in the same period last year[23] - Management Solutions revenue grew by 5% to $1,100.7 million, while PEO and Insurance Solutions revenue increased by 6% to $365.4 million for the three months ended February 28, 2025[23] - Net income for the three months ended February 28, 2025, was $519.3 million, reflecting a 4% increase from $498.6 million in the prior year[23] - Basic earnings per share for the three months ended February 28, 2025, was $1.44, up 4% from $1.39 in the same period last year[23] - Net income for the nine months ended February 28, 2025, was $1,360.1 million, compared to $1,310.5 million for the same period in 2024, reflecting a growth of 3.8%[28] Expenses and Margins - Total expenses for the third quarter increased 4% to $817.2 million, primarily due to acquisition-related costs[4] - Operating margin for the third quarter was 45.8%, up from 45.1% in the prior year, while adjusted operating margin was 46.9%[5] - Adjusted operating margin is anticipated to be approximately 43% for fiscal 2025[16] Cash Flow and Returns - Cash flow from operations was $1.6 billion for the nine months ended February 28, 2025[10] - The company returned $1.2 billion to stockholders in the first nine months of fiscal 2025[3] - Net cash provided by operating activities for the nine months ended February 28, 2025, was $1,557.1 million, down from $1,676.0 million in the prior year, a decrease of 7.1%[28] - Dividends paid amounted to $1,059.2 million for the nine months ended February 28, 2025, compared to $962.5 million in the same period of 2024, an increase of 10.0%[28] Assets and Equity - Total assets increased to $11,221.6 million as of February 28, 2025, up from $10,383.1 million on May 31, 2024, representing an increase of 8.1%[26] - Cash and cash equivalents rose to $1,563.8 million as of February 28, 2025, compared to $1,468.9 million on May 31, 2024, an increase of 6.5%[26] - Total stockholders' equity increased to $4,116.6 million as of February 28, 2025, from $3,801.0 million on May 31, 2024, marking a growth of 8.3%[26] - Total current assets reached $8,077.0 million as of February 28, 2025, up from $7,251.5 million on May 31, 2024, an increase of 11.4%[26] Client Obligations and Investments - Client fund obligations increased to $4,251.8 million as of February 28, 2025, compared to $3,868.7 million on May 31, 2024, an increase of 9.9%[26] - The company reported a net cash used in investing activities of $281.7 million for the nine months ended February 28, 2025, compared to $117.8 million in the prior year[28] Acquisitions and Future Expectations - The company expects to close the acquisition of Paycor HCM, Inc. in April 2025, which is anticipated to enhance its customer base to nearly 800,000[3] - The pending acquisition of Paycor is expected to close in April 2025, which aims to enhance the company's HR technology and advisory solutions[13] - The company expects PEO and Insurance Solutions revenue to grow in the range of 6.0% to 6.5% for fiscal 2025[16] Tax and Regulatory - The effective income tax rate was 24.3% for the third quarter, slightly down from 24.4% in the prior year[7] - The company anticipates filing its Form 10-Q for the third quarter within the next couple of days[14] Other Income - Other (expense)/income, net, for the three months ended February 28, 2025, was $(6.0) million, compared to $9.4 million in the same period last year, indicating significant variability[23] Borrowings - Long-term borrowings remained stable at $799.0 million as of February 28, 2025, compared to $798.6 million on May 31, 2024[26]