Paychex(PAYX) ZACKS·2024-12-19 18:35Core Viewpoint - Paychex, Inc. (PAYX) reported strong second-quarter fiscal 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate [1][2]. Financial Performance - Earnings per share were $1.1, surpassing the Zacks Consensus Estimate by 1.8% and increasing 5.6% year-over-year [2]. - Total revenues reached $1.3 billion, slightly exceeding the consensus estimate and reflecting a 4.8% year-over-year growth [2]. - Revenues from the Management Solutions segment rose 3% year-over-year to $962.9 million, beating the estimate of $955.5 million [3]. - Professional employer organization (PEO) and Insurance Solutions revenues were $317.9 million, up 7% year-over-year, but missed the estimate of $319.4 million [3]. - Service revenues increased 5% year-over-year to $1.3 billion, meeting the estimate [4]. - Interest on funds held for clients grew 15% year-over-year to $36.1 million, falling short of the projection of $36.8 million [4]. - EBITDA was $579.1 million, a 5% increase from the previous year, but missed the estimate of $581.3 million [5]. - Operating income rose 6% year-over-year to $538.1 million, slightly exceeding the projection [5]. - The operating margin improved to 40.9%, up 70 basis points year-over-year, but missed the estimate of 41% [5]. Balance Sheet & Cash Flow - At the end of the second quarter of fiscal 2025, cash and cash equivalents were $1.2 billion, down from $1.5 billion in the previous quarter [6]. - Long-term debt stood at $798.9 million, slightly up from $798.7 million in the first quarter of fiscal 2025 [6]. - Cash generated from operating activities was $295 million, with capital expenditure totaling $47 million [6]. Guidance - Paychex expects interest on funds held for clients to be between $145 million and $155 million [7]. - The company anticipates other income to be in the range of $30 million to $35 million [7]. - Paychex currently holds a Zacks Rank 2 (Buy) [7].