Compared to Estimates, Paychex (PAYX) Q3 Earnings: A Look at Key Metrics

Core Insights - Paychex reported $1.51 billion in revenue for the quarter ended February 2025, marking a year-over-year increase of 4.8% and an EPS of $1.49 compared to $1.38 a year ago, with a revenue surprise of +0.03% and an EPS surprise of +0.68% over consensus estimates [1] Financial Performance - Average investment balance for funds held for clients was $5.12 billion, exceeding the estimated $4.98 billion [4] - Average interest rates earned on funds held for clients stood at 3.4%, matching the average estimate [4] - Average investment balance for corporate cash equivalents and investments was $1.54 billion, slightly above the $1.50 billion estimate [4] - Average interest rates earned on corporate cash equivalents and investments were 4.3%, below the estimated 4.5% [4] - Revenue from interest on funds held for clients was $42.90 million, surpassing the average estimate of $40.82 million, but reflecting a year-over-year decline of -2.3% [4] - Total service revenue was reported at $1.47 billion, consistent with the average estimate and showing a year-over-year increase of +5.1% [4] - Revenue from PEO and Insurance Services was $365.40 million, slightly below the average estimate of $371.35 million, with a year-over-year increase of +5.8% [4] - Revenue from Management Solutions was $1.10 billion, aligning with the average estimate and reflecting a year-over-year change of +4.8% [4] Stock Performance - Paychex shares have returned -4.6% over the past month, compared to a -2.9% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]