PAYX

EX-99.1

2 payx-ex99_1.htm

EX-99.1

EX-99.1

News Release

911 Panorama Trail South • Rochester, NY 14625 • paychex.com

Paychex Reports First Quarter Fiscal 2027 Results

• Delivered double-digit diluted EPS growth supported by strong PEO and Insurance Solutions revenue growth

• Strong expansion of industry-leading operating margins

• Advanced AI leadership and launched WISE Hire agentic recruiting solution

Rochester, N.Y. (September 23, 2026) - Paychex (Nasdaq: PAYX), a leading provider of expert-enabled HR, payroll, and benefits, today reported results for the fiscal quarter ended August 31, 2026 (the "first quarter") of the fiscal year ending May 31, 2027 ("fiscal 2027"). Unless otherwise noted, all growth rates refer to the current period versus the comparable prior-year period.

Three months ended

August 31,

In millions, except per share amounts

2026

2025

Change

Total revenue

$

1,630.5

$

1,540.0

6

%

Operating income

$

619.2

$

541.9

14

%

Adjusted operating income*

$

684.7

$

626.7

9

%

Diluted earnings per share

$

1.21

$

1.06

14

%

Adjusted diluted earnings per share*

$

1.34

$

1.22

10

%

"Paychex delivered a solid start to total revenue growth in fiscal 2027, with double-digit PEO and Insurance Solutions revenue and EPS growth underscoring the strength of our advisory solutions, disciplined execution, and continued progress against our strategic priorities," stated John Gibson, President and Chief Executive Officer. "Our results reflect the durability of our business model, go-to-market investments helping us bring the full breadth of our solutions to more prospects and clients, and the value businesses place on our ability to combine innovative technology with trusted advisory expertise to navigate an increasingly complex workforce, regulatory, and benefits environment."

Gibson continued, "We continued to build meaningful momentum in AI with compelling early adopter results from our award-winning WISE engine and the introduction of WISE Hire, our agentic recruiting solution. By extending AI-enabled automation and insights across Paychex HCM platforms and into Microsoft business applications where clients already work, we are making these capabilities easier to access and adopt. Together, we believe these innovations strengthen our competitive position, enhance productivity and client outcomes, and support sustainable growth and long-term shareholder value."

First Quarter Business Highlights

• Total revenue increased 6% to $1.6 billion.

• Management Solutions revenue increased 4% to $1.2 billion driven by higher revenue per client resulting from price realization and product penetration.

• Professional Employer Organization ("PEO") and Insurance Solutions revenue increased 12% to $367.6 million, primarily due to growth in the number of average PEO worksite employees and increased PEO insurance volumes.

• Interest on funds held for clients increased 5% to $49.8 million due to higher average interest rates.

1

• Operating income grew 14% to $619.2 million, primarily reflecting revenue growth and lower acquisition-related costs, and adjusted operating income grew 9% to $684.7 million.

• Operating margin was 38.0% compared to 35.2% and adjusted operating margin* was 42.0% compared to 40.7%.

• Diluted earnings per share increased 14% to $1.21 and adjusted diluted earnings per share increased 10% to $1.34.

*Adjusted operating income, adjusted operating margin, and adjusted diluted earnings per share are non-GAAP measures. Please refer to the "Non-GAAP Financial Measures" section below. Operating margin and adjusted operating margin are calculated as a percentage of total revenue.

Financial Position, Liquidity and Return to Shareholders

As of August 31, 2026

• Cash, restricted cash, and total corporate investments of $1.0 billion.

• Long-term borrowings, net of debt issuance costs, of $4.6 billion.

For the first quarter

• Cash flow from operations was $413.5 million.

• Paid dividends of $1.19 per share totaling $424.1 million.

Fiscal 2027 Business Outlook

Our current business outlook reflects current assumptions and market conditions. Changes in the macroeconomic environment could alter our guidance. Forward-looking adjusted operating margin and adjusted diluted earnings per share exclude acquisition-related costs. With consideration of these impacts, we have updated our business outlook as follows:

Fiscal Year 2027 Outlook

Updates

Total revenue growth

5% to 6%

No change

Management Solutions revenue growth

5% to 6%

No change

PEO and Insurance Solutions revenue growth

7% to 8%

Previously 6% to 7%

Interest on funds held for clients

$200 million to $210 million

Previously $195 million to $205 million

Adjusted operating margin

~44%

No change

Effective income tax rate

~24%

No change

Adjusted diluted earnings per share growth

7% to 9%

No change

Webcast Details

The Company will host an Earnings Conference Call on September 23, 202

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