Paychex, Inc.

    PAYX ·NASDAQ ·Services-Engineering, Accounting, Research, Management ·Inc. in DE
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    Unless we state otherwise or the context otherwise requires, the terms “Paychex,” the “Company,” “we,” “our,” and “us” refer to Paychex, Inc., a Delaware corporation, and its consolidated subsidiaries.

     

    Overview

     

    We are an industry-leading human capital management (“HCM”) company providing comprehensive technology and advisory solutions in human resources (“HR”), payroll processing, employee benefits, and insurance. As of May 31, 2026, we served approximately 840,000 total customers across the U.S. and parts of Europe, of which approximately 800,000 are payroll clients. Paychex was incorporated in Delaware in 1979, maintains dual corporate headquarters in Rochester, New York and Cincinnati, Ohio, and has a fiscal year that ends on May 31st.

    Effective human capital management requires significant resources and expertise. Organizations face a rapidly evolving employment landscape including an increasing number and complexity of federal, state, and local regulations; the integration of AI into HCM processes; changing workforce dynamics; increasing medical inflation; and challenges attracting and retaining talent. Changing workplace dynamics include increasingly distributed, mobile workforces as well as employee expectations for user experiences similar to customer-oriented applications.

    We specialize in helping customers succeed in this rapidly evolving environment. What sets us apart in the industry is our comprehensive suite of solutions, deep advisory expertise, and differentiated access to a large and growing proprietary dataset. Paychex offers a full range of integrated HCM solutions from hire to retire, for businesses and their employees, with configurable options designed to meet a wide range of business sizes and complexities. We believe our solutions address the entire employee life cycle, while also enabling integrations with popular HR, accounting, enterprise resource planning (“ERP”), and point-of-sale applications.

    Key features of our solutions include:

     

    •
    Comprehensive cloud-based HCM platforms optimized to meet customers' HR and payroll needs;
    •
    AI-powered capabilities through WISE, our workforce intelligence engine, which leverages our large proprietary datasets to help automate workflows, enhance decision making, and increase productivity across our solutions and operations;
    •
    Expertise in HR and payroll backed by approximately 250 compliance experts and over 650 HR business professionals;
    •
    Streamlined workforce management that combines technology with flexible, tech-enabled support options;
    •
    Modern, mobile, and intuitive user experience with self-service capabilities; and
    •
    Scalable and customizable platforms that provide customers the flexibility to add solutions as they grow.

     

    We market our solutions through a combination of direct and virtual sales forces, supported by referrals from channel partners and existing customers, as well as digital lead generation and multi-channel marketing initiatives. Over 60% of our revenue is derived from solutions other than payroll processing.

     

    2

    On April 14, 2025, we completed our acquisition of Paycor HCM, Inc. ("Paycor"), a leading provider of HCM, payroll and talent software. This acquisition expanded our presence upmarket, increased cross-sale opportunities, and enhanced our suite of AI-driven HCM solutions.

    Company Strategy

     

    Our strategy is to be the digitally driven HR leader by serving as an essential partner to customers through technology and advisory solutions for HR, payroll, employee benefits, and insurance. We believe that successfully executing this strategy will lead to strong, long-term financial performance. We intend to strengthen and extend our position as a leading provider through continued investments in both our innovative technology and HR advisory solutions. Key elements of our strategy include:

     

    •
    Growing our customer base. We operate in a large and growing market, with significant potential to expand within our current target markets. To support this growth, we invest in demand generation, sales tools, and go-to-market initiatives, including channel partnerships, ecommerce, and digital marketing. We also intend to grow our customer base by expanding sales of solutions beyond our payroll client base and by developing additional standalone offerings that can be sold independently of our core payroll and HCM solutions.
    •
    Expanding our share of wallet. We intend to expand our share of wallet by increasing penetration of our HCM software, HR outsourcing, retirement, and insurance offerings, while also broadening the range of solutions we offer to clients.
    •
    Driving technology innovation. We continue to invest significantly in our proprietary technology, HCM platforms, advisory solutions and benefits to maximize value for our customers and their employees. We have a robust roadmap focused on enhancing our ability to address the needs of current and prospective customers. We believe we are well positioned to capitalize on AI opportunities through our large and growing data sets, predictive analytics and AI models, and continued investments to increase efficiency, enhance the customer experience, support better outcomes and create growth opportunities.
    •
    Pursuing strategic acquisitions. We utilize acquisitions, when appropriate, as a means to expand our portfolio, enter new markets, or increase our scale. We will continue to evaluate potential acquisitions that are aligned with our overall strategy.

     

    Our Customers

    We provide HCM solutions to a diverse customer base operating in a broad range of industries throughout the U.S. and parts of Europe. The flexibility and scalability of our solutions enable our customers to select the best solution that meets their needs. We utilize service agreements and arrangements with customers that generally do not contain specified contract periods and may be terminated by either party with 30-days’ notice.

    We believe client retention is a useful indicator of client satisfaction with our solutions and support. For the fiscal year ended May 31, 2026 (“fiscal 2026”), our payroll client retention was in the range of 82% to 83% of our beginning client base.

     

    Our Solutions

     

    We provide a differentiated combination of innovative technology solutions and deep advisory expertise spanning compliance, HR and benefits that help customers more effectively attract, develop, and retain talent in a challenging labor environment. Clients have the option of processing payroll online using our technology, outsourcing to our payroll specialists, or using a combination of these methods. Payroll is integrated with HCM software modules for customers who have more complex HR needs. We continue to invest in our solutions to enhance the customer and employee experiences from hire to retire.

    We also provide comprehensive HR outsourcing through our administrative services organization (“ASO”) and professional employer organization (“PEO”) solutions. We support approximately 2.6 million worksite employees with our HR Outsourcing Solutions. We have over 650 HR business professionals who are dedicated to our customers and have the experience and training to provide HR best practices and advice. HR business professionals are available to provide our ASO and PEO customers with guidance on HR issues. The integration of leading-edge technology and flexible support options enables us to meet our customers’ needs, from the tactical to the strategic.

     

    Building on our advisory strength, we launched WISE, Workforce Intelligence Strengthened by Expertise, our AI-powered intelligence engine that extends our existing capabilities into agentic AI. As of May 31, 2026, WISE powers approximately 600 AI features and agents across our solutions and operations. By embedding agents into the flow of work, WISE moves beyond insight and assistance to autonomous execution for clients. We believe this enables us to scale our expertise, enhance productivity,

    3

    and deliver better client outcomes, all with human-in-the-loop oversight and strong governance. For more than 50 years, we have been at the center of HR, payroll, and benefits, giving us access to a vast, proprietary, and growing dataset. WISE now draws on more than 26 trillion data points, helping make our solutions smarter, more relevant, and more proactive.

     

    We closely monitor the evolving challenges and needs of our customers, and proactively aid our customers in navigating macroeconomic challenges, legislative changes, and other complexities they may face. Over the past year, top challenges for employers were macroeconomic pressures including inflation and interest rates, availability of qualified talent, providing affordable benefits, keeping technology current, and ensuring legal and regulatory compliance. We have approximately 250 compliance professionals who are in real-time contact with tax agencies and regulators to understand upcoming or newly enacted laws and regulations. These compliance experts help ensure that our HCM solutions are updated in a timely fashion to reflect applicable regulations and to support our customers stay in compliance.

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    Financial statements

    data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .

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    From 10-K filed 2026-07-17 (period ending 2026-05-31).

     

    Management’s Discussion and Analysis of Financial Condition and Results of Operations reviews the operating results of Paychex, Inc. and its wholly owned subsidiaries (“Paychex,” the “Company,” “we,” “our,” or “us”) for our fiscal year ended May 31, 2026 (“fiscal 2026” or the “fiscal year”), as compared to our fiscal year ended May 31, 2025 (“fiscal 2025”), and our financial condition as of May 31, 2026. A detailed review of our fiscal 2025 performance compared to our fiscal year ended May 31, 2024 performance and our financial condition as of May 31, 2025 is set forth in Part II, Item 7 of our Annual Report on Form 10-K (“Form 10-K”) for fiscal 2025. This review should be read in conjunction with the accompanying consolidated financial statements and the related Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K and the “Risk Factors” discussed in Item 1A of this Form 10-K. Forward-looking statements in this review are qualified by the cautionary statement under the heading “Cautionary Note Regarding Forward-Looking Statements” contained at the beginning of Part I of this Form 10-K.

     

    Overview

     

    We are an industry-leading human capital management (“HCM”) company providing comprehensive technology and advisory solutions in human resources (“HR”), payroll processing, employee benefits, and insurance across the U.S. and parts of Europe.

     

    We support our customers with three proprietary SaaS-based HCM platforms: SurePayroll®, Paychex Flex®, and Paycor®, each designed to meet diverse customer needs and business requirements. For example, larger customers often have more complex HCM demands. Our integrated HCM solutions span the entire employee life cycle, enabling customers to choose from a broad range of solutions that seamlessly integrate with leading HR, accounting, enterprise resource planning, and point-of-sale applications. Our technology is complemented by a wide array of advisory, benefits, and insurance solutions. In today's dynamic, complex regulatory landscape, we see growing demand for HR outsourcing solutions.

     

    Our offerings are disaggregated into two categories, (1) Management Solutions and (2) PEO and Insurance Solutions, as discussed under the heading “Our Solutions” in Part I, Item 1 of this Form 10-K.

     

    As a digitally driven HR leader, our mission is to help businesses succeed. Our strategy includes growing our customer base; increasing product penetration; driving technology innovation; and pursuing strategic acquisitions, all aimed at achieving long-term financial success.

     

    We maintain industry-leading margins by efficiently managing costs while strategically investing in our business, particularly in sales and marketing and leading-edge, AI-driven technology and advisory solutions, which we view as critical to our ongoing success. Looking ahead, we believe that investing in our solutions, people, and AI capabilities positions us to capitalize on long-term growth opportunities.

     

    By closely monitoring customer needs and challenges, we proactively assist our customers in navigating legislative changes and other employment complexities. Our unique blend of innovative technology and extensive HR expertise enables customers to more effectively hire, develop, and retain top talent in this tight labor market. Ongoing investments in our platforms have equipped us well to meet the current business demands and regulatory compliance, resulting in high levels of customer satisfaction and retention.

     

    On April 14, 2025, we completed the acquisition of Paycor, a leading provider of HCM, payroll, and talent software. This acquisition expands our upmarket position, suite of HCM technology and cross-sale potential. Refer to the "Results of Operations" and “Liquidity and Capital Resources” section of this Item 7 for additional information.

     

     

     

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    Fiscal 2026 Business Highlights

     

    Highlights compared to fiscal 2025 are as follows:

     

     

    Fiscal Year

     

     

     

    In millions, except per share amounts

    2026

     

     

    2025

    Change(3)

    Total revenue

    $

     

    6,512.0

     

     

    $

     

    5,571.7

     

    17

     

    %

    Operating income

    $

     

    2,510.5

     

     

    $

     

    2,207.7

     

    14

     

    %

    Adjusted operating income(1)

    $

     

    2,814.7

     

     

    $

     

    2,370.0

     

    19

     

    %

    Net income

    $

     

    1,760.1

     

     

    $

     

    1,657.3

     

    6

     

    %

    Adjusted net income(1)

    $

     

    1,984.8

     

     

    $

     

    1,802.9

     

    10

     

    %

    Diluted earnings per share

    $

     

    4.89

     

     

    $

     

    4.58

     

    7

     

    %

    Adjusted diluted earnings per share(1)

    $

     

    5.51

     

     

    $

     

    4.98

     

    11

     

    %

    Dividends paid to stockholders(2)

    $

     

    1,589.6

     

     

    $

     

    1,448.5

     

    10

     

    %

     

    (1)
    Adjusted operating income, adjusted net income, and adjusted diluted earnings per share are not United States ("U.S.") generally accepted accounting principles (“GAAP”) measures. Adjusted net income and adjusted diluted earnings per share in both periods include an adjustment for net tax windfall benefits related to employee stock-based compensation payments. Adjusted operating income, adjusted net income and adjusted diluted earnings per share in both periods also include adjustments for acquisition-related costs. Refer to the “Non-GAAP Financial Measures” section of this Item 7 for a discussion of non-GAAP measures and a reconciliation to the U.S. GAAP measures of operating income, net income and diluted earnings per share.
    (2)
    Dividends paid to stockholders represented approximately 90% of net income for fiscal 2026 compared to approximately 87% of net income for fiscal 2025.
    (3)
    Percentage changes are calculated based on unrounded numbers.

     

    For further analysis of our results of operations for fiscal years 2026 and 2025, and our financial position as of May 31, 2026, refer to the tables and analysis in the “Results of Operations” and “Liquidity and Capital Resources” sections of this Item 7.

     

    Business Outlook

     

    During fiscal 2026, we served approximately 840,000 total customers across the U.S. and parts of Europe, of which approximately 800,000 are payroll clients. During fiscal 2025, we served approximately 800,000 payroll clients. Payroll client retention was in the range of 82% to 83% of our beginning client base for both fiscal 2026 and fiscal 2025 and we have sustained high revenue retention.

     

    We continue to increase penetration of our integrated solutions beyond payroll processing, including our HR outsourcing (ASO and PEO) and retirement solutions. The following table illustrates selected customer metrics:

     

    $ in billions
    As of May 31,

    2026

    2025

    Change(1)

    Paychex HR solutions (ASO and PEO) customer worksite employees

     

     

    2,600,000

     

     

    2,460,000

     

    6

     

    %

    Retirement solutions plans

     

     

    130,000

     

     

    124,000

     

    4

     

    %

    Asset value of retirement solutions participants’ funds

    $

     

    66.0

    $

     

    55.7

     

    19

     

    %

    Perks unique employee purchases

     

     

    237,000

     

     

    133,000

     

    78

     

    %

     

    (1)
    Percentage changes are calculated based on unrounded numbers.

     

    In fiscal 2026, we continued to make investments in technology a priority as companies look to leverage technology solutions to increase productivity, enhance decision-making, and deliver better outcomes. We implemented enhancements to our Paychex Flex, Paycor, and SurePayroll platforms designed to improve the customer and customer employee experiences from hiring and onboarding throughout employee retention. In fiscal 2026, we successfully implemented several innovative AI capabilities that enhanced value for Paychex and our customers, including WISE. WISE, our AI-powered intelligence engine extends our existing capabilities into agentic AI. Today, it powers approximately 600 AI features and agents across our solutions and operations. We also continue to focus on AI and related technology to leverage innovative technology and advanced analytics to gain deeper insights into prospects and customers regarding their behavior, preferences, and evolving needs.

    22

     

    We have further strengthened our position in the industry by serving as a source of education and information to customers, businesses of all sizes, and other interested parties. We provide free webinars, white papers, and other information on our website (www.paychex.com) to aid existing and prospective customers with the impact of regulatory changes. In addition, the Paychex Insurance Agency, Inc. website, www.paychex.com/group-health-insurance, helps small-business owners navigate the area of insurance coverage.

     

    Results of Operations

    Summary of Results of Operations for Fiscal Years:

     

    In millions, except per share amounts

    2026

    2025

    Change(1)

    Revenue:

     

     

     

     

     

     

     

     

     

     

     

    Management Solutions

    $

     

    4,867.9

     

     

    $

     

    4,067.1

     

     

     

    20

     

    %

    PEO and Insurance Solutions

     

     

    1,433.2

     

     

     

     

    1,342.9

     

     

     

    7

     

    %

    Total service revenue

     

     

    6,301.1

     

     

     

     

    5,410.0

     

     

     

    16

     

    %

    Interest on funds held for clients

     

     

    210.9

     

     

     

     

    161.7

     

     

     

    30

     

    %

    Total revenue

     

     

    6,512.0

     

     

     

     

    5,571.7

     

     

     

    17

     

    %

    Total expenses

     

     

    4,001.5

     

     

     

     

    3,364.0

     

     

     

    19

     

    %

    Operating income

     

     

    2,510.5

     

     

     

     

    2,207.7

     

     

     

    14

     

    %

    Interest expense

     

     

    (269.5

    )

     

     

     

    (105.4

    )

     

    n/m

     

     

    Other income, net

     

     

    69.9

     

     

     

     

    73.6

     

     

     

    (5

    )

    %

    Income before income taxes

     

     

    2,310.9

     

     

     

     

    2,175.9

     

     

     

    6

     

    %

    Income taxes

     

     

    550.8

     

     

     

     

    518.6

     

     

     

    6

     

    %

    Effective income tax rate

     

     

    23.8

     

    %

     

     

    23.8

     

    %

     

     

     

    Net income

    $

     

    1,760.1

     

     

    $

     

    1,657.3

     

     

     

    6

     

    %

    Diluted earnings per share

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    Held by

    holders ( registered funds via N-PORT, institutional investors via 13F). Showing top by dollar value.

    Holder Type ETF MF Position ($) % of holder Δ % of holder Holder AUM

    Recent insider activity

    Last 90 days. Open-market trades (purchases & sales) by directors, officers, and 10%+ owners. 4 transactions across 4 insiders. Net: -34,122 shares, -$3,734,478.

    Date Insider Role Action Shares Price Value
    2026-07-20 Schrader Robert L. Sr. VP, CFO Sell -2,600 $115.09 -$299,234
    2026-07-17 Simmons Christopher C VP, Controller & Treasurer Sell -2,615 $115.92 -$303,131
    2026-07-14 MUCCI MARTIN Director Sell -25,000 $109.93 -$2,748,250
    2026-06-26 TUCCI JOSEPH M Director Sell -3,907 $98.25 -$383,863

    Source: SEC Form 4 filings.

    Next expected filings

    • ~2026-09-29 10-Q expected by 2026-10-12 (in 46 days)
    • ~2026-12-21 10-Q expected by 2027-01-03 (in 129 days)
    • ~2027-03-25 10-Q expected by 2027-04-07 (in 223 days)
    • ~2027-07-16 10-K expected by 2027-07-29 (in 336 days)

    Predicted from historical filing cadence; not an SEC commitment.

    Recent SEC filings

    • 2026-07-21 8-K Officer/Director Change; Financial Statements and Exhibits
    • 2026-07-17 10-K Annual Report
    • 2026-06-24 8-K Earnings Release; Financial Statements and Exhibits
    • 2026-03-26 10-Q Quarterly Report
    • 2026-03-25 8-K Earnings Release; Financial Statements and Exhibits
    • 2026-01-26 8-K Material Agreement Entered; Material Agreement Terminated; Material Financial Obligation
    • 2026-01-20 8-K Officer/Director Change; Other Events; Financial Statements and Exhibits
    • 2025-12-22 10-Q Quarterly Report
    • 2025-12-19 8-K Earnings Release; Financial Statements and Exhibits
    • 2025-09-30 10-Q Quarterly Report
    • 2025-09-30 8-K Earnings Release; Financial Statements and Exhibits
    • 2025-07-14 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
    • 2025-07-11 10-K Annual Report
    • 2025-06-25 8-K Earnings Release; Financial Statements and Exhibits
    • 2025-05-16 8-K Officer/Director Change; Financial Statements and Exhibits