Paychex Enjoys Resilient Customer Retention Despite Moderating Employment Growth

Paychex's offering appeals to businesses wishing to outsource mission-critical functions, manage and attract employees, and remain compliant with increasingly complex and evolving regulations. We expect increased regulatory complexity, tight labor markets, and a growing adoption of hybrid work will underpin strong demand for Paychex's suite of offerings supporting greater share of wallet and market share gains. This includes greater penetration of the outsourced payroll and human resources model in the small-business market. While we factor in market share gains, we expect increasing competition to limit Paychex's pricing power and force the company to maintain elevated expenditure on software development and innovation to remain competitive.