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Paychex Inc PAYX

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Morningstar’s Analysis

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Paychex Continues To Ride Tailwinds From The Economic Bounce Back During Q2 2022, FVE UP 4% to $110

Emma Williams Equity Analyst

Analyst Note

| Emma Williams |

Wide-moat Paychex continued to benefit from a recovery in economic conditions in the second quarter of fiscal 2022, driving strong demand for its payroll and human capital management solutions. Second-quarter adjusted operating income increased 24% on a COVID-19 affected prior period, driven by improved operating leverage as more employees return to work, mix shift to higher margin solutions and cost efficiencies from digital sales and service. Client retention remains near record highs as small businesses continue to prove resilient, and the appeal of Paychex's solutions amid an increasingly complex operating environment drove record new business sales. Management solutions reported the strongest result with revenue increasing 14% year over year driven by a larger client base with more employees per client, and higher revenue per client due to like for like price increases and greater uptake of add on modules and services including retirement plans and HR outsourcing solutions. Interest on client funds remained weak due to lower yields, partly offset by an increase in client funds.

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Company Profile

Business Description

Paychex is a leading provider of payroll, human capital management, and insurance solutions servicing small and midsize clients primarily in the United States. The company, established in 1979, services over 710,000 clients and pays over 1 in 12 U.S. private-sector workers. Alongside its traditional payroll services, Paychex offers HCM solutions such as benefits administration and time and attendance software, as well as human resources outsourcing and insurance brokering.

Contact
911 Panorama Trail South
Rochester, NY, 14625-2396
T +1 585 385-6666
Sector Industrials
Industry Staffing & Employment Services
Most Recent Earnings Nov 30, 2021
Fiscal Year End May 31, 2021
Stock Type Cyclical
Employees 15,000

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