Paychex Q3 EPS $1.71 and 20% Revenue Surge Fueled by Paycor Deal
Paychex posted Q3 adjusted EPS of $1.71, beating estimates, and revenue rose 20% to $1.81B, driven by its April 2025 Paycor acquisition. Management Solutions revenue jumped 23% to $1.4B, while operating margin expanded to 47.7%, sending shares up 4.3%.
1. Q3 Earnings and Margin Expansion
Paychex reported Q3 adjusted EPS of $1.71, surpassing consensus of $1.67, and revenue of $1.81 billion exceeded estimates. Adjusted operating income grew 22% to $863.2 million, with margin expanding to 47.7%, up from 46.9% in the prior year.
2. Paycor Acquisition Drives Growth
The April 2025 acquisition of Paycor contributed to a 20% year-over-year revenue surge and accounted for approximately 19% of Management Solutions growth. Management Solutions revenue climbed 23% to $1.4 billion, while PEO and Insurance Solutions revenue rose 9% to $397.5 million.
3. Financing Impact and Guidance
Interest on funds held for clients jumped 33% to $56.8 million due to higher investment balances after the Paycor deal. Interest expense increased by $45.5 million to $68.1 million from acquisition-related debt, and the company set fiscal 2026 interest income guidance at $200 million to $210 million.
4. Market Reaction
Shares rose 4.3% in premarket trading following the earnings release, reflecting investor approval of the acquisition’s contribution to revenue growth and improved profitability metrics.