Paychex Q2 Earnings & Revenues Surpass Estimates, Increase Y/Y

Paychex, Inc. PAYX has reported impressive second-quarter fiscal 2026 results, wherein earnings and revenues beat the Zacks Consensus Estimate.

PAYX’s fiscal second-quarter earnings of $1.26 per share beat the Zacks Consensus Estimate by 1.6% and increased 10.5% from the year-ago quarter. Total revenues of $1.6 billion surpassed the consensus estimate by a slight margin and rallied 18.3% from the year-ago quarter.

The company’s shares have declined 11.6% over the past three months compared with the 13.5% dip of the industry and against a 2% hike of the Zacks S&P 500 composite.

PAYX’s Quarterly Performance

Revenues from the Management Solutions segment improved 21% year over year to $1.2 billion, meeting our estimate.

Professional employer organization (“PEO”) and Insurance Solutions’ revenues were $336.9 million, increasing 6% from the year-ago quarter. The figure missed our projected figure of $341.5 million.

Service revenues gained 17% year over year to $1.5 billion, meeting our estimated figure. Interest on funds held for clients rallied 51% from the year-ago quarter to $54.3 million, beating our projection of $46.1 million.

EBITDA of $681.3 million increased 18% from the year-ago quarter, missing our estimate of $728.5 million. Operating income rose 6% year over year to $571.9 million, missing our forecast of $653.8 million. The operating margin was 36.7%, down 420 basis points from the year-ago quarter. The reported figure missed our estimate of 42%.

Balance Sheet & Cash Flow of Paychex

The company exited the second quarter of fiscal 2026 with cash and cash equivalents of $1.5 billion compared with $809 million in the preceding quarter. The long-term debt totaled $4.6 billion, flat with the preceding quarter.

Cash generated from operating activities amounted to $444.9 million, while the capital expenditure totaled $62.1 million.

PAYX’S FY26 Guidance

Paychex expects revenues to grow 16.5-18.5%. Management expects interest on funds held for clients of $190-$200 million.

The company carries a Zacks Rank #4 (Sell) at present.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshots

FactSet FDS reported impressive results for first-quarter fiscal 2026.

FDS’s earnings per share of $4.51 beat the consensus mark by 2.7% and increased 3.2% from the year-ago quarter. Revenues of $607.6 million beat the Zacks Consensus Estimate by 1.4% and rose 6.9% from the year-ago quarter.

Accenture plc ACN posted impressive first-quarter fiscal 2026 results.

ACN’s earnings were $3.94 per share, beating the Zacks Consensus Estimate by 5.6%. The metric increased 9.8% from the year-ago quarter. Total revenues of $18.7 billion beat the consensus estimate by 1% and rose 6% on a year-over-year basis.

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This article originally published on Zacks Investment Research (zacks.com).

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Source Zacks-com