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Paychex (PAYX) Q2 Earnings & Revenues Beat, 2022 View Up

Paychex's (PAYX) second-quarter fiscal 2022 earnings and revenues improve on a year-over-year basis.

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This story originally appeared on Zacks

Paychex, Inc.PAYX reported better-than-expected second-quarter fiscal 2022 results.

- Zacks

Adjusted earnings of 91 cents per share beat the Zacks Consensus Estimate by 15.2% and increased 25% on a year-over-year basis. Total revenues of $1.11 billion beat the consensus mark by 4.6% and increased 13% year over year.

So far this year, shares of Paychex have gained 30.8% compared with 26.9% growth of the industry it belongs to and 26.6% increase of the Zacks S&P 500 composite.

Zacks Investment ResearchImage Source: Zacks Investment Research

 

Revenues in Detail                  

Revenues from Management Solutions increased 14% year over year to $832 million. The segment benefited from higher checks per payroll for HCM services and net gain in worksite employees for HR solutions, higher revenue per client resulting from improved price realization, growth in the company’s client bases across HCM and ancillary products resulting from strong sales performance and high levels of retention, improved market conditions on asset-based revenues for retirement services, and increase in funding for temporary staffing clients.

Professional employer organization (“PEO”) and Insurance Solutions' revenues were $262.4 million, up 11% from the year-ago quarter. The uptick was due to an increase in the number of average worksite employees, impact of an increase in average wages per worksite employee, higher revenues on state unemployment insurance and rise in PEO health insurance revenues.

Interest on funds held for clients decreased 5% year over year to $14.1 million.

Operating Performance

Adjusted operating income increased 24% year over year to $440.3 million.

Adjusted EBITDA of $495.1 million increased 21% year over year.

Paychex, Inc. Price, Consensus and EPS Surprise

Paychex, Inc. Price, Consensus and EPS Surprise

Paychex, Inc. price-consensus-eps-surprise-chart | Paychex, Inc. Quote

Balance Sheet & Cash Flow

Paychex exited second-quarter fiscal 2022 with cash and cash equivalents of $636.2 million compared with $1.10 billion at the end of the prior quarter. Long-term debt was $797.5 million compared with $797.4 million in the prior quarter.

Cash provided by operating activities was $169.8 million in the reported quarter. During the reported quarter, the company paid out $238.3 million in dividends.

Fiscal 2022 View

For fiscal 2022, total revenues are now expected to register 10-11% growth compared with the prior expectation of 8%. Adjusted earnings per share are now expected to register 18-20% growth compared with the prior expectation of 12-14%.

Management Solutions' revenues are now expected to grow 10-11% compared with the prior expectation of 8%.

Adjusted operating margin is expected to be almost 39-40% compared with the prior expectation of 38-39%. Adjusted EBITDA margin is now expected to be nearly 44% compared with the prior expectation of 43%.

Currently, Paychex carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performances of Other Business Services Companies

Equifax’s EFX third-quarter 2021 adjusted earnings of $1.85 per share beat the Zacks Consensus Estimate by 7.6% but declined on a year-over-year basis.

Equifax’s revenues of $1.22 billion outpaced the consensus estimate by 3.6% anEquifax’d improved 14.5% year over year on a reported and 14% on a local-currency basis.

IQVIA’s IQV third-quarter 2021 adjusted earnings per share of $2.17 beat the consensus mark by 1.9% and improved 33.1% on a year-over-year basis.

IQVIA’s total revenues of $3.39 billion outpaced the consensus estimate by 1% and increased 21.7% year over year on a reported and 21.1% on a constant-currency basis.

Omnicom’s OMC third-quarter 2021 adjusted earnings of $1.65 per share beat the consensus mark by 20.4% and increased 36.4% year over year.

Omnicom’s total revenues of $3.4 billion also surpassed the consensus estimate by 0.6% and increased 7.1% year over year.



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