Paychex Beats Q1 Estimates, Shares Rise

Shares of

gained over 2 percent in pre-market trading after the company reported stronger-than-expected earnings for its fiscal first quarter. The Rochester, New York-based company posted quarterly net income of $209.1 million, or $0.58 per share, compared to $171.3 million, or $0.47 per share, in the year-ago period. Its total revenue rose 8 percent to $723 million. However, analysts were expecting earnings of $0.51 per share on revenue of $717.55 million. The average estimate among 15 Estimize users was for earnings of $0.51 per share and revenue of $717.91 million. Total service revenue climbed 8 percent to $712.2 million in the quarter. Payroll service revenue rose 5 percent to $432.5 million, while Human Resource Services revenue surged 15 percent to $279.7 million. Its operating income climbed 11 percent to $296.1 million for the quarter. Total expenses gained 7 percent year-over-year to $426.9 million for the first quarter. As of August 31, 2015, the company had cash and total corporate investments of $953.9 million and no debt. During the first quarter, Paychex repurchased 1.3 million shares of common stock for a total of $62.9 million. Martin Mucci, President and Chief Executive Officer, commented, "Fiscal 2016 is off to a good start, and we have continued to experience positive results across our major product lines. Payroll service revenue growth was 5%, as expected. We continue to see strong demand for our human resource services, including double-digit growth in the number of client worksite employees served." For FY16, Paychex projects payroll service revenue to rise 4 percent to 5 percent and human resource service revenue growth of 10 percent to 13 percent. The company expects FY16 net income growth of 8 percent to 9 percent and total service sales to rise 7 percent to 8 percent. Paychex shares rose 2.15 percent to $47.00 in pre-market trading.