Paychex’s Q1 FY2026 results:

Headline Results
• Revenue: $1.54B, up 17% year-over-year (vs. $1.32B).
• Operating income: $541.9M, down 1%.
• Adjusted operating income: $626.7M, up 15%.
• Diluted EPS: $1.06, down 10%.
• Adjusted diluted EPS: $1.22, up 5%.

Key Drivers
• Management Solutions revenue grew 21% to $1.2B, boosted by Paycor acquisition (contributed ~17% of growth).
• PEO & Insurance Solutions revenue rose 3% to $329.1M, driven by more worksite employees and higher insurance revenue.
• Interest on funds held for clients jumped 27% to $47.6M on higher balances.
• Expenses rose 29% to $998.1M, largely from Paycor-related compensation, amortization, and higher tech/marketing investments.
• Operating margin fell to 35.2% (from 41.5% last year), while adjusted margin was 40.7% (vs. 41.5%).
• Interest expense rose sharply to $68.2M due to debt issued for the Paycor deal.

Financial Position
• Cash & investments: $1.7B.
• Net borrowings: $5.0B.
• Operating cash flow: $718.4M.

Capital Returns
• Dividends: $389.1M ($1.08/share).
• Share repurchases: 1.1M shares for $160.1M.

CEO John Gibson emphasized strong integration progress with Paycor, early synergies, and investments in AI-driven HCM solutions as growth enablers.