Paychex Profit and Revenue Beat Estimates, Client Base Expands

Earnings and revenue at payroll-management-services company Paychex were hurt by covid-19 but still came in stronger than expected.
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Payroll benefits manager Paychex  (PAYX) - Get Report Wednesday reported fiscal-second-quarter earnings that beat Wall Street expectations as it said client retention remained strong and its client base expanded.

For the quarter ended Nov. 30 the Rochester, N.Y., company posted earnings of $272.4 million, or 75 cents a share, compared with $258.7 million, or 72 cents a share, in the year-earlier quarter.

Revenue dropped 0.7% to $983.7 million from $990.7 million.

A survey of analysts by FactSet produced consensus estimates of GAAP net income of 66 cents a share on revenue of $954 million. 

"Financial results for the second quarter showed continued recovery in our key business metrics," President and Chief Executive Martin Mucci said in a statement.

"The effects of the covid-19 pandemic impacted our results and year-over-year comparisons; however, client retention remains strong, and our sales performance has resulted in year-over-year growth in the number of clients sold and serviced," he added.

The company has integrated its Paychex Flex program with Apple Watch  (AAPL) - Get Report and Google Assistant  (GOOGL) - Get Report, giving employees greater access to their information.

At Nov. 30 Paychex had cash, restricted cash, and total corporate investments of $963.4 million. Total short-term and long-term borrowings, net of debt-issuance costs, were $803.9 million. 

Paychex adjusted its guidance for the year ending May 31. It said it now expected adjusted earnings per share to drop 1% to 4% for the fiscal year. It expects revenue to range from flat to down 3%.

Shares of Paychex have wavered on Wednesday. At last check they'd dropped 0.7% to $96. But they also touched a 52-week high $99.95, up 3.4%.  That's more than double the 52-week low below $48, set in mid-March.