Paychex (PAYX) Q4 Earnings Miss Estimates, Revenues Beat
Zacks Investment Research | Jun 25, 2019 11:43PM ET
Paychex, Inc. (NASDAQ:PAYX) reported mixed fourth-quarter fiscal 2019 results wherein earnings lagged the Zacks Consensus Estimate but revenues surpassed the same.
Adjusted earnings of 63 cents per share missed the consensus estimate by 2 cents but increased on a year-over-year basis. Total revenues of $980.4 billion beat the consensus mark by $2 million and increased year over year.
The company witnessed solid growth in its human resource (“HR”) solutions administrative services organization with double-digit worksite employee growth and solid sales performance in professional employer organization (“PEO”), retirement, and insurance services. The company also recorded solid client retention and customer satisfaction. The company is progressing well with the integration of Oasis.
So far this year, shares of Paychex have rallied 30.2% compared with 27.6% rise of the industry it belongs to and 15.1% increase of the Zacks S&P 500 composite.
Revenues in Detail
Revenues from Management Solutions increased 4% year over year to $694.9 million. The growth was driven by increase in the company’s client base across many of its services and growth in revenue per check (on the back to price increases, net of discounts). Under Management Solutions, retirement services revenues benefited from an increase in the number of plans served and rise in revenues earned on the asset value of participants’ funds.
PEO and insurance services revenues were $263.3 million, up 67% from the year-ago quarter. Clients and client worksite employees increased across the company’s PEO business. Insurance Services revenue growth was driven by rise in the number of health and benefit clients and applicants, partially offset by softness in the workers’ compensation market as state insurance fund rates declined.
Furthermore, interest on fund held by clients increased 25% year over to $22.2 million on higher average interest rates earned.
Operating Performance
Adjusted operating income increased 4% year over year to $314.5 million. However, adjusted operating income margin declined to 32.1% from 35.7% in the year-ago quarter.
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