Paychex (PAYX) 1 Oct 242025 Q1 Earnings call transcript

Good morning, and welcome to the First Quarter 2025 Paychex Earnings Conference Call. Participating on the call today are John Gibson and Bob Schrader. After the speakers' opening remarks, there will be a question-and-answer period. [Operator Instructions] As a reminder, this conference is being recorded, and your participation implies consent to our recording of this call. [Operator Instructions] I would now like to turn the call over to Bob Schrader, Chief Financial Officer. ahead. go Please

joining Quarter for our of review Thank financial us results. First XXXX Paychex you for

Joining is financial the market first me morning, ended opened, This today quarter we our CEO, released XX, our August results the Gibson. for XXXX. John before

our access investor and as release SEC's Relations website. presentation our as on earnings Investor the website can You on well

will available being Our few days. next our Form in broadcast the approximately SEC over the XX XX-Q and will the be be Internet for website and teleconference on filed is archived with days. This

differ forward-looking call will you that Today's with information actual events future from and our to that review some contain the encourage our statements We current factors refer for additional cause on to expectations. risk. SEC filings involve could to results

we earnings also A reconciliation of non-GAAP financial call, these along be our can release. our measures some will found with measures. items reference in the a of description During non-GAAP

CEO, the Gibson. I turn will John now call to over our

Bob, for and on business Thank And course, update open going then quarter financial the first for to today's for turn up a we an good and start of Bob I'm you, it update. back with highlights your over call morning, questions. then, everyone. it will to

the post-pandemic during we first fiscal a good quarter. year we As start the era expectations are enter in growth revenue XXXX Paychex, of off exceeding to with total

processing X of Excluding in less having impact the quarter, the day and revenue the nonrecurring from was program the benefits X%. growth ERTC

and remain as market to headwinds earnings level. share in its best labor growth operators delivered businesses gradually despite the these resilient . Small strong discipline. pre-pandemic the through per U.S. returns business, also we the expense As midsize

HR base first hiring businesses. and hiring outsourcing within was While and across expected our moderated, positive growth our during HCM has the client better than quarter and

make advisory the our in market technology product continue meet and our We investments solutions. to continuous post-pandemic go-to-market drive and transition and suite capabilities and innovation to

are qualified and specifically constant designed and new and finding products for excited small businesses, launch to that midsized retaining challenge a employees. to is are We several address simply that

and with was for war examples talent Recruiting Perks, level Executive AI-driven challenging the ways to year which succeed Paychex that clients Engage our the constantly for are a to Paychex solutions announced digitally are by combined HR a offering to Our designed market of labor looking the enterprise very bring Flex and our how field. top Paychex win in the recently to HR These Copilot, we of SMB market. solutions Resource playing Magazine really product Flex and named help

Engage a manage capabilities organization of communication spectrum with comprehensive solution and size the are whom launch, seen promote AI the from remote. have we collaboration Since businesses this digital Flex across of interest is employees, and groups. generative to their between businesses increased many industries within help workflows,

by long-term the Our award-winning is the is the discounted offering is and marketplace payroll establish products provides employees. clients' it at and to a as to automatically Paychex with customer payments benefits deductions attractive Paychex through employees. allows employer, that processed to to Perks employers our digital affordable cost relationship are employees and services. no us Perks a This available access

unique initial benefits to early XX lifestyle ranging access. Our voluntary from products includes launch wage

adding We other marketplace. services will be when opportunistic to considering our continue products to and

companies. talent clients' another and in of also compete midsized market their It app. This is our against Flex years, specific to for businesses employees meet which AI-driven in for allows small investing up an needs been have that we us new are example helping our us how offerings we exciting and with capability, opens larger engage for new HCM

a qualified is According was customers help costly new challenging. and program finding find XX% study, of we our customer that to all is to Recruiting, know, a candidates respondents called which launched our Playbook, the reported Paychex Employer Choice candidates. a of as in time-consuming qualified designed we process. Last PO recent year,

owners Paychex to HR the the find of PEO, to small announcement believe recruiting Recruiting excited enabling non-Paychex add Paychex all the Copilot. are will customers midsized and not solution and solution recruiting and We relying called a talent revolutionize We AI-assisted customers recent new only of to methods. by Paycheck traditional and an hiring the customers with instead tool on this the also but recruiting playbook solely professionals quickly new for process business for top

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an As you set experience generative entirely know, offers Paychex AI, opportunities. has history a believe of and AI long with new we and

data set, we provides with a years and in competitive large growing a which have We significant believe the advantage us ahead.

employees We and with our every have their of interactions of tens month. clients millions

problems advisory our small succeed. and to our a support leader and to HR on is allows the data in ability and breadth quality to and win uniquely service our midsized company and deliver We owners upon the Paychex economy. be models today's the solutions and data business AI to set across have insights vast businesses. actionable capabilities best-in-class sales predictive focus positioned of power to help of to bringing help our with based set a them by in for solve us AI The leveraging customers

HCM strength the with well. recognition technology innovations gain to of as our continue We

fifth I top -- Advisory. the I we been an remind consecutive to years, business-focused product year fourth at Paychex which winning the and the is we year for the time HR Perks, product solution of In past named due solution of addition everyone a the would from Tech X Award top recognition. in Paychex the X has Best believe Lighthouse not workforce the year past earned an years HR HR is for continue Research core for area getting for are list, category HR to our to of X the also mall This

recently Paychex in of company's midsized uniquely responsibility the inaugural shareholders. and solutions, HCM times committed helping on business remain is small expertise, businesses. positioned set businesses based suite of to interactions our of our also insights best succeed firmly solve a and on the with businesses impact and employees, clients, our based midsized our purpose efforts. was culture, strength data the Paychex to making We the list for while upon advisory from and gained well corporate companies included results America's comprehensive midsized positive and large and our small constant of problems communities also

our I turn you financial will to a update Bob? results brief give for quarter. to first the over it on now Bob

of basis shared with from and prior with fiscal year as program Yes. an good and processing you Thank quarter. our ERTC update results XXX the headwinds and first on revenue impacted is financial to then which having the I'll two outlook. you, the increased everyone. start by morning, quarter which with day John, quarter in less X period. approximately X% expectation $X.X consistent compared growth provide items points we the fiscal expiration These Total last summary a our 'XX reflects of billion to the

X%. As John quarter headwinds, revenue excluding these mentioned, total the grew in

that across growth headwind offset client were the in $XXX HR suite primarily driven solutions by increased number the revenue product higher partially served of to by This and well and penetration. employees ERTC solutions X% was million. our Those clients our we Solutions as worksite discussed. of Management HCM higher as previously items

average costs higher on to go-to-market continued $XXX average PEO the is to direct to X% PEO this had rates driven and quarter higher PEO interest balances. also worksite related revenues. is investments innovation, employees PEO PEO funds well due average higher to our the primarily our in revenues. expenses higher increased to product clients employees higher AI Insurance revenue X% in Solutions insurance million, invested by and insurance within and worksite to for increased and increased higher as XX% primarily primarily We've Total strategies. for as growth and held million. insurance This due $XXX $XX Interest million,

Operating Diluted earnings the those and diluted quarter. also adjusted share per processing earnings operating like share remind per operating and ERTC we the per discussed. share, quarter, income by expiration the share as of million $XXX to to X% margin previously of the X% grew was $X.XX per well also increased day the $X.XX the everyone an impacted during less X headwinds that first to by increased items in X% were with as to income impacted program XX.X%. I'd

to position. turning Now financial our

million $XXX and of We to This timing. $XXX changes Cash million our a in shareholders by cash approximately working Our cash, million We and the of on by flow net financial ended and dividends included XX%. $XXX remains position returned in equity income return $XXX of XX-month total and driven $X.X capital, total the remains with and of billion quarter share million. $XXX borrowings operations during restricted from first quarter, repurchases, corporate at was robust investments of strong. rolling quarter. influenced the million

guidance XX, to May turn for now I'll the our XXXX. ended fiscal year

exception all of in fiscal with rate year. of categories We our remainder assumptions pretty the for the guidance maintained our updates the of to have much the interest

revenue our full Our directly interest points on year funds total short-term of a for assumes basis clients now a to and other which income. the XXX cuts of outlook rate held on impacts basis,

outlook current Our also a of the macro environment. continuation assumes

is include to expected are headwind the of And ERTC our in the insurance PEO to this guidance, to to X% to Our as does X% rates. the changes current mentioned, to Total grow expected I X% revenue outlook basis X%. still is have from still points X% of The in and changes Solutions approximately year. expected remind expiration to the is grow range of is range in two I'd of Management the to to that guidance XXX the interest like for of as program. No follows. X.X%. we that everyone in range related grow still

in for million. $XXX interest the million guidance guidance in our be XX%. million. to of range $XX being of previous XX% The the be the is Other in million million. million income $XXX net That's expected $XX previous of from from income to to range down $XXX is first that's range held guidance to million expected to change expected clients to million, $XX our is be of to still funds of margin our down $XXX and operating on income to No $XX to

be income Our X% to range to discussed, earnings in is the I X% grow despite that share of guidance the expected changes our tax to diluted rates the in interest for expected effective adjusted of still the to XX% per range still is range And to the XX%. year.

in points growth be Now turning quarter, And second little bit to second basis a quarter the ERTC includes of second would X% the provide of color. operating revenue to We the headwind then be -- too XX%. the X%. would this expect approximately program. quarter to total And in expiration the in the to from of approximately XXX to anticipate between quarter be also margin we

current based are change this the when quarter additional you to for of is and all on course, Of our information. second to our our on update get to we'll call. assumptions, you I investor again slides website which we subject refer will

with call back John. And I'll turn the that, to

Bob, to we call questions. the and Thank will open your you, now up

with we will take Mark Marcon Baird. from And first Instructions] question [Operator our

Two questions.

range, upper First, end differentiate employees? the that business small the currently with you're how seeing, would you the target say, relative market regards true to XX of to, your X,XXX environment to companies with

say Yes, in demand perspective, the say John. lot the small certainly, as outsourcing. see what would driving our pretty is HR we're this, I to I across would Mark, and from what for seeing growth, board moderate we're a across the seeing continue efficiency, the a this both more consistently demand is we board mid-market.

the tech outsourcing I in pure to of little mid-market market. going enterprise, not play, think our the in seeing that a decision-making see the bit I HR but particularly slower we're on there, end up upper

the to opportunities see across and the our trying So costs efficiency I to in are I drive business. are now, looking right businesses reduce what for board, think

Benefits, seems Recruiting in that the all company. reviewing of it giving new lot one And terms solutions struck presentation. is, second example, I Great. HR of at very like, I your professional and me by is struck the then were team job The had solutions The that really was just Tech there pleasure of the tremendous a did the would Copilot. tools question of really think, also Flex thing the benefit for the like a impressive. I every a

that companies seem little geared larger. bit towards Some of the tools be other were more to a

to is, your would bigger end are tools even of Or could the the market? wondering characterize you best extent So in you an what I what was where how become do think upper you player employed?

very think, with mid-market business first upper I for Mark, of we I start would a Yes, -- have large have all, decades. and

I think the get don't think I -- recognition. I we said

Our that we perspective technology there, perspective. a people from in advisory recognize the have solution capability of strength and both terms an

I think we business efficient spectrum at believe step we're look down an having. those when across we've That's had business of and look products the small Finding midsized of market efficiently. and at of And at the ago. been is our workers' serve. DNA. delivering, look what that markets apply small whether focused we every doing think people programs to a is to on the to you back that the every what we've the a that I you do bring things always done really qualified reputation small over problem to in is kind having, XX-some P&C bring years to you it XXX(k)s When comp market, what did services that we

down tools and figure take I business to those what that are typically how to for So small enterprises do we so succeed. what are and can out are reserved economically think owners large capabilities trying they is bring to

really recruiting Copilot the We're So a about big excited is issue. product.

thing other not I about tell the just Paychex' for clients. you product is The that's would Copilot

can today website. on on paychex.com our You go

that buy can You digitally.

up it you can sign service. a subscription You or a try for onetime can for

want HCM may your to be, who small help grow. businesses we provider of regardless So

so that's important. And pretty

The small, to second would say benefits affordable access benefits both you of I qualified getting providing medium-sized retain to that think is employees a thing and affordable that's say attract businesses. always problem

into well product, But of get it afford PEO. benefits, as you have terms in our can't the know, of as really where agency Perks Paychex who as employees already you gives Perks insurance that's to offer suite product. to afford like those a So products, our We both means our because maybe I it. in it a full

that app. And way cost enrollment. into through employees all is open digitally So works that of our curated for the get They're benefits their benefits of employer employees the basically, going onboarded we've a an their when nothing. set Flex these

benefits. So the payroll me, up And a the we employee, join the going new employee signs if all employer then these can tell for you're you get benefits, do to these deduct.

that into the built their services. that a Another those that they relationship thing capability continue employer and we leaves can with credit continue if card this via employee we'll is Paychex, for to collect

opens it us. a again, So new market for up

and in in those access continued we getting around big So is but really growth market, and funding the micro of attracting a capital and quality area getting those and then the is to to also not to thing problem, only to look, what be address to trying problems. retain the affordable small finding we're be the mid-market, across to And benefits, access employees, third the board attract is able employees. see the problems

That compelling to bit those a more solutions. little compelling. sounds are because Are advertise going you really

to and tuned, know, to when that we the a to selling get Stay you into that to we're tell going be come not we've be I one about next were we've ended, what these we products. years working and I And bells going out win the to all it's a in season. a our really this of solving think to to And going as just beginning going would were with X. play. proposition in X It's not launched be problems because pure our to certainly, pandemic -- have on not value going pandemic whistles. going you, during estimation. we that knew in last business coincidence been on for to have Mark, It's what it's the tech isn't different the

we've so working time. been some on for And this

that create Perks up, These benefits that you getting the We've been we at were we've can we these rates Kind of reengineer are been be the been of were customer products so making investments. ours. If able actually behind to scenes, our had all making a do as look interest going we've never we ERTC as and to before. the product, be programs. able of the really employee core to the to redesign investments

about so now these coincident launching as And we're the we're era, it's post-pandemic selling a products, the that I hear a it. that not season, would going talk expect, do you're in in lot and us to we

Citigroup. from Christiansen And we question will with next Peter take our .

sorry, if -- issue how December last an a sense curious any November know there's that's sense Just the quarter seasonal I shaping trending. was of quarter year. the is in Any how of hiring bit it of up?

Yes.

Pete, where our far, the we quarter base, this release, expected plan. within ahead script tweaked last slightly in Again, where in growth our second bit reference HCM And and within has were slightly made our and our of of a in expectations. solutions positive base But think a forecast. in build hiring then the our lot I quarter. was been that had couple things row, hiring a quarters to outsourcing We second in our a base a we didn't been to the be. press HR positive our within in year above had running the plan quarter this So of little those in row, below year both expectations the for the We our in for we in them areas. assuming

you created things problem figure make we're talked All and out out our do mentioned We're how help where had Copilot you to clients go that that. is in to add I vacancy. us program don't what there doing very PEO last seasonal to actually Pete, this do see you then We've have is the what new recruiting these Yes, did we sure And softness. we some with this working We on year, a from that. product. trying -- would aggressively. about And

been we clients we've ways can So figure aggressively out that that trying our have. fill every to vacancy

vacancies. adds clients, have of can up of you have X them That As a all imagine, X or XXX,XXX to lot checks.

And at increased by our business, our our on so consultants hiring their both consulting interactions -- look XXX%. in year-over-year and HR HR you

develop fill that help packaging turnover we're that analytics and identify reaching try We're strategies know individualized using to So problems adding to them clients are to we're proactively information. out we those jobs. to

And in our expectations, the to on continue going this work we're exceeded and so continue checks worksite environment problem. in to employees that very see pleased to to

tool The recruiting here. certainly sounds exciting

Just relationship curious our agencies, that's a with if staffing know portion this I of your deepens reasonable base.

this if curious exposure? tool is -- that broaden to this has potential Just

Yes. some know, tool the funding staffing. business. do you we staffing don't designed I for this the we think specifically as Certainly, in

PEO We as as a well. staffing we leverage that on have that have HCM our companies platform matter fact. staffing our of are some And also companies

of all So base, have penetration this us going to but non-Paychex customer. for relationship Not not unique for only product this with inside is to for I'll way a begin but Again, have is payroll thing a this to small is go our Paychex. only to our for is allow businesses. further This all this clients actually out. a us is a

today. really and on want search sign So retain to paychex.com today . employees. anyone businesses can up and help attract go small We a encourage and for and job

with next take will McVeigh our from And UBS. Kevin we question

of headwinds less I revenue, little think ERTC, pacing If better-than-expected is thoughts just quarter. to it the from client around the primarily Or QX Or any John? maybe is on a that about the bit that? interaction? Congrats QX

is Bob. Yes, Kevin, this

of over misunderstood. of questions I I of gating gated the And you us a it when was a bit entire talked the about look relates the lot year. the It answered at at of you as plan some to plan. that's So this But a little evenly Probably when year. the ERTC. look think you fairly last think -- the on gating to is the throughout quarter it of kind the and of lot the

of first to continued year, headwinds, back saw half, we we the in it's the growth through when go do of in with the year, last at the know QX to if saw an half really ex back And in we half this it look year much have really and the growth acceleration we the same. last move revenue performance in that's I that do we versus second mentioned So pretty implies the of momentum year, the year. gating quarter, comparable getting has you ramp the a but as It -- to by easier. last guide doesn't X%.

was standpoint, headwind full on pretty QX. ERTC in year large basis the it So XXX a was

As X QX, become becomes mentioned was about QX. in into prepared XXX basically it and less QX, that I QX. will the move it's points less. remarks, in in then that we It basis in

ERTC the got there's momentum having in headwind it's So second of two year. I in This continued an ramp that through our -- then half last about of the But year. and have to good more quarters assumed business. talk to into behind not that really, an continue expect the We performance the balance of QX, us. and we in started

going And the just where obviously, range? was adjustments super on helpful. think reaffirm to Or to job targets. on then offset the Was nice where it the Because you're just margin being that? fall there able the you that a in flow, any is offset? That's the

Listen, we expected. mean, QX No. than I was what better slightly

down basis being of was But the demand just assumed is ranges, XX of basis that mentioned been were the momentum points Losses environment maintaining XX where think our of short-term then plan the would of the calendar Retention pretty gives to only the able cuts, the We've which business. also rolled with in much back and at have points the I the aligned us end points basis expect points be the this I our given the cuts XXX year, year. So half, half we've -- we rate had through now first XX cost. strong. And in confidence another which to of Fed of is in basis worth John we good. cuts. another year-over-year. calendar mentioned

solutions during the see continue were our in that in our HR and then double-digit organically our We outsourcing strong demand and quarter We basically was had retirement the growth. businesses to business business. the PEO retirement three funding performance double-digit growers,

So we've expect to cover really and performance, just within the in the the than the momentum to kind the guidance. we been maintain to based were on QX wouldn't guidance be any the business, rates I of different the able beginning changes in the where short-term part of year. ranges

Yes.

think got front lot remember, we're as we've I just our it's election, we of things into really that in us, think selling everyone lot a a And of have -- to of global monitor. I items, continue season getting to knows.

setup we're to in place. as off era year. in stuff a post-pandemic like the changes showing early good have the our are fiscal all up set Bob products, start, So We've We and of got signs a investments we've ourselves doing those with we've go-to-market strategies made lot to our said. good for are start, solid and been the the approach

we're like there around trying that so said, manage are to And as I out headwinds still there well.

And we next will TD from question take Bryan with Bergin Cowen. our

growth. on modestly XQ wanted dig I in little better a bit to revenue the

expected. You how do noted and your those comment retention, how perform versus client plan? Can hiring was you just better than bookings on

business. Brian, continues our was particularly be Yes. and would you, to near outsourcing HR tell at record I in retention levels positive, or

distress of kind financial Our of and well, out client we activities. The retention fact good business latter actually uncontrollable. as nonrecessionary year-over-year both was type losses. of The have sign controllable less to and that being actually better relative a

So solid retention the was in quarter.

through how can standpoint, how from accelerate Okay. makes us is PEO versus period you on maybe year? October And go health growth, the expectation? then from what enrollment a enrollment the PEO going the X just you here as remind PEO comment on And

Yes. Yes.

mean, see. I we to happen worksite continue the is of Bryan, acceleration solid which bookings going we is quarter. PEO continuing had employees in And acceleration, the to see first the to So fact matter more by

enrollment, benefits And know, Now we is clients as well exceeding and the part our roll plans. both is resonating as and that as starts we're in enrollment both out, slightly time out PEO obviously, meeting retention first of as through because terms that's those penetration the you plans new first with you with the participant pointed our marketplace. expectations the quarter And our of our and important off, client as are well. that

pleased So with the still say this to you as we feel out where we know, last really are we at point, setup good more where as as would point We I we have, about right where that finish PEO. for January. go year are this now there. were to I But at the

And next with question Tien-Tsin JPMorgan. Huang our we will take from

the just definitely a velocity. of -- some wanted said product on ask the to Echo call. I good lot comments the on

you're better that. going is season, would some of or the products you wanted to about Just into unit understand more impact expect selling it upselling to the revenue more growth new showcasing and higher just approach. I

Yes.

area I'll quality That keep been believe not post-pandemic. we're pandemic, in three our accelerated only There's we're on that employees. on, going that retaining has the energy we that applying that core pandemic solutions the this. problems to problems trying that is back us the consistent focus during the to before focused recruiting help in And and and we're we what think have putting I think new if value provide we attract of unit more to also that's that's well. can as retention. but people find, And then drive proposition Paychex. who we think our able I find growth our value helping a you improves can that we going to believe the see have help But solve going been not clients clients to we're problem, them that help it instead, if

opportunity an with So additional module existing upsell clients we gives it on. think add retentive. think to it's We us that

employees attract remind could and our And you it business to else that get find our new start what we doing think you don't keep hope to an Paychex tool way using that to is we existing we and of a come as them today. a small and certainly help client it's We individuals you you're well. also advisers on to one Copilot, HR as you I'll your be to to buy the have talk from be about clients recruiting engage going what to when well. call

hospitals So second heard to which problem you And looking of good relationships has we them then and have we are with is -- pandemic lot think we're of inflation think the people all see, also we be manage do, a health help care for contract in scale thing. an able think who I that's still that the trying is to to through the health and look boom that's a we're capability someone coming at benefits. perspective costs. negotiations And I the the the mean, what costs. not carriers, sonic from and and that I affordable the

Now that still we trying going at do think gain can that and certainly thing the our third we're help And but demonstrated to term, is agency cost not our on more to that working we as funding. well. PEO on this look, and to we're help the come then to growth the clients our long access in people cheap we've can manage insurance, over least, provide

time. our new our adding this been headwind locations. One was headwind I you of it It's us, would a things quarter, the client for base, tell it's for clients within are some been a typically that's a headwind

others. they a bit not but fact adding client working to business with deal And going Fed unit to businesses. our And natural it's can sites referrals, why with what where affordable hurt growth, open access additional support going grow actually to think of of help. going our get they're I live want also client years. to But it again, growth has a been we ecosystem little is create entrepreneurs, that call funding, business, down, for we not a and help gain be with client It's they're the we we so to help we've that's an able clients we several do lot that's really the kind a And referrals. The if growing -- their fintechs to Paychex. rate their that's

great been fintech a On lot that a I've because later, conferences. of that's point telling

your the of more that view doing So partners? you earlier, on changed done directly concept this mentioned that? with maybe concept, versus Has of

a with an -- create create if onboarding is app going Paycheck. like you're it like an do think we to trying you we're onboard you're this about what -- experience employee to were company way, that think today, to large and a want employee, in an I our like No,

run give to going to information and enrollment experience your their like The going then so for we on because can benefits an going us load you information, your fill open trying businesses, come you're most the look at got largest your tax don't their expense. in, thing do to You've buy your small you're for offer the same us they're employer for to going you own, up, payroll is chipping you to to that payroll need when employer can to in. we're we're you

fund your want do So when the trying we're to up float to if app it to to look, comes you needed what is a set prequalified time. ability a or to time $XX,XXX partners access a your you're ecosystem that of your period there get payroll, set for could to of an we bring potentially with in right say, payroll for loan funds you

have ecosystem, how we help but treat that's nothing vision to business our could the So owners trying yet, talking them. in we're about small to that we

of a bit we do on with basis good a can on Promise, demonstrated program Paychex lot payroll-to-payroll our risk a have it. they're long-standing what We that that which we'll for actually that a them have clients called work little

more owners again, believe it's So that retain it's need of really things addressing to that more business critical to just we customers, that, it's debt customers, it's have. one that we attract small those going and do going the a

And Stanley. question take Faucette with James next Morgan from we our will

you how out in the finish of of in playing pricing that and for terms Michael over maybe you to you of wanted go the discounting some saw line quarter in the any that. in sort the Was commentary nature. get challenges last just James. just capacity play we near terms to provided of that medium I sort Did to should across that see And that how your expect into It's some is term? to of back just onetime that and deals to of quarter?

terms Yes. highly but to dramatically would is in relative not terms that. the different the anything environment. I'm it's stable seeing in of I that competitive a Certainly, anything say pricing environment competitive environment, of

on earlier piggyback it. helpful. That's Bryan's question. just Maybe Got to

sort driving to that going strength over quarter, last think what's near it versus fairly drivers you broad-based? the retirement, between Just now? key and persist of of in terms sort composition, HCM two stratify term? but to the think Is of payroll of the buckets, were retirement relative strength bookings if and how is sort it you insurance had some insurance And do I of and

Yes.

at our what Actually, say, demand the when out across think there I the think would we year-over-year. all are almost -- when look I in proposals, up I proposals suite. is segments I

that I selling their a most as think shopping there market for that. when of proposition just and compelling of looking, the think into giving comparing get there kind there that selling entering our just I are and lot out we there's segments. a we seen the do I really them people value decisions. now providers. it's of I've in we're people the and we the as season is see making of are a This out of to numbers that season. again, looking know, lot see. people are close But And shopping matter

and good demand work about a a to into and that's stable the going how we're and what see lot have to we the over I So going environment of do, really season. see feel third quarter. we're very But second selling positioned

Samad question next take Samana will we from our Jefferies. with And

us wellness remind have 'XX what monetization first, I into remind a And just outlook? Maybe kind financial embedded the contribution the how it works us the type goes you've of on there? benefits of Could And fiscal new follow-up. into, -- what then you and of solutions. just what segment just

is weeks this. just Well, We've into this something But I'll working testing while. look, describe a been to we're -- X basically been initial this for looks pleased it only beginning launch. We've like results. the with we're I'm it.

client, an You're get coming you your employee our onboarded, on. new of employee

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Go ahead. Sorry, go ahead.

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you. the a just guys last environment. you quarters, Got pricing the of talked environment maybe discounting follow-up. And and I then about know couple have the

you've been prior the maybe having there's discounting and trends need observed? quarters? frequency quarter from to just that I'm over if couple you what and saw then curious change what you've from And a perspective of just this the recent most any magnitude what observed you're So discount? And in

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Andrew And William we take our next Blair. will question from with Nicholas

up the on first I follow wanted to last question.

business, the It to that your like PEO talking are both could seems sure pricing make aggressiveness. want of the speak Just you and public private I and there. some specific competitive dynamics like increased about to to the peers,

good in business now pricing front, On a row. that the you've in quarters for growth had very several

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the Okay. specifically. then the business past Understood. agency insurance side the I rate just or And on know growth the business curious a headwinds solutions on for of years. had you've follow-up, couple over some

of there's future Just business? could in half any the the what or for a this stabilization there and if curious part that there's out growth bottoming in signs of years year that in to back potentially mean of if trough or that

the rate that comp the into unfortunately, headwind mean, side. workers' I Yes. on continued Andrew, QX

drag to mean grew strong if retention was as I Insurance of overall, double-digit that you the that to pick grower sales I the PEO continues on think category. relates business. in PEO PEO at a category made I but performance business. overall strength good it the really up the be strength comment with in just earlier that on a X%,

factored that factored -- we had So plan. into the

the performer see just it because us calling numbers guide strong PEO But don't quarter. the to again combined from for what justice I lot insurance a continues we here to a risk don't the be out do So we're for standpoint. with forward here a print really move of as business that because it's this

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And we will take RBC. Ashish Sabadra our question with next from

on Paige for is Ashish. This David

year-over-year was driving in how year? service of on what rest more color quick then, provide -- the I The can follow-up was Just growth item for X.X% what you a growth we a little that that cost guess, line was discussed year-over-year? should what think about revenues, on And earlier. the of the

David. lines, the expenses. out different specifically break would I provide on tell I don't guidance between mean, you we and that

in up PEO insurance Expenses the we've I in by the the quarter. prepared think lot was in driven higher the mentioned I the as in X% revenues remarks, of were that performance seen. A business that

getting standpoint with in as on quarter. in our earlier, higher the a ex essentially John we structure, And those of costs expenses we and ERTC. had think lot were that last this I earnings a an headwind year margin from knowing costs, cost time flat our year standpoint mentioned line our big fairly spent

optimization ERTC a of and headwind, in that has us still points the face margin we guide week were to invest project I costs So able XX investments we our midpoint business. line really can about with the year, and end expansion, so the that those a And of the lot in the deliver expansion being Tech to we HR and of showcase at the announced that expansion deliver invest obviously, think time to able get John the spent as earnings continue enabling of cost new fairly fruits to to lot a significant assumes we basis you're seeing some year of in at well. last last margin which last and of really margin of solutions highlighted headwind

our And take Bryan Deutsche with will we Keane Bank. question from next

is to Bryan. for just kind up wanted of comments I Svenson follow Nick on the on margin This there.

than XX%. lower XQ bit we you expected from maintain little guide expecting of margins going a still full the XX% you're year So XX%, maybe and had to

margin be seasonality for maybe that half confidence some looks I talk pretty -- to guess, and in stronger back particularly the still in third there's some of to tends know in quarter? like I headwinds experience in about can the business the but So your half, realizing, you back be margin sequential you terms going ERTC material there's in guys the margin,

back margin I which the QX ex of points ERTC. of last if the year margins basis. ex well. I to a XXX mean mean then I it's XXX ERTC in the revenue. in really ERTC, on color, XXX really margin half QX as you obviously, between QX it's was the as headwinds it's QX expansion full the of versus the basis where exclude compare margin contraction that's get in Yes. points expansion the and again, a story basis in in for implies gave margin expansion subside you you same slight margin XX% the about And But expansion year. year,

same be to So in to plan. prior the that with revenue It appears the margin to year expansion. relates compare. the acceleration It's story really similar the

maybe go-to-market Got beyond points there? you're progress we approach? remarks. some are those couple on helpful. to quarter, that, maybe on seeing learned, Are you your talked And you for behind made it. some early with a go-to-market mentioned are the and channel, any you've That's some last the you us then times that now. Maybe about there changes of starting see lessons the -- traction things you've positive proof on that know strategy assume in I changed rollout some the I the updates digital follow-up, the issues prepared And but with

question. X new pleased things that which we're about. very good of on We day Yes, learn something the this is every front,

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told. these the just world. for investing while delivering story Bob margin about margins and preparing the We've significantly think been So post-pandemic

money So what knew while have interest we coming. were rates having into been were ERTC, of for putting going the the we business up we benefit and the to was prepare

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about marketplace. actually the on. segmentation. it's teams of been sellers over about that, And been in the working and you think very execution our really I've increased retraining pleased X,XXX our So retooling when go-to-market with transformation have And we've

more bit question So asked about a in little the think and market. upper I was a mid earlier the

of seen sales lot actually across We've go-to-market the in are and do done segments, can given actually added We that various we we've in segment. that a And we results that have the accelerating its other particular pilots we've the hiring. that. quarter confidence hundreds first

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Barclays. Ramsey take next with El-Assal will our we And from question

This is on Ramsey. Owen for

an just wanted growth sort the to kind drivers of sales Solutions. update of within get your You Management on on team and touched

client focus to given additional versus expectations further into other? the to insight has base forward in rollouts, be the shifted wondering lean all client your bit existing Any expect penetration the from with with going a Any Just if helpful. HCM wins -- your more one which you there new the services? would product new of

I drive say, look, growth clients, would No. formula of innovate. total our It's grow hasn't to new penetration changed. products, continue

the products we're that's pricing have base, that to So what we to say to to have more continue pass and price XX-year would on. our capacity, to the work to history, going provide ability client into so and we value I clients drive Paychex's And against. been that's continue that

revenues. Got of it. service on just And cost

in bit a early You the that touched on call.

would kind forward the be helpful claims color of also and utilization kind if well. with Any expectations going cost? Just on increase in the cost benefit interested of in side, any is associated kind there of as

not is year. last claim attachment much add over being seen Overall, you're I comment. so think that seeing to just higher higher the but driven employer I'd we've and cost worksite Yes. insurance my what by really there

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from take Northcoast next we Mehta will And Kartik Research. our with question

thoughts versus buyback. on acquisitions your getting Just

the lot new maybe about change of a businesses some You've talked products a the of have, want, what you need.

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And our it We're in can in changed. a we in the I the and -- terms opportunities full and months company. pipeline in we're just think where we tell there's scale at time. I more the at together. last coming what rational of hasn't The really time. But is just changed we're you advisory rationality market, would at to think this willingness services. in has combinations. at I point to what pipeline I of breadth see potential markets, several right our drive really in over seeing. of at saw our a robust coming I just we're looking existing a at our can say, the time would tech little not XX looking I industry are this Remember, look point our that more deals

ways those a at that where to looking we We're then looking to opportunities can of sell have expand our ton of other to could services growth platforms. business bring continually all markets. and our into we We're capabilities and digital we looking can add for products We for can product add our in that and to services adjacent which we clients. to that products suite continue

more those years conservative is and to a interest for of the going very, what looking now months, And there, think XX rationality. over of more all years are So have do. I had at that more more you right prices seen we're even said would X serious very and unreasonably high in value, the the I've ago, X I you, and were What as individuals conversations. rationality, I we we're last at told know, going in last lot deals

shareholders for it's long going And smart one so is out we're make there, we're looking, to but again, and deal we're our term. to going accretive that sure a be

of Bob, pace are one gave anticipated little feel about of guidance think per for flat if I per expectations expected. going as to changed kind those need it Any be seems maybe you you follow-up. than thoughts you when guidance, bit terms just And out, better a look initially in control better kind of like the control? or things you

the on the checks Yes. full I in there. We in going assumed contributor more of -- would we side, be had we was Again, to say positive We and HCM it's per it it flattish to of assumed bit it more wasn't client on the a latter better. plan the trended growth. feel a the little part say, basis year big it, business had be a would I to

slightly in I of on expected where in where in bit well. We're than our QX. assume growth, maintaining positive, neither not line was did we're certainly again, face big contributors growth us huge a and but sizes, we to client guide think expected it we us them we to then at guide and be rate the basis. at. growth guide confidence little the our that that of full top HR revenue maintaining when And plan. the the So one think of kind Again, bigger better on were in to to a in confidence be contributor particularly of the there gives And But it look again. the a some year as I gives models, interest headwinds outsourcing

from with question Kupferberg America. Bank Jason take And we will next of our

wanted Management to the I start Solution. on

but us for in you're on It improvement I the you'd growth have implying won't still what just underlying give the quarter any guide. any on coming there. color visibility on a know like headwind? just in comments processing that acceleration And sound other you then aspect, the second doesn't half second but the You too. performance, have you ERTC expect sense headwind, day of

get Yes, might approach, trying don't Jason, your specifics. the you be to guidance, split. I me into annual next I wrong. particularly maintain on quarter, last but bit quarter model, question to updates mean, But similar I I I and quarterly I asked provide want you our to quarterly. have could a the don't to guys giving think We're with provide into out to to guidance is try on get a want give help you color of the which little

As in ERTC. is expect revenue. to I Management basis QX It's X%. to X% The It's be headwind points mentioned, total on we'd the Solutions. XXX

And the versus first we the exiting and standpoint we gating my half. the like to I'd half to last of in So just where you were acceleration were exclude and very where kind by is you the prior reiterate headwind, quarter by from the an a acceleration back look that. again When in growth is in kind at I'll stick year, relates quarter-to-quarter quarter, was comments consistent line the the business. of which again, with it as to ERTC gating of

the again, product last from new certainly a lot solution So feel have introductions momentum things talk out and or great expect really year in the continue of we an that Lots so, back through assumed, of that in positive of accelerates the look like business. to here got half. not to the we But rolled last the about, that momentum and compare the like it in really acceleration there growth it's we balance the makes is year. month

Understood. Okay.

margins. operating on Just

year outlook. in came timing know there I full other dynamics I you factors? above the guide there you're in expense the quarter. for think Were the first or any mean I

a I Yes. a to was I mean I'd our little favorable bit expectations. of say revenue couple mean things.

month, we us and it the a thought in than And together bit a at it helps. put headcount little and expenses, adding, investments get in we when plan, we assumed So certainly takes a maybe we and we that plan, what longer that like going takes make, that look have little we're to first bit longer. the that we to we were hey, want

little had things better what bit a a favorability, favorability. of bit two So had I'd little guided combined, bit a expense say those of we than little we to. revenue And provide margin

with final Research. our from take Wolfe will question Scott we Wurtzel And

Just little cadence full wanted headwinds. year-over-year similar we on guess, But year. to the relative in guidance or touch know quarter, on the kind sort a just two key reported of margins for of the bit guidance a first but to what ERTC little the more. bit have we of obviously, a looking, touched I implies change, better I you improving

season, respect items should be get Just or understand to if wondering any about items to going around of there's the selling that if I kind we that contemplating? should there's the to with XQ we we're any margin? think others

Yes.

exactly you same throughout the quarter. if gating think look it's margin by of the not year, the the quarter I at

basis between that, a XXX would versus I you really see you're headwind year. It's margin. from again, had in out, good than back When the other quarter. from referenced to of I processing half. QX ERTC. Scott, call the that's it's think good that high to the in higher typically contraction seeing nothing expansion that And say in guide XXX specific someone exclude of occurs prior we'd year-end the to QX But in points. But margin slight higher expect implies some is because coming that margin

season. gearing like if headwind. we're selling exclude have specific up, want Yes, to the that's did the in and fully have can to we you investments, position, going sure making if feel successful you math, to going we're what we're to we call we're so out. a you successful -- a selling and I think staffed make good season. get I But would a so ERTC nothing the into

helpful. called at pretty just I I'm presentation, mean, seems it. follow-up. which growth single-digit out you looking a in Got just And high impressive. I just to the HR then And outsourcing WSEs, want during you you understand maybe ASO the that can there And drivers the in saw better. would business about quarter talk the the bit if be very little of a some maybe

about Yes, don't end I is of last assistance think think I is when the HR message that think back. to just industry would I it's be building outsourcing X say provide our look that our the to said, bells the years. years And going in not PEOs what's and beyond in that proposition. next And outsourcing proves I to resonating. comprehensive once the offering one, tech that of I X play, what at is the Like the be and going think the you again, we're value that's I power whistles. the at we do And driving

where job done you and pull value a PEO that PEO. great more I the was PEO than and what page to has a team putting tilted set see proposition offerings powerful a If of in a We execution the think, back is now little the remember benefit ASO together market. a of,

that's what's this quarter driving So exciting been growth.

no are this at further questions there And time.

Well, Okay. close this call. the we're thanks, to listen, everyone. going At point,

your thank a in interested has a will you're If in I of to great replay interest Again, you webcast, days. the everyone and it Paychex, for approximately for XX archived be want hope day.

Conference That concludes Call. XXXX quarter Earnings today's Paychex first

lines You wonderful time, a day. disconnect at may now have your and this