Overview of Paychex (PAYX) 1Q 2021 earnings report and stock price history
Category: Paychex (PAYX)
Date: 7 October 2020 Stock price of Paychex: $79.43 We take a look at the 1Q 2021 earnings report from Paychex, an integrated human capital management firm who pays one in every twelve Americans. Revenue for the quarter came in at $932.2 million and net income for the quarter amounted to $211.6 million. That fact that less Americans are employed due to Covid-19 has affected the group's revenues and earnings.
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Financial results for the first quarter showed marked improvement as most of our key business metrics recovered at a faster rate than anticipated. The effects of the COVID-19 pandemic continue to impact our results causing unfavorable year-over-year comparisons, however, client retention has remained strong and sales performance is accelerating with year-over-year growth in the number of clients sold "
More About Paychex (PAYX)
Paychex, Inc. (Nasdaq:PAYX) is a leading provider of integrated human capital management solutions for human resources, payroll, benefits, and insurance services. By combining its innovative software-as-a service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Backed by more than 45 years of industry expertise, Paychex serves approximately 670,000 payroll clients as of May 31, 2019 across more than 100 locations in the U.S. and Europe, and pays one out of every 12 American private sector employees.
Overview of Paychex (PAYX) 1Q 2021 earnings report
ROCHESTER, N.Y.--(BUSINESS WIRE)-- Paychex, Inc. (the “Company,” “Paychex,” “we,” “our,” or “us”) (Nasdaq:PAYX) today announced total revenue of $932.2 million for the three months ended August 31, 2020 (the “first quarter”), a decrease of 6% compared to the prior year period. Net income decreased 20% to $211.6 million and diluted earnings per share decreased 19% to $0.59 per share for the first quarter. Adjusted net income and adjusted diluted earnings per share, both non-GAAP measures, each decreased 11% to $228.0 million and $0.63 per share, respectively, for the first quarter. Adjusted net income and adjusted diluted earnings per share include adjustments for one-time costs of $31.2 million related to the acceleration of cost-saving initiatives, including the long-term strategy to reduce our geographic footprint and headcount optimization, and net tax windfall benefits related to employee stock-based compensation payments.
First Quarter Fiscal 2021 Key Points
First Quarter Fiscal 2021 Key Points
- First quarter results reflect better improvement than expected from the fourth quarter fiscal 2020 COVID-19 impact; Company improves guidance ranges for fiscal 2021.
- Total revenue decreased 6% to $932.2 million.
- Operating income decreased 19% to $284.0 million. Adjusted operating income(1) decreased 10% to $315.2 million.
- Net income decreased 20% to $211.6 million. Adjusted net income(1) decreased 11% to $228.0 million.
- Diluted earnings per share decreased 19% to $0.59 per share. Adjusted diluted earnings per share(1) decreased 11% to $0.63 per share.
Martin Mucci, President and Chief Executive Officer, commented, “Financial results for the first quarter showed marked improvement as most of our key business metrics recovered at a faster rate than anticipated. The effects of the COVID-19 pandemic continue to impact our results causing unfavorable year-over-year comparisons, however, client retention has remained strong and sales performance is accelerating with year-over-year growth in the number of clients sold. We continue to provide excellent customer service and invest in our business while remaining cost-conscious. Cost-saving initiatives are underway and proceeding as expected.”
Mucci added, “We have released several new innovative Paychex Flex® features and functions to our clients to address the ongoing business challenges and shifting workplace dynamics resulting from the COVID-19 pandemic. The Company’s most recent round of product releases includes solutions designed to help organizations stay connected with remote workers and assist clients as workers return to the office. Our mobile technology delivers solutions for ongoing health attestations, time clocks with iris scanning capabilities and paperless reporting and tracking of COVID-19 exposure and return to work testing, including automated Occupational Safety and Health Administration reporting requirements. We believe our current and past investments in our platforms have prepared us well for the demands of this environment, allowing us to adapt while maintaining high levels of service delivery resulting in strong client satisfaction and retention.”
Results of operations for the first quarter were adversely impacted as businesses continue to be affected by the COVID-19 pandemic. Management Solutions revenue was $687.4 million for the first quarter, a 5% decrease compared to the prior year period. The decrease was primarily driven by a decline in check volumes, partially offset by increased penetration of retirement services. The decline in check volumes was due to a reduction in the number of clients processing payrolls as well as the number of employees paid. Professional employer organization (“PEO”) and Insurance Solutions revenue was $229.9 million for the first quarter, a 7% decrease compared to the prior year period. The decrease was primarily driven by a decline in the number of our clients’ worksite employees. Insurance Solutions revenue declined as a result of lower workers’ compensation premiums driven by reduced wages and related premium rates.
Mucci added, “We have released several new innovative Paychex Flex® features and functions to our clients to address the ongoing business challenges and shifting workplace dynamics resulting from the COVID-19 pandemic. The Company’s most recent round of product releases includes solutions designed to help organizations stay connected with remote workers and assist clients as workers return to the office. Our mobile technology delivers solutions for ongoing health attestations, time clocks with iris scanning capabilities and paperless reporting and tracking of COVID-19 exposure and return to work testing, including automated Occupational Safety and Health Administration reporting requirements. We believe our current and past investments in our platforms have prepared us well for the demands of this environment, allowing us to adapt while maintaining high levels of service delivery resulting in strong client satisfaction and retention.”
Results of operations for the first quarter were adversely impacted as businesses continue to be affected by the COVID-19 pandemic. Management Solutions revenue was $687.4 million for the first quarter, a 5% decrease compared to the prior year period. The decrease was primarily driven by a decline in check volumes, partially offset by increased penetration of retirement services. The decline in check volumes was due to a reduction in the number of clients processing payrolls as well as the number of employees paid. Professional employer organization (“PEO”) and Insurance Solutions revenue was $229.9 million for the first quarter, a 7% decrease compared to the prior year period. The decrease was primarily driven by a decline in the number of our clients’ worksite employees. Insurance Solutions revenue declined as a result of lower workers’ compensation premiums driven by reduced wages and related premium rates.
Paychex (PAYX) stock price history over the last 5 years
The image below shows the stock price history of PayChex over the last 5 years. And its been
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