Paychex, Inc.

Solid Q1 FY27 performance; earnings growth outpaced revenue - Total revenue +6% to ~$1.6B. - Management Solutions revenue +4% to ~$1.2B. - PEO & Insurance Solutions revenue +12% to ~$368M (key driver; includes increased PEO worksite employees and PEO insurance volumes). - Profitability improved: operating margin +280 bps to 38%; adjusted operating margin ~42% (+~130 bps). - Earnings: diluted EPS +14% to $1.21; adjusted diluted EPS +10% to $1.34. - Cash flow from operations: $414M (timing of client/corporate tax payments). - Returned $424M to shareholders via dividends this quarter; ROE (12-month rolling) ~47%.

Updated FY27 guidance: reaffirm total outlook; raise PEO/Insurance growth and interest income - Company reaffirmed full-year FY27 guidance overall, assuming stable demand and flat employment. - PEO & Insurance Solutions revenue growth now: 7%–8% (raised vs prior guide due to continued PEO strength). - Interest on funds held for clients now: $200M–$210M, including a +25 bps Fed funds rate increase. - Mix guidance: if Q1 strength in PEO upsells and HCM referrals continues, PEO/Insurance could trend toward upper end of range, while Management Solutions could trend toward lower end. - Watch items mentioned by management: two remaining PEO enrollment/renewal windows (Oct and Jan)—uncertainty implies conservatism until further quarters.

Q2 outlook: ~4% revenue growth with margins ~40% (but includes prior-year one-time comparables) - Q2 expected to reflect a difficult comp due to two one-time items in Q2 last year (revenue synergy benefit and portfolio repositioning gains). - Guidance for Q2 (reported): revenue growth ~4% with adjusted operating margin ~40%. - Excluding those one-time items, Q2 total revenue growth is expected to be closer to Q1’s ~6% run rate.