Paychex, Inc. Q2 FY2026 earnings call

• Delivered solid second quarter results with revenue up 18% and adjusted operating income up 21% driven by higher productivity and AI integration. - Made progress on Paycor acquisition and integration, expecting ~$100M cost synergies for fiscal 2026. - Strengthened broker relationships via Partner Plus program. - PEO business doing well with strong demand and retention. - AI initiatives advanced with patent-pending knowledge mesh system and GenAI-powered platforms showing strong adoption. - First Agenic AI pilots a success

Total revenue increased 18% year-over-year to $1.6 billion. Management Solutions revenue grew 21% to $1.2 billion, with Paycor contributing ~17 percentage points. PEO business performed well with mid-single-digit worksite employee growth. Interest on funds held for clients expected at high end of $190M - $200M range. Adjusted diluted earnings per share expected to grow 10 - 11%

• Reaffirming fiscal 2026 outlook except raising earnings expectations; adjusted diluted earnings per share expected to grow 10 - 11% (up from 9 - 11% last quarter). - Interest on funds held for clients expected at high end of $190M - $200M range. - Total revenue growth expected ~18% in Q3 with adjusted operating margin 47 - 48%. - Effective income tax rate expected ~24%

• Q: Concerns about Paycor contribution and integration, A: Discussed Paycor growth estimate adjusted for December form filings, progress on synergies and client retention. - Q: Thoughts on selling season and Agenic pilots impact on cost synergies, A: Feels good about competitive position, Agenic pilots just scratching surface of potential cost savings. - Q: On fiscal 2026 growth guide and Paycor growth, A: Explained softer revenue per client, Paycor growth estimate adjusted for December form filings and macro factors. - Q: On managed services and PEO insurance, A: Discussed smaller deal sizes and macro factors, PEO performing well but not cheap value proposition. - Q: On AI presentation and monetization, A: AI helps improve value proposition, productization still to be determined. - Q: On buyback and pricing inside install base, A: Buyback opportunistic, continue to drive value proposition and pricing in install base