Paychex, Inc. Q3 FY2026 earnings call

John Gibson mentioned delivering a strong quarter with revenue up 20% and adjusted operating income up 22% year-over-year, driven by effective execution and progress advancing strategic priorities like the pay core integration and acceleration of transformational AI initiatives. Clients' workforce levels remained stable supported by Paychex's solutions. Demand for comprehensive advisory and benefit solutions remains strong. The PayCore integration continues to progress well with bookings and broker referrals re-accelerating to pre-acquisition levels. Paychex Flex and PayCore platforms were recognized as industry-leading HCM solutions. Over 500 AI-powered capabilities and agents are in use, with generative AI-powered employment law and compliance platform processing tens of thousands of inquiries. AI use cases are being expanded to enhance client experience and sales effectiveness. Paychex was named one of the world's most ethical companies for the 18th time and recognized as a leading corporate partner by United Way worldwide.

Total revenue increased 20% over the prior year to $1.8 billion. Management Solutions revenue grew 23% to $1.4 billion, driven by product penetration and price realization, with PayCorp contributing approximately 19 percentage points to growth. PEO and insurance solutions revenue increased 9% to $398 million, primarily driven by strong growth in the number of average PEO worksite employees and an increase in PEO insurance revenues. Interest on funds held for clients increased 33% to $57 million, largely due to the addition of PayCorp balances.

Reaffirms prior fiscal 26 outlook except for raising interest on funds held for clients expectations to $200 to $210 million. Anticipates fourth quarter growth to be approximately 12% with an adjusted operating margin of 41% to 42%. Second half outlook remains consistent with organic revenue growth acceleration seen in Q3.

Includes multiple questions and answers from analysts regarding organic growth, 4Q exit rates, PEO insurance strength, re-acceleration of referrals and bookings, AI go-to-market, margin expansion, PACOR integration, form filing revenue impact, pricing, enrollment, Salesforce alignment, stock buybacks, management solutions organic growth, and float income guide