Paychex (PAYX) Reports In-Line Q4 EPS of 40c; Issues FY15 Growth Outlook

(Updated - July 1, 2014 4:46 PM EDT)

Paychex, Inc. (Nasdaq: PAYX) reported Q4 EPS of $0.40, in-line with the analyst estimate of $0.40. Revenue for the quarter came in at $639 million versus the consensus estimate of $617.35 million.

Martin Mucci, President and Chief Executive Officer of Paychex, commented, "We are pleased with our strong finish to fiscal 2014. Payroll service revenue continued to advance for the fiscal year, driven by higher revenue per check, client base, and checks per payroll. Our Human Resource Services revenue continued to grow at a double-digit rate, driven largely by demand for human resource outsourcing solutions. We again finished the year with client retention at record levels."

Mr. Mucci added, "In fiscal 2014, we continued our investment in software-as-a-service solutions and mobility applications with new product releases that position us for long-term growth. Our focus on client service, coupled with our leading-edge technology and full suite of product offerings, distinguishes us from our competitors and positions us as a valuable partner for small- to medium-sized businesses. The recent launch of our Paychex | IHS Small Business Jobs Index provides data on macro-economic trends, and we are encouraged by results that show a trend of continuing steady growth."

OUTLOOK

Our outlook for the fiscal year ending May 31, 2015 ("fiscal 2015") is based upon current market, economic, and interest rate conditions continuing with no significant changes. Our expected full year fiscal 2015 payroll revenue growth rate is based upon anticipated client base growth and increases in revenue per check. HRS revenue and total service revenue reflect the classification of certain PEO direct costs as operating expenses rather than a reduction in service revenue. The impact of this change in classification will add approximately 5% to the HRS revenue growth rate and approximately 2% to the total service revenue growth rate, but will have no impact on net income growth.

Our guidance is as follows:

Operating income, net of certain items, as a percent of total service revenue is expected to be in the range of 37% to 38% for fiscal 2015. The effective income tax rate for fiscal 2015 is expected to be consistent with that experienced for fiscal 2014. Interest on funds held for clients for fiscal 2015 is expected to be relatively flat as it continues to be impacted by the low interest rate environment, with funds reinvested at lower yields.

For earnings history and earnings-related data on Paychex, Inc. (PAYX) click here.

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