Paychex (NASDAQ: PAYX) reported Q3 EPS of $0.97, $0.02 better than the analyst estimate of $0.95. Revenue for the quarter came in at $1.1 billion versus the consensus estimate of $1.14 billion.

Outlook:

Our outlook for the fiscal year ending May 31, 2020 (“fiscal 2020”) incorporates known and some estimated impacts related to the COVID-19 virus, including the most recent reductions in the Federal Funds rate. The impact from the rapidly changing market and economic conditions due to COVID-19 is uncertain and could impact our results of operations and financial condition in the future. That impact could alter our guidance, which is currently as follows:

• Management Solutions revenue is anticipated to grow approximately 4%;
• PEO and Insurance Solutions revenue is anticipated to grow approximately 24%;
• Interest on funds held for clients is anticipated to decline in the range of 2% to 3%;
• Total revenue is anticipated to grow in the range of 8% to 9%;
• Operating margin is anticipated to be approximately 36%;
• EBITDA margin(1) for the full year fiscal 2020 is anticipated to be approximately 41%;
• Other expense, net is anticipated to be in the range of $22 million to $24 million;
• The effective income tax rate for fiscal 2020 is expected to be in the range of 23.5% to 24.0%;
• Net income and diluted earnings per share are expected to grow approximately 7%; and
• Adjusted net income(1) and adjusted diluted earnings per share(1) are expected to grow approximately 6%.

(1)

EBITDA margin, adjusted net income, and adjusted diluted earnings per share are not U.S. GAAP measures. Please refer to the “Non-GAAP Financial Measures” section on page 4 of this press release for a discussion of these non-GAAP measures and a reconciliation to the most comparable U.S. GAAP measures of net income and diluted earnings per share.

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