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View All NewsPaychex PEO revenue up 10%, cites growth in client base
Paychex Inc. (NASD: PAYX) revenue rose 10% in its “Human Resource Services” division, which includes its PEO operations, during the company’s fiscal fourth quarter ended May 31. Looking ahead, the Rochester, N.Y.-based firm forecast revenue from the division would increase 8% to 10% in the first quarter.
(US$ millions) | Q4 2017 | Q4 2016 | % growth |
Payroll service revenue | $440.9 | $430.4 | 2% |
Human resource services revenue | $343.7 | $311.2 | 10% |
Interest on funds held for clients | $14.0 | $12.3 | 14% |
Total revenue | $798.6 | $753.9 | 6% |
Net income | $195.3 | $178.1 | 10% |
Human Resource Services' revenue growth was driven primarily “by increases in our client base across all major HCM services, including: comprehensive outsourcing services [PEO and ASO], retirement services, time and attendance, and human resource,” according to the company.
Revenue in Paychex’s Payroll Services division, which provides payroll processing and other services, rose 2%.
The company also owns Advance Partners, a provider of funding and other services to the staffing industry, which it acquired in December 2015. Advance Partners contributed 1% to revenue growth in both the Human Resource Services and Payroll Services divisions.
Total revenue rose 6%. However, MarketWatch reported shares fell as guidance lagged estimates.
Paychex also announced it recently received certification under the Small Business Efficiency Act.
Full-year results
(US$ millions) | 2017 | 2016 | % growth |
Total revenue | $3,151.3 | $2,951.9 | 7% |
Net income | $817.3 | $756.8 | 8% |
Guidance
Payroll service revenue is anticipated to increase in the range of 1% to 2% for the fiscal year ending May 31, 2018. Human Resource Services revenue is anticipated to increase in the range of 8% to 10%. Total revenue, including interest on funds held for clients, is expected to increase approximately 5%.
Share price and market cap
Shares in Paychex fell 1.83% in late morning trading to $57.55. The company had a market cap of $20.67 billion, according to Yahoo.