Paychex, Inc. (PAYX – Free Report) reported first-quarter fiscal 2019 adjusted earnings of 67 cents per share that surpassed the Zacks Consensus Estimate by 2 cents. Total revenues of $862.8 million beat the consensus mark by $13 million. The company posted strong growth across major human capital management (“HCM”) product lines and professional employer organization (“PEO”) services.
In the past six months, shares of Paychex have gained 20.9%, outperforming the 12.1% rise of the Zacks S&P 500 Composite Index.
Revenues in Detail
Post-adoption of Accounting Standards Codification Topic 606, Paychex classifies its service revenues as Management Solutions revenues, and PEO and insurance services revenues.
Management Solutions provides payroll processing, payroll-related ancillary services (which includes retirement services and time and attendance solutions) and administrative services organization (“ASO”). Revenues from Management Solutions improved 3% year over year to $687.7 million. The growth was driven by rise in client bases across the company’s human capital management (HCM) services — payroll, ASO, retirement services and time and attendance solutions. Acquisition of Lessor Group contributed less than 1% to growth in Management Solutions revenues in the reported quarter.
PEO and insurance services includes PEO services offered through Paychex’s registered and licensed subsidiaries, Paychex Business Solutions, LLC and HR Outsourcing Holdings, Inc. (“HROI”). Additionally, it includes the company’s insurance services sold through its licensed insurance agency, Paychex Insurance Agency, Inc.
PEO and insurance services revenues were $158.0 million, up 39% from the year-ago quarter. The uptick was driven by increase in clients and client worksite employees across the company’s PEO business. Acquisition of HROI contributed around 20% to total PEO and insurance services revenues for the first quarter of fiscal 2019.
