Paychex Inc (NASDAQ:PAYX) stock fell 8.56% (As on June 25, 11:22:06 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the fourth quarter of FY25, driven by continued investment in artificial intelligence and the successful acquisition of Paycor. However, the company’s bottom line came in at $297.2 million, or $0.82 per share. This compares with $379.9 million, or $1.05 per share, last year. Management Solutions revenue increased 12% to $1.0 billion for the fourth quarter. Professional Employer Organization (“PEO”) and Insurance Solutions revenue increased 4% to $340.3 million for the fourth quarter, primarily due to the growth in the number of average PEO worksite employees; and increase in PEO insurance revenues. Interest on funds held for clients increased 18% to $45.2 million for the fourth quarter, primarily due to the acquisition of Paycor. Cost optimization initiatives totaling $39.5 million recognized in the prior year period. Adjusted operating income grew 11% to $576.7 million for the fourth quarter. Adjusted operating margin was 40.4% for the fourth quarter compared to 40.2% for the prior year period.

Further, as of May 31, 2025, the company had cash, restricted cash, and total corporate investments of $1.7 billion. Short-term and long-term borrowings, net of debt issuance costs, of $5.0 billion, an increase of $4.1 billion compared to May 31, 2024, primarily related to the financing for the Paycor acquisition. Cash flow from operations was $2.0 billion for the fiscal year. Cash used from investing activities was $3.7 billion for the fiscal year, primarily related to acquisitions. Cash flow from financing activities was $2.6 billion for the fiscal year, primarily related to the financing for the Paycor acquisition.

PAYX in the fourth quarter of FY25 has reported the adjusted earnings per share of $1.19, beating the analysts’ estimates for the adjusted earnings per share of $1.18, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 10 percent to $1.43 billion in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $1.41 billion.

For fiscal 2026, total revenue is anticipated to grow in the range of 16.5% to 18.5%, adjusted diluted earnings per share is anticipated to grow in the range of 8.5% to 10.5%, Management Solutions revenue is anticipated to grow in the range of 20.0% to 22.0%, PEO and Insurance Solutions revenue is anticipated to grow in the range of 6.0% to 8.0%, Interest on funds held for clients is expected to be in the range of $190 million to $200 million and adjusted operating margin is anticipated to be approximately 43%.