Paychex Inc (NASDAQ:PAYX) stock rose 0.65% (As on October 2, 11:26:01 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the first quarter of FY 25. Operating income grew 2% to $546.7 million for the first quarter. Operating margin was 41.5% for the first quarter compared to 41.7% for the prior year period. Operating income was impacted by the expiration of the ERTC program and one less payroll processing day as compared with the prior year quarter. Other income, net decreased 19% to $10.4 million for the first quarter primarily as a result of lower average investment balances on the corporate investments. As of August 31, 2024, the company had Cash, restricted cash, and total corporate investments of $1.6 billion, short-term and long-term borrowings, net of debt issuance costs, of $817.6 million and cash flow from operations was $546.1 million for the first quarter.

Moreover, Management Solutions revenue increased 1% to $961.7 million for the first quarter, driven by the growth in the number of clients served across our suite of human capital management (“HCM”) solutions and client worksite employees for Human Resources (“HR”) Solutions; higher product penetration, including HR Solutions and Retirement; and Lower revenue from ancillary services, primarily due to the expiration of our ERTC Service.. Professional Employer Organization (“PEO”) and Insurance Solutions revenue increased 7% to $319.3 million for the first quarter, driven by the growth in the number of average PEO worksite employees; and increase in PEO insurance revenues.. Interest on funds held for clients increased 15% to $37.5 million for the first quarter primarily due to higher average interest rates and average investment balances.

PAYX in the first quarter of FY 25 has reported the adjusted earnings per share of $1.16, beating the analysts’ estimates for the adjusted earnings per share of $1.14, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 2.5 percent to $1.3 billion in the first quarter of FY 25, beating the analysts’ estimates by 0.31%.

Additionally, during the first quarter, the company paid cumulative dividends of $0.98 per share totaling $353.4 million and repurchased 828,855 shares of our common stock for $104.0 million.

PAYX expects interest on funds held for clients to be $145-$155 million. The company anticipates other income to be $30-$35 million.