Paychex, Inc. (NASDAQ: PAYX) stock rose over 1.6% on 2nd October, 2019 (as of 12:18 pm GMT-4; Source: Google finance) after the company posted better than expected results for the first quarter of FY 20 and provided a full-year profit outlook that was in line with expectations. PAYX has reported the Net income for the quarter of $264.2 million compared to $243.6 million in the year-earlier period, which implies the growth of 8%. The company’s cash, restricted cash, and total corporate investments stood at $695.3 million. Total short-term and long-term borrowings, net of debt issuance costs were $853.0 million as of August 31, 2019.
PAYX in the first quarter of FY 20 has reported the adjusted earnings per share of 71 cents, beating the analysts’ estimates for the adjusted earnings per share of 69 cents, according to the FactSet consensus. The company had reported the adjusted revenue growth of 15 percent to $992 million in the first quarter of FY 20, beating the analysts’ estimates for revenue of $991.2 million. Oasis Outsourcing Group Holdings, L.P., acquired during December 2018, had contributed a little less than 10% to the growth in total revenue compared to the same period last year.
The management solutions revenue grew 5% to $724.5 million to beat expectations of $713.2 million while PEO and insurance services revenue grew 56% to $247.0 million but missed expectations of $258.6 million. The management solutions revenue growth was mainly due to increases in the client bases across many of the services and growth in revenue per client, which improved as a result of price increases, net of discounts. Retirement services revenue also benefited from an increase in asset fee revenue earned on the asset value of participants’ funds. In addition to the acquisition of Oasis, PEO and insurance services revenue grew was driven by growth in clients and client worksite employees across the existing PEO business. Insurance Services revenue was moderated by softness in the workers’ compensation market as state insurance fund rates declined. This was partially offset by an increase in the number of health and benefit clients and applicants.
Additionally, during the first quarter, the company has repurchased 2 million shares of the common stock for a total of $171.9 million.
For fiscal 2020, the company expects adjusted EPS growth to be of approximately 9%, while the current FactSet EPS consensus of $3.09 implies an 8.8% rise.