Paychex, Inc. (NASDAQ: PAYX) stock lost over 3.5% on 26th June, 2019 (As of 1:21 pm GMT-4; Source: Google finance) after the company posted mixed results in the fourth quarter of FY 19. Operating income increased 4% to $314.5 million for the fourth quarter; 6% to $1.4 billion for fiscal 2019. Adjusted operating income increased 4% for fiscal 2019 to $1.4 billion. Net income increased 6% to $230.4 million for the fourth quarter and 4% to $1.0 billion for fiscal 2019. Adjusted net income rose 10% to $228.1 million for the fourth quarter and 11% to $1.0 billion for fiscal 2019.
PAYX in the fourth quarter of FY 19 has reported the adjusted earnings per share of 63 cents, missing the analysts’ estimates for the adjusted earnings per share of 64 cents, according to FactSet consensus. The company had reported the adjusted revenue growth of 16 percent to $980.4 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $979.4 million. Services revenue rose 16% to $958.2 million, just missing the FactSet consensus of $958.3 million, while interest on funds held for clients increased 25% to $22.2 million to beat expectations of $21.2 million.
Moreover, Management Solutions revenue grew 4% for both the fourth quarter and fiscal year to $694.9 million and $2.9 billion, respectively, compared to the same periods last year. The increases were mainly driven by growth in the client base across many of the services and growth in revenue per check, which improved as a result of price increases net of discounts. Within Management Solutions revenue, retirement services revenue also benefited from an increase in the number of plans served as well as an increase in revenue earned on the asset value of participants’ 401(k) funds. PEO and Insurance Services revenue increased 67% to $263.3 million for the fourth quarter and 48% to $822.3 million for the fiscal year, compared to the same periods last year. PEO and Insurance Services revenue increased 67% to $263.3 million for the fourth quarter and 48% to $822.3 million for the fiscal year, compared to the same periods last year.
For fiscal 2020, Paychex expects adjusted earnings per share growth to be in the range of 8% to 9%, while the current FactSet consensus of $3.10 implies 9.2% growth of 2019 adjusted earnings per share of $2.84; revenue is expected to grow in the range of 10% to 11%, while current expectations of $4.17 billion implies 10.5% growth.