Paychex Q2 2012 Results: Revenues Up 7% - EPS Beats By Penny

December 21, 2011

Paychex reported total revenue of $545.7 million for the three months ended November 30, 2011 (the “second quarter”), a 7% increase from $512.0 million for the same period last year. Net income and diluted earnings per share increased 5% to $140.4 million and $0.39 per share, respectively. The inclusion of SurePayroll and ePlan Services were acquired in the second half of the fiscal year ended May 31, 2011 (“fiscal 2011”), contributed to the financial results for the second quarter. These acquisitions contributed approximately 2.0% in total revenue growth for the second quarter.

The Street looked for a profit of 38 cents on revenue of $551.7 million.

Martin Mucci, President and Chief Executive Officer, commented, “Paychex delivered solid results for the second quarter. We expanded our software-as-a-service (SaaS) offerings with the introduction of our new single sign-on page for online users and an iPad application. Checks per client continued to improve for the second quarter, but, as anticipated, the 1.5% growth rate for the quarter was lower than the 2.0% experienced for the first quarter. This moderation is expected to continue through the remainder of the fiscal year. We have reiterated our guidance for the fiscal year as we continue to see a slow recovery in the economy with respect to sales from new business formations.”

Payroll service revenue increased 5% to $371.7 million for the second quarter from the same period last year. Payroll service revenue growth, excluding revenue from SurePayroll, was 3% for the second quarter and was driven by increases in both checks per client and revenue per check. Checks per client increased 1.5% for the second quarter compared to the same period last year. Revenue per check was positively impacted by price increases and lower discounting within our overall client base.

Human Resource Services revenue increased 12% to $163.3 million for the second quarter compared to the same period last year.