Paychex, Inc. : Paychex 4Q Profit Up 3.7% as Revenue Rises
06/27/2012| 04:33pm US/Eastern
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By Nathalie Tadena
Paychex Inc. (PAYX) fiscal fourth-quarter earnings rose 3.7% as revenue from both its payroll services and human resources segments strengthened.
Paychex, which also provides human-resources and benefits services to small- and medium-size businesses, has now steadily posted stronger earnings over the past two years as its main business generates more revenue per paycheck. The smaller human resources segment has also posted revenue gains in recent quarters as the segment develops new business lines, like the administrative services organization product it launched in November.
For the quarter ended May 31, Paychex reported a profit of $123.3 million, or 34 cents a share, up from $118.9 million, or 33 cents a share, a year earlier.
Total revenue jumped 5.5% to $551.5 million.
Analysts polled by Thomson Reuters expected a 34-cent per-share profit and $558 million in revenue.
Operating margin edged up to 35.5% from 35%.
Payroll-service sales, which provide the bulk of Paychex's revenue, increased 3.5% while human-resources revenue improved 12%.
Operating income excluding interest on funds held for clients was up 8.6%. Interest on money held for clients fell 12%.
For the new fiscal year, Paychex projects earnings growth of 5% to 7% and total service revenue growth of 5% to 6%.
Shares were up by a penny to $31.94 after. The stock, which hit its highest level in 52 weeks last week, is up 6% since the start of the year.
-Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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