- Total revenue increased 15% to $990.7 million.
- Operating income increased 11% to $341.7 million.
- Net income increased 10% to $258.7 million, and adjusted net income(1) increased 8% to $253.8 million.
- Diluted earnings per share increased 11% to $0.72 per share, and adjusted diluted earnings per share(1) increased 8% to $0.70 per share.
- Earnings before interest, taxes, depreciation, and amortization (“EBITDA”)(1) increased 16% to $398.8 million.
Paychex, Inc. announced total revenue of $990.7 million for the three months ended November 30, 2019 (the “second quarter”), an increase of 15% from $858.9 million for the same period last year. Oasis Outsourcing Group Holdings, L.P. (“Oasis”), acquired in December 2018, contributed approximately 9% to the growth in total revenue compared to the same period last year. Net income increased 10% to $258.7 million, and diluted earnings per share increased 11% to $0.72 per share for the second quarter. Adjusted net income and adjusted diluted earnings per share, both non-GAAP measures, each increased 8% to $253.8 million and $0.70 per share, respectively, for the second quarter.
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Martin Mucci, President and Chief Executive Officer, commented, “During the second quarter, we delivered solid growth across our major business lines. In particular, our human resource (“HR”) outsourcing services, time and attendance solutions, and retirement services performed well.”
Mucci added, “We are heavily focused on continued innovation to meet our customers’ and their employees’ evolving needs, simplifying HR complexities and offering solutions to help them thrive and grow. We are investing in innovative technology in the areas of flexible payments, integrations, data analytics, and artificial intelligence, while still maintaining our commitment to personalized service. Our state-of-the-art technology and exceptional service distinguish us in the market as we deliver a more personalized and technology-enhanced experience for our clients and their employees.”
Management Solutions revenue was $726.7 million for the second quarter, a 6% increase compared to the same period last year. Oasis contributed slightly less than 1% to the growth in Management Solutions revenue compared to the same period last year. The remaining increase was primarily driven by increases in our client base and growth in revenue per client, which improved as a result of higher price realization and increased penetration of our suite of solutions, particularly time and attendance, retirement services, and HR outsourcing. Retirement services revenue also benefited from an increase in asset fee revenue earned on the asset value of participants’ funds.
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Professional employer organization (“PEO”) and Insurance Services revenue was $244.1 million for the second quarter, an increase of 57% compared to the same period last year. Oasis contributed approximately 47% to the growth in PEO and Insurance Services revenue compared to the same period last year. In addition to the acquisition of Oasis, this increase was driven by growth in clients and client worksite employees across our PEO business. Insurance Services revenue benefited from an increase in the number of health and benefit clients and applicants, offset by the impact of softness in the workers’ compensation market as state insurance fund rates declined.
Interest on funds held for clients increased 9% to $19.9 million for the second quarter, compared to the same period last year. The increase resulted from higher realized gains, average investment balances, and average interest rates. Funds held for clients average investment balances were impacted by wage inflation and increases within our client base, offset by changes in client base mix and timing of collections and remittances.
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