Q2 2025 Paychex Inc Earnings Call Transcript
Key Points
- Paychex Inc (PAYX) reported a 7% revenue growth in the second quarter, excluding the impact of the expiration of the ERTC program.
- Diluted earnings per share increased by 6%, showcasing efficient operations and enhanced customer value propositions.
- Strong demand for HR technology and advisory solutions, particularly in the PEO and middle market HCM businesses.
- High client retention rates, with improvements across all employee size segments and retention levels above pre-pandemic levels.
- Successful early adoption of new AI-powered solutions, such as Paychex Recruiting CoPilot and HR analytics, indicating strong customer engagement and innovation.
- Flat enrollment in the Florida at-risk medical plan year-over-year, with more employees opting for lower-cost health plans due to rising healthcare costs.
- Total revenue growth was impacted by a 200 basis point headwind from the expiration of the ERTC program.
- PEO and Insurance Solutions revenue growth is expected to be at the lower end of the 7% to 9% range due to enrollment issues in Florida.
- Interest on funds held for clients is expected to face headwinds in the latter half of the fiscal year due to anticipated interest rate cuts.
- Business starts are down year-over-year, although still above pre-pandemic levels, indicating a moderation in new business formation.
Good morning, and welcome to the second quarter fiscal 2025 Paychex earnings conference call. Participating on the call today are John Gibson and Bob Schrader. (Operator Instructions). As a reminder, this conference is being recorded, and your participation implies consent to our recording of this call. If you do not agree with these terms, please disconnect at this time.
I would now like to turn the call over to Bob Schrader, Chief Financial Officer. Please go ahead.
Thank you for joining us for our review of the Paychex second quarter 2025 financial results. Joining me today is John Gibson, our Chief Executive Officer. This morning, before the market opened, we released our financial results for the quarter ended November 30, 2024. You can access our earnings release and investor presentation on the SEC's website as well as on our Investor Relations website.
Our Form 10-Q will be filed with the SEC within the next couple of days. This teleconference is being
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