PAYX
Paycor is doing the heavy lifting
Paychex turned in a pretty lively Q3 FY2026, with total revenue climbing 19.9% year over year to $1.81 billion. The star of the show was Management Solutions revenue, which jumped 23% to $1.4 billion — and about 19 percentage points of that growth came from the Paycor acquisition. In other words: this wasn’t just a “look, we grew” quarter. It was a “the acquisition is actually showing up in the numbers” quarter.
Margins, but make it interesting
The nice part for bulls is that Paychex didn’t buy growth at the expense of all sense and discipline. Gross margin came in around 76%, up from roughly 74% a year ago, while adjusted operating margin expanded about 80 basis points to roughly 48%. That’s the kind of combo investors love: bigger top line, better unit economics, fewer headaches.
Cash keeps flowing like a very polite river
Adjusted diluted EPS rose 15% to $1.71, while free cash flow climbed 27% year over year. Paychex also returned $463 million to shareholders in the quarter and more than $1.5 billion year to date through dividends and buybacks. Oh, and it approved a fresh $1 billion repurchase authorization — because apparently the company looked at its balance sheet and said, “We can still flex.”
What to watch next
Management reiterated full-year FY2026 guidance, with one tweak: interest on funds held for clients now looks more like $200 million to $210 million. For Q4, Paychex is calling for about 12% revenue growth and an adjusted operating margin of 41% to 42%, as the Paycor anniversary effect starts to lap the comp.
Big picture: Paychex is looking less like a sleepy payroll utility and more like a scaled software-and-services platform that can grow, integrate, and still shower shareholders with cash. That’s a pretty decent plot twist.