Payroll and human resource service provider Paychex, Inc. (PAYX) reported Wednesday a profit for the first quarter that increased 22 percent from last year, helped by growth in both payroll and human resource services revenues.
Both adjusted earnings per share and quarterly revenues topped analysts' expectations. The company also reaffirmed its earnings and revenue growth guidance for the full-year 2016.
"Fiscal 2016 is off to a good start, and we have continued to experience positive results across our major product lines. Payroll service revenue growth was 5%, as expected. We continue to see strong demand for our human resource services, including double-digit growth in the number of client worksite employees served," President and CEO Martin Mucci said.
The Rochester, New York-based company reported net income of $209.1 million or $0.58 per share for the first quarter, higher than $171.3 million or $0.47 per share in the prior-year quarter.
Results for the latest quarter were positively impacted by a $0.06 per share net tax benefit recorded for income derived in prior tax years. Excluding the net tax benefit, net earnings per share would have been $0.52.
On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.51 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue for the quarter increased 8 percent to $723 million from $666.8 million in the same quarter last year, and topped sixteen Wall Street analysts' consensus estimate of $717.52 million by a whisker.
Total service revenue for the quarter grew 8 percent to $712.2 million, with payroll service revenue improving 5 percent and human resource services revenue increasing 15 percent.
Operating income increased 10 percent to $296.1 million, and total expenses were $426.9 million, up 7 percent from the year-ago quarter.
Looking ahead to fiscal 2016, the company continues to expect net income to grow 8 to 9 percent and total service revenue to improve 7 to 8 percent from the fiscal 2015 level. Analysts are currently looking for full-year 2016 earnings of $2.01 per share on revenue growth of 7.2 percent to $2.94 billion.
Founded by Thomas Golisano in 1971, Paychex provides services such as calculating payroll, filing tax payments, administering retirement plans and handling workers' compensation. The company serves about 590,000 payroll clients nationwide and has more than 100 locations across the U.S.
PAYX closed Tuesday's regular trading session at $46.01, up $0.34 on a volume of 2.91 million shares. In the past 52-week period, the stock has been trading in a range of $41.59 to $51.72.
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