Paychex, Inc. provides payroll processing, HR and PEO services to small- and medium-sized businesses, including tax withholding/remittance, payments on behalf of customers, benefits and technology-enabled solutions with emphasis on data privacy, security and regulatory compliance.

# Paychex, Inc.

## Identity
Paychex, Inc. and its wholly owned subsidiaries are referred to as Paychex, the Company, we, our, or us.

## Business activities
- Payroll processing and related HR solutions, including tax withholding, remittances, and payments made on behalf of customers.
- Professional Employer Organization (PEO) services that create a co-employment relationship with clients.
- Use of artificial intelligence and other new technologies in products and operations.
- Emphasis on data privacy, security, and regulatory compliance.

## Key risks
- Technology changes and the need for timely product enhancements
- Risks associated with AI and other new technologies
- Software defects, undetected errors, and development delays
- Cyberattacks, security vulnerabilities, data security/privacy breaches, data loss, and business interruptions
- Potential failure of business continuity plans during catastrophic events
- Dependence on third-party service providers
- Risks related to the co-employment nature of the PEO business
- Changes in health and workers’ compensation insurance rates and claim trends
- Risks from acquisitions and challenges with post-acquisition integration
- Customers’ failure to reimburse payments made on their behalf
- Regulatory changes affecting tax withholding and remittance timing
- Debt covenants, credit ratings, and compliance with debt agreements
- Changes in governmental regulations, laws, and policies, including data privacy and AI laws
- Intellectual property protection risks
- Potential litigation outcomes and legal claims
- Macroeconomic factors affecting the U.S. and global economy and their impact on small- and medium-sized business customers
- Inflation, interest rate changes, and political or economic volatility
- Talent attraction and retention challenges
- The impact of negative publicity on reputation and brand value

## Scope
The excerpt is framed as a cautionary note regarding forward-looking statements and risk factors.

Paychex, Inc. is a leading provider of comprehensive HR, payroll, benefits, and insurance solutions primarily in the U.S., with international operations, serving around 800,000 clients and managing over 2.46 million employee worksite units.

# Summary of Paychex, Inc.

## Business Overview
- **Industry**: Human Capital Management (HCM)
- **Core Services**:
  - Human Resources (HR) solutions
  - Employee benefit solutions and insurance
  - Payroll processing and administration
  - Human capital management technology platforms
  - HR advisory services
  - Retirement plan administration and funding solutions
  - Employee engagement and workforce management tools
  - Professional Employer Organization (PEO) and Administrative Services Organization (ASO) solutions
  - Employee benefits marketplaces and insurance agency services

## Operations and Reach
- **Geographic Markets**:
  - Primarily United States, with operations in Europe (Denmark, Germany) and India.
- **Customer Base**:
  - Approximately **800,000 clients and their employees** as of May 31, 2025.
  - Client retention rate: approximately **82-83%**.
- **Employees**:
  - Around **19,000 employees** as of May 31, 2025.
  - No employees are covered by collective bargaining agreements.

## Revenue and Income
- **Fiscal Year 2025 Financial Highlights**:
  - **Total Revenue**: $5.57 billion (up 6% from FY 2024)
    - Made up of:
      - Management Solutions: $4.07 billion (up 5%)
      - PEO and Insurance Solutions: $1.34 billion (up 6%)
      - Interest on funds held for clients: $161.7 million (up 10%)
  - **Operating Income**: $2.21 billion (up 2%)
  - **Net Income**: $1.66 billion (down 2%)
  - **Diluted Earnings Per Share**: $4.58 (down 2%)
  - **Adjusted Net Income** (non-GAAP): $1.80 billion (up 5%)
  - **Adjusted Diluted EPS** (non-GAAP): $4.98 (up 6%)

## Market and Growth Strategies
- **Market Focus**:
  - Large and growing market with over 6 million employer firms in the U.S.
  - Competitively fragmented with primary competitors including ADP.
- **Growth Initiatives**:
  - Expanding client base via digital marketing and sales channels, channel partnerships, and referrals.
  - Increasing share of wallet by penetrating HR outsourcing, retirement, and insurance segments.
  - Investing in technology innovation, especially in AI and data analytics.
  - Pursuing strategic acquisitions, notably the acquisition of Paycor HCM, Inc. on April 14, 2025, to expand upmarket and enhance HR solutions.

## Product and Service Offerings
- **Human Capital Management Platforms**:
  - **Paychex Flex**: SaaS platform for small to medium-sized businesses with modules for payroll, HR, benefits, talent acquisition, and workforce management.
  - **SurePayroll**: Digital, self-service payroll for small businesses.
  - **Paycor**: SaaS platform for larger enterprises with complex HR needs.
- **Solutions Provided**:
  - Cloud-based HR and payroll platforms
  - Employee benefit administration including health, FSA/HSA, voluntary benefits
  - Workforce management with labor forecasting and mobile self-service
  - PEO offerings with co-employment model, including risk and benefits management
  - Insurance solutions through licensed insurance agency for property, casualty, and health coverages
  - Retirement plan administration, including 401(k), IRAs, and pooled employer plans
  - Funding solutions, including payroll funding and accounts receivable purchase programs

## Revenue Streams
- Mainly from service fees (over 50% from non-payroll solutions)
- Includes interest income on client funds
- Revenue from product modules, advisory, and insurance commissions
- Recurring revenue with high client retention

## Key Metrics
- Approximate **client worksite employees in HR solutions**: 2.46 million (up 5%)
- **Retirement plans**: 124,000 as of May 31, 2025 (up 3%)
- Asset value of retirement funds: $55.7 billion (up 8%)

## Employees and Corporate Culture
- Focus on attracting, developing, and retaining qualified talent
- Corporate values emphasize integrity, accountability, innovation, partnership, respect, and service
- Recognized as one of the **World’s Most Ethical Companies 17 times** (since 2012)
- Investments in employee training, development, and well-being programs

## Financial Position (As of May 31, 2025)
- **Cash and equivalents**: $1.63 billion
- **Total assets**: $16.56 billion
- **Total liabilities**: $12.44 billion
- **Shareholders’ equity**: $4.13 billion
- **Debt**:
  - Long-term corporate bonds: $4.55 billion
  - Short-term borrowings: $18.6 million
  - Unused credit capacity: $2 billion

## Recent Developments
- Completed acquisition of Paycor (April 14, 2025)
- Continues to invest in AI, data analytics, and technology platforms
- Management projects continued growth driven by expanding solutions and client base

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**In Summary**: Paychex, Inc. delivers comprehensive HR, payroll, benefits, and insurance solutions primarily in the U.S. with international operations, serving around 800,000 clients and managing over 2.46 million employee worksite units. It operates through proprietary SaaS platforms such as Paychex Flex and Paycor, generating over $5.57 billion in revenue for the fiscal year 2025, with net income of approximately $1.66 billion. The company emphasizes technological innovation, strategic acquisitions, and client retention in its long-term growth strategy.

Paychex, Inc. is a leading provider of Human Capital Management (HCM) services, helping small- to medium-sized businesses manage HR, payroll, and compliance needs.

# Paychex, Inc.

## Company profile
- Founded: 1979  
- Incorporation: Delaware  
- Headquarters: Rochester, New York  
- Fiscal year end: May 31

## Key information
- Number of customers: Over 745,000 small- to medium-sized businesses  
- Number of employees: Approximately 16,500  
- Client retention rate (Fiscal 2024): Approximately 82%–83% of the beginning client base

## Business model
Paychex provides human capital management (HCM) services and solutions for small- to medium-sized businesses, covering payroll, HR, benefits, compliance, and related administrative functions.

### Solutions offered
1. HCM Technology (Paychex Flex)
   - Cloud-based HR and payroll platform  
   - Features recruiting, onboarding, HR management, time and attendance, and benefits administration  
   - Mobile access and employee self-service

2. Payroll processing
   - Payroll calculation, delivery of employee checks, and payroll tax filing  
   - Options for online self-service or fully outsourced payroll handled by specialists

3. HR solutions
   - HR outsourcing and administration, including compliance support  
   - Trained HR representatives available virtually or on-site

4. Retirement services
   - Administration of retirement plans, including 401(k) plans with compliance management

5. PEO solutions
   - Professional Employer Organization services offering co-employment arrangements, payroll, compliance, HR, and benefits administration

6. Insurance solutions
   - Licensed to provide health, dental, vision, and liability coverage

7. Compliance services
   - Support for regulatory compliance such as new-hire reporting, employee benefits administration, and Affordable Care Act (ACA) requirements

## Target market
Paychex serves small- to medium-sized businesses across the U.S. and parts of Europe. Common client challenges addressed include regulatory compliance, talent acquisition and retention, and integrating HR technology.

## Competitive advantages
- Expertise in compliance: about 250 compliance experts and over 650 HR business professionals available for consultation and client support  
- Integrated service offering: a full suite of products and services that can be scaled and customized to client needs  
- Technology-enabled client service: dedicated payroll specialists and virtual assistance, including chatbots, complement in-person support  
- Scalable platform: clients can tailor services as they grow

## Investment in technology
The company continues to invest in its Paychex Flex platform to improve efficiency and user experience, including the integration of data analytics and artificial intelligence capabilities.

## Growth strategy
- Expand the client base through demand generation and sales initiatives  
- Enhance service delivery and client experience via technology improvements  
- Pursue strategic acquisitions to broaden services and enter new markets

Paychex is a full-service HCM provider focused on helping small- and medium-sized businesses manage payroll, HR, benefits, and compliance through a combination of service expertise and technology.

PAYCHEX INC

10-K / July 17, 2026

10-K / July 11, 2025

10-K / July 11, 2024

10-K / July 17, 2026

Paychex, Inc.

Identity

Business activities

Key risks

Scope