Paychex (PAYX) FY2026 10-K Annual Report
Paychex (PAYX) 10-K annual report for fiscal year 2026, filed with SEC EDGAR on Jul 17, 2026. This page provides AI-powered analysis including business overview, management discussion & analysis (MD&A), risk factors, and key financial data such as revenue, net income, gross margin, operating margin, and return on equity (ROE) extracted from XBRL.
Paychex FY2026 10-K Analysis
Business Overview
- • Core business model: comprehensive technology and advisory human capital management (HCM) solutions spanning HR, payroll, benefits, and insurance
- • New emphasis on AI-powered WISE engine with ~600 AI features, leveraging 26 trillion data points for autonomous execution and enhanced productivity
- • Strategic shift: acquisition of Paycor HCM (April 2025) expanded presence upmarket, increased cross-sales, enhanced AI-driven HCM offerings
- • Quantitative highlight: payroll client retention 82%-83%; workforce ~17,600 employees; processed $1.3 trillion payroll for 800,000 clients
- • Noteworthy fact: recognized 15th consecutive year as one of the World's Most Ethical Companies by Ethisphere in 2026
Management Discussion & Analysis
- • Revenue $6.51B, up 17% YoY from $5.57B, driven by Management Solutions up 20% to $4.87B and PEO and Insurance Solutions up 7% to $1.43B
- • Operating income $2.51B, up 14% YoY; operating margin 38.6% vs 39.6% prior year; adjusted operating income $2.81B up 19%, adjusted margin 43.2% vs 42.5%
- • Best performing segment: Management Solutions revenue $4.87B, +20% driven by Paycor acquisition; worst performing segment: PEO and Insurance Solutions revenue $1.43B, +7%
- • Operating cash flow $2.56B, investing cash flow used $1.15B (vs. $3.36B prior year); financing cash used $2.65B including dividends $1.59B and 5.6 million shares repurchased at $108.81 average price
- • Management outlook highlights continued investment in AI and technology, sustaining high customer retention (~82-83%), and potential risk from uncertain tax positions and variable cash flow impacting liquidity
Risk Factors
- • Regulatory risk from SECURE Act 2.0 and OFAC sanctions, with potential civil/criminal penalties for non-compliance affecting payroll and benefits services
- • Macroeconomic risk due to banking environment instability risking client bankruptcies and funding shortfalls, with 82-83% payroll client retention rate
- • Supply chain vulnerability tied to reliance on third-party vendors for IT, cloud platforms, and banking services, risking operational interruptions and penalties
- • Market disruption from competitors Automatic Data Processing and Intuit, requiring continuous AI/tech investments to maintain innovation and customer retention
- • Financial risk from $4.2B corporate bonds issued in April 2025, leverage ratio capped at 3.5:1, with $2B unused credit facilities and $269.5M interest expense in fiscal 2026
Paychex FY2026 Key Financial MetricsXBRL
Revenue
$6.3B
▲ +16.5% YoY
Net Income
$1.8B
▲ +6.2% YoY
Operating Margin
39.8%
▼ -97bp YoY
Net Margin
27.9%
▼ -270bp YoY
ROE
47.1%
▲ +698bp YoY
Total Assets
$16.2B
▼ -2.4% YoY
EPS (Diluted)
$4.89
▲ +6.8% YoY
Operating Cash Flow
$2.6B
▲ +34.5% YoY
Source: XBRL data from Paychex FY2026 10-K filing on SEC EDGAR. All figures in USD.
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