Short answer
Paychex (PAYX) filed its fiscal 2026 10-K annual report with the SEC on Jul 17, 2026. It reported revenue of $6.3B (+16.5% year over year) and net income of $1.8B.
- Top risk flagged: Regulatory risk from SECURE Act 2.0 and OFAC sanctions, with potential civil/criminal penalties for non-compliance affecting payroll and benefits services
FY2026 key financial metrics · XBRL
- Revenue
- $6.3B
- +16.5% YoY
- Net income
- $1.8B
- +6.2% YoY
- Operating margin
- 39.8%
- −1.0 pp YoY
- EPS (diluted)
- $4.89
- +6.8% YoY
- ROE
- 47.1%
- +7.0 pp YoY
- Operating cash flow
- $2.6B
- +34.5% YoY
Source: XBRL data from the Paychex (PAYX) FY2026 10-K on SEC EDGAR. USD.
Paychex FY2026 10-K analysis
AI summary of each section, grounded in the filing text
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
Generated from the filing text; verify against the original. How to read a 10-K
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