Paychex (NASDAQ:PAYX), a prominent provider of integrated human capital management (HCM) solutions, announced its financial results for the third quarter ended February 28, 2026.
The results were headlined by a 20% year-over-year increase in total revenue to $1.8 billion, a surge largely attributed to the transformative acquisition of Paycor HCM in April 2025.
The company’s Management Solutions segment was the primary growth engine, with revenue rising 23% to $1.4 billion.
Paycor contributed approximately 19% to this segment's year-over-year growth, bringing an upmarket client base that bolstered revenue per client.
Additionally, the Professional Employer Organization (PEO) and Insurance Solutions segment grew 9% to $397.5 million, supported by an increase in average worksite employees and insurance revenues.
Profitability metrics also remained strong despite the costs associated with the Paycor integration.
Operating income for the third quarter rose 14% to $792 million.
On an adjusted basis—excluding $71 million in acquisition-related costs—operating income grew 22% to $863.2 million, yielding an adjusted operating margin of 47.7%.
Diluted earnings per share (EPS) increased 9% to $1.56, while adjusted diluted EPS saw a 15% jump to $1.71.
The acquisition also impacted the company’s capital structure and interest dynamics.
Interest on funds held for clients rose 33% to $56.8 million due to higher balances from the Paycor portfolio.
Conversely, interest expense increased to $68.1 million, reflecting the debt issued to finance the transaction.
Meanwhile, total expenses climbed 24% to $1 billion, driven by compensation, intangible asset amortization, and continued strategic investments in technology and marketing.