Payroll processor Paychex Inc. (PAYX), Wednesday reported a seven percent increase in third-quarter profit, mainly on double-digit growth at its human resource services business, with modest growth in Payroll services segment. Both earnings and revenues for the quarter topped Wall Street estimates.
Paychex reaffirmed its earnings and revenue guidance for fiscal year 2013, expecting growth in its client base and modest increases in revenue per check.
Paychex processes payroll, handles employee benefits, and offers related human resources services. During the quarter, Human resource services increased 10 percent from last year, on client growth and price increases. Retirement services, HR solutions, Insurance services, and eServices were all in positive territory.
Meanwhile, payroll service revenue edged up 2 percent from the prior year. Checks per payroll were up 2.3 percent, partly due to higher calendar year-end bonus payment activity, while revenue per check grew modestly.
Overall, Paychex reported quarterly revenues that grew 4 percent to $593 million from $569.5 million last year. On average, 19 analysts polled by Thomson Reuters estimated revenues of $592.62 million.
Paychex' results come amid high unemployment and interest rate concerns as such factors play a key role in client base growth.
The Rochester, New York-based company posted quarterly net profit of $144.5 million or $0.40 per share, compared to $135.4 million or $0.37 per share a year ago. Analysts on consensus expected earnings of $0.39 per share for the quarter.
Operating margin, net of certain items, increased to 36.8 percent from 35.7 percent last year.
For fiscal year 2013, Paychex continues to expect net income growth of 5 to 7 percent, with total service revenue growth of 5 to 6 percent.
Analysts currently expect earnings of $1.60 per share on revenues of $2.33 billion for the full year.
Paychex stock closed Wednesday at $34.76, down 0.23%, on a volume of 2.9 million shares on the Nasdaq. In after hours, the stock dropped 0.46%.
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