Paychex Inc - PAYX STOCK NEWS

The Paychex Small Business Employment Watch reports that U.S. small business job growth moderated in 2024. The national jobs index remained relatively unchanged at 100.22, marking modest employment growth. However, it slowed by 1.32 percentage points from December 2023 to December 2024.

Hourly earnings growth for small business workers stayed below three percent for the fifth consecutive month in December, at 2.96%. The Midwest led regional employment growth, with Wisconsin ranking second among all states. Dallas and Houston were top metros for job growth.

Despite challenges such as access to growth capital, rising healthcare costs, and hiring qualified talent, small businesses showed resilience. Optimism and hiring intentions improved towards the end of the year. Paychex introduced several solutions in 2024, including Paychex Flex Perks®, Paychex Recruiting Copilot, and HR Analytics with AI Insights, to support small business growth.

Three-month annualized hourly earnings growth was 3.02% in December, while weekly earnings growth hit a four-year low at 2.54%. Weekly hours worked growth remained negative year-over-year for the 21st consecutive month.

Paychex (NASDAQ: PAYX) has entered into a definitive agreement to acquire Paycor HCM (NASDAQ: PYCR) in an all-cash transaction valued at $22.50 per share, representing a total enterprise value of $4.1 billion. The deal marks the exit of Apax Partners, which acquired a majority stake in Paycor in November 2018 for $1.3 billion and subsequently took the company public in July 2021.

Under Apax's ownership, Paycor has undergone significant transformation, tripling in size through strategic investments in product development and customer service. The company expanded into tier one cities across North America and established itself as a leading HCM platform for the mid-market segment. Goldman Sachs is serving as Paycor's exclusive financial advisor, with Kirkland & Ellis LLP acting as legal advisor.

Paychex (PAYX) has announced a definitive agreement to acquire Paycor HCM in an all-cash transaction valued at $22.50 per share, representing an enterprise value of approximately $4.1 billion. The acquisition will create one of the most comprehensive human capital management (HCM) solution suites in the industry.

Paycor, headquartered in Cincinnati, serves over 49,000 clients and supports approximately 2.7 million employees across the United States with its 2,900 employees. The transaction represents a 19% premium over Paycor's 30-day volume weighted average trading price as of January 3, 2025.

The deal is expected to generate run-rate cost synergies exceeding $80 million in the near term, with substantial revenue synergy opportunities. The acquisition is anticipated to be neutral to slightly accretive to adjusted diluted EPS in the first fiscal year post-close and accretive thereafter. The transaction is expected to close in the first half of calendar 2025, subject to regulatory approvals.

Paychex has been awarded a silver Brandon Hall Group Excellence in Technology award for Paychex Flex® Perks in the category of Best Advance in HR Technology for Small and Medium-Sized Businesses. This marks the company's 11th year of recognition by the global research firm.

Launched in August 2024, Paychex Flex Perks is a digital marketplace offering 17 unique product integrations, including early wage access, financial wellness solutions, and voluntary lifestyle benefits. Employees can select benefits based on personal needs, with costs covered through payroll deductions at no employer expense. Since launch, over 100,000 users have purchased at least one benefit.

According to Tom Hammond, Paychex managing director, the platform addresses the top HR challenge expected in 2025: attracting qualified talent. The award evaluation considered fit, program design, functionality, innovation, and measurable benefits, with judging conducted by 400 independent industry experts.

Paychex reported strong Q2 fiscal 2025 results with total revenue increasing 5% to $1.3 billion. The company achieved a 6% growth in operating income to $538.1 million and diluted earnings per share rose 6% to $1.14. Management Solutions revenue grew 3% to $962.9 million, while PEO and Insurance Solutions revenue increased 7% to $317.9 million.

The company maintained strong financial position with $1.3 billion in cash and investments, returning $810 million to stockholders through dividends ($706.2 million) and share repurchases ($104.0 million) in the first half of fiscal 2025. Operating margin improved to 40.9% from 40.2% year-over-year, despite headwinds from the expiration of the Employee Retention Tax Credit program.

Paychex has released its annual list of top regulatory issues for small and medium-sized businesses to monitor in 2025. Key areas include: taxes and tax credits, with many Tax Cuts and Jobs Act provisions sunsetting by end-2025; retirement regulations, requiring auto-enrollment in new 401(k) or 403(b) plans; paid leave expansions across multiple states; wage and hour developments, including numerous minimum wage increases; and AI and privacy regulations, with eight new state-level laws taking effect in 2025.

The company emphasizes the importance of businesses staying compliant with these changing regulations, particularly given the upcoming new administration and rapid technological advancement.

Paychex (PAYX) has announced it will release its fiscal 2025 second quarter financial results, covering the period ended November 30, 2024, before market open on Thursday, December 19, 2024. The company will host a conference call at 9:30 a.m. ET the same day, featuring president and CEO John Gibson and senior vice president and CFO Bob Schrader. The call will be accessible via live broadcast on the Paychex Investor Relations portal, with an on-demand webcast available for approximately 90 days afterward.

The Paychex Small Business Employment Watch reports steady job growth in November 2024, with an index of 99.91 and an average of 100.25 through the first 11 months. Hourly earnings growth remained below 3% at 2.97%, while weekly earnings growth stayed at 2.84%. Notable hurricane recovery efforts were observed in the Southeast, with Florida's construction job growth increasing by 2.55 points. Texas led state job growth at 101.60, while the Midwest maintained its position as the top region for the sixth consecutive month. Tennessee ranked first in hourly earnings growth at 3.98%.

Paychex has launched HR Analytics Premium Plus, a new solution combining real-time data with generative AI capabilities. The platform, integrated into Paychex Flex and powered through Visier, enables businesses to benchmark workforce data against industry standards. The solution includes three components: HR Analytics Premium for workforce analytics, HR Analytics Premium Plus for compensation benchmarking using data from 20M+ employee records, and AI Insights, a generative AI assistant. This enhancement aims to help small and medium-sized businesses make data-driven decisions and compete more effectively with larger enterprises in talent acquisition and retention.