Paychex (PAYX) Reports Q2: Everything You Need To Know Ahead Of Earnings

Kayode Omotosho /
2022/12/21 4:13 am EST

Payroll and human resources software provider, Paychex (NASDAQ:PAYX) will be announcing earnings results tomorrow before market hours. Here's what you need to know.

Last quarter Paychex reported revenues of $1.2 billion, up 11.3% year on year, beating analyst revenue expectations by 3.5%. It was a solid quarter for the company, with a significant improvement in gross margin and a decent beat of analyst estimates.

Is Paychex buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Paychex's revenue to grow 6.08% year on year to $1.17 billion, slowing down from the 12.6% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.96 per share.

Paychex Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 3.51%.

Looking at Paychex's peers in the finance and HR software segment, some of them have already reported Q1 earnings results, giving us a hint of what we can expect. BlackLine delivered top-line growth of 22.7% year on year, in-line with analyst estimates and Paylocity reported revenues up 39.3% year on year, exceeding estimates by 5.65%. Both companies (BlackLine and Paylocity) traded flat on the results. Read our full analysis of BlackLine's results here and Paylocity's results here.

There has been positive sentiment among investors in the software segment, with the stocks up on average 2.56% over the last month. Paychex is down 4.79% during the same time, and is heading into the earnings with analyst price target of $125.90, compared to share price of $115.09.

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The author has no position in any of the stocks mentioned.