Company: PAYX
Filing Date: 2025-03-26
Form Type: 10-Q
Source: 0000950170-25-045216
Chunk: 52

Company: PAYCHEX INC
Filing Date: 2025-03-26
Form: 10-Q
Item: Part I, Item 8
Chunk 52
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% to $2.4 billion for the nine months, compared to the prior year periods. Total expenses increased as a result of the following:

•PEO direct insurance costs: $127.7 million for the third quarter and $388.8 million for the nine months, reflecting increases of 7% and 14% respectively, related to growth in average worksite employees and PEO insurance revenues.

•Acquisition-related costs: $16.7 million in the third quarter and nine months, primarily reflecting third-party professional service fees related to the pending Paycor acquisition.

•Other expenses: $174.0 million for the third quarter and $477.1 million for the nine months, reflecting increases of 7% and 6% respectively, primarily related to continued investment in technology, general cost increases to support business growth, and the benefit from a sales tax audit recognized in the three-month period ended February 29, 2024. In addition, the increase for the nine months included continued investment in sales and marketing. 

Total expenses, excluding acquisition-related costs noted above, increased 1% to $800.5 million for the third quarter and 3% to $2.4 billion for the nine months, compared to the prior year periods.

Operating income: Operating income increased 6% to $691.8 million for the third quarter and 5% to $1.8 billion for the nine months, as a result of revenue growth which outpaced expense increases as previously discussed. Adjusted operating income(1), which excludes the impact of the acquisition-related costs, increased 9% to $708.5 million for the third quarter and 6% to $1.8 billion for the nine months. Operating income for both periods was impacted by the expiration of the ERTC program.

Operating margin (operating income as a percentage of total revenue) and adjusted operating margin(1) (operating income, as adjusted for acquisition-related costs, as a percentage of total revenue) were as follows:

    For the three months ended
     
    For the nine months ended

    February 28,
     
    February 29,
     
    February 28,
     
    February 29,

    2025
     
    2024
     
    2025
     
    2024

    Operating margin

    45.8
     
    %

    45.1
     
    %

    42.9
     
    %