Company: PAYX
Filing Date: 2025-03-26
Form Type: 10-Q
Source: 0000950170-25-045216
Chunk: 14

Company: PAYCHEX INC
Filing Date: 2025-03-26
Form: 10-Q
Item: Part I, Item 2
Chunk 14
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 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
     
    %

    42.5
     
    %

    Adjusted operating margin (1)

    46.9
     
    %

    45.1
     
    %

    43.3
     
    %

    42.5
     
    %

(1)Adjusted operating income and adjusted operating margin are not U.S. GAAP measures. Refer to the “Non-GAAP Financial Measures” section of this Item 2 for a discussion of non-GAAP measures and a reconciliation to the U.S. GAAP measures of net income and diluted earnings per share.

24 

Other (expense)/income, net: Other (expense)/income, net decreased $15.4 million to expense of $6.0 million for the third quarter and decreased $23.9 million to income of $10.0 million for the nine months, primarily as a result of acquisition-related costs associated with the pending Paycor acquisition recognized in interest expense and lower average interest rates earned on our corporate investments.

Income taxes: Our effective income tax rate was 24.3% for the third quarter and 23.9% for the nine months, compared to 24.4% and 24.1%, for the