Paychex Inc. (NASDAQ: PAYX) reported its most recent quarterly results before the markets opened on Wednesday. The company said that it had $0.60 in earnings per share (EPS) on $785.5 million in revenue. In the same period of last year, it posted EPS of $0.52 and $723.0 million in revenue. The consensus estimates from Thomson Reuters had called for $0.57 in EPS on revenue of $782.8 million.
In terms of the revenue breakdown, Payroll Service revenue increased 4% to $450.9 million for the first quarter, compared to the respective period last year. This increase was driven by growth in client base and revenue per check. Revenue per check improved as a result of price increases, net of discounts. Advance Partners contributed approximately 1% to the growth in payroll service revenue for the first quarter.
Human Resource Services revenue was $322.6 million for the first quarter, an increase of 15% compared to the same period last year. HRS revenue growth was primarily driven by increases in the client base across all major HCM services, including: comprehensive human resource outsourcing services; retirement services; time and attendance; and human resource administration.
In terms of the outlook for the fiscal year ending in May 2017, the company expects net income to increase by 7%, Payroll service revenue to increase 3% to 4%, HRS revenue to increase 12% and 14% and total service revenue to increase 7% and 8%. The consensus estimates call for $2.21 in EPS on $3.18 billion in revenue for the 2017 fiscal year.
Cash flows from operations were $294.7 million for the first quarter, an increase of 6% over the same period last year. On the books, Paychex cash, cash equivalents and corporate investments totaled $497.7 million at the end of the quarter, up from $352.1 million at the end of May 2016.
Martin Mucci, president and CEO of Paychex, commented on earnings:
We are off to a solid start in fiscal 2017, and we experienced growth across all of our major human capital management (“HCM”) product lines. The number of client worksite employees served by our human resource outsourcing services grew by double digits on a year-over-year basis. Our cloud-based HCM services, including time and attendance and human resource management, continue to gain strong market acceptance. Last December, we acquired Advance Partners, which provides a portfolio of services to the temporary staffing industry, and we are encouraged with its contribution to our results.
Shares of Paychex were last seen down more than 4% at $57.61, with a consensus analyst price target of $53.46 and a 52-week trading range of $45.76 to $61.87.