Payroll processor Paychex misses revenue estimates on weak client spending

Paycom Software

02/04/2024 14:52

April 2 (Reuters) - Paychex  PAYX.O  missed Wall Street
estimates for third-quarter revenue on Tuesday, hurt by sluggish
client spending on its human capital management and payroll
services, sending its shares down nearly 4% in early trading.
    The higher-for-longer interest rates and economic
uncertainties have compelled clients to cut spending budgets,
affecting demand for payroll services providers such as Paychex.
    "Small- and medium-sized businesses are dealing with a tight
job market for qualified workers, reduced access to affordable
growth capital and inflationary pressures," said Paychex CEO
John Gibson.
    Peer Paycom  PAYC.N  also provided a somber first-quarter
revenue forecast due to weak client spending on its services.
    Paychex reported revenue of $1.44 billion for the quarter
ended Feb. 29, missing average analysts' estimate of $1.46
billion, according to LSEG data.
    The company's earnings per share was at $1.38, compared with
$1.29 per share a year ago.
    Paychex forecast total revenue growth of 5% to 6% for full
year 2024, below analysts' estimate of a 6.4% growth.
     

 (Reporting by Zaheer Kachwala in Bengaluru; Editing by Shilpi
Majumdar)
 ((Zaheer.Kachwala@thomsonreuters.com))