PAYCHEX INC
For the period ended May 31, 2025. Filed Jul 11, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Jul 11, 2025
PAYX$117.06-2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-05-31; filed 2024-07-11.
0000950170-24-082958
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-05-31; filed 2025-07-11.
0000950170-25-095300
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 158 previous paragraphs and 176 current paragraphs.
82 unchanged; 53 reworded; 39 added; 20 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
On April 14, 2025, we completed our acquisition of Paycor HCM, Inc. ("Paycor"), a leading provider of HCM, payroll and talent software. This acquisition extends our upmarket position and expands our suite of HR technology and advisory solutions. Refer to the “Liquidity and Capital Resources” section of this Item 7 for additional information.
Current report
Management Solutions revenue:$4.1 billion for fiscal 2025, reflecting an increase of 5%:
Current report
The acquisition of Paycor; offset by
Current report
Excluding the acquisition of Paycor, Management Solutions revenue increased by 3% compared to the prior year.
Current report
Increase in PEO insurance revenues.
Current report
Interest on funds held for clients:$161.7 million for fiscal 2025, reflecting an increase of 10%:
Current report
The acquisition of Paycor.
Current report
Excluding the acquisition of Paycor, interest on funds held for clients increased by 7% compared to the prior year.
Current report
n/m - not meaningful
Current report
The acquisition of Paycor. Excluding the impact of the acquisition of Paycor, compensation-related expenses were relatively flat compared to the prior year.
Current report
PEO insurance costs: $520.1 million in fiscal 2025, reflecting a 10% increase:
Current report
Other expenses: $659.8 million in fiscal 2025, reflecting a 9% increase:
Current report
Continued investment in technology; and
Current report
o
Current report
The acquisition of Paycor.
Current report
Acquisition-related costs: $162.3 million in fiscal 2025:
Current report
o
Current report
Acquisition-related costs include the amortization of intangibles acquired in the acquisition of Paycor, compensation costs related to the acquisition and integration of Paycor, including replacement awards, severance, and retention and transaction bonuses, and other acquisition-related costs, primarily reflecting professional service fees.
Current report
o
Current report
Operating income: Fiscal 2025 operating income was $2.2 billion, an increase of 2% compared to fiscal 2024. Adjusted operating income(1)of $2.4 billion, which excludes the acquisition related costs and cost optimization initiatives noted above, reflects an increase of 7%. Operating income for fiscal 2025 was impacted by the acquisition of Paycor and the expiration of the ERTC program.
Current report
Operating margin (operating income as a percentage of total revenue) and adjusted operating margin(1)(adjusted operating income(1) as a percentage of total revenue) were as follows:
Current report
Interest expense: Interest expense increased $68.1 million to $105.4 million in fiscal 2025, primarily due to the issuance of incremental debt to finance the acquisition of Paycor and acquisition-related costs included in interest expense.
Current report
Acquisition-related costs included in selling, general and administrative expenses include $40.7 million in amortization of intangibles acquired in the acquisition of Paycor, $70.8 million in compensation costs related to the acquisition and integration of Paycor, including replacement awards, severance, and retention and transaction bonuses, and $50.8 million in other acquisition-related costs, primarily reflecting professional service fees. Acquisition-related costs included in interest expense includes $34.0 million reflecting the amortization of financing fees related to debt instruments associated with the financing of the Paycor acquisition and the excluded component of the initial fair value of the interest rate swaption contracts ("Swaption Contracts").
Current report
Cost optimization initiatives recognized in fiscal 2024 include further reductions to our geographic footprint, reprioritization of certain technology investments, and headcount optimization.
Current report
Bridge Loan Commitment: On January 7, 2025, we and our subsidiary, Paychex of New York, LLC, entered into a bridge loan commitment with JPM, pursuant to which JPM committed to provide a 364-day senior unsecured credit facility not to exceed $3.5 billion for the acquisition of Paycor, including related fees and expenses. We incurred $14.9 million in debt financing fees, including structuring and commitment fees, which were capitalized as Prepaid expenses and other current assets on our Consolidated Balance Sheets and recognized as interest expense on a straight-line basis through the issuance date of our Corporate Bonds. The bridge loan commitment expired upon the issuance our Corporate Bonds. Refer to Note N of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for further discussion on our long-term financing.
Current report
Interest Rate Swaption Contracts: On January 31, 2025, we executed three Swaption Contracts with JPM. The Swaption Contracts qualified as cash flow hedges, had an aggregate notional amount of $3.0 billion, and were utilized to manage exposure to fluctuations in benchmark interest rates associated with the issuance of Corporate Bonds to fund our acquisition of Paycor. At inception, we recorded Swaption Contract assets related to paid premiums of $19.2 million. The fair value of the Swaption Contract assets were classified as Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets. Upon issuance of our Corporate Bonds, the Swaption Contracts expired unexercised.
Current report
operating leases for $84.1 million;
Current report
purchase obligations for $384.1 million;
Current report
long-term Corporate Bonds and Senior Notes for $5.0 billion, plus interest payments of $1.7 billion.
Current report
An increase in accrued interest related to our Corporate Bonds; offset by
Current report
Cash used primarily for the acquisition of Paycor. We financed the acquisition of Paycor by issuing fixed-rate corporate bonds Refer to Note D and Note N of the Notes to the Consolidated Financial Statements for additional discussion on these transactions;
Current report
Proceeds received from the issuance of Corporate Bonds. The proceeds received were used to acquire Paycor;
Current report
The fair value of performance-based stock awards that include a market condition is estimated based on a Monte Carlo simulation. The Monte Carlo simulation requires various assumptions as inputs including the expected volatility of the Paychex stock price and the stock prices of the companies that comprise the designated peer group. Stock price volatility of the Company and the designated peer group is estimated based on historical volatility, using stock prices over a period equal to the measurement period of the award.
Current report
Business combinations: We account for acquisitions in accordance with the guidance in Financial Accounting Standards Board ASC 805, Business Combinations (ASC 805), using the acquisition method of accounting. We allocate the purchase price consideration associated with its acquisitions to the fair values of assets acquired and liabilities assumed at their respective acquisition dates, with the excess recorded to goodwill. This allocation involves a number of assumptions, estimates, and judgments in determining fair value of the following:
Current report
Intangible assets, including valuation methodology, estimations of future cash flows, discount rates, market segment growth rates, and our assumed market share, as well as the estimated useful life of intangible assets;
Current report
Deferred tax assets and liabilities, uncertain tax positions, and tax-related valuation allowances, which are initially estimated as of the acquisition date;
Current report
Goodwill as measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and liabilities assumed; and
Current report
Pre-existing liabilities and legal claims, and contingent consideration, each as may be applicable.
Current report
Our assumptions and estimates are based upon comparable market data and information obtained from management and the management of the acquired companies. These assumptions and estimates are used to value assets acquired and liabilities assumed, and to allocate goodwill to the reporting units of the business that are expected to benefit from the business combination. Adjustments to the fair values of assets acquired and liabilities assumed may be recorded during the measurement period, which may be up to one year from the acquisition date, with the corresponding offset to goodwill. We may engage valuation specialists to assist in the fair value measurement of assets acquired and liabilities assumed for each acquisition.
Removed paragraphs (20)
Previous report
During the fourth quarter of fiscal 2024 (the "fourth quarter"), we focused on cost optimization initiatives, including further reductions to our geographic footprint, reprioritization of certain technology investments, and headcount optimization. These initiatives are directed at generating additional cost savings for us and providing greater value to our customers.
Previous report
Management Solutions revenue:$3.9 billion for fiscal 2024, reflecting an increase of 4%:
Previous report
Higher health insurance premiums; and
Previous report
Growth in ancillary services.
Previous report
Interest on funds held for clients:$146.3 million for fiscal 2024, reflecting an increase of 47%:
Previous report
Lower realized losses on investment sales.
Previous report
Higher compensation costs due to increases in average wages.
Previous report
PEO insurance costs: $471.3 million in fiscal 2024, reflecting a 13% increase:
Previous report
Operating income: Fiscal 2024 operating income was $2.2 billion, an increase of 7% compared to fiscal 2023, as a result of revenue growth outpacing expense increases as previously discussed. Adjusted operating income(1) of $2.2 billion, which excludes the impact of one-time costs, reflects an increase of 9%. Operating margin and adjusted operating margin(1) were as follows:
Previous report
One-time costs and corresponding tax benefit related to our cost optimization initiatives, including further reductions to our geographic footprint, reprioritization of certain technology investments, and headcount optimization.
Previous report
On April 12, 2024, we and Paychex of New York LLC, a Delaware limited liability company (“PoNY”), entered into an amendment (the “2019 Credit Facility Amendment”) to our $1.0 billion, five-year, unsecured, revolving credit facility (the “2019 Credit Facility”), for which JPM acts as Administrative Agent. The 2019 Credit Facility Amendment, among other things, (a) extended the maturity date of the 2019 Credit Facility from July 31, 2024 to April 12, 2029, (b) amended the interest rate provisions under the 2019 Credit Facility, (c) amended the lenders under the syndication and (d) made other ministerial changes to the 2019 Credit Facility.
Previous report
On April 12, 2024, we and PoNY entered into an amendment (the “2017 Credit Facility Amendment”) to our $750.0 million, five-year, unsecured, revolving credit facility (the “2017 Credit Facility”), for which JPM acts as Administrative Agent. The 2017 Credit Facility Amendment, among other things, (a) amended the interest rate provisions under the 2017 Credit Facility, and (b) made other ministerial changes to the 2017 Credit Facility.
Previous report
operating leases for $73.2 million;
Previous report
purchase obligations for $211.2 million;
Previous report
long-term Senior Notes debt obligations for $800.0 million, plus interest payments of $117.6 million.
Previous report
The consolidated statement of cash flows for the fiscal year ended May 31, 2023 includes a revision to previously reported amounts related to the presentation of cash flows associated with short-term receivables purchased from our clients under non-recourse arrangements, net of funding reserves. Refer to Note A of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for a discussion on the revision.
Previous report
Increase in deferred revenue primarily due to set-up fees related to our pooled employer plan option, which we began offering to our clients during fiscal 2022 and amortize over 4 years; and
Previous report
Change in accrued income taxes due to the impact of an increase in our unrecognized tax position related to ongoing regulatory audits, offset by an increase in prepaid income taxes as a result of changes to the deductibility of research and development costs; offset by
Previous report
Increase in non-PEO related trade receivables primarily due to timing related to our payroll cut-off and month-end, as well as the timing of cash collections for other ancillary services; and
Previous report
Proceeds received from the sale of two commercial buildings; offset by
Reworded paragraphs (53)
Previous wording
We are an industry-leading human capital management (“HCM”) company delivering a full suite of technology and advisory services in human resources (“HR”), employee benefits, insurance, and payroll for small- to medium-sized businesses and their employees across the United States (“U.S.”) and parts of Europe.
Current wording
We are an industry-leading human capital management (“HCM”) company delivering a full suite of technology and advisory solutions in human resources (“HR”), employee benefits, insurance, and payroll for businesses and their employees across the United States (“U.S.”) and parts of Europe.
Previous wording
We offer a full range of integrated HCM solutions covering the employee life cycle for businesses and their employees. Clients may choose from a breadth of solutions that also allow integration with some of the most popular HR, accounting, point-of-sale, and productivity applications on the market today.
Current wording
We offer a full range of integrated HCM solutions covering the employee life cycle for businesses and their employees. Clients may choose from a breadth of solutions that also allow integration with some of the most popular HR, accounting, ERP, and point-of-sale applications on the market today.
Previous wording
We support our small-business clients by utilizing our proprietary, robust, software as a service (“SaaS”) Paychex Flex® platform and the Company’s SurePayroll® SaaS-based solutions. Our medium-sized clients generally have more complex payroll and employee benefit needs, though with the environment of increasing regulations, we believe the need for HR outsourcing services has been moving down-market. Any of our clients on Paychex Flex can opt for the integrated suite of HCM solutions, which allows clients to choose the service and software solutions that will meet the needs of their business.
Current wording
We support our clients through our proprietary, robust, SurePayroll® SaaS-based solutions, Paychex Flex® and Paycor. Our larger clients generally have more complex payroll and employee benefit needs, though with the environment of increasing regulations, we believe the need for HR outsourcing solutions has been moving down-market. Any of our clients on Paychex Flex or Paycor can opt for the integrated suite of HCM solutions, which enables clients to choose the service and software solutions that will meet the needs of their business.
Previous wording
Our mission is to be the leading provider of HR, employee benefits, insurance, and payroll solutions by being an essential partner to small- and medium-sized businesses across the U.S. and parts of Europe. Our strategy focuses on providing industry-leading, integrated technology; delivering superior customer experiences; expanding our leadership in HR; growing our client bases; and engaging in strategic acquisitions. We believe that successfully executing this strategy will lead to strong, long-term financial performance.
Current wording
Our mission is to be the leading provider of HR, employee benefits, insurance, and payroll solutions by being an essential partner to businesses across the U.S. and parts of Europe. Our strategy focuses on providing industry-leading, integrated technology; growing our client base; expanding our share of wallet; driving technology innovation; and pursuing strategic acquisitions. We believe that successfully executing this strategy will lead to strong, long-term financial performance.
Previous wording
We closely monitor the evolving challenges and needs of small- and medium-sized businesses, and proactively aid our clients in navigating these challenges. Through our unique blend of innovative technology solutions, backed by our extensive compliance and HR expertise, we help clients more effectively hire, develop, and retain top talent in this challenging workforce environment. Our ongoing investments in our platforms have prepared us well for the demands of the current business and regulatory environments, allowing us to adapt while maintaining strong solutions and support delivery, resulting in high levels of client satisfaction and retention.
Current wording
We closely monitor the evolving challenges and needs of our clients, and proactively aid our clients in navigating macroeconomic challenges, legislative changes, and other complexities they may face. Through our unique blend of innovative technology solutions, backed by our extensive compliance and HR expertise, we help clients more effectively hire, develop, and retain top talent in this challenging workforce environment. Our ongoing investments in our platforms have prepared us well for the demands of the current business and regulatory environments, allowing us to adapt while maintaining strong solutions and support delivery, resulting in high levels of client satisfaction and retention.
Previous wording
Adjusted net income and adjusted diluted earnings per share are not U.S. generally accepted accounting principle (“GAAP”) measures. Adjusted net income and adjusted diluted earnings per share in all periods include an adjustment for net tax windfall benefits related to employee stock-based compensation payments. In fiscal 2024, adjusted net income and adjusted diluted earnings per share also include adjustments for one-time cost optimization initiatives. Refer to the “Non-GAAP Financial Measures” section of this Item 7 for a discussion of non-GAAP measures and a reconciliation to the U.S. GAAP measures of net income and diluted earnings per share.
Current wording
Adjusted operating income, adjusted net income, and adjusted diluted earnings per share are not U.S. generally accepted accounting principle (“GAAP”) measures. Adjusted net income and adjusted diluted earnings per share in all periods include an adjustment for net tax windfall benefits related to employee stock-based compensation payments. Adjusted operating income, adjusted net income and adjusted diluted earnings per share also include adjustments for acquisition-related costs in fiscal 2025 and cost optimization initiatives in fiscal 2024. Refer to the “Non-GAAP Financial Measures” section of this Item 7 for a discussion of non-GAAP measures and a reconciliation to the U.S. GAAP measures of operating income, net income and diluted earnings per share.
Previous wording
Dividends paid to stockholders represented approximately 78% of net income for fiscal 2024 compared to approximately 75% of net income for fiscal 2023.
Current wording
Dividends paid to stockholders represented approximately 87% of net income for fiscal 2025 compared to approximately 78% of net income for fiscal 2024.
Previous wording
Our payroll and PEO client base was greater than 745,000 clients as of May 31, 2024 and approximately 740,000 clients as of May 31, 2023. Client retention remained high in the range of 82% to 83% of our beginning client base for both fiscal 2024 and fiscal 2023 and we have sustained high revenue retention.
Current wording
Our payroll and PEO client base, including clients added through the acquisition of Paycor, was approximately 800,000 clients as of May 31, 2025 and approximately 745,000 clients as of May 31, 2024. Client retention remained high in the range of 82% to 83% of our beginning client base for both fiscal 2025 and fiscal 2024 and we have sustained high revenue retention.
Previous wording
We continue to increase penetration of our integrated solutions beyond payroll processing, including our HR outsourcing and employee benefit solutions. These offerings are included as part of the integrated HCM solutions within Paychex Flex or provided through the PEO platform. The following table illustrates selected HR solutions client metrics:
Current wording
We continue to increase penetration of our integrated solutions beyond payroll processing, including our HR outsourcing (ASO and PEO) and retirement solutions. The following table illustrates selected HR solutions client metrics:
Previous wording
In fiscal 2024, we continued to make investments in technology a priority as companies look to leverage technology solutions to maintain operations, stay connected to employees, and increase productivity. We implemented enhancements to our Paychex Flex platform designed to improve the client and client employee experiences from hiring and onboarding through employee retention. We also continue to focus on artificial intelligence (“AI”) and related technology to leverage innovative technology and advanced analytics to gain deeper insights into prospects and clients regarding their behavior, preferences, and evolving needs. In fiscal 2024, we successfully implemented several additional innovative AI models that significantly improved results for Paychex and our clients.
Current wording
In fiscal 2025, we continued to make investments in technology a priority as companies look to leverage technology solutions to maintain operations, stay connected to employees, and increase productivity. We implemented enhancements to our Paychex Flex, Paycor, and SurePayroll platforms designed to improve the client and client employee experiences from hiring and onboarding through employee retention. We also continue to focus on AI and related technology to leverage innovative technology and advanced analytics to gain deeper insights into prospects and clients regarding their behavior, preferences, and evolving needs. In fiscal 2025, we successfully implemented several additional innovative AI models that significantly improved results for Paychex and our clients.
Previous wording
The changes in revenue as compared to the prior year were primarily driven by the following factors:
Current wording
Total revenue increased to $5.6 billion for fiscal 2025, reflecting an increase of 6% compared to the prior year. The changes in revenue as compared to the prior year were primarily driven by the following factors:
Previous wording
Increase in the number of clients and clients' employees for HCM solutions and worksite employees for HR solutions;
Current wording
Continued growth in the number of HCM solution clients and HR outsourcing solutions worksite employees;
Previous wording
Higher revenue per client resulting from pricing realization and product attachment, including increased demand for HR solutions and retirement solutions; and
Current wording
Higher revenue per client resulting from price realization and product penetration, including HR solutions and retirement;
Previous wording
Lower revenue from ancillary services, primarily due to the expiration of our Employee Retention Tax Credit Service.
Current wording
Lower revenue from ancillary services, primarily due to the expiration of our Employee Retention Tax Credit ("ERTC") program.
Previous wording
PEO and Insurance Solutions revenue:$1.3 billion for fiscal 2024, reflecting an increase of 8%:
Current wording
PEO and Insurance Solutions revenue:$1.3 billion for fiscal 2025, reflecting an increase of 6%:
Previous wording
Growth in the number of average PEO worksite employees and increases in average wages per worksite employee;
Current wording
Growth in the number of average PEO worksite employees; and
Previous wording
We invest in highly liquid, investment-grade fixed income securities and do not utilize derivative instruments to manage interest rate risk. As of May 31, 2024, we had no exposure to high-risk or non-liquid investments. Details regarding our combined funds held for clients and corporate cash equivalents and investment portfolios are as follows:
Current wording
We invest in highly liquid, investment-grade fixed income securities. As of May 31, 2025, we had no exposure to high-risk or non-liquid investments. Details regarding our combined funds held for clients and corporate cash equivalents and investment portfolios are as follows:
Previous wording
The net unrealized loss on our investment portfolios was approximately $137.6 million as of July 09, 2024.
Current wording
The net unrealized loss on our investment portfolios was approximately $49.6 million as of July 8, 2025.
Previous wording
The Federal Funds rate was in the range of 5.25% to 5.50% as of May 31, 2024 and in the range of 5.00% to 5.25% as of May 31, 2023.
Current wording
The Federal Funds rate was in the range of 4.25% to 4.50% as of May 31, 2025 and in the range of 5.25% to 5.50% as of May 31, 2024.
Previous wording
Total expenses: The following table summarizes total combined cost of service revenue and selling, general and administrative expenses for fiscal years:
Current wording
Total expenses: Total expenses, which reflects the total combined cost of service revenue and selling, general and administrative expenses, increased 8% to $3.4 billion compared to the prior year. The following table summarizes the components of total expenses:
Previous wording
Compensation-related expenses: $1.8 billion for fiscal 2024, reflecting a 2% increase:
Current wording
Compensation-related expenses: $1.9 billion for fiscal 2025, reflecting a 2% increase:
Previous wording
During the fourth quarter, we focused on cost optimization initiatives, including further reductions to our geographic footprint, reprioritization of certain technology investments, and headcount optimization. These initiatives will provide ongoing savings in rent, facilities maintenance, and wage-related expenses.
Current wording
Cost optimization initiatives taken during the fourth quarter of 2024, included reductions to our geographic footprint, reprioritization of certain technology investments, and headcount optimization.
Previous wording
Total expenses, excluding one-time cost optimization initiatives noted above, increased approximately 3% compared to the prior year.
Current wording
Excluding the acquisition of Paycor and the prior year period cost optimization initiatives noted above, total expenses increased approximately 2% compared to the prior year.
Previous wording
Other income, net: Other income, net increased $28.8 million to $43.9 million in fiscal 2024 as a result of higher average investment balances and average interest rates earned on our corporate investments.
Current wording
Other income, net: Other income, net decreased 9% to $73.6 million in fiscal 2025, as a result of lower average interest rates earned on our corporate investments, partially offset by higher average investment balances.
Previous wording
Income taxes: Our effective income tax rate was 23.8% and 24.0% for fiscal years 2024 and 2023, respectively. The effective income tax rates in both periods were impacted by the recognition of net discrete tax benefits related to the volume of stock option exercises and the associated employee stock-based compensation payments. Refer to Note L of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for additional disclosures on income taxes.
Current wording
Income taxes: Our effective income tax rate was 23.8% for fiscal 2025 and 2024. The effective income tax rates in both periods were affected by the recognition of discrete tax impacts related to employee stock-based compensation payments. Refer to Note L of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for additional disclosures on income taxes.
Previous wording
Net income and diluted earnings per share: Net income was $1.7 billion and $1.6 billion for fiscal 2024 and fiscal 2023, respectively. Diluted earnings per share was $4.67 per diluted share for fiscal 2024 and $4.30 per diluted share for fiscal 2023. Refer to Note C of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for information on dilutive shares outstanding.
Current wording
Net income and diluted earnings per share: Net income was $1.7 billion for fiscal 2025 and 2024. Diluted earnings per share was $4.58 per diluted share for fiscal 2025 and $4.67 per diluted share for fiscal 2024. Refer to Note C of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for information on dilutive shares outstanding.
Previous wording
Adjusted net income(1) was $1.7 billion and $1.5 billion for fiscal 2024 and fiscal 2023, respectively, reflecting an increase of 10%. Adjusted diluted earnings per share(1) was $4.72 per diluted share and $4.27 per diluted share for fiscal 2024 and fiscal 2023, respectively, reflecting an increase of 11%.
Current wording
Adjusted net income(1) was $1.8 billion and $1.7 billion for fiscal 2025 and 2024, respectively, reflecting an increase of 5%. Adjusted diluted earnings per share(1) was $4.98 per diluted share and $4.72 per diluted share for fiscal 2025 and fiscal 2024, respectively, reflecting an increase of 6%.
Previous wording
Non-GAAP Financial Measures: Adjusted net income, adjusted operating income, adjusted operating margin, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), and adjusted EBITDA are summarized as follows:
Current wording
Non-GAAP Financial Measures: Adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), and adjusted EBITDA are summarized as follows:
Previous wording
Net tax windfall benefits related to employee stock-based compensation payments recognized in income taxes. This item is subject to volatility and will vary based on employee decisions on exercising employee stock options and fluctuations in our stock price, neither of which is within the control of management.
Current wording
Net tax windfall related to employee stock-based compensation payments recognized in income taxes. This item is subject to volatility and will vary based on employee decisions on exercising employee stock options and fluctuations in our stock price, neither of which is within the control of management.
Previous wording
In addition to reporting operating income, operating margin, net income and diluted earnings per share, which are U.S. GAAP measures, we present adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA, which are non-GAAP measures. We believe these additional measures are indicators of our core business operations performance period over period. Adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA, are not calculated through the application of U.S. GAAP and are not required forms of disclosure by the Securities and Exchange Commission (“SEC”). As such, they should not be considered a substitute for the U.S. GAAP measures of net income and diluted earnings per share, and, therefore, they should not be used in isolation but in conjunction with the U.S. GAAP measures. The use of any non-GAAP measure may produce results that vary from the U.S. GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.
Current wording
In addition to reporting operating income, operating margin, net income and diluted earnings per share, which are U.S. GAAP measures, we present adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA, which are non-GAAP measures. We believe these additional measures are indicators of the performance of our core business operations period over period. Adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA, are not calculated through the application of U.S. GAAP and are not required forms of disclosure by the Securities and Exchange Commission (“SEC”). As such, they should not be considered a substitute for the U.S. GAAP measures of operating income, operating margin, net income, and diluted earnings per share, and, therefore, they should not be used in isolation but in conjunction with the U.S. GAAP measures. The use of any non-GAAP measure may produce results that vary from the U.S. GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.
Previous wording
Our financial position as of May 31, 2024 remained strong with cash, restricted cash, and total corporate investments of $1.6 billion. Short-term borrowings of $18.7 million and long-term borrowings of $800.0 million were outstanding as of May 31, 2024. Our unused capacity under our unsecured credit facilities was $2.0 billion as of May 31, 2024. Our primary source of cash is our ongoing operations, which was $1.9 billion for fiscal 2024. Our positive cash flows have allowed us to support our business, pay dividends and fund our acquisition of Alterna Capital Solutions, Inc. We currently anticipate that corporate cash, corporate restricted cash, and total corporate investments as of May 31, 2024, along with projected operating cash flows and available short-term financing, will support our business operations, capital purchases, primarily investment in our technology solutions, share repurchases, dividend payments, and the servicing of long-term debt for the foreseeable future.
Current wording
Our financial position as of May 31, 2025 remained strong with cash, restricted cash, and total corporate investments of $1.7 billion. Short-term borrowings of $18.6 million and long-term borrowings of $5.0 billion were outstanding as of May 31, 2025. Our unused capacity under our unsecured credit facilities was $2.0 billion as of May 31, 2025. Our primary source of cash is our ongoing operations, which was $1.9 billion for fiscal 2025. Our positive cash flows have allowed us to support our business, and pay dividends. We currently anticipate that corporate cash, corporate restricted cash, and total corporate investments as of May 31, 2025, along with projected operating cash flows and available short-term financing, will support our business operations, capital purchases, primarily investments in our technology solutions, share repurchases, dividend payments, acquisitions and debt service for the foreseeable future.
Previous wording
Letters of credit: As of May 31, 2024, we had irrevocable standby letters of credit available totaling $168.5 million, required to secure commitments for certain insurance policies. The letters of credit expire at various dates between June 26, 2024 and September 29, 2025. No amounts were outstanding on these letters of credit during fiscal 2024 or fiscal 2023, or as of May 31, 2024 and May 31, 2023. Subsequent to May 31, 2024, one letter of credit expiring on June 26, 2024, was renewed for a one year term.
Current wording
Letters of credit: As of May 31, 2025, we had irrevocable standby letters of credit available totaling $165.0 million, required to secure commitments for certain insurance policies. The letters of credit expire at various dates between June 1, 2025 and February 27, 2027. No amounts were outstanding on these letters of credit during fiscal 2025 or fiscal 2024, or as of May 31, 2025 and May 31, 2024. Subsequent to May 31, 2025, eight letters of credit expired and were renewed for one year terms.
Previous wording
Long-term financing: We have borrowed $800.0 million through the issuance of long-term private placement debt (“Senior Notes”). Refer to Note N of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for further discussion on our long-term financing.
Current wording
Long-term financing: We have borrowed $4.2 billion through the issuance of three fixed rate corporate bonds ("Corporate Bonds") and $0.8 billion through the issuance of long-term private placement debt (“Senior Notes”). Refer to Note N of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for further discussion on our long-term financing.
Previous wording
workers’ compensation estimated obligations for $218.6 million; and
Current wording
workers’ compensation estimated obligations for $236.8 million; and
Previous wording
Refer to Notes A, I, N, and Q of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for more information on these areas.
Current wording
Refer to Notes A, I, N, and Q of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for more information on these commitments.
Previous wording
The liability for uncertain tax positions, including interest and net of federal benefits, was approximately $86.4 million as of May 31, 2024. Refer to Note L of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for more information on income taxes. We are not able to reasonably estimate the timing of future cash flows related to this liability.
Current wording
The liability for uncertain tax positions, including interest and net of federal benefits, was approximately $108.6 million as of May 31, 2025. Refer to Note L of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for more information on income taxes. We are not able to reasonably estimate the timing of future cash flows related to this liability.
Previous wording
We are a limited partner in three venture capital fund arrangements and have committed to contribute a maximum amount of $30.0 million for investment in equity and debt securities of start-up entities primarily in the financial technology sector. As of May 31, 2024, we have contributed $23.4 million of the total funding commitment. The timing of future contributions to be made to these venture capital funds cannot be specifically or reasonably determined. Our investments in these venture capital funds are not considered part of our ongoing operations, are accounted for under the equity method, and represented less than one percent of our total assets as of May 31, 2024.
Current wording
We are a limited partner in five limited partnership arrangements to contribute a maximum of $37.0 million to venture capital funds. As of May 31, 2025, we have contributed $29.0 million of the total funding commitment. The timing of future contributions to be made to these venture capital funds cannot be specifically or reasonably determined. Our investments in these venture capital funds are not considered part of our ongoing operations, are accounted for under the equity method, and represented less than one percent of our total assets as of May 31, 2025.
Previous wording
We currently self-insure the deductible portion of various insured exposures under certain corporate and PEO employee health and medical benefit plans. Our estimated loss exposure under these insurance arrangements is recorded in other current liabilities on our Consolidated Balance Sheets. Historically, the amounts accrued have not been material and were not material as of May 31, 2024. We also maintain corporate insurance coverage in addition to our purchased primary insurance policies for gap coverage for employment practices liability, errors and omissions, warranty liability, theft and embezzlement, cyber threats, and acts of terrorism; and capacity for deductibles and self-insured retention through our captive insurance company.
Current wording
We currently self-insure the deductible portion of various insured exposures under certain corporate and PEO employee health, medical, and workers' compensation benefit plans. Our estimated loss exposure under these insurance arrangements is recorded in other current liabilities on our Consolidated Balance Sheets. Historically, the amounts accrued have not been material and were not material as of May 31, 2025. We also maintain corporate insurance coverage in addition to our purchased primary insurance policies for gap coverage for employment practices liability, errors and omissions, warranty liability, theft and embezzlement, cyber threats, and acts of terrorism; and capacity for deductibles and self-insured retention through our captive insurance company.
Previous wording
Primary sources of cash, restricted cash, and equivalents are through collections for services rendered to our customers and interest earned on funds held for clients and corporate investments. Primary uses of cash include employee compensation and contractual obligations related to business operations, cash dividends paid, share repurchases, purchases of property and equipment, and acquisitions.
Current wording
Primary sources of cash, restricted cash, and equivalents are through collections for services rendered to our customers and interest earned on funds held for clients and corporate investments. Primary uses of cash include employee compensation and contractual obligations related to business operations, cash dividends paid, share repurchases, purchases of property and equipment, servicing our long term debt, and acquisitions.
Previous wording
Our investment portfolio incorporates both corporate cash and funds held for clients. Interest rates, market conditions, and our volatile cash flows are among several factors influencing our investment strategy directing the mix between long-term and VRDN AFS securities vs. short-term restricted cash and cash equivalents held in the portfolio. A portfolio strategy that favors larger balances held in restricted cash and cash equivalents will impact our investing activities due to the offsetting activity in the purchases and sales/maturities of AFS investments.
Current wording
Our investment portfolio incorporates both corporate cash and funds held for clients. Interest rates, market conditions, and our variable cash flows are among several factors influencing our investment strategy directing the mix between long-term and VRDN AFS securities vs. short-term restricted cash and cash equivalents held in the portfolio. A portfolio strategy that favors larger balances held in restricted cash and cash equivalents may impact our investing activities due to the offsetting activity in the purchases and sales/maturities of AFS investments.
Showing the first 40 of 53 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Net purchases of short-term accounts receivable due to an increase in our client base, and funding to existing client base, and the timing of net cash collections; and
Current report — wording carried from elsewhere
Repurchases of 0.8 million shares of our common stock at a weighted-average price of $125.50. These shares were retired immediately upon purchase.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Net sales from AFS securities primarily due to a shift from investing in VRDNs to reinvesting in cash and cash equivalents due to more favorable interest rates. Our VRDN holdings were $344.1 million at May 31, 2023 compared to $1.2 billion at May 31, 2022; and
Previous report — wording carried elsewhere
Cash activity related to equity-based plans; offset by
Previous report — wording carried elsewhere
Increase in client fund obligations due to the timing of collections and remittances of semi-weekly tax payments that were deferred at the end of fiscal 2023 due to the Memorial Day holiday.