On this page of StockholderLetter.com we present the latest annual shareholder letter from PAYCHEX INC — ticker symbol PAYX. Reading current and past PAYX letters to shareholders can bring important insights into the investment thesis.

 •  8/30/2024 Letter Continued (Full PDF)
 •  9/1/2023 PAYX Stockholder Letter
 •  More "Business Services & Equipment" Category Stockholder Letters
 •  PAYX Benford's Law Stock Score = 79

PAYX Shareholder/Stockholder Letter Transcript:

ANNUAL REPORT | 2024
The Digitally Driven HR Leader


5.3 Billion

1.3 Billion
Dividends Paid1
Total Revenue1
Total Revenue
78%
($ Millions)
$5,500
of Net Income Paid
to Shareholders1
$5,000
$4,500
2.2

$4,000
$3,500
Billion
$3,000
Adjusted
Operating
Income1,2
2020
2021
2022
2023
2024
9%
Increase
(For the fiscal year ended May 31)
Adjusted Operating Income2
Adjusted
Diluted
Earnings
Per Share1,2
$2,250
$2,000
($ Millions)
4.72

11%
Increase
$1,750
$1,500
300,000
$1,250
$1,000
2020
2021
2022
2023
2024
(For the fiscal year ended May 31)
Estimated Small Business Jobs Saved
with our support (2021   2024)3

A Letter From John Gibson,
President and CEO
Fiscal 2024 was another year of delivering long-term value to our customers, investors, and the communities
we live and work in. We adapted to changing market conditions by remaining focused on our purpose    
helping businesses succeed.
I   m proud of how our more than 16,000 global employees come together every day, determined to make us the
digitally driven HR leader, continuing our long history of solid financial performance, and delivering operational
excellence for our customers, their employees, and you, our shareholders. Our innovative HR technology and
advisory solutions and our ongoing commitment to being the best operator in the human capital management
(HCM) industry make us well-positioned to deliver for our clients and shareholders in the years ahead.
Our long-standing growth strategy remains sound, founded on continued product innovation and utilization
in our customer base, disciplined client growth, strategic acquisitions, and value-based pricing. These pillars
have allowed us to meet the evolving needs of our more than 745,000 clients and deliver 11% growth in
adjusted diluted earnings per share2 to $4.72 in FY24. Over the past five years, we have returned $5.9 billion to
shareholders in the form of cash dividends and share repurchases.
Because we have decades of detailed workforce datasets, resulting from serving 1 in 12 private sector workers,
we can create AI-powered insights to personalize the client experience, identify unmet needs, and maximize
our operational efficiency and productivity. With these data insights and our culture of innovation, we believe
Paychex is strategically placed to benefit from our investments in digitalization and AI. Our investments
continue to enhance our sales and operational capabilities and should enable us to turn our data assets into a
resource to deliver long-term profitable growth and provide di   erentiated insights for our customers.
As one of the World   s Most Ethical Companies   for the 16th time and among Fortune   magazine   s America   s
Most Innovative Companies, we continue to be known for both what we do and, most importantly, how we do
it. With the successful completion of our Employee Retention Tax Credit (ERTC) program, we helped our clients
file for tax credits totaling nearly $90 billion. We estimate that our e   orts in helping businesses file for Paycheck
Protection Program (PPP) loans and forgiveness helped small businesses
save over 300,000 jobs across the country.3 This is just one example of
how we helped businesses succeed in challenging times.
We have much to be proud of regarding our financial and operational
performance, but it is our collective impact on the world, by supporting
the entrepreneurial spirit of small and medium-sized businesses in the
U.S. and Europe, that brings us the greatest sense of achievement.
On behalf of myself and our employees, thank you for your continued
investment in Paychex.
John B. Gibson, President and Chief Executive Officer
Paychex Annual Report 2024 | 1

Innovative HR Solutions That Deliver Results
By providing innovative HR technology and advisory solutions to help our more than 745,000 clients navigate
difficult and changing market conditions, we delivered solid results in FY24.
Total revenue grew 5%, or approximately 6% excluding revenue from our discontinued ERTC service, with
revenue retention from existing clients remaining near record levels. We also increased our annual dividend per
share by 12% year-over-year, and paid shareholders $1.3 billion during FY24     78% of our net income.
Leading With Data
We   ve analyzed the vast amounts of data we have gathered on small and medium-sized businesses over
our more than 50-year history of engaging them on their issues and concerns. As we continually refresh our
dataset, we evaluate new AI-powered solutions and update our models with input from our HR and compliance
risk experts. This has revolutionized our ability to simplify HR, payroll, and benefits for small and medium-sized
businesses while significantly improving our operational efficiency.
Best Operators in the Business
We   ve continued to achieve the highest adjusted operating margin in the HCM industry at 41.9%, an expansion of
130 basis points over the prior year.2 This increase is a direct result of how we have leveraged our data to drive our
decisions and our culture of strong expense management and investment discipline. Our performance is also driven
by the dedication of our more than 16,000 global employees, who consistently find ways to add more value for our
clients and our shareholders.
Tech-Enabled HCM and HR Advisory Solutions Company
We   ve completed the transition from a payroll company to an HCM powerhouse. Today, Paychex is a technologyenabled HR solutions leader. Approximately 58% of our total service revenue was generated from services beyond
payroll in FY24. Our Professional Employer Organization (PEO) and Insurance Solutions revenue grew 8% to $1.3
billion and our combined HR solutions businesses now support 2.3 million worksite employees, an increase of 8%
from FY23. Customers continue to turn to Paychex when it comes to navigating the ever-changing and complex
world of attracting, retaining, and engaging today   s workforce.
Retirement Services revenue saw double-digit growth, with $52 billion under management for 121,000 clients as we
capitalize on the growing need for employees and employers to plan for retirement and meet expanding regulatory
requirements for retirement benefits across the United States.4
2 | The Digitally Driven HR Leader

Advancing Data, Analytics,
and AI Tools
We   ve always been a proactive company, ready to deliver on trends that could benefit our clients and our business.
As a result, we   ve been finding new ways to expand the responsible use of data to help simplify HR administration.
Paychex is, and has always been, committed to the privacy, safety, and security of information shared by our clients
and their employees. We continue to take a thoughtful approach to AI, including a risk assessment that includes
proper testing and development processes, industry-leading security standards, and rigorous internal controls.
In FY24, we created a new organization focused on leading our data, analytics, and AI strategy across the company.
Its purpose is to drive the most efficient investment decisions on the e   ective and ethical use of our vast repository
of data across HR, payroll, employee benefits, and insurance. This initiative accelerates our ability to capitalize on our
data to benefit our customers, employees, and shareholders.
Delivering Better Client Experiences
While data is the solid foundation of our HR solutions,
people, as always, are the key to success. We
launched our Employer of Choice Playbook in FY24,
starting with Paychex PEO, to combine our digital
HR and analytics with one-on-one HR advice from
Paychex HR professionals. They can help clients
find, attract, hire, and retain employees, assess their
total HR needs, and leverage the data insights and
predictive modeling within Paychex Flex   to help
meet those needs.
From Service to Advising
It   s about more than providing service; it   s giving our
clients the satisfaction of solving their issues, from
recruiting and retention to compliance, employee
performance, and talent management. Our goal is
always to deliver a positive experience that leads to
better outcomes for our clients, their employees    
and our business.
98%
of companies expect to be
using AI in the next 12 months.5
The team at Paychex that I work with is always there for me, 24/7. Their people are
empowered with knowledge and with authority. Even when I don   t think I need them, they   re
there for me. It   s just a wonderful feeling.   
    Ashley Newton, Payroll Specialist, Phoenix Franchise Brands
Paychex Annual Report 2024 | 3



 8/30/2024 Letter Continued (Full PDF)