Paychex Inc Q2 2026 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : Good morning and thanks for taking my questions, and nice to see the earnings strength. The stock is down 3.5% right now. And you've got so many positive things to talk about, but I wanted to address initially the underlying reason, which seems to be around Paycor. When we go through the math, in terms of the contribution from Paycor, it looks like even if we adjust in the form filings from December, that the growth wasn't significant. So I was wondering, it seems like it's optics and there's obviously integration challenges. But can you just initially address this, what you're seeing with regards to Paycor? And then I'd like to follow up.

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : That does. And just as a follow-up, just two quick ones. Quick commentary just with regards to -- so I know we're halfway through the selling season, but what are you seeing so far? And then secondly, just on the cost side, you're clearly doing a great job. And I'm particularly excited about what you're talking about with regards to the agentic pilots that have handled things with 100% accuracy. What does that make you -- how does that make you feel with regards to the longer-term cost synergies that you could end up getting from some of these efforts? Thank you and happy holidays.

Question: Mark Marcon - Robert W. Baird & Co Inc - Analyst : Great. Thanks a lot and happy holidays.

Question: Bryan Bergin - Cowen and Company LLC - Analyst : Hey, guys. Good morning. Happy holidays. Let's start on the fiscal '26 growth guide here. So I just wanted to dig in on your comment there, Bob, on the greater comfort at the low end of the range now. I know you noted penetration and price realization have been driving growth so far, but I guess, softer-than-expected revenue per client. So can you just talk about that a bit more? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 19, 2025 / 2:30PM, PAYX.OQ - Q2 2026 Paychex Inc Earnings Call

Question: Bryan Bergin - Cowen and Company LLC - Analyst : Okay. Understood. Thank you for that detail. And my follow-up is on Paycor. So the 8% to 9% that you mentioned earlier, is that adjusted to remove out the December form filings? Just any context around that, please? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 19, 2025 / 2:30PM, PAYX.OQ - Q2 2026 Paychex Inc Earnings Call

Question: Bryan Bergin - Cowen and Company LLC - Analyst : Okay. Thank you. Happy holidays.

Question: Bryan Keane - Citibank Cameroon SA (Douala Branch) - Analyst : Just to follow up on Paycor. Is it still a low double-digit grower? Or should we be modeling more in this 8% to 9% growth territory for this fiscal year?

Question: Bryan Keane - Citibank Cameroon SA (Douala Branch) - Analyst : Got it.

Question: Bryan Keane - Citibank Cameroon SA (Douala Branch) - Analyst : No, that's helpful. And then just a follow-up on managed services. So the smaller deal sizes, the less attachment and then the softer rates in HR, are those all macro driven? Or is anything fundamental happening there, competition causing some of that softness?

Question: Bryan Keane - Citibank Cameroon SA (Douala Branch) - Analyst : Okay. Very helpful. Happy holidays.

Question: Tien-Tsin Huang - JPMorgan Chase & Co - Analyst : I'm just curious, given the smaller deal size commentary just shared there, any consideration or thought to changing your pricing and packaging of bundles? Maybe there's an opportunity here to sell more at a more value or at a lower price? Curious if this is a new normal, how you might adjust is really what I'm trying to get at here.

Question: Tien-Tsin Huang - JPMorgan Chase & Co - Analyst : No, it does seem like an opportunity, which is why I thought I'd ask the question. Thank you for that. Just on -- just my follow-up just on PEO that did come in better. Similar question. Is the insurance rate a bigger selling point here? I'm just trying to understand if you're reading it that way and there's an opportunity to lean harder on the PEO front given this macro situation that we're in? Perhaps, prospects or value in the insurance offering more in this push towards value, your thoughts?

Question: Andrew Nicholas - William Blair Capital Partners - Analyst : I wanted to talk a bit about the upsell motion to PEO specifically. Kind of a two-parter here. One on just overall Paycor client receptivity to PEO? And then also in this environment and you just spoke to some of the unique dynamics with healthcare inflation, is the percentage of worksite employees going into the PEO business from your HR MS segment evolved at all? Is there a bigger percentage coming from existing clients than previously or has that remained relatively steady in this environment?

Question: Andrew Nicholas - William Blair Capital Partners - Analyst : That's helpful. And then switching gears, I really appreciate the AI investor presentation that you put out including some of the examples of wins and benefits. Is there any way to quantify or maybe it's not in the numbers yet, but the impact on cost efficiency? Like it sounds like you're doing things using agentic AI to streamline payroll without people. Is that something that is already impacting headcount, you'd expect to impact head count in the future? Or is it more having those same individuals do more with their current hourly availability or capacity? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 19, 2025 / 2:30PM, PAYX.OQ - Q2 2026 Paychex Inc Earnings Call

Question: James Faucette - Morgan Stanley - Analyst : A couple of follow-up questions from me. First, on the incremental realized gains on the investment portfolio from Paycor, are those gains included in the guide moving forward? And were they contemplated when you put together your forecast for the second quarter?

Question: James Faucette - Morgan Stanley - Analyst : Great. And then I want to just check in on some of the go-to-market changes you made. You've talked about territory resets and broker program launches. What are you seeing there? And how are you feeling about the -- your ability to deliver efficacy? And when do you expect to see the full benefit in bookings momentum?

Question: Scott Wurtzel - Wolfe Research LLC - Analyst : Bob, I just had a question on the 3Q guide and calling for a total revenue growth of 18%. If I do some back of the envelope math and assume some degree of acceleration on the PEO side of the business as you lap the headwinds, it implies not really too much change on the MS side. I'm just trying to square that with some of the timing around Paycor form filing revenue that they show up in fiscal 3Q. So any color you can give on the different moving parts there would be super helpful.

Question: Scott Wurtzel - Wolfe Research LLC - Analyst : Got it. That's helpful. And then just on the AI side, I know you guys mentioned having like an AI-powered sales engine. Just wondering how much that's deployed across your sales force and any noticeable productivity gains that you're seeing off of that?