“We are pleased to report a strong start to fiscal 2026, delivering robust double-digit revenue growth,” stated John Gibson, President and Chief Executive Officer. “Our first quarter results reflect continued progress integrating Paycor and sustained demand for our comprehensive HCM solutions. The early realization of cost and revenue synergies from the Paycor acquisition reinforces our confidence in the strategic rationale of the deal, which includes significant cross-selling potential.”
Gibson added, “As the digitally driven HR leader, our ongoing strategic investments in AI and technology are driving meaningful innovation, elevating the client experience and delivering operational efficiency. We believe these continued advancements uniquely position us to help our clients navigate today’s complex labor and regulatory landscape while delivering long-term value to our shareholders.”
First Quarter Business Highlights
Total revenue increased to $1.5 billion for the first quarter, representing growth of 17% over the prior year period. Highlights compared to the prior year period include:
- Management Solutions revenue increased 21% to $1.2 billion for the first quarter. Paycor HCM, Inc. (“Paycor”), acquired in April 2025, contributed approximately 17% to total Management Solutions revenue growth year-over-year. This increase was due to the following:
- Growth in the number of clients served, primarily driven by the acquisition of Paycor and client worksite employees for Human Resources (“HR”) Solutions; and
- Higher revenue per client driven by Paycor’s upmarket client base, price realization, and product penetration, including HR Solutions and Retirement.
- Professional Employer Organization (“PEO”) and Insurance Solutions revenue increased 3% to $329.1 million for the first quarter, primarily due to the following:
- Growth in the number of average PEO worksite employees; and
- Increase in PEO insurance revenues.
- Interest on funds held for clients increased 27% to $47.6 million for the first quarter due to higher average investment balances resulting from the acquisition of Paycor.
Total expenses increased 29% to $998.1 million for the first quarter, primarily due to the following:
- Increases in compensation-related expenses and amortization of intangible assets, primarily driven by the acquisition of Paycor; and
- Higher technology, selling, and marketing investments driven by the acquisition of Paycor and our continued strategic initiatives.
Operating income decreased 1% to $541.9 million for the first quarter. Adjusted operating income(1), which excludes $84.1 million of Paycor acquisition-related costs included in selling, general and administrative expenses, grew 15% to $626.7 million for the first quarter. Operating margin (operating income as a percentage of total revenue) was 35.2% for the first quarter compared to 41.5% for the prior year period. Adjusted operating margin(1) (adjusted operating income as a percentage of total revenue) was 40.7% for the first quarter compared to 41.5% for the prior year period.
Interest expense increased $58.6 million to $68.2 million for the first quarter, primarily due to the issuance of incremental debt to finance the acquisition of Paycor.
Our effective income tax rate was 22.9% for the first quarter compared to 23.3% for the prior year period. Both periods were affected by the recognition of discrete tax impacts related to employee stock-based compensation payments.
Diluted earnings per share decreased 10% to $1.06 per share and adjusted diluted earnings per share(1) increased 5% to $1.22 per share for the first quarter.
| (1) Adjusted operating income, adjusted operating margin, and adjusted diluted earnings per share are not U.S. GAAP measures. Please refer to the “Non-GAAP Financial Measures” section of this press release for a discussion of non-GAAP measures. |
Financial Position and Liquidity
Our financial position and cash flow generation remained strong during the first three months of fiscal 2026. As of August 31, 2025, we had:
- Cash, restricted cash, and total corporate investments of $1.7 billion.
- Short-term and long-term borrowings, net of debt issuance costs, of $5.0 billion.
- Cash flow from operations was $718.4 million for the first quarter.
Return to Stockholders During the First Quarter
- Paid cumulative dividends of $1.08 per share totaling $389.1 million.
- Repurchased 1.1 million shares of our common stock for $160.1 million.
