Paychex revenue fell 7 percent for the fourth quarter ended May 31 and the payroll and HR company expects revenue will stay down in the current quarter. The company said during its recent earnings webcast revenue will be down from “high single to low-double digits”.

That characterization by CFO Efrain Rivera included a forecast operations will improve continually. through fiscal 2021. The fourth quarter, he continued, will look more like a pre-COVID-19 quarter.

For the most recently ended quarter, net income was $220.7 million, down 4 percent from $240.6 million a year ago. Revenue was $915.1 million, compared to $980.4 million the prior year. With the strong start to the fiscal 2020 before the virus shutdowns, net income was $1.1 billion for the recently completed year, an increase pf 6 percent from $1.034 billion the prior year. Revenue for fiscal 2020 reached $4.04 billion, a 7-percent rise from $3.77 billioin in fiscal 2019.

The purchase of Oasis Group Holdings contributed about 4 percent to growth for the year.

CEO Martin Mucci said performance is improving each week with business re-openings. “We are seeing businesses come back,” he said. “They are not always coming back with full employment.” He said more than half the businesses which had suspended payroll processing have resumed.

Paychex has not seen an impact from states now closing businesses because of the virus’ spread. Mucci said residential and commercial construction remains strong, particularly in the south. However, he said some impact is likely in the hospitality business with the closing of bars and restaurants in those states.

The company had limited discretionary spending and accelerating a range of cost-saving efforts. That includes a $40-million charge to be taken in the first half as Paychex decided to accelerate its plan to consolidate facilities. Cost-savings include layoffs of less than 2 percent of the company workforce.

Mucci noted because of the ability of employees to work remotely the practice has been to let experience employees work from home when a facility has closed. Paychex discovered in those cases “client satisfaction went up.”

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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