Thank you for joining us to discuss Paychex fourth quarter and full year fiscal 26 results. Our earnings release and presentation are available on our Investor Relations website.

We plan to file our Form 10-K with the SEC before the end of July. This call is being webcast live and will be available for replay on our Investor Relations Today's call includes forward-looking statements that refer to future events and involve some risk.

We encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ from our current expectations. We will also reference non-GAAP financial measures, the description of these items along with the reconciliation of non-GAAP measures can be found in our earnings release.

I would now like to turn the call over to John Gibson Jr., Paychex President and CEO.

Thanks, Bob. I will begin with our operational highlights for the quarter and the full year.

And then Bob will discuss our financial performance and outlook before we open the call for your questions. We finished the year with strong momentum.

Delivering double digit revenue and earnings growth in the fourth quarter and the full year. While also accelerating organic revenue growth in each quarter.

Our team executed well against our strategic priorities. Expanding upmarket strengthening our advisory differentiation, and advancing our AI capabilities to drive better client outcomes.

Our mission is simple. Help businesses succeed.

Today, customers are managing more work, and complexity than ever before, and want more than just the tool. They want a trusted partner.

That can help them manage cost, attract and retain talent, and navigate a dynamic regulatory landscape. That trust is reflected in our strong client retention across our payroll clients.

Who rely on paychecks for support and advice across a growing number of solutions. Our differentiated advisory and benefits solutions, including ASO, PO and retirement continue to resonate in the market and drive robust revenue growth.

While other providers offer fragmented tools, or limited support models, we believe we stand apart by combining technology, with trusted human expertise to help customers solve their most important workforce challenges. That differentiation is driving higher engagement in our HR outsourcing.

In ASO, engagements increased more than 60% this year alone. Reflecting growing demand for support, navigating, and increasingly complex HR landscape.

We believe our investments in go to market and technology strengthened our value proposition and contributed to record work employee retention, and ASO and PO this year. PO, in particular, remains a key growth driver.

PO worksite employee growth continued to outpace the industry with high single digit growth in the quarter and full year. The comprehensive solution helps businesses manage regulatory complexity and offer competitive benefits often with little or no in house HR staff.

We continue to see a long secular runway for growth in this business. Building on our advisory strength, we launched Wise, also known as our workforce intelligence strengthened by expertise, which is our AI powered intelligence engine.

Wise extends our capability into Agenic AI and is powering approximately 600 AI features and agents. Embedded into the work, Wise moves beyond insights and assistance to autonomous execution.

Helping scale our expertise, enhance productivity, and deliver better client outcomes all with human in the loop oversight, available on demand support, and strong governance. We believe differentiated access to large datasets will be a key driver of AI leadership and that Paychex is exceptionally well positioned.

For more than 50 years, we have been at the center of HR, payroll, and benefits. Giving us access to a vast proprietary and growing amount of data.

WISE now draws on more than 26 trillion data points. Helping make our solutions smarter, more relevant, and more proactive.

What makes this unique is our patent pending AI knowledge mesh technology, which helps unlock insights from unstructured data including emails, calls, and other client interactions. And turns it into actionable intelligence.

We believe that our unique technology, large data set, and deep HR and compliance expertise make our AI enabled HR solutions truly unique in the market. We are already seeing the benefits in practice with meaningful reductions in administrative work We can now automatically create and update client employee handbooks as regulations or business needs change in real time.

Our workforce management solutions intelligently generate schedules in minutes instead of hours and reduce time sheet approvals by more than 50%. on our commitment to flexible service models, clients can submit payroll by phone or email, through a service experience powered by Wise.

In addition, our Agenic payroll solutions have continued to scale significantly reducing wait times while maintaining the accuracy our clients expect. Over time, we see WISE as a meaningful driver of long term value creation, through direct monetization opportunities as well as indirect benefits including stronger upsell, higher revenue per client, improved retention, and greater pricing power.

As AI automates more routine tasks, we believe differentiation will increasingly come from compliance expertise, advisory capabilities, proprietary data, and trusted execution. Areas where we believe Paychex is structurally advantaged.

Those strengths, combined with continued investment in our innovation road map, will position us well for the long term AI leadership our category. Turning to our enterprise business, we continue to perform well upmarket among clients with more than a 100 employees.

We exceeded our fiscal year 26 synergy targets associated with the Paycor acquisition. Contributing more than 50 basis points to revenue growth and generating over $100 million in cost synergies.

We continue to make progress cross selling advisory offerings such as ASO, retirement, and PO into the Paycor base and are winning larger deals than originally anticipated. We also saw continued traction in the broker channel, including 2 new national partnerships this quarter alone reinforcing our position as a preferred choice for HCM referrals.

During fiscal year 26, we completed the organizational and sales territory realignments associated with moving the Paycor under-100 employee businesses into our SMB segment and integrating the Paychex 100+ businesses into our enterprise segment. We enter fiscal year 27 with currently aligned teams, brands, and platforms focused on the specific needs of each market segment.

All of this is powered by our scaled, modernized, and modular infrastructure including our new modern tax engine, which we expect to further enhance through integration with our Wise Intelligent Engine. Beyond shifting upmarket, 2 emerging growth areas for us are expanding employee based revenue streams and growing beyond our payroll base.

Introduced Perks, our digital benefits marketplace, less than 2 years ago. And today, more than 400 thousand employees have already purchased affordable transferable benefits through the marketplace.

We are now expanding access to perks to employees on the Paycor platform, increasing our addressable market by more than 2.5 million employees. More broadly, we now see meaningful opportunity to grow beyond our traditional payroll base.

Historically, many of our solutions could only be sold in connection with a client being on our payroll platforms. With the modernization of our underlying infrastructure now complete, we are developing more payroll-agnostic and stand-alone AI enabled solutions.

Which we believe will significantly expand our addressable market to help more businesses succeed. Our momentum this year is also being recognized externally.

Time named Paychex 1 of America's top work tech companies. And Newsweek recognized us as 1 of America's most trustworthy companies and greatest workplaces.

This underscores the strength of our brand, culture, and the trust we have built with clients and employees. Taken together, this progress reflects strong execution against our strategic priorities.

From integrating the largest acquisition in our history to modernizing our infrastructure and rolling out Wise across our HCM platforms and operations. We believe we enter fiscal year 27 well positioned for continued growth and long term leadership in the AI era of HCM.

I will now turn the call over to Bob to discuss our financial performance and outlook. Bob?

Thank you, John. I will begin with our fourth quarter and full year financial results, and then I will share our outlook for fiscal 27.

For the fourth quarter, total revenue increased 12% over the prior year to $1.6 billion reflecting the mid quarter anniversary of the Paycor acquisition. As John noted, we accelerated organic revenue growth in each quarter this fiscal year.

Management Solutions revenue grew 14% to $1.2 billion driven by product penetration, price realization, and approximately 8 percentage points of growth from Paycor. PEO and Insurance Solutions revenue increased 9% to $370 million driven primarily by strong growth in PEO worksite employees as well as an increase in PEO insurance revenues.

Interest on funds held for clients grew 15% to $52 million Total expenses for the quarter were relatively flat as higher compensation amortization and continued investments in our strategic priorities were offset by lower acquisition related costs. Operating income margins increased approximately 750 basis points to 37.7% adjusted operating income margin increased by approximately 170 basis points to 42.1% for the quarter, was driven by increased productivity and cost discipline while increasing our investments in AI.

Diluted earnings per share increased 43% to $1.17 per share, and adjusted diluted earnings per share increased 11% to $1.32 per share. Turning to the full year results.

For the full year, we delivered on our total revenue guidance accelerated our organic growth in the back half of the year and exceeded our earnings guidance raising expectations twice during the year. Total revenue increased 17% over the prior year to $6.5 billion Management Solutions revenue grew 20% to $4.9 billion PO and Insurance Solutions revenue increased 7% to $1.4 billion.

Operating income margins for the year were 38.6%, and our adjusted operating income margin increased by approximately 70 basis points to 43.2%. Diluted earnings per share increased 7% to $4.89 a share, and adjusted diluted earnings per share increased 11% to $5.51 a share.

Our financial position remains strong with cash, restricted cash and total corporate investments of $1.2 billion and total borrowings of approximately $4.6 billion at the end of the quarter. Cash flow generation continues to be a key strength of our model.

Our operating cash flow for the year increased 35% to $2.6 billion and our free cash flow increased 36% to $2.3 billion this fiscal year. Our capital allocation strategy remains focused on delivering long term shareholder value This year, we returned $2.2 billion to shareholders through $1.6 billion in cash dividends and $600 million in share repurchases.

In addition to this, we reduced our leverage ratio by half a turn through the combination of our strong earnings growth and repaying the initial $400 million tranche of debt from the Oasis acquisition that matured in March. We remain focused on the levers of long term shareholder returns that are within our control including strong EPS growth, sustained dividend growth, and disciplined capital deployment.

Our 12-month rolling return on equity remains robust at 45%. Turning to our guidance for fiscal 27.

Our outlook reflects the current macro environment as well as the assumptions that employment levels will continue to remain flat. For fiscal 27, we expect total revenue growth in the range of 5% to 6%, Management Solutions revenue growth is also expected to be in the range of 5% to 6%.

PEO and Insurance Solutions revenue growth will be in the range of 6% to 7%. Interest on funds held for clients is expected to be in the range of $195 million to $205 million This year over year decline reflects the full year impact of the 75 basis points of cuts at the end of last calendar year and the lapping of onetime gains associated with the strategic portfolio repositioning we executed in the second quarter.

The outlook also assumes no further changes in the Fed funds rate. Adjusted operating income margin are expected to be approximately 44% and our effective income tax rate is expected to be approximately 24%.

Adjusted diluted earnings per share is expected to grow in the range of 7% to 9%. Now I will provide a little bit of color on the first quarter expectations, we would expect total revenue growth to be consistent with our full year guidance with an adjusted operating margin of 41% to 42%.

And of course, this outlook is based on current assumptions, as I mentioned, and remains subject to change. Our business fundamentals remain strong as we enter fiscal 27, As John mentioned, I think we are exiting the back half of the year with strong momentum We believe Paychex is exceptionally well positioned to succeed in the AI era of HCM.

And continue delivering shareholder value. Our efficient operating model continues to generate industry leading operating and free cash flow margins with meaningful opportunity for further expansion over time.

The durability of our business the strength of our cash generation and our disciplined capital allocation support our confidence in continued revenue and earnings growth and sustained Rule of 50 performance. I will now turn the call back over to John.

Thank you, Bob. We will now open the call for your questions.

Hey, guys. Good morning.

Saw results. Just hoping you guys could talk a little bit about the trend in organic growth that you saw in the second half of the year.

What are you guys calculating it as, and as we jump off here in the fiscal year 2027, with the range of 5 to 6%, what gets us to the low end and what gets us to the high end for that? As we think about organic growth, bookings trends, all that adds up to the numbers?

Yes, Brian. I mean I will start and John can add some color.

I mean, you mentioned in your report last week or a couple of weeks ago, I mean, we have definitely continued to see a sequential improvement in the organic growth of the business. Think if you go back to this time last year, we were exiting fiscal year at around 3%.

We have nearly doubled the organic growth of the business with improving each quarter as we move through the year. And so I think if you look at the Q4 numbers, the Q4 exit rate from an organic growth standpoint, I would say, is largely in line with the guide that we provided.

And I think you if you look at the midpoint of the, you know,, the management solutions in the PO guide, I think you will get to service revenue. Growth rate that pretty much is in line with the organic growth that we are exiting the year at.

Obviously, next year, there is a little bit of a of a headwind. We had a tailwind this year from flow with the Paycor balances and some other things.

Next year, there is a little bit of a headwind. I am expecting interest on funds to be down about 4% to 5%.

You got the full year impact of the cuts that happened last year, as I mentioned in the prepared remarks. And then we had some gains this year from some repositioning that we did earlier in the year.

But I think those things added up together, I think, get you to a guide next year that pretty much is in line with a strong organic growth improvement this year in where we are exiting the year. Obviously, it is early on, so better performance would drive higher end, you know, we are assuming a stable macro environment.

We are not expecting that to change. But the typical things that you are aware of that could move the needle in 1 direction or another.

I would say the other thing is really strong momentum in bookings. You know, we talked about this last quarter.

I think you highlighted it in your report, probably 1 of the stronger selling seasons that we had in Q3, and I think we followed that John can provide some more color on it, but we followed that up in Q4 with a really another strong performance in bookings. And it was really broad based across many categories.

Certainly, we are benefiting from the Paycor acquisition When you look at ASO, PEO, retirement, you know, that is really driving a lot of the growth both of what you see in the P and L as well in bookings. And a lot of that is coming from the ability to go into Paycor's base and sell them those high value solutions.

So I do not know if you have anything you wanna add to that, John.

Yeah. No.

I think we go back a year on this call. we kind of laid out.

We went through a pretty significant, you know, integration of our enterprise business together. We said, our view was as we execute the integration plan that we had, we believe that we were gonna continue to build momentum each of the quarters, and I think there are probably some skeptics about the back half.

And I am very pleased and proud of the team for what they delivered. Every quarter, bookings got better and better.

Fourth quarter was better than the third quarter. And the third quarter, as I said on our call, was the best I have seen in 13 years here.

So I feel good about the momentum we have going into this. Certainly, having all the disruptions behind us is gonna be positive going into this.

I would say the macro environment despite all the potential challenges that we have going on globally around us, has been stable. No signs of recession.

And in fact, if you look at our index, the last several reports have actually shown an increase in index under 50, We continue to see a good-- I would say solid growth, not good growth, but solid growth in the in the 50 plus. And we will be announcing our index next week, and again, I am just amazed at the resiliency.

So I think we are going into this year. With all the disruptions behind us, with better focus, our product road map, our integration road map, is just really accelerating.

AI is helping us accelerate that even more. In terms of the development road map.

And so I am very encouraged about what the setup is going into this, fiscal year.

Great. And just as a follow-up, just thinking about, the launch of Wise and AI in general, how do we think about the potential revenue opportunities that AI could bring paychecks?

And how long will it take maybe to start developing some of those?

Well, I would say we are already generating some revenue from that. We have launched several components of WISE.

Some of that is in the reporting areas of what I would say enhancements to our current reporting capabilities. And we have launched that into the data into our client base.

We have we have gotten good success there. When you look at it at this point in time, we also did our, our intelligence timekeeping in Flex.

We currently have about 10 thousand customers that are in our soft launch of that. And, again, we think that is gonna be another opportunity.

What we are seeing there in terms of just time savings but more importantly, error predictions. So we are actually cutting errors down like, 70% upfront.

And so what I see, that is gonna be a good value upsell opportunity for us. We go into the year.

So I think we are early in figuring out the monetization. I would say a lot of what we are getting right now from Wise has been turned internally.

So our service concierge, we are now all of our service individuals have access to all of our knowledge systems across all of our products and services. Instantaneously, and then also, what we are calling the sales guru which is a Wise based product, which again gives access to all of our datasets across all of our platforms and all of our service and sales interactions to our salespeople in real time to be able to both plan their calls appropriately and offer the right solution for the client.

So a lot of it right now is internally, we are starting the product roadmap. We have launched the first kind of AI based product we launched was in 2022 with Retention Insights.

And now what we will do is we are going back and looking at refreshing, those legacy AI products with the Wise platform. Okay.

Great. Thanks for taking the questions.

Thanks, Brian.

Hey. Good morning, John and Bob.

Thanks for taking my questions. John, I wanted to ask you about a couple of strategic elements.

First of all, you mentioned that you are developing payroll-agnostic solutions, you know, in order to help businesses to a greater extent. Can you talk a little bit more about that in terms of what your outlook is for that?

When should investors expect the launches? What areas do you think you can go into?

And with the AI tools in terms of coding, how quickly do you think you can do that?

Well, I think we have been doing this has been a long term project. Let me step back, Mark.

We have been investing really since kind of the COVID ERTC era. When we had the opportunity to take some of the cash flow that was being generated during that time.

And we looked across the platform and said, how do we wanna modernize our back office and our operating layer? And as you all know, we are our operating layer of our business is best in class.

that is that is how we get the margins we do. Want to modernize it We want to modularize it.

And really allow us to begin to offer more products and services on a stand alone basis. Because most of our products and services that we built at Paychex really did not have the means to bill a client, to engage a client, separately outside of being part of our HCM, payroll infrastructure.

And so 1 of the key things we wanna do was break that apart, break our tax engine apart. bring all the payments, orchestration that we do apart.

So all of that has been done and finally completed. Over the past fiscal year.

So what we have today is the capability that if a customer would leave our HCM platform, but enjoy our insurance agency, they can now stay with our insurance agency. that is something a lot of times that did not happen in the past.

Someone leaves our HCM platform and they like our 401(k) product, we could do that. It also gives us the potential to partner with those separate products separately as well, something we have historically not done.

So we look at it as a big opportunity for us. That investment that we have made in that back office infrastructure is what allowed us to launch Perks because it also allows us to treat every 1 of our clients and employees as potential stand alone customers And, they can continue to be a customer of Paychex, even if they leave their current employer and even if they are not on 1 of our HSA platforms.

So this is in the early innings of really getting this put together. Of course, we are going to look at the economics both in terms of go to market and capability.

But what I would tell you is it enhances our ability to retain customers in some way across our multiple products. It gives us new go to market opportunities, and it gives us new segments that we could potentially go after.

I also believe particularly as it pertains to wise, and what we are putting together in terms of HR compliance in real time advisory solutions. That can be digitally enabled with our HR people in the background.

I think that could be valuable for customers, small and midsized customers, or HR professionals whether or not they are on 1 of our platforms or not. And so certainly 1 of the things I think is a great potential for us to help businesses succeed is to be able to turn our 50-plus years of HR advisory and HR and payroll and tax compliance capabilities.

And monetize that for the benefit for a broader market. And those are things we are considering as well.

Could you also get into more of the office of the CFO? Or the office of the CTO.

From a longer term perspective?

I think, Mark, at this point in time, we see the opportunity within HR, particularly in the segment we serve to be the best place for our investment in time. We still have a lot of opportunity, I think, and particularly most of our clients do not have an HR department.

HR is becoming more complex. I think at this point in time, what we are focused on is continuing to do that.

And also try to put into our marketplace for their employees a set of benefits solutions that allows a small employer to mimic a large employer in terms of what benefits they can offer employee without having to contribute to that, from a financial perspective because those are the things that we hear, from our small client all the time that is more important to them than us, you know, helping help be their CFO at this point in time. that is great.

Thank you so much.

Yep.

Hi. Good morning.

Appreciate you taking my You have hit on a few of the reasons, but I was just hoping you could expand on of what drives your conviction in the HRMS acceleration next year on an organic basis? And any color you could provide on kind of expected growth by market segment would be helpful.

Between mid market and enterprise Yes.

Well, look, think that we feel very confident across the portfolio. Again, as we see, we have had continued momentum across the portfolio throughout the year.

When you look at the enterprise side, continue to see good growth there as we combine the groups together. You go back and look at our enterprise bookings In the fourth quarter, we had the highest booking dollar volume we have had all year.

And I think as we told you before that, continued to build through the third quarter. We have continued to add partners there.

And I just think with the integration behind us, and all the disruption that caused, and having the focus, I think we are entering the year very well focused with a good set of products and services to go in the market. Then when you look across HR solutions and benefits retirement, the acceleration there has just been phenomenal.

It just really has and not stock. Our bookings have continued to grow in those areas.

Continued to show strong retention continue to see strong cross sell across the various teams. I think that cross sell motion is really getting going, particularly in the legacy Paycor sales teams.

I think they are trying to finally figuring out how they can leverage the full power of paychecks to drive not only meetings, but also to drive deals coming to closure. So I feel good about where we are again, heading into this fiscal year just with everything behind us.

I think all the all the things are in place. The organizational components are in place.

The technology components, and all the all the focus we have been having on what I would say and you guys do not see it, what we see, All the inside work we have had to do. In finishing the transformation of our operating layer, dealing with all the integration issues with the largest integration we have had, all the internal things we needed to do organizationally around that from a sales and sales territory perspective.

You guys do not see that; we have been seeing that. And now to not have to be focused on that and to be able to totally focus on execution.

And then the tailwinds that I am seeing in product development that from AI utilization there that is gonna accelerate our ability to execute the road map faster. And the benefit that I am seeing both our sales and service teams are having in leveraging these tools, these wise tools that we have launched to them over the last quarter and the benefits we are seeing in their productivity really makes me encouraged about how we are setting up for this year.

And just the other thing I would just add from a conviction standpoint Andrew, I think this next fiscal year sets up a lot differently than last fiscal year for all the reasons that John highlighted. But in addition, you know, to last year's guide, the 26 guide, there was an acceleration that was required in the back half.

There was reasons for that. Some of it was on the compares.

We certainly delivered that. But now I think as we go into next fiscal year, you know, John talked about all the momentum that we have exiting this year.

And really, what we have set up next year you know, from a guide standpoint, is pretty much in line with what we are delivering and what we are exiting the year. So certainly from a conviction standpoint, the year sets up much differently than last year did We do not have this big ramp in the second half.

We delivered it. Like we mentioned, but it certainly gives us a lot more confidence just given the, you know, the momentum that we have exiting this year and not having to deliver a significant step up as we move through the year.

Helpful. Thank you.

And then and maybe I just switch over to PEO and Insurance Services, that was a result that was quite a bit better than what we expected. Can you walk through kind of what PEO revenue looks like versus Insurance Services in the quarter?

And kind of level set where we are at heading into 27 from, in terms of health care plan and those dynamics that you were kind of fighting against at the beginning of 2026? Thank you.

Yeah. I mean, the underlying operating performance for the PO business has been strong for a number of quarters and a number of years.

We knew we had some challenges last year with some of the optics with the MPP enrollment And, you know, you and I have talked about this. You are very familiar with the PO industry.

To me, it is all about driving worksite employee growth, and we continue to do that. And as John mentioned in the prepared remarks, continue to outpace kind of the industry there.

And it is really coming from strong demand And we saw another quarter of double digit demand in the PEO business as well as record worksite employee retention. So we know the strength of that business model, the value proposition is very strong.

And that business grew double digits in the quarter. Obviously, the category was a little bit below that.

The agency continues to be a drag on the overall growth of that quarter. We are seeing some positive trends certainly in the back half of this year as it relates to the agency, both from a demand and retention standpoint.

So we would expect prospectively, that headwind from the agency side to subside somewhat. But continue to expect the momentum that we have seen in the PO.

And the other thing too, I would just say from a enrollment standpoint, as you know, we had the MPP challenges. Last year.

We have anniversaried those which helped with the compare. But we have also seen the enrollment growth not only overall in medical attachment across the PO within Florida where we have that at risk plan, we actually grew that this year.

And so, you know, we are seeing good enrollment. We had a good annual, renewals in those books of business as well as we are seeing I would say, better attachment of medical upfront, which really helps drive that worksite employee retention that we talked about because it just really makes those clients much more stickier when they attach their health with us.

So a lot of positive trends as we move forward in the PEO.

Thank you very much.

Yep.

Great. Thanks so much.

Commentary on the first quarter was helpful in terms of the revenue growth. Bob, if I heard you right, I think you said the first quarter should be similar to the full year.

Maybe just help us with the pacing over the course of, you know,, quarters 2 through 4. And, you know, as you start to comp tougher comps, where's the offset to that?

Is it just the way the bookings come in? Or maybe just help us dimensionalize that a little bit?

Yeah. I think listen.

I think the year sets up as I mentioned earlier, you know, the gating is fairly consistent. When you talk about comps, I mean, we certainly had easier comps in the back half of this year relative to PEO.

So you are not gonna have you know, we are comparing the back half of this year to last year when we were actually down in enrollment. Now we are gonna be up in enrollment.

So the comps get a little bit tougher, Kevin, on the PO business as we move into the back half. Obviously, we continue to expect improved performance from a bookings and retention and all the things within our control.

But when you look at the quarters, the gating is relatively consistent quarter to quarter. there is always puts and takes.

I do not see as much risk maybe as was perceived with this fiscal year. Got it.

And with, with Paycor, in the base now, is there anything from a seasonality perspective that we should consider just as the year kind of shapes up I mean, nothing that comes to mind.

I mean, similar to our business, there is a there is obviously a lot of year end processing revenue that hits the third quarter, and, obviously, that drives a lot of it is high margin, so it drives a lot of profitability in Q3. But outside of that, I think of anything offhand that would give you some differences quarter to quarter.

Thank you.

I would add. I think you know, anytime you have the larger deals larger deals, a lot of times, will wait until the till the end of the year So you know, the that is 1 of the things we constantly look at is bookings.

there is building and building and building in the larger segments. You know, a lot of times, you will either they will wait for a quarter.

A lot of times, they wanna wait till the end of a calendar year. So again, nothing that I would say is meaningful.

Remember, we had a very large enterprise business before we bought Paycor. So we are familiar with it, but certainly as we focus there, you know, we are watching the how the bookings develop because the bookings may be you know, building, but then the implementation date is not for you know, 9 months away.

So we are we are looking at that as well, but we are not seeing anything that is that is meaningful to change substantially the gating we have seen historically in our business. And, John, just on that point, that would impact your Q3 more, right, in terms of as they go live January 1?

that is correct. that is correct.

Okay. But, again, that is something we are very it is very typical in our business.

But, again, because we are putting more resources against the enterprise area, we are also again, we are doing ASO and we are doing PO at the point of sale as well. And, again, as we do larger deals, any larger deal, a lot of times those clients are going to want to do something on a clean quarter Whereas in the small business, you know, we will do it during middle of the week if we if we need to.

So Good. Thank you.

Yep.

Thank you. I wanted to dig in, in terms of the implied Paycor ex-slow growth right around 4% based on my math here in 4Q.

I guess, any way to size how much of that deceleration in growth is more so cross sells of the ASO and PEO thinking about kind of revenue shifting out of Paycor to Paychex more so than kind of revenue churn or even, you know, weaker than expected bookings here?

Yeah, Jared, but, you know, I will talk the way we talked last quarter as it relates that. I think it is somewhat of an apples to oranges comparison just given the way we are managing the business this year versus the way it was managed last year with revenue and resources moving around between the 2.

I think the way we have been looking at that business is our enterprise business, which is, you know, 100 plus you know, loosely defined. And when we kind of look at that, the growth of that business, I think, was fairly strong in Q3 and we saw similar trends in Q4 where our enterprise business you know, across both platforms, so it really does not matter you know, where the client was last year and where they are this year.

We saw high single digit growth in our enterprise business during the quarter. And again, I think we have talked about that.

that is our expectation prospectively when you look at the other assets in that space. You know, that growth rate is not too dissimilar to what the other pays are producing, and we would expect, at minimum, to continue to keep pace with that growth, in that segment of the market.

Yes. I just I want to add on to this because you know, the first thing I am always cautious of because I do not wanna come off as being, like, defensive about this topic.

It but it is been challenging as we launch the integration And I think what is probably not known is you look at the Paycor business, and 1 of the things that attracted us to us strategically is this was a legacy business that had a rather sizable under 100 client base. And probably the brand was known as something larger than that.

But when we looked under the-- there was, and there was a motion in that in that business to keep that client base at least stable. We made a so when you are looking at comps about what growth was 3 years ago, you are looking at a growth of both a under a 100 and an over-100 business.

Stop right there. We made a conscious decision, which I think is the best decision for the company was we wanted to focus that technology and brand where it was resonating most and where it was getting the most both the best traction.

So when we separated the 2, we took all that under 100 and move that to our small business segment and vice versa. So, look, on an aggregate basis, it is aggregate basis.

But in terms of Paycor is now a brand for our enterprise segment that we define as a 100 employees and more. And we are selling complete solutions there We are selling at the point of sale, a PO, an ASO, and those are going into different parts of our business segments.

So, it is very complicated to do that. You know, what I am looking at is the enterprise.

Here's what I can tell you. Our enterprise business at Paychex is growing faster than it is grown.

Yeah. Number 1.

And number 2, our 100 plus retention is the highest it is been since I have been here in 13 years. So, again, the combination of having the right technology, the right capabilities focused on these upper end enterprise segments, I think, is benefiting us not only from accelerating our historical organic growth there, but also in retaining clients.

So I certainly think, you know, look, we are better together. We are totally together now.

We are totally integrated. I think as we move forward, know, what we are gonna be focused on is continuing to grow and serve that enterprise segment.

Making sure we are maximizing the product penetration, both PO, ASO, and HCM the 100 plus segment in the marketplace. Hope that helps.

No. That was helpful.

And then as my follow-up here, in terms of the roughly flat client count growth this year, I guess anything to call out in terms of notable differences whether it came to call it the core Paychex versus Paycor? And when might this potentially inflect and return back to growth?

No. I think when you look at it from a retention perspective across the board, our client retention was record in the in our ASO PO business worksite employee basis.

Our 100 plus, as I said, was record level, as well. When you look at client losses, client losses tend to be in the lower end of the market.

And tend to be out of business. And that is that is that is just really where the where the year has gone.

And as I said repeatedly, know, we constantly are selective in clients that we are going to bring in. To the business.

We know what a good client's going to be. A client that we can attach, a client we are gonna get lifetime value on, understand the cost of acquisition very, very well.

And we are not going to do irrational things just to add clients. Are not going to be profitable clients.

You cannot achieve the margin profile that we do and have a lot of unprofitable clients. So that is gonna continue to be our strategy.

And we think that is gonna continue to not only grow revenue, for us, but I think it is also going to make sure that we have, the right underlying financial performance in terms of margins and margin expansion going forward.

Got it. Thank you.

Great. Good morning.

Thanks for taking my question. On the revenue synergies, the outperformance that you had this fiscal year, more than 50 basis points It sounded like from some of the comments on the questions that maybe the Paycor Salesforce was not sort of fully engaged the whole fiscal year.

And so is there any way to think about how that cross sell could progress next year or the opportunity, could it actually contribute more to growth next fiscal year than the past 1? Thank you.

Yeah. I mean, I will sorry.

Go ahead.

I well, first thing, I do not wanna cat categorize it as they were not that they were not engaged. We were very engaged and we had good success.

You look at ASO, and retirement penetration really exceeded our expectations. PO, which is a longer sales cycle, we got several large deals, and that is as the years went on.

You know, look. I just I would go back and remind you know, we did change territories.

We changed management. We changed leadership structure.

And we retrain them on the various products and services, and all that did not start until June. A year ago.

So what I would what I would not characterize it as not was not a lack of engagement. it is really just that point of kind of learning and then getting accustomed to okay, how do I put this into my sales motion?

How do I put these talk tracks in? And how do I engage my paychecks partners in the sales process?

So, you know, as you can imagine, you just get better with that over time. And we are constantly learning on that.

So I do not I do not wanna characterize it as we were. Having engagement, but there is no question as we do it more frequently and we have success doing it, that success breeds more success.

More people are doing it. that is what we are seeing, in our bookings, in our in our referral our referrals this year across all the platform was stellar, and it really drove a lot of the booking success that we had this year.

Bob.

Okay. Yeah.

No. Yeah.

I mean, the only thing I would just add to it is that I mean, it is the reason why we did the deal. Right?

I mean, it was 1 of the main reasons why we did the deal is the opportunity to go after those revenue synergies because we knew how successful that we had been in going in and monetizing our client base. Particularly with these higher value solutions.

And so we are already having a ton of success with the Paycor client base. I think when we did the deal, we highlighted that was not, you know, a 1 and done type of thing that we would continue to build momentum there over time as we went after that opportunity.

We exceeded the this year's number, and now we gotta grow over that. Right?

And we would expect you know, probably, even stronger, contribution, you know, next year and beyond. To growth.

And I do think it is what is fueling a lot of the improvement in the organic revenue growth that we have talked about as we move through the year.

that is really helpful context, so thank you. And then maybe to go back to a question earlier on AI monetization and Wise.

As you sort of roll this out to customers, is this something that you think is gonna be more for SMBs? Is this more enterprise?

Who do you think is gonna be able to engage with these tools kinda out of the gate? How do you see that ramping?

Thank you.

Yeah. Look, I think that this product is going to resonate with clients of all sizes.

And the reason why I say that let's just talk about the HR compliance capabilities. That we now have based upon our 50 year history For a client that does not have an HR department, this enables them to, in real time, make sure that they are always in compliance.

So when you are hitting thresholds in a certain state, either be because you went you now hired your fifth employee, and now you have got you have got certain state stipulations that you have gotta do certain things. Instead of you needing to wait or remembering it is 5 or for us reminding you just hired your fifth, the system's automatically doing that and automatically taking the action.

To enroll you in a workers' comp program or unemployment insurance. So think in the small end, think this is gonna give them greater peace of mind.

I think we are gonna have less errors on tax and tax ID issues that we have. I think it is going to be beneficial from a retention perspective.

And then I think as you go up market, I think this tool in the hand of an HR professional is going to give them far more confidence and capability to be able to focus on strategic HR initiatives and have our AI models and agents actually do the work for them. Stop this.

Our way our wise AI compliance tool, some of which we did through acquisition. Integrates with most of the large HCM platforms that are in the market today.

So, again, as I said, you can have the compliance AI, egenic AI patent pending paycheck compliance capability regardless of the platform that you are on and we will integrate with your platform to help you have a digital HR agent keep you compliant.

Great. Thank you very much.

Hey. Thanks for taking my question.

How did Paycor broker referrals trend during the quarter? Did you to see acceleration in bookings like you called out last quarter?

And then on the Hub International partnership you announced back in May, curious what is actually different in that arrangement versus how you and Paycor worked with the broker channel before? We have also had several quarters now to gather feedback from partners on what they want to see.

Wondering if this is an evolution of the Partner Plus program and whether this model is something you are looking to take to other national brokerages to drive new business referrals going forward.

Yeah. No.

Our bookings, holistically, through the pay core again, enterprise sorry. Yep.

Through our enterprise reps, has grown every quarter since the acquisition. And the broker pipeline has continued to grow with it, the fourth quarter being higher.

Than the third quarter. So, again, even with even if you strip out seasonality, which there is in that business in terms of timing, We are seeing, and we are now back to what I would say is pre acquisition levels in that area.

We did sign actually 2. 1 is named Hub.

You mentioned 1. We have hit there is another 1.

Unnamed that we have already signed, and it is part of our partner plus. The thing that is different about the partner plus program that we are going to market with is it is holistic.

They are able to represent all of our products and services, any products and services that we have. In the Paychex portfolio, We are also partnering with them on some of the HR compliance and some of the HR capabilities that I just mentioned to you.

So I really think you begin to look at the holistic both advisory solutions compliance tools, and then the breadth of the of the capabilities we have from a technology perspective, we are bringing all that to bear in our partner pro plus program for brokers. And so we actually are getting good feedback from those loyal brokers that have been there.

And as we are adding new brokers, they like the approach that we are bringing, that it is a holistic approach. Great.

Thanks. And quick follow-up as well.

Just on Paycor sales headcount, last quarter, you mentioned intention to expand there. May maybe just an update there.

Should we expect you know, that to help FY 2027 bookings, or maybe a little bit further out since there is a ramp period.

Yes. I mean, we have we are we are committed as we said when we did the acquisition to continue to add a sales headcount that is in our plan, and we are actively building head sales headcount as we speak.

So we have openings if you know anybody, you can refer Great.

Thank you.

Hi, good morning. Thanks for taking my questions.

Maybe just unpacking the fiscal 2027 guidance a little bit. If I think about some of the assumptions around unit growth versus pricing contribution versus new bookings?

I know you guys do not guide to those components specifically, but just as we think about the fiscal 26 contribution, how are you tilting those variables? Like, what are you assuming Are you assuming retention's flat up or down?

How are you thinking about the amount of price you can take in fiscal 27 versus 2026? Just help us understand the growth algorithm given all the changes that have occurred over the last 18 months.

Yeah. I mean, we all we always put together a plan where we are trying to, you know, sell more and lose less.

You know, retention has improved significantly over the last 5 years, particularly when you look at the ASO in PO, it is pretty remarkable how much retention has improved. But the teams always challenge themselves, and always trying to get better and improve retention, obviously, trying to look to grow sales, as John mentioned, you know, look for opportunities that add headcount.

And so when you look at our client base, Samad, and our assumptions there. Listen, Our client base has been relatively flat.

We are not getting a ton of growth from that. You know, really, we do not need to get a ton of growth out of that.

We are trying to be thoughtful and make the right investments and really trying to attract the right client. And so overall, you know, we are we are trying to, you know, outsell our losses and grow our client base a little bit, but really trying to grow our client base in the right client sizes.

I mean, that was 1 of the reasons why we pulled the trigger on the Paycor acquisition, you know, trying to know, get larger clients in the door because we know where we have gotten all of our growth from, you know, ASO and PO retirement services. You know, a lot of those solutions meet the needs of larger customers.

But our assumption is, you know, not that we are gonna generate a ton of client base growth that we would, you know, continue to maintain our client base but maybe improve in the right client sizes. To really execute on our model, which, you know, I think you and I talked about this, is really a revenue per client model, really our ability to go in, get a larger share of wallet out of our client base, When we look at the penetration rates of the key solutions, you know, within the Paychex Flex client base, they are still relatively low.

So we see lots of opportunities there. And then, obviously, there is the huge opportunity in front of us that we have been executing on with the Paycor client base.

And so when you look at the plan next year, you know, it is it is it is it is that. it is it is assuming that, you know, client base will be, you know, relatively flat but maybe improving a little bit and in the right client sizes, and then it is really gonna be an increase in revenue per client, which is really our model You know, roughly, you know, half of that is coming from pricing, and half of it is coming from share of wallet.

And as I mentioned, there is a bit of a headwind on float this year. Just given what happened with, short term rates at the end of last calendar year.

So that is is kind of how we are thinking about the year.

Great. And then I just wanna ask 1 follow-up on the especially since you just mentioned kind of revenue per client.

I thought the discussion around you know, I guess, being able to have products and not while not having the payroll or core payroll module is a is a good strategy for the retention component. But how is that impacting maybe the initial land?

Are you seeing the funnel either broaden to where you are getting like, a greater mix of nonpayroll customers at the outset of joining the Paychex journey, and is that changing maybe what the average revenue per new customer added looks like and how should we think about that maybe in your guidance as well?

No. I think, Samad, what you should think about is, you know, as we have now had now that we have this capability and we have been using this capability, you know, to you know, let's say just somewhat defensively, let's do not lose everything.

Let's-- if there is for us to add a client on a stand alone basis that is non stand alone payroll, Let's go and do that. Think what you are gonna see is we now that we have this capability, we will try to begin to integrate that into our sales motion.

So that if it is not the right time, for a client to transition their payroll provider, their HCM provider, it may be the right time for them to leverage our compliance tool, or it may be the right time for them to use another 1 of our products or services like 1 of our benefits. So retirement or etcetera.

So I think 1 of the things that it is is probably different in the motion that we now have the capability to do that we just have to figure out the economics, the go to market strategy around is okay. When I am in that deal and I am trying to sell the entire bundle, which is typically what we are trying to do, we are trying to convince someone to move to our HCM and payroll platform then we are bringing our 4 zero 1 k partner in at the same time Those things are generally or insurance or ASO those things were generally done as a integrated bundle.

If you did it when the HCM payroll, you did not win anything. And now what we are in what we have an enablement to do technologically, that is the start, Right?

Is that we can actually bill it, and we can actually collect it, and we can actually service it that is the that is the breakthrough here. And I think, you know, now we are just really to the point of saying, okay.

Can you do that profitably? What are the economics of that?

But certainly, capabilities, what I am excited about because I do think it gives us an opportunity to be able to impact more customers in the marketplace and then build a relationship with them. And I think over the long term, what we have proven is over the long term, if we build a relationship with a client, they are going to buy more from us and they are getting value.

I look at our retention this year for example, our price value losses were down. Significantly.

Again, that just that just that is a it is a very competitive environment. And I think it just indicates that customers are seeing the value that we are providing.

And I think you know, as long as we continue to do that, And now that we have more products and services that we can serve those clients with, I think gives us more opportunities to get hooks into a client. And then I think if we get a hook into a client, I think we know how to monetize that relationship over the long term.

Great. Thank you so much.

Thanks, Samad.

Hey. Good morning, guys.

This is Will Chi on for Ashish Sabadra. Appreciate you guys taking our question.

Maybe just on the fiscal year 2027 margin guidance. 44% came in a little bit above our expectations.

I think you alluded to some of the factors with better client selection, but just wondering if you could break out the drivers there as we kind of rationalize you know, increase resources towards Salesforce, but also general kind of grid cost management and optimization across the rest of the Yeah.

Well, let me start by saying I said approximately 44%. So you can leave that to interpretation.

So listen, think we typically are looking for ways to, you know, in a normal year, we are looking at 25 to 50 basis points of margin expansion. This is probably on the guide probably assumes that higher end of that.

And I think we have talked a lot about this. I think the investment in and what we are seeing from a productivity standpoint, You know, if you asked us a few years ago, whether we be able to get the 44% margins, we probably would have had a different answer, but we continue to look for ways to be more productive, more efficient, You know, 1 of the metrics that John and I are holding ourselves and the team accountable to is really trying to drive higher service revenue per employee, and that is growing at a rate, you know, higher than our revenue growth rate.

And so that certainly helps with driving margin expansion. And then I would say the other thing to think about there too is you know, we bought a business that had structurally significantly lower operating margins than them than what we had, and we came in and we applied our operating model to it.

Got a lot of synergies associated with that, and you are gonna see the full year you know, a lot of that was realized this year. Also going to get the full year impact of that next year, which helps from a margin standpoint.

And we are not done. I am not sure we will talk, further about expense synergies as we go forward.

It will be BAU, but we see further opportunities there certainly from a procurement standpoint as contracts come up for renewal and those types of things. But you know, it is it is I would say those are probably the things that contributed to maybe being a bit on the high end of a normal year, but not too dissimilar than what we have been able deliver I think it was 70 basis points this year.

it is in that range next year.

Yeah. I do not again, I am gonna I am gonna harp on this a little bit because I am this is something that does not get exposure.

You cannot go to HR tech. And look at our back office systems.

You go to HR tech and you look at all the client facing components. And so I know for some people, it is a mystery how we can have the margins we have 40, you know, 42, 44%.

And it and it really has to do with the heritage of us being a payroll service company that invested a lot of technology and having a very tight operating model and system internally. And so I always say that because this modernization that we have been able to unlock and do systematically across each portion of the back office component of what we do I think, has been 1 of the reasons why you have seen this constant progression.

it is why when we went into an acquisition, even I remember in the Oasis days, when we did the Oasis acquisition, and someone from their operations comes in and looks at our tax capability and go like, well, when can we get off of ours? Right?

So it is those type of things you begin to have that because in our business, the most expensive most expense is generated by mistakes and errors. Because if you have to clean up a tax error, then it takes a lot of manual work to do that with the government, etcetera.

So the capability now to prevent these errors upfront, and now to be able to use Agenic AI to actually those issues and get in front of them and actually fix them on our behalf. At the scale that we operate, that is a significant benefit, and it really frees up resources for us to move more resources to an advisory and support capability so that we can be more responsive to our clients when they need us And a lot of that benefit, we are gonna be able to drive more value to customers And so I am I am really excited.

Again, I am as you guys know, I am the old operator here. So you know, these are the things that I was dreaming we would have someday.

And now we have them. And I and I think there is a lot of potential, a lot of runway because a little bit, we just got this completed.

And so more to come I think, in the in the in the years ahead here. Thank you, guys.

Hey. Good morning, John and Bob.

Yeah. I wanted to go back to a comment you made or Bob made on client growth and kinda just to understand your philosophy on client growth and looking at that.

And I know you said it is going to be kind of flat to up slightly. And how you are approaching that?

And do you think you can accelerate client growth, or would that be bad and hurt margins? I am just interested to get your perspective on that.

Well, Kartik, I think the first thing we wanna do is we wanna make sure we are driving retention in our highest lifetime value customer segments. So we already said record PO ASO, and a 100 plus.

And, you know, let's let's start there. When you look at where we have client attrition, again, you go back let's look holistically payroll.

Our payroll retention is at pre pandemic levels, which I would remind you was record levels at the time for paychecks. So at the end of the day, from a retentive perspective, I think we are holding our own in the market in the marketplace.

We are putting our go to market motions, are in our higher value segments. And what we are trying to do is you look in the lower end of the market is we are trying to make sure that we are for a client not overpaying from a cost of acquisition that we know we will not make a long term return on or monetize.

And, again, you know, that is that is been our philosophy. I think is that is how we get the margins we do.

that is how we you know, focus on, you know, driving more value over the long term. And so that is our operating model.

As Bob says, it is not been a big part of our growth story. Over the past several years.

And really, that is been our strategy this point in time.

Perfect, John. And just a follow-up.

Just your perspective, on competition. Obviously, based on the bookings growth you have talked about, it looks like VTX is holding its own better than holding its own.

So curious as to what the competitive environment looks like.

You know, I do not I do not look. I think the competitive environment remains exactly the same.

I think it is a very competitive market. I think that we have a broad suite of products and services.

I think, obviously, our value proposition is resonating well with our existing clients given the retention we have had. And I think when you look at the bookings accelerating we are doing very well.

We are certainly doing extremely well in the PO business. And I would say the HR advisory side you know, just given the growth rates that we are seeing in comparison to the other benchmarks I have seen in the industry.

So feel good about the way we are positioned. We have a competitive product.

And I have not seen any major shifts in the competitors or in competitive behaviors. As well.

Perfect. Thank you very much.

As always, appreciate it.

Thanks, Kartik.

Thanks, Kartik.

Good morning. Thank you.

So health care costs have been fairly elevated this year. Actually quite elevated.

And then just curious, what impact if any, do the changes in health care inflation have on the growth of the PEO? And if you could just remind us on whether the PEO renewals are skewed to any particular quarter or quarters like it is for some of your peers.

Yeah, I mean, I will start and then John can add on. I think in general medical inflation, is high and we would expect to continue to be high, think that is a tailwind for the PEO business.

I think it is helping drive our growth Certainly, you know, I think we have a long history of trying to help small businesses punch above their weight, and I think that is 1 of the strengths of that PO business model that we can typically leverage our scale in being able to offer, you know, rates and benefits to small businesses that you know, cheaper than what they would be able to offer on their own. And so I see that as contributing to the strength of that business model that we are currently seeing, and we would expect that to continue in the future.

As it relates to our renewals, Dave, I think there is 2. there is 1 that happens in you know, just based on acquisitions so forth.

We have not fully aligned those. there is 1 that happens in the in the fall time frame, and then there is 1 that happens at the beginning of the calendar year.

We went through both of those this year with, successful renewals. And when I look at a across the PEO, whether it is our Florida at risk medical plans, whether it is maybe attachment within our agency, the open market or whether it is, you know, outside of Florida and our other master plans.

Our medical enrollment was up really across the board. And, again, I think that just speaks to the value of that business model and really small businesses deal with a very pretty big challenge for them, not only inflation, but the cost of medical inflation.

Yeah. I look.

I think this is 1 of, you know, the top 3 issues that I think our market segment faces is in order to compete for labor, which is very difficult small, medium sized businesses to compete with, you have gotta be able to have a competitive benefit packages against larger companies. Okay?

I gotta do it to be competitive for labor. And then when you look at the cost, the cost is, in many ways, unsustainable for both the employer and the employee.

So it is a double edged sword. While you get the tailwind of a rising cost of your insurance that may show up in your revenue.

The problem is that rising cost also scares people away from being able to afford it. So it is kind of balanced itself out.

And I think to Bob's point, that is why we have had a multitude of different ways in which we can procure and provide health insurance both in our PO and more generally across our business. I think it is the other thing that we continue to try to do is come up with innovative approaches to be able to assist small businesses.

We look at our Perks product. So, again, we offer these type of health and dental and other traditional big company benefits.

In our Perks marketplace, we are an employer can say, I offer these benefits, but they do not pay into it and then we are providing a discounted and a better user experience just like in an open enrollment. For 1 of their employees to be able to buy it a la carte.

We have over 400 thousand employees buying from that marketplace today. As we mentioned, we are now rolling that out to the Paycor, 2.5 million employees.

We also have a health reimbursement arrangement solution that we have brought to market and will continue to bring to market to try to help businesses. So look, I think this health care inflation issue is real.

it is a real squeeze for small and medium sized businesses that wanna compete for labor. And they are at a disadvantage.

And we are providing a ton of different options And that is why they are gravitating towards RPO because it is not 1 size fits all. We can give you a multitude of different solutions and your employees will have a very similar experience as if they were on a master plan.

So I do think that is another differentiator for us in the marketplace there.

Great. Thank you very much for that.

And just 1 other quick 1. Bob, I know you said the cadence of growth should be relatively consistent across the year.

However, given we all over indexed to very small variations in growth quarter to quarter, Just based on the comps, is it reasonable to expect that we would be closer to the high end of the range in the first half? Or the higher the upper half of the range.

In the first half of the year and maybe the lower half in the second half of the year. Just based on the arithmetic and the comparisons?

Yeah. Dave, I am not sure I wanna get into trying to parse the quarters at this point in time.

You know, there is puts and takes as we go through the year. We will kind of update you guys and try to provide more color on at least the next quarter Again, kind of looking at it in front of me, and there is not really a lot of variation quarter to quarter.

So we will we will provide more color on the splits as we move through the year, but just kind of given we are at the beginning of the year, and it is fairly consistent as we move through the year. You know, I am not gonna kinda get into the and takes between the different quarters at this point in time.

Great. Fair enough.

Thank you very much.

Yep.

Hey. Good morning, guys.

Thanks for, squeezing me in. Just 1 from me.

Just thinking about the potential cross sell opportunities with the PEO. Dave you given any thought to sort of bringing the PEO platform and functionality over to, the Paycor side, or is it gonna continue to just remain on the, the Paychex, platform?

Thanks.

So Scott, I think the complexities of PO tax and unemployment insurance are a pretty heavy lift. We feel like we have a very solid platform We have worked a lot on managing that migration because remember we did that internally as well.

I would say that we continually to look, particularly with the advances we are seeing from product development perspective with the use of AI. And as I talked about before, as we now completed the modularization of our various back office components, that is certainly something that we will continue to look at.

What we are committed to is offering a client a seamless migration path across our platforms and across our solutions. And, you know, whether that is done from moving them to 1 platform to another platform and doing that in a very seamless and effortless way.

Or whether that is empowering each 1 of our platforms to offer the full suite of capabilities is really gonna be you know, cost benefit analysis that our product team's gonna have to do. Thanks, guys.

Yep.

Scott.

Hey. Thank you, guys.

Good morning. So just reflecting on your mid term target for upper single digit revenue growth.

I mean, this year, obviously, we are guiding 5 to 6, very consistent with what you had previewed last quarter. But just conceptually, as we think about that medium term, does upper single digits still feel like the right range, or is it possible we need some more m and a to get there?

We would love some perspective on that. Thanks.

Yeah. I mean, I think if you look at kinda historically, the business mean, updated the slides in the investor slide.

So when you look at the revenue CAGR, it is obviously much higher. I think it is a 13%-- no, it is actually a 3% to 13%, I think, on the top line over the last 5 years.

Obviously, a big contribution from Paycor. But if you strip that out, Mason, we have typically been in that 7% to 8% range historically.

And when you look at the growth, you know, growth formula, whatever you wanna call it, it typically we are driving 1% to 2% from M&A. And that continues to be an area of interest to us to look for opportunities.

I do not expect us to do anything, you know, at least in the near term that we like we just did with the Paycor acquisition, but there is certainly opportunities out there and we would expect to leverage M&A prospectively like we have in the past to drive growth in our business where we see opportunities. And so I think if you look at organic growth of the business coupled with what we have historically contributed over a longer period of time, 1% to 2% from M&A, you can clearly see where it is in that upper single digit range.

Okay. That color is helpful and Yep.

Just coming back to the conversation earlier about some of the recategorization between Paychex and Paycor. I know you took the sub 100 employee, clients, from Paycor.

Put them in paychecks, and then the 100 plus, obviously, going to Paycor, and that is making some of the comparability in the apples to apples harder to really discuss. But sitting here today, if we look at management solutions revenue, based on all this recategorization, like, what percent of MS revenue is now enterprise, I e, the 100 plus You know, I do not I do not have that breakdown in front of me to be fair, and I do not really wanna try to guess.

I mean, when we look at that enterprise segment, we are not just talking management solutions. We are we are looking at the entire business.

So certainly, in the in the PEO, we have larger clients as well. So I just you know, maybe that is something that we can add to just based on your feedback we can add to.

A future IR deck But I do not have that breakdown in front of me.

Okay. That would be great.

Thanks, Bob.

Yep.

Thank you. You.

Well, listen, thanks, everybody, for your questions. And for joining us today and your interest in Paychex.

You know, we are entering the fiscal year 2027. Positioned better than ever.

I really feel our we have had strong momentum as we went through fiscal year 2026. We have made meaningful progress across our strategic priorities, including our upmarket expansion and the integration of Paycor.

The work that we have done to drive advisory differentiation and the AI innovation that we have done in the very short period of time. Very proud of all the work that teams have done across the board.

it is just really been if you think back what this team and this organization has been through the last year since we just all came together. Just 1 short year ago.

And the amount of work that needed to be done in the back office the amount of work that needs to be done in the integration front, and the progress we have made. I am just so proud of the company.

And to deliver these results that we delivered, again, to a hit the original guidance that I think probably were some skeptics about a year ago on the back half. To be able to, you know, land that and to be able to raise guidance twice on earnings per share as we went through the year because we demonstrated our best operator capabilities and were able to exceed the expense synergies in the acquisition.

Look, I think we sit here today with the teams in place with the technology and platforms that are built for purpose for the markets that they serve. And now an AI enabled organization that I that I really think is just really going to continue the momentum that we have seen, build over fiscal year 26.

So we believe this enhances our competitive position. As I said, we are stronger together I think it really supports the growth and value creation for paychecks, not only in 2027, but I think well beyond.

So, again, thank you for your support. And we will talk to you next quarter.