Paychex, Inc. stock research
FY2023 Q4
Paychex (PAYX) Gross Margin — Quarter Ended May 31, 2023
Revenue decreased from the prior quarter while cost of revenue declined only slightly, causing gross profit to fall and gross margin to weaken. Compared to the same quarter last year, revenue and gross profit were higher, and gross margin improved.
Gross margin takeaway
Quarter ended May 31, 2023 · FY2023 Q4
Revenue decreased from the prior quarter while cost of revenue declined only slightly, causing gross profit to fall and gross margin to weaken. Compared to the same quarter last year, revenue and gross profit were higher, and gross margin improved.
- The strongest observable margin driver is the relationship between revenue and cost of revenue: revenue declined from the prior quarter while cost of revenue remained nearly stable, compressing gross margin.
- Compared to the immediately preceding quarter, gross margin weakened as revenue fell more sharply than cost of revenue. Compared to the same quarter one year earlier, gross margin improved, supported by a larger increase in revenue relative to cost of revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
69.3%
Gross profit
$834.9M
Revenue
$1.2B
Cost of revenue
$369.8M
Quarter-over-quarter change
-3.0 pts
Year-over-year change
+1.2 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Feb 28, 2023 | $1.3B | $972.8M | $372.9M | 72.3% |
| May 31, 2023 | $1.2B | $834.9M | $369.8M | 69.3% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Feb 28, 2023
-3.0 pts
Year-over-year change
May 31, 2022
+1.2 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the relationship between revenue and cost of revenue: revenue declined from the prior quarter while cost of revenue remained nearly stable, compressing gross margin.
Compared to the immediately preceding quarter, gross margin weakened as revenue fell more sharply than cost of revenue. Compared to the same quarter one year earlier, gross margin improved, supported by a larger increase in revenue relative to cost of revenue.
Monitor the trajectory of cost of revenue relative to revenue, as its near-stability in the current quarter contributed to margin compression.