Paychex, Inc. stock research
FY2025 Q1
Paychex (PAYX) Gross Margin — Quarter Ended Aug 31, 2024
Revenue was unchanged versus the prior quarter and the same quarter last year. Gross profit increased from the prior quarter but decreased from a year ago, while cost of revenue rose from both periods, resulting in a gross margin that improved sequentially but weakened year-over-year.
Gross margin takeaway
Quarter ended Aug 31, 2024 · FY2025 Q1
Revenue was unchanged versus the prior quarter and the same quarter last year. Gross profit increased from the prior quarter but decreased from a year ago, while cost of revenue rose from both periods, resulting in a gross margin that improved sequentially but weakened year-over-year.
- Gross profit improvement from the prior quarter occurred while revenue held steady, indicating that cost of revenue grew less than in the preceding period. The year-over-year decline in gross profit, despite stable revenue, points to a higher cost base compared to a year earlier.
- Gross margin was higher than the immediately preceding quarter but lower than the same quarter one year earlier. Revenue was flat in both comparisons, meaning the margin movement was driven entirely by changes in cost of revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
70.3%
Gross profit
$901.0M
Revenue
$1.3B
Cost of revenue
$380.0M
Quarter-over-quarter change
+0.2 pts
Year-over-year change
-0.9 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 |
|---|---|---|---|---|
| Nov 30, 2023 | $1.2B | $862.3M | $364.1M | 70.3% |
| Feb 29, 2024 | $1.4B | $1.0B | $379.8M | 72.8% |
| May 31, 2024 | $1.3B | $881.7M | $375.2M | 70.1% |
| Aug 31, 2024 | $1.3B | $901.0M | $380.0M | 70.3% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
May 31, 2024
+0.2 pts
Year-over-year change
Aug 31, 2023
-0.9 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
Gross profit improvement from the prior quarter occurred while revenue held steady, indicating that cost of revenue grew less than in the preceding period. The year-over-year decline in gross profit, despite stable revenue, points to a higher cost base compared to a year earlier.
Gross margin was higher than the immediately preceding quarter but lower than the same quarter one year earlier. Revenue was flat in both comparisons, meaning the margin movement was driven entirely by changes in cost of revenue.
Monitor the trend in cost of revenue relative to revenue, as it has increased from both the prior quarter and the year-ago quarter while revenue remained stable.