Paychex, Inc. stock research
FY2025 Q3
Paychex (PAYX) Gross Margin — Quarter Ended Feb 28, 2025
Revenue improved sequentially and year-over-year, while cost of revenue rose less than revenue, leading to gross profit expansion. As a result, gross margin strengthened compared to both the prior quarter and the same quarter last year.
Gross margin takeaway
Quarter ended Feb 28, 2025 · FY2025 Q3
Revenue improved sequentially and year-over-year, while cost of revenue rose less than revenue, leading to gross profit expansion. As a result, gross margin strengthened compared to both the prior quarter and the same quarter last year.
- The gap between revenue growth and cost of revenue growth widened, allowing gross profit to increase at a faster rate than revenue. This spread was the strongest observable factor supporting margin expansion.
- Gross margin was higher than the immediately preceding quarter and also higher than the same quarter one year earlier. Cost of revenue was relatively stable across periods while revenue grew, which improved the margin profile.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
73.6%
Gross profit
$1.1B
Revenue
$1.5B
Cost of revenue
$387.4M
Quarter-over-quarter change
+3.2 pts
Year-over-year change
+0.8 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 |
|---|---|---|---|---|
| May 31, 2024 | $1.3B | $881.7M | $375.2M | 70.1% |
| Aug 31, 2024 | $1.3B | $901.0M | $380.0M | 70.3% |
| Nov 30, 2024 | $1.3B | $901.7M | $379.1M | 70.4% |
| Feb 28, 2025 | $1.5B | $1.1B | $387.4M | 73.6% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Nov 30, 2024
+3.2 pts
Year-over-year change
Feb 29, 2024
+0.8 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The gap between revenue growth and cost of revenue growth widened, allowing gross profit to increase at a faster rate than revenue. This spread was the strongest observable factor supporting margin expansion.
Gross margin was higher than the immediately preceding quarter and also higher than the same quarter one year earlier. Cost of revenue was relatively stable across periods while revenue grew, which improved the margin profile.
Monitor total expenses, which increased compared to the prior year, as noted in the filing context, for any potential impact on net profitability.