Paychex, Inc. stock research
FY2025 Q4
Paychex (PAYX) Gross Margin — Quarter Ended May 31, 2025
Revenue decreased from the prior quarter but increased compared to the same quarter last year. Gross margin weakened sequentially due to a combination of lower revenue and higher cost of revenue, while it improved year-over-year as gross profit growth outpaced revenue growth.
Gross margin takeaway
Quarter ended May 31, 2025 · FY2025 Q4
Revenue decreased from the prior quarter but increased compared to the same quarter last year. Gross margin weakened sequentially due to a combination of lower revenue and higher cost of revenue, while it improved year-over-year as gross profit growth outpaced revenue growth.
- The sequential margin decline is associated with a decrease in revenue and an increase in cost of revenue, which together caused gross profit to fall more than proportionally. Year over year, margin improvement reflected gross profit rising faster than revenue.
- Compared to the previous quarter, gross margin weakened as revenue declined and cost of revenue rose. Compared to the same quarter one year earlier, gross margin improved as gross profit increased at a faster pace than revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
71.5%
Gross profit
$988.2M
Revenue
$1.4B
Cost of revenue
$393.9M
Quarter-over-quarter change
-2.1 pts
Year-over-year change
+1.4 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 |
|---|---|---|---|---|
| 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% |
| May 31, 2025 | $1.4B | $988.2M | $393.9M | 71.5% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Feb 28, 2025
-2.1 pts
Year-over-year change
May 31, 2024
+1.4 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The sequential margin decline is associated with a decrease in revenue and an increase in cost of revenue, which together caused gross profit to fall more than proportionally. Year over year, margin improvement reflected gross profit rising faster than revenue.
Compared to the previous quarter, gross margin weakened as revenue declined and cost of revenue rose. Compared to the same quarter one year earlier, gross margin improved as gross profit increased at a faster pace than revenue.
Monitor the trend in cost of revenue relative to revenue, as the sequential increase in costs combined with decreased revenue weighed on margins.