Paychex, Inc. stock research
FY2026 Q1
Paychex (PAYX) Gross Margin — Quarter Ended Aug 31, 2025
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year, while cost of revenue also rose. Gross margin improved relative to both periods, indicating that gross profit grew faster than cost of revenue.
Gross margin takeaway
Quarter ended Aug 31, 2025 · FY2026 Q1
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year, while cost of revenue also rose. Gross margin improved relative to both periods, indicating that gross profit grew faster than cost of revenue.
- The strongest observable margin driver is the sequential and year-over-year improvement in gross margin, which rose from the prior quarter and from the same quarter one year earlier. This reflects a favorable relationship between revenue growth and cost of revenue growth.
- Compared to the immediately preceding quarter, revenue, gross profit, and gross margin were all higher, while cost of revenue was also higher. Compared to the same quarter one year earlier, all metrics were higher, with gross margin improved.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
72.3%
Gross profit
$1.1B
Revenue
$1.5B
Cost of revenue
$413.8M
Quarter-over-quarter change
+0.8 pts
Year-over-year change
+1.9 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, 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% |
| Aug 31, 2025 | $1.5B | $1.1B | $413.8M | 72.3% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
May 31, 2025
+0.8 pts
Year-over-year change
Aug 31, 2024
+1.9 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the sequential and year-over-year improvement in gross margin, which rose from the prior quarter and from the same quarter one year earlier. This reflects a favorable relationship between revenue growth and cost of revenue growth.
Compared to the immediately preceding quarter, revenue, gross profit, and gross margin were all higher, while cost of revenue was also higher. Compared to the same quarter one year earlier, all metrics were higher, with gross margin improved.
Monitor the trend in cost of revenue relative to revenue, as its growth rate influences gross margin sustainability.