Paychex : Fourth Quarter 2024 Investor Presentation

Fourth Quarter Highlights and

Financial Results

Fiscal 2024

Forward Looking Statements

You should be aware that certain written and oral statements made by management may constitute "forward-looking statements" within the meaning of the safe-harbor provisions of the United States ("U.S.") Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, many of which are outside our control. Our actual results and financial conditions may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance upon any of these forward-looking statements. The information provided in this document is based upon the facts and circumstances known at this time, and any forward-looking statement made in this document speaks only as of the date on which it was made. Except as required by law, we undertake no obligation to update these forward-looking statements after the date of issuance of this document to reflect events or circumstances after such date, or to reflect the occurrence of unanticipated events.

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Paychex Overview

An industry-leading human capital management ("HCM") company delivering a full suite of technology and advisory services in human resources, employee benefit solutions, insurance and payroll for small- to medium-sized businesses.

• Comprehensive technology-driven HCM solutions company
• Leading-edgetechnology platform backed by HR and compliance expertise
• Industry leader in comprehensive HR outsourcing solutions with approximately 2.3M worksite employees(1)
• >745,000 clients(1)
• Strong financial position with net cash and equivalents(2) of $737M
• Market capitalization of >$45B(3)
• 1. As of May 31, 2024
  2. See slide 15 for additional financial highlights

(3) As of June 21, 2024	3

Fourth Quarter Highlights

Fourth Quarter Financial Highlights

Total Revenue

5%

$1,295M

$1,230M

Q4 FY23

Q4 FY24

Adjusted Operating Income(1)

15%

$521M

$453M

Q4 FY23

Q4 FY24

Adjusted Diluted EPS(1)

15%

$1.12

$0.97

Q4 FY23

Q4 FY24

1. Adjusted operating income and adjusted diluted earnings per share ("EPS") are not U.S. generally accepted accounting principles ("GAAP") measures. Refer to slide 16 for a reconciliation to the corresponding GAAP measure.

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Fourth Quarter Revenue

Total Revenue

5%

$1,230		$1,295
$25		$38
+54%
$300	+9%	$327

$905

+3%

$930

Q4 FY23	(In Millions)	Q4 FY24

1. Professional Employer Organization ("PEO")

Key Drivers

Total Revenue: Lower contribution from ERTC service impacted growth by approximately 300bps

Management Solutions

• Growth in the number of clients served across our suite of HCM solutions
• Higher product penetration, including HR Solutions and Retirement Services

PEO(1) & Insurance Solutions

• Growth in the number of average PEO worksite employees
• Increase in PEO insurance revenues

Interest on Funds Held for Clients

• Higher average interest rates and invested balances
• Lower realized losses on investment sales

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Fourth Quarter Business Highlights

Sustained financial performance

• Revenue growth of 5% and adjusted diluted EPS(1) growth of 15%
• Excluding ERTC, revenue growth accelerated in Q4 to 8%
• Adjusted Operating margin(1) expansion of 330 basis points year-over-year to 40.2% in Q4
• PEO momentum continues with strong results in sales, retention, and enrollment

Solid execution across key operational metrics

• Implemented cost optimization initiatives across the business, including further reductions to our geographic footprint, reprioritization of certain technology investments and headcount optimization; recognized $39M in one-time costs associated with these initiatives(2)
• Revenue retention remains above pre-pandemic levels and near record levels
• Upper-single-digitgrowth in HR outsourcing worksite employees (WSE) and record WSE retention levels
• Product penetration continues to increase across our suite of HCM solutions

Positioned for growth in fiscal 2025 and beyond

• Leading SaaS HCM platform with comprehensive, integrated suite of solutions from hire to retire. Paychex Flex® is consistently rated as a leader in the industry by independent analysts
• Investing in the business to drive sustainable, profitable growth with targeted investments in AI, digital, product and technology
• Leveraging vast data assets and accelerating AI investments to improve efficiency, enhance customer experience and provide our clients with insights to help them succeed

Paid $353M of dividends to shareholders during the quarter

(1) Adjusted diluted EPS and adjusted operating margin are non-GAAP financial measures. Refer to slide 16 for a reconciliation to the corresponding GAAP measure.

(2) $29.5M of the one-time costs related to our cost optimization initiatives were recognized within Selling, General & Administrative expenses, and $9.9M were recognized as Cost of Service revenue on the consolidated income statement during the three months ended May 31, 2024.

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Product & Technology Horizon

Innovation to meet our customers' evolving business needs

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Recent Awards and Recognition

Paychex was recognized for its innovative technology and market leadership

FORTUNE® Magazine 2024	Ethisphere Worlds' Most
America's Most Innovative	Ethical Companies
Companies	Paychex recognized for the 16th time,
Paychex was recognized for a second	and the 13th consecutive year
consecutive year for its innovative technology
and corporate culture

HR Tech Award from Lighthouse

Research & Advisory -

Best Small Business-focused

Solution in the Core

HR/Workforce Category

Paychex was recognized for the fifth

consecutive year

2024 G2 Best Software Award

Paychex was recognized for having one of the best HR software products for 2024

USA Today

America's Climate Leaders 2024

Paychex was recognized for the second consecutive year by USA Today on the 2024 America's Climate Leaders list for the Company's achievement in reducing its core emissions and carbon footprint

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Sustained Financial Performance

(in uncertain times)

(In Millions, Except Per Share Amounts)

Total Service Revenue

Adjusted Diluted EPS(1)

$4.72

		$4,907	$5,132		$4.27
		$4,554	$1,266		$3.77
	$3,997	$1,177
$3,954
	$1,111			$3.04
			$3.00
$991	$974

$2,963 $3,023

$3,443 $3,730 $3,866

FY20	FY21	FY22	FY23	FY24	FY20	FY21	FY22	FY23	FY24
Management Solutions	PEO and Insurance Solutions

1. • 5-YearCAGR
2. Adjusted diluted earnings per share ("EPS") is not a U.S. generally accepted accounting principles ("GAAP") measure. Refer to our Annual Report on Form 10-K for discussion of these measures and a reconciliation to the corresponding GAAP measures.

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