PAYX: 4Q26 Results: Solid PEO Momentum; Management Solutions in Focus as PYCR Fully Anniversaries in 1Q27

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PAYX: 4Q26 Results: Solid PEO Momentum; Management Solutions in Focus as PYCR Fully Anniversaries in 1Q27

rating income/margin estimate of $3,002m/43.7% is moderately

above consensus estimate of $2,982m/43.4%. Our adj. EPS estimate is at $5.98 (+8.4% y/y) vs.

consensus estimate of $5.91. (See Exhibit 2)

WISE AI Platform. In the quarter (May 2026), PAYX launched WISE, an AI-powered intelligence

engine with ~600 AI features and agents built on ~26+ tn data points. The platform uses PAYX's

proprietary AI knowledge mesh technology to extract insights from unstructured data including

emails, calls, and client interactions. Current applications include workforce management

solutions that generate schedules in minutes and reduce timesheet approvals by 50%+,

timekeeping intelligence (soft launch with 10,000 customers, achieving 70% error reduction),

and enhanced reporting. Internally for PAYX, WISE powers a service concierge providing real-

time access to product knowledge and a "sales guru" tool giving salespeople access to datasets

and interaction history.

Management expects monetization through direct revenue, upsell opportunities, higher

revenue-per-client metrics, improved retention, and pricing power. The compliance tool

integrates with major HCM platforms independent of payroll provider, applicable to both small

businesses seeking automated regulatory compliance and larger enterprises looking to drive

higher productivity from employees.

Sales realignment completed, solid momentum for bookings. In FY26, PAYX completed

organizational and sales territory realignments following the Paycor acquisition, moving Paycor's

under-100 employee businesses into the SMB segment and integrating Paychex's 100+ employee

businesses into the enterprise segment.