Paychex, Inc. (NASDAQ:PAYX) shares reversed Tuesday on quarterly earnings. The company today announced total revenue of $932.2 million for the three months ended August 31, a decrease of 6% compared to the prior year period. Net income decreased 20% to $211.6 million and diluted earnings per share decreased 19% to $0.59 per share for the first quarter.
Adjusted net income and adjusted diluted earnings per share, both non-GAAP measures, each decreased 11% to $228.0 million and $0.63 per share, respectively, for the first quarter.
Adjusted net income and adjusted diluted earnings per share include adjustments for one-time costs of $31.2 million related to the acceleration of cost-saving initiatives, including the long-term strategy to reduce our geographic footprint and headcount optimization, and net tax windfall benefits related to employee stock-based compensation payments.
Said CEO Martin Mucci, “Financial results for the first quarter showed marked improvement as most of our key business metrics recovered at a faster rate than anticipated. The effects of the COVID-19 pandemic continue to impact our results causing unfavorable year-over-year comparisons, however, client retention has remained strong and sales performance is accelerating with year-over-year growth in the number of clients sold.
“We continue to provide excellent customer service and invest in our business while remaining cost-conscious. Cost-saving initiatives are underway and proceeding as expected.”
Results of operations for the first quarter were adversely impacted as businesses continue to be affected by the COVID-19 pandemic. Management Solutions revenue was $687.4 million for the first quarter, a 5% decrease compared to the prior year period. The decrease was primarily driven by a decline in check volumes, partially offset by increased penetration of retirement services.
PAYX retreated 81 cents, or 1%, to $80.64.