Paychex Inc (PAYX)
Pretax margin
| May 31, 2025 | Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before tax but after interest (EBT) (ttm) | US$ in thousands | 2,175,900 | 2,278,400 | 2,251,800 | 2,226,000 | 2,218,000 | 2,189,800 | 2,148,000 | 2,105,300 | 2,048,200 | 1,973,400 | 1,910,300 | 1,872,700 | 1,824,600 | 1,781,700 | 1,690,000 | 1,602,000 | 1,434,200 | 1,379,900 | 1,381,500 | 1,368,900 |
| Revenue (ttm) | US$ in thousands | 5,571,700 | 5,439,500 | 5,369,800 | 5,310,800 | 5,278,300 | 5,212,800 | 5,154,500 | 5,086,900 | 5,007,100 | 4,921,800 | 4,816,800 | 4,735,000 | 4,611,700 | 4,496,600 | 4,332,300 | 4,207,500 | 4,056,800 | 3,942,700 | 3,973,700 | 3,980,700 |
| Pretax margin | 39.05% | 41.89% | 41.93% | 41.91% | 42.02% | 42.01% | 41.67% | 41.39% | 40.91% | 40.10% | 39.66% | 39.55% | 39.56% | 39.62% | 39.01% | 38.07% | 35.35% | 35.00% | 34.77% | 34.39% |
May 31, 2025 calculation
Pretax margin = EBT (ttm) ÷ Revenue (ttm)
= $2,175,900K ÷ $5,571,700K
= 39.05%
The pretax margin of Paychex Inc. has demonstrated a consistent upward trajectory over the analyzed period, reflecting improving profitability before income taxes. Starting at approximately 34.39% as of August 31, 2020, the pretax margin gradually increased through subsequent periods, reaching over 41% by November 30, 2023. This consistent growth indicates enhanced operational efficiency or revenue growth relative to expenses, allowing the company to generate higher pretax profits as a percentage of total revenue.
Notably, from August 2021 onward, the pretax margin shows a steady rise, surpassing 38%, and continues to approach 42% by February 2024. There is evidence of sustained margin expansion over multiple fiscal periods, which may be attributed to factors such as improved cost management, favorable revenue mixes, or operational leverage.
However, a reversal is apparent toward the end of the period. From May 31, 2025, where the pretax margin is recorded at 39.05%, there is a decline observed in subsequent periods, with the margin decreasing to approximately 41.91% by August 31, 2024, and remaining around that level through the end of the period analyzed. This decline suggests potential tightening of profit margins, possibly due to increased expenses, competitive pressures, or other operational challenges.
Overall, the trend underscores a trajectory of increasing profitability pre-tax over the majority of the period, with recent indications of a slight contraction. The consistent margin expansion preceding 2024 reflects strong operational performance, while the subsequent decline warrants monitoring for any underlying shifts in the company's cost structure or revenue conditions.