Payroll provider Paychex reported a 22-rise in net income for the first quarter ended August 31 as the company took advantage of a federal tax program involving its software. Without the tax benefit, earnings would have risen 11 percent on an 8-percent increase in revenue as results were helped by price increases.
The company's net income rose to $209.1 million for the most recently ended period up from $171.3 million a year ago. Revenue of $723 million compared to $666.8 million in last year's corresponding period.
Paychex got the extra earnings bump as taxes fell to $88.4 million, down 8 percent from $97.6 million. CFO Efrain Rivera said during this week's earnings webcast that stemmed from the company's realization its customer-facing software qualified for a federal tax break designed for technology companies. The decline stemmed from applying the benefit to prior tax years.
CEO Martin Mucci said payroll revenue was $432.5 million, an increase of 5 percent from the same quarter a year earlier, driven by growth in revenue per check and the client base with revenue per check growth stemming from price increases. Prices increased within what the company described as 2-percent-to-4-percent range.
The company says it sees continued increases in the formation small businesses and growth in hiring in the segment that exceeds pre-recession levels.
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards. Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that. A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
