PAYCHEX INC Segments Disclosure
Note R — Segment Reporting
The Company has determined that it operates as a single operating segment at the consolidated level. Operating segments for the Company are determined based on the information used by the chief operating decision maker ("CODM") in assessing performance and allocating resources. The Company's is the CODM and reviews the Company's financial information on a consolidated basis. Accordingly, the CODM primarily uses consolidated net income as the measure of segment profit or loss and to assess performance and allocate resources, primarily through the annual budgeting and forecasting process. Budget-to-actual variances are reviewed regularly, with consideration given to the impact of certain expenses that are not considered part of the Company's core business operations.
Total revenue, net income, and significant expenses used by the CODM for the purpose of allocating resources and evaluating the Company's financial performance were as follows:
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Year ended May 31, |
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In millions |
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2025 |
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2024 |
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2023 |
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Total revenue |
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$ |
|
5,571.7 |
|
|
$ |
|
5,278.3 |
|
|
$ |
|
5,007.1 |
|
|
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Core business operations: |
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|
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Compensation-related expenses |
|
|
|
1,853.0 |
|
|
|
|
1,810.4 |
|
|
|
|
1,782.6 |
|
PEO direct insurance costs |
|
|
|
520.1 |
|
|
|
|
471.3 |
|
|
|
|
416.8 |
|
Depreciation and amortization |
|
|
|
168.8 |
|
|
|
|
176.5 |
|
|
|
|
176.6 |
|
Other segment items(1) |
|
|
|
659.8 |
|
|
|
|
606.5 |
|
|
|
|
598.0 |
|
Non-core business operations: |
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|
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|
|
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Acquisition-related costs(2) |
|
|
|
162.3 |
|
|
|
|
— |
|
|
|
|
— |
|
Cost optimization initiatives(3) |
|
|
|
— |
|
|
|
|
39.5 |
|
|
|
|
— |
|
Total expenses |
|
|
|
3,364.0 |
|
|
|
|
3,104.2 |
|
|
|
|
2,974.0 |
|
Interest expense, excluding Paycor acquisition-related costs |
|
|
|
(71.4 |
) |
|
|
|
(37.3 |
) |
|
|
|
(36.7 |
) |
Acquisition-related costs(2) |
|
|
|
(34.0 |
) |
|
|
|
— |
|
|
|
|
— |
|
Other income, net |
|
|
|
73.6 |
|
|
|
|
81.2 |
|
|
|
|
51.8 |
|
Income before income taxes |
|
|
|
2,175.9 |
|
|
|
|
2,218.0 |
|
|
|
|
2,048.2 |
|
Income tax expense |
|
|
|
518.6 |
|
|
|
|
527.6 |
|
|
|
|
490.9 |
|
Net income |
|
$ |
|
1,657.3 |
|
|
$ |
|
1,690.4 |
|
|
$ |
|
1,557.3 |
|
Geographic information: Substantially all of the Company's revenue is generated within the U.S. Approximately 1% of the Company's total revenue was generated within Europe for fiscal 2025, 2024, and 2023. Long-lived assets in European countries and other foreign countries were approximately 2% and less than 1% of total long-lived assets of the Company, respectively, as of May 31, 2025. Long-lived assets in European countries and other foreign countries were approximately 6% and less than 1% of total long-lived assets of the Company, respectively as of May 31, 2024.
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.