Paychex achieved record financial results in FY22, which reflect strong business performance from our unique blend of human capital management (HCM) solutions and the hard work and dedication of our 16,000 employees. Our results contributed to Paychex being in the top five for annualized total shareholder return (TSR) of all S&P 500 companies that have traded since the Paychex IPO.¹

MARTIN:

Chairman of the Board and Chief Executive Officer

Paychex achieved record financial results in FY22 — our best performance in the 50+ years since the company was founded. While I’m excited that we achieved double-digit revenue and earnings growth during one of the most challenging times in our history, I’m especially proud that we were able to help our clients, their employees, and communities succeed with support from our continuing innovations in human capital management (HCM) technology and service.

We have helped more than 40,000 clients apply for government tax credits of over $8 billion — an average of nearly $200,000 per client. A high percentage of businesses who used our Employee Retention Tax Credit (ERTC) Service have stayed in business — and have stayed Paychex clients. They’re continuing to look to us for long-term support of their HR, payroll, and benefits in the competitive hiring and employee retention marketplace.

Paychex has a strong history of solid financial results — and we’re growing at an accelerated rate. In FY22, our total revenue grew 14% year-over-year to a record $4.6 billion, and our adjusted diluted earnings per share rose 24% to $3.77. Our operating margin was 40%, an increase of 390 basis points over the prior year.

New opportunities have also been growing in this post-pandemic marketplace. To position and structure our company to best capitalize on those opportunities, I assumed the role of chairman of the board on December 1, 2021, adding to my role as CEO and succeeding Paychex founder Tom Golisano, who remains on the board as a director. To further strengthen our executive leadership team, I promoted longtime Paychex executive John Gibson to the new position of president and chief operating officer.

Following our performance in FY22, Paychex has entered the current fiscal year with momentum that positions us to build on our results and help clients continue to navigate this changing workplace environment.

MARTIN:

Chairman of the Board and Chief Executive Officer

Better human resource support delivers better business performance and results for our clients. This March, we launched Paychex HR, which brings together all our HR offerings under a single name, including Paychex HR PEO and Oasis®, as well as our administrative services organization (ASO) and HR Essentials product.

With a strategy based on extensive market research, Paychex HR is more than a convenient way to organize our HR products and services. By listening to clients and conducting our annual Pulse of HR Survey, we have been able to determine their top needs right now and position our HR solutions to meet them.

Paychex HR gives clients a full range of HR options to meet their specific needs, so they can more easily invest in their culture and employee development; deliver world-class benefits; comply with changing regulations; and support the physical, emotional, and financial wellness of their employees. Because we believe that happier, healthier, and more engaged teams create better businesses.

_{3 2021 Paychex Brand Research: A joint study conducted by ClearlyRated and Paychex.}

JOHN:

President and Chief Operating Officer

It’s more important than ever for employers to make a connection with employees, so they feel like their needs are being recognized and addressed.

Nearly 40% of employees surveyed said their organization’s benefits, policies, and culture fail to support their health across the four pillars of wellness in the workplace— mental, physical, financial, and social.⁴ To help, Paychex HR supports clients so they can effectively address these pillars in order to improve recruiting, retention, morale, and productivity.

To support employees′ mental health, we include an employee assistance program (EAP) through Paychex HR for confidential support, Paychex Flex Time to enable more flexible scheduling, and performance management and development tools in Paychex Flex.

Clients can access tools to support their employees’ physical well-being with help from our offerings, including group health insurance; voluntary vision, dental, and wellness programs; flexible spending accounts (FSA); and health savings accounts (HSA); as well as workplace safety programs.

We help enable financial peace of mind through the FinFit® wellness program, retirement services to help employees save for the future — including our new Pooled Employer 401(k) Plan (PEP) — flexible pay options to give employees convenient access to their earnings, and a discount program to help them save on a variety of products and services outside of work.

We also help clients to improve employees’ social health by offering them the tools to enhance workplace culture, including employee surveys; HR technology to help simplify employee management and benefits administration; and a learning management system (LMS) for online training and development. In addition, we offer clients proactive, experienced HR advice from a dedicated Paychex HR Professional.

_{4 Joint survey by Paychex and ClearlyRated of 2,142 employees of small and mid-sized businesses from November 2, 2020 to November 30, 2020. The survey was weighted to be representative of the U.S. adult workforce and included employees across industries and skills.}

MARTIN:

Chairman of the Board and Chief Executive Officer

I’m proud of the work our team delivered in FY22, from Marketing to Sales, Product Development, and Management. The awards we won reflect positively on our HR technology as well as our workplace culture and values.

For the 14th year, Paychex was named one of the World’s Most Ethical Companies® by the Ethisphere® Institute, and we were recognized by Forbes® as one of the Best Employers for Diversity. Fortune® magazine once again named us one of the World’s Most Admired Companies. Our new Paychex Pre-Check product won technology awards from HR Executive, the Brandon Hall Group, and the Business Intelligence Group. And our ERTC Service won a Gold Brandon Hall Award for helping clients receive billions of dollars in tax credits, to name just a few of the many accolades Paychex has received from respected industry and business organizations.

Brandon Hall Gold Award

Brandon Hall Gold Award

Paychex was recognized with a Gold Excellence in Technology Award from Brandon Hall Group for our Employee Retention Tax Credit (ERTC) Service, which was launched in 2021. This is the ninth consecutive year that the preeminent research and analyst firm has recognized Paychex technology solutions.

Brandon Hall Silver Award

Brandon Hall Silver Award

Our Paychex Pre-Check product won a Silver Excellence in Technology Award from Brandon Hall Group for its ability to help clients simplify payroll processing while improving accuracy and their employees payroll experience.

World's Most Admired Companies

World's Most Admired Companies

Paychex was named to FORTUNE® magazine’s 2022 list of the World’s Most Admired Companies. The annual list is considered a definitive report card on corporate reputation, honoring companies globally for their outstanding financial performance and leadership in key areas of importance in today’s business environment. Companies are ranked based on nine criteria, including innovation, investment value, quality of management, ability to attract talent, and social responsibility.

HCM Technology Leader

HCM Technology Leader

NelsonHall, a leading global analyst and research firm, identified Paychex as a “Leader” in its latest annual NEAT vendor evaluation report for human capital management (HCM) due to our persistent focus on HCM software innovations that meet the new way of working.

Forbes Best Employers for Diversity

Forbes Best Employers for Diversity

Paychex was named among America's Best Employers for Diversity by Forbes magazine in 2022 based on a survey by 60,000 Americans working for businesses with at least 1,000 employees. They identified the companies most dedicated to diversity, equity, and inclusion through criteria such as age, gender, ethnicity, disability, and sexual orientation equality, as well as that of general diversity.

HR Tech Award

HR Tech Award

Paychex was recognized with an HR Tech Award for Best Small and Medium Business (SMB)-focused Solution in the Core HR/Workforce category, honoring our all-in-one HR, payroll, and benefits technology platform, Paychex Flex. The HR Tech Awards program, powered by Lighthouse Research & Advisory, is designed to give buyers a shortlist of vetted, capable providers specific to their needs.

BIG Innovation Award

BIG Innovation Award

Paychex Pre-Check received a BIG Innovation award in FY22 from the Business Intelligence Group. Entrants are judged by experienced and knowledgeable business executives. The organization's proprietary scoring system selectively measures performance across multiple business domains and rewards those companies whose achievements stand above those of their peers.

Largest 401(k) Recordkeeper

Largest 401(k) Recordkeeper

For the eleventh straight year, PLANSPONSOR magazine recognized Paychex as the largest 401(k) plan recordkeeper in the U.S. by number of plans. As of May 31, 2022 we serviced more than 100,000 retirement plans.

Top HR Product

Top HR Product

For the second consecutive year, Paychex earned recognition for a “Top HR Product of the Year” in the Core HR category by Human Resource Executive magazine and the HR Technology Conference & Exposition. Paychex earned the recognition for its Paychex Pre-Check solution, which gives employees the opportunity to confirm paycheck accuracy before payday and introduces more automation into the payroll cycle for employers.

World's Best Training Organizations

World's Best Training Organizations

Paychex has been recognized as one of the top training organizations in the world with a 2022 Training APEX Award presented by Training magazine. Paychex ranked number five on the list, its highest-ever ranking after 21 consecutive appearances, including a number seven ranking in 2021. Ranking is determined by assessing a range of qualitative and quantitative factors, including demonstrated innovation and financial investment in employee development, the scope of development programs, and how closely such development efforts are linked to business goals and objectives.

World's Most Ethical Companies

World's Most Ethical Companies

Paychex was honored by the Ethisphere Institute^® as one of the World's Most Ethical Companies^® for 2022. Being a 14-year honoree underscores our commitment to ethical business standards and practices, ensuring long-term value to key stakeholders, including customers, investors, and employees.

Top New Products

Top New Products

The Paychex Employee Retention Tax Credit (ERTC) Service Service was named a Top New Product by Accounting Today for its ability to leverage payroll data and Paychex Flex technology to identify tax credits retroactively and file amended returns to claim the credits based on wages already paid.

KAREN:

Vice President and Chief Human Resources Officer

At Paychex, we’re focused on maintaining the viability of the communities where we and our clients live and work by helping small to medium-sized businesses access expertise and support that they otherwise might not be able to achieve.

At the same time, we’ve been reinvesting in our employees and our technology to offer enhanced career development, more flexible workplace schedules, benefits, and support. Included among these are a new discretionary time-off policy and expanded annual bonus opportunities, a transition to the Fidelity® investment and multi-event platforms to make retirement benefits easier to manage, and an additional Cultural Day paid holiday.

We’re also investing in our communities. Thanks to our financial success, we’ve significantly increased the funding of the Paychex Foundation to nearly $20 million.⁵

We’re also leading the way in our efforts to help improve the environment. In addition to tracking and reducing carbon emissions from our owned and rented offices, we have approved goals and metrics for our plan to achieve net-zero greenhouse gas emissions by 2050, created an environmental management system, and adopted an official environmental policy. All of this is published in our 2022 Environmental Social and Governance Report.

Diversity, equity, and inclusion (DEI) is also a major focus of our ESG efforts. In addition to earning recognition as one of The Best Employers for Diversity by Forbes, our board of directors approved a new nominating and ESG committee. Its charter includes assisting the board with identifying, evaluating, and recommending candidates for nomination for election to the board, as well as overseeing and improving the company’s ongoing corporate social responsibility (CSR) and ESG activities and performance.

_{5 Paychex 2022 ESG Report.}

MARTIN:

Chairman of the Board and Chief Executive Officer

We’re not taking our success for granted. We’re prepared to deliver an exceptional return in FY23 by anticipating what’s next in the world of work and delivering innovative solutions where HR, payroll, and benefits meet.

Our focus on our ERTC Service will continue by educating our existing client base and leveraging our service to attract new clients.

Paychex Flex will include completely redesigned modules for time and attendance, and recruiting and onboarding, to make them even easier for clients and their employees to use.

We’ll keep helping Paychex HR PEO clients recruit new employees with a full suite of benefits including traditional health, dental, vision, disability, and accident insurance, as well as voluntary benefits, part-time employee benefits, subsidies to help reduce student debt, and enhanced EAP and telemedicine offerings.

The integration of Flock Benefits Administration, by Paychex with Paychex Flex will let us provide advanced benefits capabilities for employers, administrators, and brokers.

We’re going to introduce the first hands-free payroll entry process — voice activated payroll — leveraging our integration with Google^® smart speakers to make payroll processing quicker and easier for clients.

We’ll also be transitioning our real-time payments offering to allow clients to process payroll on the check date and fund employee direct deposit transactions within only eight seconds.

With 16,000 employees working together to innovate our technology and service solutions, Paychex is excited to continue to help our more than 730,000 clients thrive and grow in a changing remote work environment.