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About Paychex Benefit Technologies Inc.

Paychex began as a payroll processing firm, but has since expanded to offer a variety of human resources-related services. The company provides payroll services through its SurePayroll online application, while its Paychex Flex platform integrates payroll processing with HR management, employee benefits administration, time tracking, and employee performance management. Paychex processes the payrolls of more than 670,000 clients, making it the second-largest payroll accounting firm in the US after Automatic Data Processing. The company focuses on small and mid-sized businesses and serves clients throughout the US and Europe.

Operations

Paychex organizes its operations into two main segments. Its Management Solutions includes payroll processing and other HR services and products, and accounts for about 75% of revenue. Its Professional Employer Organization (PEO) and Insurance Services are grouped together and account for most of the remaining revenue.

PEO operations offer clients a combined package of services that includes payroll, employer compliance, HR and employee benefits administration, risk management outsourcing, and the on-site availability of a professional HR representatives. Paychex serves as a co-employer of its PEO clients' employees and takes care of administrative duties so clients can focus on their core operations. 

The company also attributes a small share of revenue (less than 5%) to interest earned from funds held for clients.  

Geographic Reach

The Rochester, New York-based Paychex has offices throughout the US. It also has European branches and sales locations, and a location in India for information technology staffing.

Sales and Marketing

Paychex markets and sells its services primarily through its direct sales force based in metropolitan markets. Sales representatives are supported by marketing, advertising, public relations, trade shows, and telemarketing programs. The company also solicits new client referrals through relationships with existing clients, certified public accountants, and banks. About 50% of its new payroll clients come from these sources.

Financial Performance

Paychex has enjoyed year-over-year growth in revenue and profits over the past several fiscal years, experiencing strong momentum in its human resource solutions administrative services and solid sales performance in professional employer organization, retirement, and insurance services.

In fiscal 2019 total revenue increased 12% to $3.8 billion. Its acquisition of Oasis in 2019 boosted Paychex's PEO growth in 2019, with Oasis contributing $163.7 million to total revenue. Even without Oasis, an increase in PEO revenue was driven by growth in existing clients and client worksite employees.

Net income increased 4% to $1.0 billion on higher revenue. Paychex reported increasing expenses in 2019, especially from higher PEO insurance costs.

The company had $673.6 million in cash and cash equivalents at the end of fiscal year 2019. Cash from operations was $1.3 billion, while investing activities used $1.6 billion. Financing activities used $1.0 billion.

Strategy

Paychex's strategy focuses on providing a comprehensive suite of value-added services and making strategic acquisitions. The company continues to invest in its business, particularly in technology. Paychex is responding to customer demand for SaaS solutions by investing in its Paychex Flex platform. Recent enhancements to Paychex Flex include the addition of Paychex Learning, a web-based learning management system for providing professional training courses; Paychex Flex Assistant, a chatbot programed to answer commonly asked HR-related questions; tablet-enabled facial recognition for time and attendance; and new synchronization functionality between Paychex General Ledger Service and QuickBooks Online. Paychex also added performance management, workflow approvals, real-time analytics, and a configurable events calendar to the Paychex Flex platform. 

 

Mergers and Acquisitions

In 2018 Paychex acquired Oasis, an industry leader in HR outsourcing services including employee benefits, payroll administration and risk management services, for $1.2 billion. Oasis, headquartered in West Palm Beach, Florida, has more than 8,400 clients nationwide. Paychex made the purchase to expand its Professional Employer Organization (PEO) segment.

Earlier that year the company acquired Lessor Group, a Dutch provider of payroll and human capital management software solution. Paychex made the deal to expand its presence in Denmark and other parts of Northern Europe. 

Company Background

Before founding Paychex in 1971, Thomas Golisano worked in a payroll accounting company that solicited the business of large firms. After discovering that 98% of all US businesses had 200 or fewer employees, he started his own company to cater to small business needs.

Several friends started branches in other cities, and by 1979 the enterprise had grown to 17 locations, some company-owned, some joint ventures, and some franchised. Golisano began consolidating Paychex, buying out his partners and friends. In 1983 the company went public. (In 1994, 1998, and 2002 Golisano made unsuccessful bids for the New York governorship.)

Paychex Benefit Technologies Inc.

2385 NORTHSIDE DR STE 100
San Diego, CA 92108-2716
Phone: 1 (800) 322-7292

Stats

Employer Type: Privately Owned
V Pres: Jan Hawthorne
Manager: Roberto Renovales
V Pres: Susan Short
Employees (This Location): 110
Employees (All Locations): 110

Major Office Locations

San Diego, CA