Why did PAYX's operating expenses rise in Q2 2025?

Paychex Inc. (PAYX) experienced a rise in operating expenses in Q2 2025, which can be attributed to several key factors:

1. Acquisition-Related Costs: The company's pending acquisition of Paycor is a significant factor contributing to the increase in operating expenses. The acquisition is expected to enhance competitiveness in the Human Capital Management (HCM) sector and is forecasted to be accretive to adjusted EPS in the next fiscal year. The integration of Paycor is expected to drive Q4 revenue growth of 10% to 12%, with a neutral impact on adjusted EPS for the quarter.
2. Investments in Automation and Technology: Paychex has been investing in automation and technology, which is boosting overall efficiency and contributing to the rise in operating expenses. These investments are essential for maintaining competitiveness in the evolving HR landscape and are reflected in the increased adjusted operating margin to 46.9% in Q3 2025, up from 45.1% in Q3 2024.

In conclusion, the rise in operating expenses for Paychex in Q2 2025 can be attributed to a combination of factors, including acquisition-related costs and investments in automation and technology. These expenses are strategic in nature and are poised to enhance the company's operational efficiency and market position in the long term.