(Reuters) - Paychex (NASDAQ:PAYX) missed Wall Street estimates for third-quarter revenue on Tuesday, hurt by sluggish client spending on its human capital management and payroll services, sending its shares down nearly 4% in early trading.
The higher-for-longer interest rates and economic uncertainties have compelled clients to cut spending budgets, affecting demand for payroll services providers such as Paychex.
"Small- and medium-sized businesses are dealing with a tight job market for qualified workers, reduced access to affordable growth capital and inflationary pressures," said Paychex CEO John Gibson.
Peer Paycom (NYSE:PAYC) also provided a somber first-quarter revenue forecast due to weak client spending on its services.
Paychex reported revenue of $1.44 billion for the quarter ended Feb. 29, missing average analysts' estimate of $1.46 billion, according to LSEG data.
The company's earnings per share was at $1.38, compared with $1.29 per share a year ago.
Paychex forecast total revenue growth of 5% to 6% for full year 2024, below analysts' estimate of a 6.4% growth.