Paychex, Inc. (NASDAQ:PAYX) Q1 2021 Earnings Conference Call - Final Transcript
Oct 06, 2020 • 09:30 am ET
Ladies and gentlemen, thank you for standing by and welcome to the Paychex First Quarter Fiscal Year 2021 Earnings Conference Call. [Operator Instructions]. Thank you.
I will now hand the call over to Martin Mucci, President and Chief Executive Officer to begin. Please go ahead, sir.
Great, thank you. And thank you for joining us for our discussion of our Paychex first quarter fiscal 2021 earnings release. Joining me today is Efrain Rivera, our Chief Financial Officer. This morning before the market opened, we released our financial results for the first quarter, ended August 31, 2020. You can access the earnings release on our Investor Relations webpage, and our Form 10-Q will be filed with the SEC, within the next few days. This teleconference is being broadcast over the internet, will be archived and available on our website for approximately 90 days.
I will start today's call with an update on the business highlights for the first quarter. Efrain will review our first quarter financial results, and provide an update on fiscal '21, and then we'll open it up for your questions.
Fiscal '21 is off to a good start. Although the impacts of COVID-19 continue to affect our results, causing unfavorable year-over-year comparisons, our first quarter results finished better than originally projected, as most of our key business metrics recovered at a faster rate than anticipated. Throughout the COVID-19 crisis, our business model has proven resilient. We have seen good sales momentum, excellent client retention, and accelerated product development responsive to the needs of our clients. We also rapidly reduced discretionary costs where needed, to protect margins and are ahead of schedule on a number of initiatives, to reduce long term costs as well.
We are pleased with our sales performance during the first quarter, which reflected new annualized revenues, significantly higher than our expectations. Growth in new payroll sales units was strong year-over-year, reflecting the highest fiscal quarter growth in over five years. Our investments over the past several years in virtual sales, digital marketing and lead generation, and sales support technologies, have positioned us well to succeed in this environment.
With the challenges small and mid-sized businesses faced during this environment, our HR value proposition has never been more clear. We have seen a surge in demand for our various HR offerings, since the beginning of COVID, and our Q1 sales results for our HR Services division were very strong, with double-digit increase over last year. We are well positioned to continue to take advantage of this opportunity.
Our client retention during the first quarter has remained at record levels. We continue to see payroll clients, that have been in non-processing status, begin to pay, employees again. Throughout this crisis, we have been very proactive in providing information, tools and guidance to our clients. We are proud of our response, supporting our clients during this crisis. We worked closely with regulatory agencies, to both remain informed and advocate for our clients. Our compliance and software development teams worked