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Dayforce, Inc. (CDAY)·Q1 2024 Earnings Summary

Executive Summary

  • Dayforce delivered solid Q1 2024: total revenue $431.5M (+16.4% y/y) and Dayforce recurring revenue $337.2M (+24.3% y/y; +23.0% ex-float) with cloud recurring gross margin expanding to 79.0% and adjusted cloud recurring gross margin to 80.0% .
  • Versus estimates: revenue beat consensus proxies (e.g., $425.9M) while adjusted EPS of $0.43 was roughly in line to slightly above some proxies (e.g., $0.42) and below others ($0.45), reflecting mixed third-party estimates amid unavailable SPGI access .
  • Guidance was raised across all key metrics: FY 2024 total revenue to $1.73–$1.74B, Dayforce recurring ex-float to $1.163–$1.168B, float to $183M, and adjusted EBITDA to $484–$499M; Q2 2024 guidance introduced with total revenue $414–$419M and adjusted EBITDA $108–$113M .
  • Management emphasized momentum across sales, product, and operations, with AI-led innovation (Dayforce Co-Pilot) and SI-led implementation scaling; CFO reiterated a “highly plannable business” and noted ~$21M amortization of the Ceridian trade name hitting G&A in Q1 .

What Went Well and What Went Wrong

What Went Well

  • Dayforce recurring revenue growth sustained at +24.3% y/y (+23.0% ex-float), supporting mix shift toward higher-margin cloud recurring and driving margin expansion; “We grew both revenue and operating profit, and we exceeded guidance across all key revenue and profitability metrics” — CEO David Ossip .
  • Cloud recurring gross margin increased 170 bps to 79.0% (adjusted to 80.0%); CFO highlighted expansion and scalability: adjusted cloud recurring gross margin up 130 bps y/y .
  • Raised FY guidance across revenue, Dayforce recurring ex-float, float, and adjusted EBITDA, citing strong execution and confidence in pipeline; “we have raised our guidance across all key metrics” — CEO Ossip .

What Went Wrong

  • GAAP diluted EPS of $0.04 was down vs $0.06 y/y, reflecting higher interest and other expense; net income fell to $7.1M vs $9.9M y/y .
  • Operating margin compressed to 9.4% from 10.4% y/y as selling & marketing and G&A costs rose; CFO noted a full-quarter ~$21M amortization impact associated with the prior Ceridian trade name .
  • Professional services and other revenue declined (-7.4% y/y) amid ongoing SI-led implementation model shift; “SI-led sales growth” scaling was discussed in Q&A, implying continued transition from internal services to partners .

Financial Results

Key Financials vs Prior Year and Prior Quarter

MetricQ1 2023Q4 2023Q1 2024
Total revenue ($USD Millions)$370.6 $399.7 $431.5
GAAP diluted EPS ($)$0.06 $0.29 $0.04
Adjusted diluted EPS ($)$0.31 $0.50 $0.43
Operating profit ($USD Millions)$38.4 $38.8 $40.7
Adjusted EBITDA ($USD Millions)$105.4 $99.2 $129.9
Cloud recurring gross margin (%)77.3% 77.0% 79.0%
Adjusted cloud recurring gross margin (%)78.7% 78.1% 80.0%

Segment and Revenue Components Trend

Metric ($USD Millions)Q3 2023Q4 2023Q1 2024
Dayforce recurring, excluding float$245.6 $256.4 $282.4
Dayforce float$34.0 $35.7 $54.8
Total Dayforce recurring$279.6 $292.1 $337.2
Powerpay recurring, excluding float$19.6 $23.1 $20.5
Powerpay float$4.4 $5.0 $5.5
Total Powerpay recurring$24.0 $28.1 $26.0
Other recurring$21.8 $18.9 $19.5
Professional services & other$52.1 $60.6 $48.8
Total revenue$377.5 $399.7 $431.5

KPIs

KPIQ3 2023Q4 2023Q1 2024
Live Dayforce customers (period-end)6,346 6,393 6,575
Dayforce recurring revenue per customer (TTM, $)$138,838 $146,771 $150,362
Dayforce Wallet: signed / live customers1,760 / 1,060 1,860 / 1,150 1,960 / 1,200
Dayforce Wallet registration rate (eligible)>55% >60% >65%
Avg float balance ($B) / yield (%)$4.02B / 3.8% $4.18B / 3.9% $5.56B / 4.4%

Q1 2024 vs Consensus Proxies (SPGI unavailable)

MetricCompany ActualConsensus ProxySource
Total revenue ($M)$431.5 $425.94
Adjusted diluted EPS ($)$0.43 $0.42
Total revenue ($M)$431.5 $431.5 vs $426.1
Adjusted diluted EPS ($)$0.43 $0.45

Note: SPGI estimates could not be retrieved due to access limitations; consensus proxies are from public sources, which may differ in methodology.

Guidance Changes

MetricPeriodPrevious Guidance (Feb 7, 2024)Current Guidance (May 1, 2024)Change
Total revenue ($M)FY 2024$1,720–$1,730 $1,730–$1,740 Raised
Dayforce recurring ex-float ($M)FY 2024$1,160–$1,165 $1,163–$1,168 Raised
Float revenue ($M)FY 2024$174 $183 Raised
Adjusted EBITDA ($M)FY 2024$480–$495 $484–$499 Raised
Total revenue ($M)Q2 2024N/A$414–$419 New
Dayforce recurring ex-float ($M)Q2 2024N/A$276–$279 New
Float revenue ($M)Q2 2024N/A$47 New
Adjusted EBITDA ($M)Q2 2024N/A$108–$113 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023)Previous Mentions (Q4 2023)Current (Q1 2024)Trend
AI/Technology (Dayforce Co-Pilot, Autonomous Payroll)Introduced Co-Pilot; Autonomous Payroll vision; HR Service Delivery; Alumni Network Continued platform innovation; leadership accolades; record go-lives Co-Pilot charter launched; productivity use cases; internal adoption; scaling AI across suite Accelerating
SI-led implementation and partner ecosystemBuilding SI relationships; global rollouts Focus on scaling platform; commentary on partner ecosystem SI-led sales growth called out in Q&A; partner-driven scaling highlighted Scaling
Float revenue tailwindFloat up y/y on higher rates Float increased; laddered portfolio commentary Q1 float $60.7M; FY float guide raised to $183M Supportive tailwind
Macro/labor marketStable demand environment; FX assumptions Resilient HCM demand; normalized employment cadence Reuters noted payroll demand and resilient labor market backdrop Supportive
Government of Canada payroll modernizationNot highlightedNot highlightedBudget progress, potential revenue acceleration in 2025 Emerging catalyst
Brand transitionAnnounced rebrand to Dayforce Name change to Dayforce; ticker DAY Full-quarter amortization of prior trade name (~$21M in G&A) Transition costs rolling off over time

Management Commentary

  • “I am pleased to report another strong quarter for Dayforce. We grew both revenue and operating profit, and we exceeded guidance across all key revenue and profitability metrics… we have raised our guidance across all key metrics.” — David Ossip, Chair & CEO .
  • “Cloud recurring gross margin was 79%, up 170 bps… adjusted cloud recurring gross margin was 80%, expanding 130 bps… operating profit was $41M, up 6%, including a full quarter of the amortization of the Ceridian trade name (~$21M in G&A).” — CFO Jeremy Johnson .
  • Product roadmap emphasized AI-led capabilities and compliance: “Dayforce Co-Pilot… empowers employees… and helps boost recruiter productivity… 160+ global compliance updates…” .

Q&A Highlights

  • SI-led partner channel: Analysts probed the shift from professional services to system integrator-led implementations; management reiterated consistent growth and scaling via partners .
  • Predictability and planning: CFO characterized Dayforce as a “highly plannable business,” aligning to tight revenue and EBITDA guides .
  • AI scope and internal adoption: Discussion on Co-Pilot use cases and productivity gains both for customers and internally .
  • International and large-enterprise wins: Multiple wins in Canada, U.S., and multi-country deployments (e.g., Western Digital, Carhartt), underscoring global footprint expansion .

Estimates Context

  • SPGI S&P Global consensus was unavailable due to tool access limitations; public proxies indicated revenue consensus around $425.9M–$426.1M and adjusted EPS consensus ranging from $0.42 to $0.45 for Q1 2024 .
  • Result vs proxies: revenue beat by ~1–1.3% and adjusted EPS was roughly in line to slightly above some proxies, but below others. Near-term estimate revisions likely reflect raised FY guide and stronger Dayforce recurring trajectory .

Key Takeaways for Investors

  • Dayforce’s mix continues shifting toward cloud recurring, driving margin expansion; watch cloud gross margin sustainability and adjusted EBITDA cadence through 2024 .
  • Guidance raise across all key FY metrics is a positive catalyst; monitor Q2 execution vs tight guides (revenue $414–$419M; adjusted EBITDA $108–$113M) .
  • AI-led product momentum (Co-Pilot) and SI-led scaling should support enterprise wins and shorten time-to-value, potentially dampening internal services revenue but improving long-term profitability .
  • Float revenue tailwind remains meaningful (Q1: $60.7M; FY guide $183M), but investors should track rate environment and laddered portfolio maturities for sensitivity .
  • Brand transition cost (~$21M amortization) in Q1 pressured GAAP EPS; expect normalization to aid GAAP profitability optics over time .
  • Government of Canada payroll modernization budget progress offers a medium-term upside optionality (potential acceleration in 2025) .
  • Near-term trading: bias positive on raised FY guide and revenue beat; monitor Q2 print for consistency and any signs of macro slowdown affecting employment-level driven metrics .