Executive Summary

Q3 delivered strong topline and profitability: total revenue $377.5M (+19.6% y/y), Adjusted EBITDA $107.2M (28.4% margin), and Adjusted diluted EPS $0.37; Cloud recurring gross margin expanded to 77.0% (78.3% adjusted) .
Execution exceeded the company’s Q3 guidance across revenue, Dayforce recurring ex-float, float revenue and Adjusted EBITDA, and management raised Q4 and full-year 2023 outlook (FY revenue to $1,512–$1,515M; Adj. EBITDA to $408–$410M) .
Growth was driven by Dayforce recurring (+34.6% y/y to $279.6M) with tax migration adding ~450 bps to Dayforce recurring ex-float; float revenue tailwinds and margin scale further supported the beat .
Strategic catalysts: rebrand to Dayforce announced in early October (effective January 2024) and new AI features (Dayforce Co‑Pilot, Autonomous Payroll) were showcased at INSIGHTS 2023, reinforcing the innovation narrative and customer engagement momentum .

What Went Well and What Went Wrong

What Went Well
- Dayforce engine: Dayforce recurring revenue grew 34.6% to $279.6M; ex‑float grew 28.6% with ~450 bps contribution from tax migration; Cloud recurring gross margin expanded to 77.0% (78.3% adjusted) .
- Profitability scaled: Adjusted operating profit rose to $89.4M (23.7% margin) and Adjusted EBITDA to $107.2M, reflecting revenue upside and mix shift to recurring .
- Positive tone and innovation cadence: “Ceridian delivered another strong quarter, underpinned by Dayforce recurring revenue growth of 34.6%,” said Chair & Co‑CEO David Ossip; CFO: “we are raising our revenue and profitability outlook… with clear visibility to our 2025 targets” .
What Went Wrong
- GAAP loss and brand amortization: Q3 posted a GAAP net loss ($3.8M) and operating margin compression vs Q2 due in part to $13.9M non‑cash amortization from the brand transition to Dayforce (two months impact) .
- Legacy headwinds: “Other recurring” declined 34.7% y/y as tax modernization and legacy sunsetting continued; professional services growth was modest (+0.6% y/y) .
- Reporting correction: a prior period correction reclassifying customer funds and obligations (no P&L or liquidity impact) may raise process questions until fully digested by investors .

Financial Results

Core P&L and Margins (chronological order: Q3’22 → Q2’23 → Q3’23)

Metric	Q3 2022	Q2 2023	Q3 2023
Total Revenue ($M)	$315.6	$365.9	$377.5
GAAP Diluted EPS	($0.14)	$0.02	($0.02)
Adjusted Diluted EPS	$0.20	$0.32	$0.37
Adjusted EBITDA ($M)	$63.5	$98.4	$107.2
Cloud Recurring Gross Margin	72.1%	76.7%	77.0%
Cloud Recurring Gross Margin (Adj.)	74.8%	78.1%	78.3%
Operating Margin (GAAP)	(1.2)%	8.0%	7.0%
Adjusted Operating Margin	15.9%	22.7%	23.7%

Revenue mix and segments

Revenue Detail ($M)	Q3 2022	Q2 2023	Q3 2023
Dayforce recurring (ex‑float)	$191.0	$231.3	$245.6
Dayforce float	$16.8	$36.9	$34.0
Total Dayforce Recurring	$207.8	$268.2	$279.6
Powerpay recurring (ex‑float)	$19.3	$19.7	$19.6
Powerpay float	$3.3	$4.4	$4.4
Other recurring	$33.4	$22.6	$21.8
Total Recurring Revenue	$263.8	$314.9	$325.4
Professional services & other	$51.8	$51.0	$52.1
Total Revenue	$315.6	$365.9	$377.5

KPIs and operating drivers

KPI	Q2 2023	Q3 2023
Live Dayforce customers	6,272	6,346
Dayforce recurring revenue per customer (TTM)	$131,693	$138,838
Avg float balance (customer funds)	$4.6B; yield 3.7%	$4.02B; yield 3.8%
Float revenue from invested funds	$41.8M	$38.8M
Dayforce Wallet adoption	1,640 signed / 1,010 live; >50% avg registration; 25 tx/mo	1,760 signed / 1,060 live; >55% avg registration; 25 tx/mo

Q3 actual vs company’s prior Q3 guidance (issued Aug 2)

Metric	Company Q3’23 Guidance (Aug 2)	Q3 2023 Actual	Delta
Total Revenue ($M)	$368–$371	$377.5	+$6.5 to +$9.5
Dayforce recurring ex‑float ($M)	$239–$241	$245.6	+$4.6 to +$6.6
Float revenue ($M)	$36	$38.8	+$2.8
Adjusted EBITDA ($M)	$89–$91	$107.2	+$16.2 to +$18.2

Guidance Changes

Metric	Period	Previous Guidance (Aug 2)	Current Guidance (Nov 1)	Change
Total Revenue	FY 2023	$1,490–$1,510M	$1,512–$1,515M	Raised
Dayforce Recurring ex‑float	FY 2023	$950–$958M	$962–$964M	Raised
Float Revenue	FY 2023	$160M	$166.5M	Raised
Adjusted EBITDA	FY 2023	$384–$392M	$408–$410M	Raised
Total Revenue	Q4 2023	N/A	$398–$401M	New
Dayforce Recurring ex‑float	Q4 2023	N/A	$255–$257M	New
Float Revenue	Q4 2023	N/A	$39M	New
Adjusted EBITDA	Q4 2023	N/A	$97–$99M	New
FX incremental impact vs prior guide	Q4 / FY23	N/A	Rev: ($1.3M)/($1.3M); Dayforce ex‑float: ($0.6M)/($0.6M)	FX headwind

Notes: “Other recurring” expected to decline given tax modernization and sunsetting of legacy solutions; PowerPay modest growth/stability; tax migration expected to contribute ~480 bps to FY Dayforce recurring ex‑float growth .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2023)	Current Period (Q3 2023)	Trend
AI/Technology initiatives	Q1: Integration Studio, Agile Org Mgmt, analytics enhancements, automation in payroll; expanding global payroll and industry solutions . Q2: Career Explorer (Talent Intelligence), People Search expansion, burnout analytics, integration acceleration .	Announced Dayforce Co‑Pilot (GenAI), Autonomous Payroll, HR Service Delivery, Alumni Network, Dayforce Exchange; framed around efficiency/productivity at INSIGHTS .	Strengthening/accelerating
Branding	N/A in Q1; N/A in Q2	Announced rebrand: Ceridian to become Dayforce (effective Jan 2024) .	New strategic pillar
Margins/Scale	Cloud recurring gross margin improved y/y; Adjusted EBITDA margin expanded (Q1/Q2) .	Further expansion: adj. cloud recurring GM 78.3%, Adj. EBITDA margin 28.4% ; operating profit impacted by brand amortization .	Improving structurally
Float revenue & rate tailwind	Elevated yields supported float revenue in Q1/Q2 .	Float revenue $38.8M; yield 3.8%; guided Q4 float $39M, FY $166.5M .	Supportive, rate-dependent
Tax modernization/migration	Cited contribution to Dayforce recurring ex‑float growth (400–480 bps) .	~430 bps (Q4 guide) and ~480 bps (FY) contributions reiterated .	Ongoing tailwind
Macro/employment cadence	Expect normalized seasonal cadence for employment levels in guidance .	Reiterated normalized cadence in Q4/FY commentary .	Stable

Management Commentary

“Ceridian delivered another strong quarter, underpinned by Dayforce recurring revenue growth of 34.6%.” — David Ossip, Chair & Co‑CEO .
“The compounding effect of greater recurring revenue and margin expansion is well reflected… we are raising our revenue and profitability outlook for the fourth quarter and fiscal year 2023, with clear visibility to our 2025 targets.” — Noémie Heuland, CFO .
On innovation and positioning: management highlighted Dayforce Co‑Pilot (GenAI), Autonomous Payroll, and Dayforce Exchange as part of a broader push for “efficiency and productivity,” with Dayforce recognized as a Leader in Gartner’s Cloud HCM Magic Quadrant (1,000+ EE) .
On brand: “Notably, we announced that Ceridian is becoming Dayforce… This will unify our industry-leading platform with our brand and further advance our shared ambition of making work life better.” — Prepared remarks summary .

Q&A Highlights

Automation/Payroll efficiency revenue impact: Management addressed investor questions on whether increased automation (e.g., Autonomous Payroll) reduces revenue tied to re-runs/fixes; focus was on efficiency gains and customer value rather than dependency on remediation revenues .
Large enterprise/global rollouts: Discussed multiyear expansion of large logos and the sizable “land grab” opportunity across enterprise and global footprints .
Leadership update: Call referenced executive changes and strength of the leadership bench amid transition (context: co‑CEO Leagh Turner moving to Coupa) .
CFO search timing: Management indicated progress and an expected timeline for an announcement around the start of the year .

Estimates Context

S&P Global (Capital IQ) consensus via tool was unavailable for CDAY due to a mapping issue in the estimates dataset. We attempted retrieval but could not access S&P Global consensus for Q3 2023 (tool error).
As a proxy, third‑party reporting indicated Adjusted EPS of $0.37 versus a consensus expectation of $0.29, suggesting a material beat on EPS; we do not rely on this as S&P Global consensus and note it here for context .
Company vs guidance comparisons (above) show clear beats vs the firm’s own Q3 guidance across revenue, Dayforce ex‑float, float, and Adjusted EBITDA .

Key Takeaways for Investors

Durable growth engine: Dayforce recurring grew ~35% y/y, with structural tailwinds from tax migration and expanding product breadth; recurring mix and scale are driving sustained margin expansion .
Elevated profitability: Adj. EBITDA margin reached 28.4% and adj. cloud recurring gross margin 78.3%, underscoring operating leverage; FY Adj. EBITDA guidance raised to $408–$410M .
Near-term catalysts: Clear Q4 and FY raises, continued AI innovation (Co‑Pilot, Autonomous Payroll), and brand unification to Dayforce support narrative momentum and potential multiple re‑rating .
Watch GAAP optics: Q3 GAAP net loss and lower operating margin vs Q2 were impacted by non‑cash brand-related amortization; underlying economics remain strong on an adjusted basis .
Legacy runoff vs core growth: “Other recurring” continues to decline as legacy is sunset, but Dayforce and Powerpay core recurring are stable to growing; mix shift is favorable for margins .
Rate sensitivity: Float revenue/yield remains a tailwind but is rate-dependent; management provided explicit Q4/FY float guidance .
Housekeeping risk addressed: Prior period balance sheet/cash flow presentation correction had no P&L or liquidity impact; maintain vigilance on financial reporting controls but impact appears non-economic .

Additional Context: Other Q3‑Period Press Releases

“Ceridian to Become Dayforce” (Oct 3, 2023) — rebrand announcement (effective Jan 2024) .
“Ceridian Introduces Hyper‑Personalized Dayforce Experiences” (Oct 4, 2023) — Dayforce Co‑Pilot and related features highlighted at INSIGHTS 2023 .

Dayforce, Inc. (CDAY)·Q3 2023 Earnings Summary