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Dayforce, Inc. (DAY)·Q1 2025 Earnings Summary

Executive Summary

  • Dayforce delivered a clean beat in Q1 2025: total revenue $481.8M (+11.7% YoY; +13.6% cc) and adjusted diluted EPS $0.58 versus Wall Street consensus revenue $476.7M and EPS $0.5426; adjusted EBITDA margin expanded 240 bps to 32.5%. The company reiterated FY 2025 growth and margin targets and raised certain dollar guidance levels slightly on FX updates . Revenue/EPS estimates via S&P Global: $476.7M and $0.5426; actual $481.8M and $0.58 (beat)*.
  • Key operational wins: Dayforce recurring revenue ex float grew 14.4% to $323.1M; professional services surged 46.1% to $71.3M; wallet monetization and AI attach gained traction (Copilot attached to ~50% of new deals). Live customers reached 6,929 (+5.4% YoY), and Dayforce recurring revenue per customer rose 11.5% to $167,600 .
  • Guidance: Q2 revenue $454–$460M, adj. EBITDA margin 30.5–31.5%; FY 2025 total revenue $1,929–$1,944M, ex float $1,749–$1,764M, Dayforce recurring ex float $1,317–$1,342M, adj. EBITDA margin 32%, FCF margin 12% (constant currency growth rates unchanged). FX assumptions updated for Q2, float revenue held at $180M .
  • Catalysts: sustained bookings strength (~40% YoY in H1), Azure Marketplace availability enabling Azure credit burn-down, Canadian federal contract extension (CAD 105M; ~USD $72M) enhancing services visibility, and a 5% workforce efficiency plan targeting $65M 2025 savings support margin expansion .

What Went Well and What Went Wrong

What Went Well

  • Strong topline and margin expansion: Adjusted EBITDA $156.7M (32.5% margin), adjusted diluted EPS $0.58, operating cash flow $49.6M and FCF $19.5M; professional services revenue +46% supported implementation from strong sales pipelines .
  • AI and product momentum: “In the quarter, we extended our AI copilot to iOS and Android… In Q1, 50% of new deals had it attached.” and new Dayforce Wallet direct-to-bank capabilities launched with growing monetization uplift .
  • Partner channel and bookings: “We had the best first quarter in our history… we would expect the first half bookings to be up approximately 40% year-over-year.” SI prime deals up significantly; Azure Marketplace partnership simplifies procurement and allows customers to use Azure credits .

What Went Wrong

  • Minor Q4 carryover headwinds clarified: CFO noted lower-than-expected employee volumes, reduced print/tax filing fee usage, and contract amendments shifting revenue to services—factors to watch for seasonality and mix effects going forward .
  • Other recurring decline and legacy migrations: Other recurring revenue continued to fall (down ~29–31% YoY in Q1), with management targeting aggressive migration from APJ legacy platforms; uplift on migrated contracts averages ~50% but near-term “other recurring” could decline ~40% YoY in Q2–Q3 .
  • Ongoing restructuring costs: A ~$29.2M nonrecurring restructuring charge in Q1 for a ~5% workforce reduction; press release adjustments reflected $26.6M in restructuring within operating profit adjustments, plus pension-related costs and tax effects .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($USD Millions)$440.0 $465.2 $481.8
Total Revenue ex Float ($USD Millions)$394.4 (calc: 440.0−45.6) $420.1 (calc: 465.2−45.1) $426.5
Dayforce Recurring ex Float ($USD Millions)$292.0 $307.6 $323.1
Float Revenue ($USD Millions)$45.6 $45.1 $55.3
Professional Services ($USD Millions)$64.1 $71.5 $71.3
Diluted EPS (GAAP, $)$0.01 $0.07 $0.09
Adjusted Diluted EPS ($)$0.47 $0.60 $0.58
Adjusted EBITDA ($USD Millions)$126.1 $129.2 $156.7
Adjusted EBITDA Margin (%)28.7% 27.8% 32.5%
Operating Profit Margin (GAAP, %)4.7% 6.1% 6.4%
Net Income Margin (GAAP, %)0.5% 2.3% 3.1%
Operating Cash Flow ($USD Millions)$91.8 $81.0 $49.6
Free Cash Flow ($USD Millions)$63.4 $54.2 $19.5

Segment revenue breakdown:

Segment ($USD Millions)Q3 2024Q4 2024Q1 2025
Dayforce Recurring ex Float$292.0 $307.6 $323.1
Dayforce Float$41.2 $40.3 $55.3
Total Dayforce Recurring$333.2 $347.9 $410.5 (includes float)
Powerpay Recurring ex Float$20.2 $23.1 $19.0
Powerpay Float$4.2 $4.4 —
Other Recurring$18.3 $18.3 $13.1
Professional Services & Other$64.1 $71.5 $71.3
Total Revenue$440.0 $465.2 $481.8

Key KPIs:

KPIQ3 2024Q4 2024Q1 2025
Live Customers6,730 6,876 6,929
Dayforce Recurring Rev/Customer (TTM, $)$159,496 $163,101 $167,600
Avg Float Balance ($B)$4.48 $4.68 $5.86
Avg Float Yield (%)4.0% 3.8% 3.8%
Float Revenue ($M)$45.6 $45.1 $55.3

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024 release)Current Guidance (Q1 2025 release)Change
Total Revenue ($M)FY 2025—$1,929–$1,944 Introduced
Total Revenue ex Float ($M)FY 2025$1,745–$1,760 $1,749–$1,764 Raised slightly
Dayforce Recurring ex Float ($M)FY 2025$1,315–$1,340 $1,317–$1,342 Raised slightly
Float Revenue ($M)FY 2025$180 $180 Maintained
Adjusted EBITDA Margin (%)FY 202532% 32% Maintained
Free Cash Flow Margin (%)FY 202512% 12% Maintained
Total Revenue ($M)Q2 2025—$454–$460 Introduced
Total Revenue ex Float ($M)Q2 2025—$408–$414 Introduced
Float Revenue ($M)Q2 2025—$46 Introduced
Adjusted EBITDA Margin (%)Q2 2025—30.5%–31.5% Introduced
FX AssumptionsQ2/FY 2025CAD 1.44/1.61/0.81 (Q1 guide) Updated: CAD 1.40 (Q2), 1.43 (FY); AUD 1.59 (Q2), 1.60 (FY); GBP 0.76 (Q2), 0.79 (FY) Updated Q2, FY maintained constant currency

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
AI/TechnologyIntroduced Learning replatform, People Analytics Measures; Copilot GA announced for Q4 Wallet revenue >$30M in 2024; Copilot sold >60 units since Nov; plan for AI agents 50% Copilot attach in Q1 new deals; mobile rollout; “AI everywhere” with single data model Strengthening adoption and monetization
Bookings & PipelinePipeline coverage ~4x; some elongated cycles upmarket Q4 record sales, Jan strong; 4x pipeline coverage entering year H1 bookings expected +~40% YoY; add-on sales +30%; SI prime deals up significantly Robust demand; accelerating bookings
Macro & FXFX headwind; float yield stabilization; employment +~1.5% YoY Muted Q4 holiday employee volume; extreme weather in SE; constant currency guide reiterated USD weakening post tariffs; updated Q2 FX; still naturally hedged at EBITDA; no tariff impact seen FX monitored; cc growth unchanged
Product PerformanceWallet features: Savings, Cashless Tips; Payroll reimagined Wallet revenue growth; new talent acquisition UX; Learning content store Wallet direct-to-bank, debit card pay options; daily revenue uplift observed Continued feature cadence and usage
Regional/ContractsGlobal wins, UK go-lives Large enterprise wins; Government of Canada timeline Canadian federal contract extension CAD 105M (~USD $72M); additional federal agency win Visibility on services and recurring ramp
Regulatory/LegalCompliance leadership highlighted; 900+ updates in 2024 Gartner compliance leadership; margin improvements via automation Forward-looking risks include AI frameworks & compliance; continued global statutory enhancements Ongoing leadership; risk awareness
Services/PartnersBuilding SI channel; repurchase $30M shares SI partnerships maturing; PS margins moving to breakeven SI prime deals up; PS growth outpacing Dayforce recurring in 2025; breakeven targeted in 2025 Channel scaling; margin uplift

Management Commentary

  • “We kicked off the year with strong first quarter results and excellent sales momentum… reinforcing our optimism for continued momentum through 2025 and beyond as we further our HCM leadership position.” – David Ossip, CEO .
  • “Adjusted EBITDA margin was 32.5%, up 240 basis points year-over-year, and free cash flow of $19.5 million was up significantly versus last year, keeping us on track to achieve our full year target of 12%.” – David Ossip, CEO .
  • “During the quarter, we announced an efficiency plan and the reduction of our global workforce by approximately 5%… $65 million in savings in 2025 and $80 million annualized… incurred a nonrecurring restructuring charge in the first quarter of $29.2 million.” – Jeremy Johnson, CFO .
  • “We now expect 3 rate cuts in the U.S. in the back half… Q1 float revenue came favorable to our expectations… we are comfortable holding our full year float revenue guidance.” – Jeremy Johnson, CFO .
  • “Yes, [Azure Marketplace] customers can burn down their Azure market credits.” – David Ossip, CEO .

Q&A Highlights

  • Bookings/pricing: H1 bookings expected up ~40% YoY; full suite deals ~50% of total; major market and enterprise segments seeing near-100% full-suite adoption; win rates nearly doubled YoY .
  • Revenue cadence: Q2 seasonality from year-end services; professional services growth to moderate from Q1’s +50% but remain strong; float guided to ~$46M in Q2 with ~3.6% effective yield .
  • Canada contract: Government of Canada extended configuration work by CAD 105M (~USD $72M) for ~15 months; additional federal agency deal signed in Q1 .
  • Efficiency plan: Savings $65M in 2025 ($80M annualized), ~$29M Q1 restructuring charge; expect more G&A leverage; recurring and PS margins to improve toward breakeven .
  • APJ migrations: Other recurring expected to decline faster (potentially ~40% YoY in Q2–Q3) as legacy customers migrate; average uplift ~50% per contract post-migration .
  • AI monetization: Copilot attached to ~50% of new deals; broader AI agents rolling across HR, payroll, time, talent; single database architecture supports pervasive AI .

Estimates Context

  • Q1 2025 vs Consensus: Revenue $481.8M vs $476.7M* (beat) and adjusted diluted EPS $0.58 vs $0.5426* (beat). Estimates based on 16 revenue and 15 EPS contributor counts* .
MetricQ1 2025 Consensus*Q1 2025 Actual
Revenue ($USD Millions)476.7*481.8
Primary EPS ($)0.5426*0.58
Revenue - # of Estimates16*—
Primary EPS - # of Estimates15*—
  • FY 2025 Consensus vs Company Guidance: Revenue consensus $1,943.7M* aligns with company guidance $1,929–$1,944M; EPS consensus $2.2245*; company targets adj. EBITDA margin 32% and FCF margin 12% (implying potential upward estimate revisions if execution continues on cost and bookings momentum) .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • The quarter showed balanced growth with a mix shift toward higher-margin recurring plus strong services execution; margin expansion and cash generation are on track with reiterated FY targets .
  • Bookings momentum (H1 +~40% YoY) and SI partner priming should sustain implementation pipelines into 2H25 and FY26; watch professional services moderation in Q2 and conversion of large enterprise deals .
  • AI is becoming a meaningful commercial lever (50% attach on Copilot for new deals) and wallet monetization is accelerating via new direct-to-bank/debit features—both are likely drivers of ARPU uplift and add-on sales .
  • Float dynamics remain managed (average yield ~3.6–3.8%; balances growing mid- to low-single digits); the business is naturally hedged at EBITDA, with FX impacts reflected in guidance updates .
  • Efficiency plan supports multi-year margin trajectory (2025 adj. EBITDA margin 32%, FCF margin 12%); restructuring costs are front-loaded, with savings flowing through H2 and FY 2026 .
  • Legacy to Dayforce migrations will depress “other recurring” near-term but create contract-level uplift (~50% average) and simplification benefits; track progress through Q3 .
  • Near-term trading: Expect focus on execution against Q2 margin/float targets and confirmation of bookings conversion; medium-term thesis centers on durable ~15% cc revenue growth, expanding margins, and AI-driven attach/upsell .

Press Releases of note (Q1 window):

  • Dayforce available in Microsoft Azure Marketplace (simplifies procurement; Azure credits usable) .
  • Tampa Bay Buccaneers expand platform usage (performance and compensation management) .
  • Hubexo selects Dayforce for global workforce transformation .
  • Rimini Street launches Rimini Manage for Dayforce as Community Partner (extended services ecosystem) .

All document data cited from Dayforce’s 8-Ks, press releases, and earnings call transcripts as noted.