Dayforce Inc. (NYSE:DAY): A Comprehensive Look at the HCM Leader's Impressive Performance

Published on September 24, 2024 | Ticker: DAY

Dayforce Inc. (NYSE:DAY) has delivered an exceptional performance, showcasing its dominance in the human capital management (HCM) software market. With a strong focus on innovation, customer success, and financial discipline, the company has solidified its position as a leading provider of cloud-based HCM solutions.

Financials

In the latest fiscal year, Dayforce reported annual net income of $54.8 million and annual revenue of $1.51 billion, reflecting the company's ability to drive consistent growth and profitability. The company's annual operating cash flow reached $219.5 million, while its annual free cash flow stood at $105.1 million, underscoring its robust financial position and ability to generate substantial cash flows.

Dayforce's quarterly performance has been equally impressive. In the first quarter of 2024, the company reported Dayforce recurring revenue of $337.2 million, up 24% year-over-year, including float revenue. Excluding float, Dayforce recurring revenue grew 23%, driven by strong go-lives and healthy underlying customer trends. Total revenue for the quarter reached $431.5 million, representing a 16% increase on a GAAP basis and a 17% increase on a constant currency basis.

The company's profitability metrics have also been noteworthy. Gross profit for the first quarter was $205 million, up 28% year-over-year. Cloud recurring gross margin expanded to 79%, up 170 basis points compared to the prior year period. On a non-GAAP basis, adjusted cloud recurring gross margin reached 80%, expanding 130 basis points year-over-year, reflecting the continued scaling of the Dayforce platform.

Adjusted EBITDA for the first quarter was $129.9 million, up 23% year-over-year, with an adjusted EBITDA margin of 30.1%, expanding 170 basis points. This strong profitability performance underscores Dayforce's ability to leverage its operational efficiency and scale to drive bottom-line growth.

Business Overview

Dayforce's geographic diversification has also been a key strength. The company's international operations, particularly in Canada, have contributed significantly to its overall performance. In the first quarter, Powerpay recurring revenue, which serves the Canadian small business market, grew 8% year-over-year, including float, and 5% excluding float.

The company's product innovation has been a driving force behind its success. The launch of Dayforce Co-Pilot, a generative AI-powered assistant, has been a significant milestone, empowering customers and their employees with new levels of productivity and efficiency. This cutting-edge technology, combined with Dayforce's continuous compliance updates and enhancements to its workforce management and talent management capabilities, has solidified the platform's position as a comprehensive HCM solution.

Dayforce's strong customer acquisition and retention have also been instrumental to its growth. The company ended the first quarter with 6,575 live Dayforce customers, up 6.4% from the prior year period. Dayforce recurring revenue per customer, a key metric, grew 19% year-over-year, reflecting the increasing value that customers derive from the platform.

The company's strategic focus on expanding its partner ecosystem has also paid dividends. In the first quarter, SI-led sales growth was up 35% year-over-year, demonstrating the strength of Dayforce's go-to-market strategy and the appeal of its solutions to a broader range of customers.

Outlook

Looking ahead, Dayforce has provided an optimistic outlook for the remainder of 2024. For the full year, the company expects Dayforce recurring revenue, excluding float, to be in the range of $1.163 billion to $1.168 billion, representing growth of 21% as reported and on a constant currency basis. Total revenue is expected to be between $1.73 billion and $1.74 billion, reflecting growth of approximately 14% to 15% as reported and on a constant currency basis.

Adjusted EBITDA is forecasted to be in the range of $484 million to $499 million, translating to an adjusted EBITDA margin of 28% to 28.7%. The company's guidance also includes an expectation of $183 million in float revenue for the full year, reflecting fewer rate cuts than originally anticipated.

Conclusion

Dayforce's strong performance, innovative product roadmap, and robust financial position position the company well to capitalize on the significant growth opportunities in the HCM market. As organizations of all sizes continue to seek solutions that drive productivity, optimize processes, and enhance employee experiences, Dayforce's comprehensive platform and customer-centric approach make it a compelling choice for businesses across various industries and geographies.

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