Ceridian(CDAY) - 2024 Q2 - Quarterly Results

Q2 2024 Earnings Summary Dayforce reported strong Q2 2024 results, with revenue growth, improved adjusted profitability, and strategic advancements Financial Highlights Dayforce reported strong financial results for the second quarter of 2024, with total revenue increasing 15.7% to $423.3 million and Dayforce recurring revenue growing 19.9% to $321.6 million Q2 2024 Key Financial Metrics (YoY) | Metric | Q2 2024 | Q2 2023 | Change | Constant Currency Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $423.3M | $365.9M | +15.7% | +16.3% | | Dayforce Recurring Revenue | $321.6M | $268.2M | +19.9% | +20.4% | | Operating Profit | $14.1M | $29.4M | -52.0% | N/A | | Adjusted Operating Profit | $94.9M | $83.0M | +14.3% | N/A | | Net (Loss) / Income | ($1.8M) | $3.1M | - | N/A | | Adjusted Net Income | $76.2M | $50.8M | +50.0% | N/A | | Diluted EPS | ($0.01) | $0.02 | - | N/A | | Adjusted Diluted EPS | $0.48 | $0.32 | +50.0% | N/A | | Adjusted EBITDA | $116.3M | $98.4M | +18.2% | N/A | - The number of customers live on the Dayforce platform grew by 6.1% year-over-year, reaching 6,657 as of June 30, 2024[34] - For the six months ended June 30, 2024, net cash from operating activities increased 16% to $108.3 million, and free cash flow grew to $53.9 million from $36.5 million in the prior year period[5][7] - Dayforce recurring revenue per customer for the trailing twelve months increased by 17.7% to $154,998[8] Management Commentary and Corporate Actions Management highlighted continued business momentum, attributing success to the simplicity and efficiency of the Dayforce platform - CEO David Ossip credited the company's success to the simplicity and efficiency benefits that customers realize from the Dayforce platform[30] - CFO Jeremy Johnson announced a Board-approved $500 million share repurchase program, citing strong results and improved cash flow generation[5] - The company will host its first Investor Day on November 12, 2024, in Las Vegas to present its vision, strategy, and multi-year financial model[5] Business, Product, and Customer Highlights Dayforce received multiple industry recognitions for value realization and sustainability, and significantly expanded its global advisory partner ecosystem - Dayforce received accolades from The Hackett Group, was named a Leader in the PEAK Matrix® Assessment 2024 for People Analytics, and ranked 1 on USA TODAY's list of America's Climate Leaders 2024[10] - The company expanded its global advisory partner ecosystem by adding 11 new partners[10] - Notable new customer wins include the Government of Canada (expanding usage), a global agribusiness company with over 20,000 employees, and a UK-based hospitality brand with over 20,000 employees[11] - Dayforce Wallet achieved a milestone, delivering over $4 billion in on-demand payroll to users, with over 1,270 customers live on the platform as of June 30, 2024[16] - Product enhancements were released for Dayforce Co-Pilot (AI), Talent acquisition experiences, and compliance, with over 200 compliance updates in the first half of 2024[41] Business Outlook Dayforce provides financial guidance for Q3 and full year 2024, detailing expected revenue and adjusted EBITDA Q3 and Full Year 2024 Guidance Dayforce provided its financial outlook for the third quarter and full year of 2024 Financial Guidance for Q3 and Full Year 2024 | Guided Metrics | Third Quarter 2024 | Full Year 2024 | | :--- | :--- | :--- | | Total Revenue | $425M - $430M (+13% to 14%) | $1,736M - $1,746M (+15% to 15.5%) | | Dayforce Recurring Revenue (ex-float) | $289M - $294M (+18% to 20%) | $1,163M - $1,168M (+21% to 21.5%) | | Float Revenue | $40M | $187M | | Adjusted EBITDA | $115M - $125M | $490M - $505M | - The guidance for Q3 and Q4 2024 assumes an average USD to CAD foreign exchange rate of $1.38[19] Consolidated Financial Statements (Unaudited) This section presents Dayforce's unaudited consolidated financial statements, detailing operations, balance sheets, and cash flows Condensed Consolidated Statements of Operations The statement of operations shows a 15.7% increase in total revenue to $423.3 million for Q2 2024, resulting in a net loss of $1.8 million Q2 2024 Statement of Operations Highlights (in millions) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Total Revenue | $423.3 | $365.9 | | Gross Profit | $186.8 | $155.9 | | Operating Profit | $14.1 | $29.4 | | Net (Loss) Income | $(1.8) | $3.1 | Condensed Consolidated Balance Sheets As of June 30, 2024, Dayforce's balance sheet shows total assets of $9.05 billion and total liabilities of $6.57 billion Balance Sheet Summary (in millions) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $5,836.6 | $5,955.2 | | Total Assets | $9,046.1 | $9,010.9 | | Total Current Liabilities | $5,280.3 | $5,334.9 | | Total Liabilities | $6,570.3 | $6,612.7 | | Total Stockholders' Equity | $2,475.8 | $2,398.2 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash provided by operating activities was $108.3 million, with significant net cash used in investing activities Six Months Ended June 30 Cash Flow Summary (in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $108.3 | $93.0 | | Net cash (used in) provided by investing activities | $(383.5) | $14.9 | | Net cash provided by financing activities | $7.7 | $119.5 | | Net (decrease) increase in cash | $(289.2) | $290.5 | Supplemental Financial Information and Non-GAAP Reconciliation This section details revenue analysis, GAAP to non-GAAP reconciliations, and definitions of key non-GAAP metrics Revenue Analysis This section provides a detailed breakdown of revenue by source for Q2 and the first six months of 2024 Q2 2024 Revenue Breakdown (in millions) | Revenue Stream | Q2 2024 | Q2 2023 | Growth (GAAP) | Growth (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Dayforce recurring, ex-float | $277.7 | $231.3 | 20.1% | 20.5% | | Dayforce float | $43.9 | $36.9 | 19.0% | 19.5% | | Total Dayforce recurring | $321.6 | $268.2 | 19.9% | 20.4% | | Total Cloud recurring | $346.2 | $292.3 | 18.4% | 19.0% | | Professional services & other | $58.3 | $51.0 | 14.3% | 14.5% | | Total Revenue | $423.3 | $365.9 | 15.7% | 16.3% | Reconciliation of GAAP to Non-GAAP Financial Measures Dayforce provides reconciliations of its GAAP results to non-GAAP measures to exclude specific items Q2 2024 GAAP to Non-GAAP Reconciliation Highlights (in millions) | Metric | GAAP | Adjustments | Non-GAAP (Adjusted) | | :--- | :--- | :--- | :--- | | Operating Profit | $14.1 | +$80.8 | $94.9 | | Net (Loss) Income | $(1.8) | +$78.0 | $76.2 | | EBITDA | $61.7 | +$54.6 | $116.3 (Adjusted EBITDA) | - Key adjustments for Q2 2024 included $40.8 million in share-based compensation, $29.5 million in amortization of intangibles, and $10.5 million in restructuring expenses[64] Reconciliation of Free Cash Flow Free cash flow, a non-GAAP measure of liquidity, is calculated by subtracting capital expenditures from net cash provided by operating activities Free Cash Flow Calculation (in millions) | Line Item | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $108.3 | $93.0 | | Expenditures for property, plant, and equipment | $(6.7) | $(10.1) | | Expenditures for software and technology | $(47.7) | $(46.4) | | Free cash flow | $53.9 | $36.5 | Definitions of Non-GAAP Financial Measures This section defines the non-GAAP financial measures used throughout the earnings release - Adjusted EBITDA is defined as net income before interest, taxes, depreciation, and amortization, adjusted to exclude share-based compensation and other certain items[89] - Adjusted Net Income excludes items such as share-based compensation and amortization of acquisition-related intangible assets, adjusted for the effect of income taxes[89] - Free Cash Flow is defined as net cash provided by operating activities less capital expenditures for property, plant, equipment, software, and technology[89][95]