Ceridian(US:CDAY)2025-08-06 11:18PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) The unaudited condensed consolidated financial statements for Q2 2025 reflect revenue growth, net income, and balance sheet shifts, influenced by an efficiency plan Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $8.50 billion, liabilities decreased, and stockholders' equity increased Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $8,500.8 | $9,117.0 | | Cash and equivalents | $625.2 | $579.7 | | Customer funds | $4,259.5 | $5,001.5 | | Goodwill | $2,382.8 | $2,336.7 | | Total Liabilities | $5,798.5 | $6,570.7 | | Customer funds obligations | $4,250.1 | $5,024.2 | | Current portion of long-term debt | $582.3 | $7.3 | | Long-term debt, less current portion | $631.8 | $1,209.1 | | Total Stockholders' Equity | $2,702.3 | $2,546.3 | Condensed Consolidated Statements of Operations For Q2 2025, total revenue grew to $464.7 million, operating profit increased, and the company achieved a net income of $21.3 million Q2 Financial Performance (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $464.7 | $423.3 | | Operating Profit | $42.3 | $14.1 | | Net Income (Loss) | $21.3 | $(1.8) | | Diluted EPS | $0.13 | $(0.01) | Six-Month Financial Performance (in millions, except per share data) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total Revenue | $946.5 | $854.8 | | Operating Profit | $73.3 | $54.8 | | Net Income | $36.2 | $5.3 | | Diluted EPS | $0.22 | $0.03 | Condensed Consolidated Statements of Cash Flows For H1 2025, operating cash flow increased to $162.3 million, with significant cash used in investing and financing activities, leading to a net decrease in cash Six-Month Cash Flow Summary (in millions) | Cash Flow Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $162.3 | $108.3 | | Net cash used in investing activities | $(180.3) | $(383.5) | | Net cash (used in) provided by financing activities | $(919.5) | $7.7 | | Net decrease in cash, restricted cash, and equivalents | $(912.6) | $(289.2) | - Significant cash outflows from financing activities in H1 2025 included a $854.2 million decrease in customer funds obligations and $50.9 million in common stock repurchases29 Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, segment information, and financial statement items, covering an efficiency plan, customer funds, debt, and share repurchases - On February 26, 2025, the company announced an efficiency plan involving a 5% workforce reduction, incurring restructuring charges of $31.9 million in the first six months of 202542 Investment Income from Customer Funds (Float Revenue, in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $47.4 | $48.9 | | Six Months Ended June 30 | $102.7 | $109.6 | - As of June 30, 2025, total debt was $1.22 billion, including $643.5 million in Term Debt and $575.0 million in Convertible Senior Notes due March 2026, which are now classified as current debt6272 - As of June 30, 2025, the company has approximately $1.43 billion in remaining performance obligations (backlog), expected to be recognized as revenue over the next three years95 - Under its $500 million share repurchase program, the company purchased 882,968 shares for a total cost of $51.2 million in the first six months of 2025110111 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses revenue growth from Dayforce customers, analyzes operating expenses, assesses liquidity, and provides non-GAAP financial measure reconciliations Overview The company's business model focuses on recurring revenue from its Dayforce and Powerpay HCM solutions, sold on a subscription PEPM basis - The company's business model is centered on recurring revenue from its Dayforce and Powerpay HCM solutions, sold on a subscription PEPM basis, typically with initial contract terms of three to five years113114 - It takes approximately two years to recover the initial implementation and customer acquisition costs for a new Dayforce customer contract115 Results of Operations For Q2 2025, total revenue grew 9.8% to $464.7 million, driven by Dayforce customer growth, with operating profit surging 200% Q2 2025 vs Q2 2024 Revenue Growth (in millions) | Revenue Stream | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $464.7 | $423.3 | 9.8% | | Recurring Services | $393.1 | $365.0 | 7.7% | | Professional Services | $71.6 | $58.3 | 22.8% | - Revenue growth was driven by a 4.9% increase in live Dayforce customers (to 6,984) and a rise in Dayforce recurring revenue per customer to $171,075 for the trailing twelve months128 - Float revenue decreased in Q2 2025 due to a 40 basis point drop in average yield, despite a 7.2% increase in the average float balance to $5.08 billion129 - For H1 2025, total revenue grew 10.7% to $946.5 million, and operating profit increased 33.8% to $73.3 million compared to H1 2024143145 Liquidity and Capital Resources The company's liquidity, supported by $625.2 million in cash and operating cash flow, is deemed sufficient, despite significant cash usage in financing activities - As of June 30, 2025, the company had cash and equivalents of $625.2 million and total debt of $1,224.6 million161 - Management believes existing cash, operating cash flow, and available credit will be sufficient to meet liquidity needs for the foreseeable future164 Six-Month Cash Flow Summary (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $162.3 | $108.3 | | Net cash used in investing activities | $(180.3) | $(383.5) | | Net cash (used in) provided by financing activities | $(919.5) | $7.7 | Non-GAAP Financial Measures The company uses non-GAAP measures like Adjusted Operating Profit and Free Cash Flow, with Q2 2025 Adjusted Operating Profit at $124.9 million and H1 2025 Free Cash Flow nearly doubling Reconciliation of Operating Profit to Adjusted Operating Profit (in millions) | | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating profit (GAAP) | $42.3 | $14.1 | | Share-based compensation | $48.4 | $40.8 | | Amortization | $31.1 | $29.5 | | Other adjustments | $3.1 | $10.5 | | Adjusted operating profit (Non-GAAP) | $124.9 | $94.9 | Free Cash Flow (in millions) | | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $162.3 | $108.3 | | Capital expenditures | $(55.7) | $(54.4) | | Free cash flow (Non-GAAP) | $106.6 | $53.9 | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company faces market risks from foreign currency, interest rate fluctuations impacting float revenue and debt expense, and pension obligations - The company's primary market risks are foreign currency (Canadian Dollar), interest rates, and pension obligations188 - A 100 basis point decrease in market investment rates would result in an estimated $27 million decrease in annual float revenue192 - A 100 basis point decrease in applicable reference rates would lead to an approximate $6 million decrease in annual interest expense on its Term Debt193 - The company is finalizing the wind-down of its U.S. pension plan, with liabilities expected to be transferred to an insurance company in 2025197 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level199 - No changes were made to internal control over financial reporting during the six months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, these controls200 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business, financial condition, or liquidity - The company is not presently a party to any legal proceedings that it believes would have a material adverse effect on its business203 Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, have occurred - No material changes in risk factors have occurred since those disclosed in the 2024 Form 10-K204 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities During Q2 2025, the company repurchased 364,059 shares for $20.8 million under its $500 million share repurchase program, with $412.7 million remaining available Share Repurchases for Q2 2025 | Metric | Value | | :--- | :--- | | Total Shares Purchased | 364,059 | | Average Price Paid per Share | $57.05 | | Total Cost (in millions) | $20.8 | | Remaining Authorization (in millions) | $412.7 | Item 5. Other Information No directors or officers adopted or terminated any Rule 10b5-1 trading plans or arrangements during the fiscal quarter ended June 30, 2025 - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the quarter209 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and XBRL data