Today in Bloomberg Deals: Canaccord is buoyant in Boston, Swiss M&A is on a tear and Thoma Bravo is in talks to buy Dayforce https://t.co/ok6j6Xwk2x ...

HR software provider Dayforce is reportedly discussing a sale to private equity firm Thoma Bravo. https://t.co/IeaWxvEYvP ...

Thoma Bravo is in talks to acquire human resources management software provider Dayforce, in a deal that could be announced as soon as in the coming weeks https://t.co/mVv5RLPcHG ...

Summary of Dayforce (DAY) Conference Call - August 11, 2025 Company Overview - **Company**: Dayforce (DAY) - **Industry**: Human Capital Management (HCM) Software Key Points Demand and Revenue Performance - Dayforce is experiencing strong demand with three consecutive quarters of over 40% bookings growth, starting from Q4 of the previous year [4] - Current recurring revenue growth is at approximately 14% in constant currency, indicating a disparity between bookings and revenue growth [4][5] - Forecast for Q3 recurring revenue growth is expected to be between 13% to 16%, and for Q4, between 16% to 19% [6] Customer Dynamics - The company has a gross retention rate of 98% for enterprise customers, while smaller customers experience higher churn rates [12] - The average revenue per customer is currently $170,000, with expectations for this figure to increase as larger customers are onboarded [13] - Add-on sales constitute 40% of total sales, with managed services accounting for 17% [7] Product and Technology Advancements - Dayforce has launched an AI assistant that enhances user experience by allowing employees to query company-specific information [24][25] - The AI assistant has been attached to 50% of sales year-to-date, indicating strong market resonance [26] - Future plans include launching 30 AI agents to automate various tasks for users [27] Market Position and Competitive Landscape - Dayforce is positioned as a competitor to Workday and ADP, focusing on larger enterprise customers [37] - The company has successfully secured contracts with significant clients, including the Government of Canada and a large U.S. Federal agency [35][36] - Dayforce aims to replace multiple vendor solutions with its comprehensive platform, which is seen as a competitive advantage [38] Financial Performance and Projections - Free cash flow margin has improved to 13.5% to 14%, with a target of reaching $1 billion in free cash flow by 2031 [42][43] - The company aims to expand free cash flow margins by 100 to 200 basis points annually, with confidence in controlling costs and improving cash realization [44][45] Additional Insights - The company emphasizes the importance of AI in the industry, viewing it as a critical factor for future success [29] - Dayforce's strategy includes focusing on larger customers while maintaining strong relationships with systems integrators [32][33] This summary encapsulates the key insights and data points from the Dayforce conference call, highlighting the company's current performance, future outlook, and strategic initiatives.

Core Viewpoint - Dayforce (DAY) reported quarterly earnings of $0.61 per share, exceeding the Zacks Consensus Estimate of $0.52 per share, and showing an increase from $0.48 per share a year ago, representing an earnings surprise of +17.31% [1][2] Financial Performance - The company achieved revenues of $464.7 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.41%, compared to $423.3 million in the same quarter last year [2] - Over the last four quarters, Dayforce has consistently exceeded consensus EPS estimates [2] Stock Performance - Dayforce shares have declined approximately 26.8% since the beginning of the year, while the S&P 500 has gained 7.1% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.57, with projected revenues of $481.73 million, and for the current fiscal year, the EPS estimate is $2.30 on revenues of $1.94 billion [7] - The outlook for the industry, specifically the Internet - Software sector, is favorable, ranking in the top 32% of over 250 Zacks industries, which historically outperform the bottom 50% by more than 2 to 1 [8]

Group 1: Labor Market Overview - The U.S. job market exceeded expectations for the 11th consecutive month, with 147,000 jobs added in June compared to the forecast of 110,000 [1] - The unemployment rate decreased from 4.2% to 4.1%, better than the expected 4.3% [1] - Average hourly earnings increased by 0.2% month-over-month and 3.7% year-over-year [1] Group 2: Payroll Stocks Performance - Paylocity Holding Corporation (PCTY) and Dayforce (DAY) saw stock increases of over +2% and +1% respectively, both classified as Zacks Rank 3 (Hold) [2] - Paychex (PAYX) is noted for its integrated Human Capital Management (HCM) solutions and has a Zacks Rank 2 (Buy), with expectations for steady growth in top and bottom lines [3] - Maximus (MMS) is identified as a strong buy with a Zacks Rank 1 (Strong Buy), despite a 21% decline from its 52-week high, attributed to a spike in FY25 EPS estimates by 7% [5] Group 3: Market Reactions and Economic Implications - The dip in Maximus stock followed the announcement of 7,000 federal government job cuts, but this may be an overreaction given the addition of 47,000 state government jobs and 19,000 social assistance jobs [6] - The resilient labor market and better-than-expected jobs report contribute positively to the stock market's recovery, making payroll stocks particularly attractive [8]

Summary of Dayforce (DAY) 2025 Conference Call Company Overview - **Company**: Dayforce (DAY) - **Industry**: Payroll and Human Capital Management (HCM) Software Key Points Macro Environment Impact - **Interest Rates**: Fluctuations impact the float business; revenue from float expected to decrease from $200 million last year to $180 million this year [6][5] - **Foreign Exchange Rates**: Approximately 20% of business in Canada, 4% in Australia, and 3-4% in the UK; constant currency guidance provided to mitigate FX impacts [7][6] - **Employment Levels**: Revenue fluctuates based on customer employment levels; expected tailwind from employment under 1% this year, down from 1-2% last year [9][8] - **Demand Environment**: Strong demand for software; 40% increase in bookings in Q4 last year and expected 40% year-over-year increase for the first half of this year [11][10] Competitive Landscape and Product Development - **Product Differentiation**: Continuous calculation of net pay differentiates Dayforce from competitors; full HCM suite developed to enhance offerings [13][12] - **Managed Services**: New product offering where Dayforce operates as the payroll and benefits department for clients, adding $10 to $12 per employee per month [16][15] - **Sales Strategy**: Shifted messaging to emphasize ROI by consolidating multiple systems into Dayforce, improving win rates [19][18] Financial Performance and Guidance - **Revenue Growth**: Guidance for constant currency growth of 15-17%; Q1 growth at 16% [20][21] - **Go-Live Cycle**: Revenue primarily driven by sales from the past 1-2 years; go-live times range from 6-12 months depending on customer size [22][21] - **Free Cash Flow**: Targeting 12% free cash flow margin this year, with a path to 20% in the future; improvements in recurring gross margins expected [43][42] Managed Services Opportunity - **Market Position**: Unique value proposition in managed services; targeting complex industries such as retail, hospitality, and manufacturing [38][37] - **Growth Potential**: Low attach rate for managed services indicates significant growth opportunity; margins now on par with software margins [36][35] AI Integration - **Internal AI Use**: AI tools implemented in customer support, professional services, and product development to improve efficiency [55][54] - **AI Revenue Opportunities**: Potential to generate additional $10 to $12 per employee per month through AI features integrated into the platform [59][58] Future Outlook - **Managed Services Growth**: Anticipated higher retention and NPS scores from managed services customers; expected to contribute significantly to revenue targets [68][67] - **Wallet and Flex Products**: Wallet revenue expected to grow from $30 million last year to near $50 million this year; Flex still in testing phase [71][70] Conclusion - Dayforce is positioned for strong growth driven by demand for its software solutions, effective management of macroeconomic factors, and innovative product offerings, particularly in managed services and AI integration. The company is confident in achieving its revenue targets and improving free cash flow margins in the coming years.

Summary of Dayforce (DAY) 2025 Conference Call Company Overview - **Company**: Dayforce - **Industry**: Human Capital Management and Payroll Software Key Points and Arguments Market Environment - **Customer Employment Levels**: Employment levels at customer companies are lower than in previous years, with growth below 1% year-over-year, which aligns with expectations given the economic outlook [6][7] - **Interest Rate Impact**: Float revenue is expected to decrease from $200 million last year to $180 million this year due to interest rate changes [8] - **Foreign Exchange (FX) Impact**: Approximately 20% of Dayforce's business is in Canada, with additional exposure in Australia and the UK, affecting revenue guidance [9] - **Demand Environment**: Strong demand environment with a 40% growth rate in bookings for Q4 and expected to maintain similar growth in the first half of the year [10][11] Financial Performance - **Recurring Revenue Growth**: Dayforce's recurring revenue growth was around 20% last year, but has decreased to 16% in Q1, attributed to macroeconomic factors and a recent acquisition [13][14] - **Guidance for Full Year**: Guidance for full-year growth is set at 15% to 17% [15] - **Managed Services Growth**: 70% of growth in managed services sales year-over-year, indicating a strong market response [27] Product Development and Strategy - **Full Suite Offering**: Dayforce has expanded its offerings to include a full suite of Human Capital Management (HCM) services, which has improved win rates and deal sizes [22][23] - **Managed Services**: The company has improved margins in managed services to be on par with software margins, allowing for further growth in this area [38][39] - **AI Integration**: Dayforce is leveraging AI to enhance user experience and operational efficiency, with plans for further development in AI capabilities [51][55] Pricing and Packaging - **Current Pricing Model**: Dayforce currently uses a per employee per month pricing model, primarily charging at go-live [63] - **Future Pricing Strategy**: There is potential to shift towards a subscription-based model, which could simplify billing and enhance customer experience [64] Additional Revenue Streams - **Wallet and Flex Services**: The wallet service has seen significant growth, with revenue increasing from $12 million in 2023 to an expected $30 million in 2024. Flex services are still in early development stages [80][81] Customer Retention and Sales Strategy - **Back to Base Sales**: The strategy to focus on existing customers has shown success, with a goal to increase the percentage of sales from add-on services to 50% [72][73] - **Net Retention Rate**: The net retention rate is projected to exceed 110%, indicating strong customer loyalty and satisfaction [73] Partner Ecosystem - **Strategic Partnerships**: Dayforce is building relationships with system integrators and software partners to enhance implementation and expand market reach [76][78] Other Important Insights - **Operational Efficiency**: The company has focused on improving operational efficiency, which has contributed to a significant increase in underlying EBITDA margins [41][42] - **Future Growth Potential**: Dayforce is optimistic about its growth trajectory, with plans to enhance profitability and free cash flow margins in the coming years [47][49] This summary encapsulates the key insights from the Dayforce conference call, highlighting the company's current market position, financial performance, strategic initiatives, and future growth potential.

Summary of Dayforce (DAY) FY Conference Call - May 13, 2025 Company Overview - **Company**: Dayforce - **Industry**: Human Capital Management (HCM) Software - **Revenue**: Approximately $1.95 billion - **Customers**: About 7,000 - **Users**: Approximately 7 million on the global platform - **Core Offering**: Comprehensive HCM talent suite covering the entire employee lifecycle from hire to retire [4][5] Key Points and Arguments Product Differentiation - Dayforce's vision emphasizes compliance and a full talent suite within a single application, distinguishing it from competitors who often separate payroll and time management [7][8] - The continuous calculation of net pay allows payroll processing without waiting for time system closure, enhancing operational efficiency [8] - Dayforce has transitioned to a full HCM suite post-IPO, with significant improvements in talent capabilities [9][10] - The company is recognized as a leader in the Gartner Magic Quadrant for talent enterprise solutions, with nearly 90% of deals in the 500 to 3,500 employee segment being full suite deals [11] Managed Services and Revenue Growth - Dayforce's managed services act as the payroll department for clients, generating an additional $10 to $12 per employee per month, with a gross margin of nearly 80% [12][13] - Managed services revenue grew by 70% in Q1, indicating strong demand [13] - The average revenue per employee is currently $12.13 per month, with potential for growth through enhanced offerings [15] Sales Performance - New sales bookings grew by approximately 40% in Q4 and are expected to maintain similar growth in the first half of the year [19][30] - The sales strategy has shifted to emphasize a "12 to 1 simplification," showcasing the ROI of replacing multiple HCM solutions with Dayforce [21][22] - Customer engagement through sales summits has fostered community and peer-to-peer selling, enhancing brand loyalty [25] Market Dynamics and Employment Trends - Employment growth is modest, modeled at around 1% for the year, which is a headwind for revenue growth [38][39] - Dayforce has not seen significant impacts from tariffs on employment levels, maintaining steady growth despite economic uncertainties [38] Financial Strategy and Future Outlook - The CFO has focused on simplifying financial reporting and targeting durable revenue growth and increased profitability [56][59] - A long-term goal of achieving $1 billion in free cash flow alongside a $5 billion revenue target has been set, with current free cash flow margins expanding from 9.7% to 12% [61][64] - The company is navigating headwinds such as reduced float revenue and restructuring costs but remains optimistic about future cash flow expansion [62][64] Industry Trends - The software industry is experiencing layoffs even among companies with healthy growth, attributed to increased efficiency through AI and automation [66] - Dayforce is leveraging AI to enhance productivity across various functions, allowing for a leaner workforce [66] Additional Important Insights - The Dayforce Wallet allows employees to access earned wages during the pay period, enhancing employee engagement and retention [51][52] - The company has made significant strides in talent management capabilities, including recruiting and learning management, which are critical for client retention and upselling [42][44] This summary encapsulates the key insights from the Dayforce FY conference call, highlighting the company's strategic direction, market positioning, and financial outlook.

Core Insights - Dayforce, Inc. reported strong financial results for Q1 2025, with total revenue of $481.8 million, representing an increase of 11.7% year-over-year, or 13.6% on a constant currency basis [6][9] - The company's recurring revenue, excluding float, was $323.1 million, up 14.4% year-over-year, or 15.9% on a constant currency basis [6][29] - Dayforce's net income for the quarter was $14.9 million, compared to $7.1 million in the previous year, reflecting a net profit margin increase to 3.1% from 1.6% [6][23] Financial Performance - Total revenue of $481.8 million, up 11.7%, or 13.6% on a constant currency basis [6][29] - Recurring revenue, excluding float, was $323.1 million, an increase of 14.4%, or 15.9% on a constant currency basis [6][29] - Operating profit was $31.0 million, down from $40.7 million, while adjusted operating profit rose to $132.3 million from $109.1 million [6][23] - Adjusted EBITDA was $156.7 million, compared to $129.9 million, with an adjusted EBITDA margin of 32.5% [6][23] Cash Flow and Shareholder Returns - Net cash provided by operating activities was $49.6 million, significantly up from $9.1 million in the prior year [6][25] - Free cash flow for the quarter was $19.5 million, compared to a negative $18.8 million in the previous year [6][39] - The company repurchased approximately $30 million worth of shares during the quarter under its $500 million repurchase program, returning over $66 million of capital to stockholders to date [3][6] Customer Growth and Market Position - As of March 31, 2025, Dayforce had 6,929 customers live on its platform, a 5.4% increase year-over-year [6][29] - Dayforce recurring revenue per customer was $167,600 for the trailing twelve months, an increase of 11.5% [6][29] - The company announced an expanded partnership with Microsoft, making its platform available in the Microsoft Azure Marketplace [12] Business Outlook - Dayforce provided guidance for Q2 2025, projecting total revenue of $454 million to $460 million, and full-year revenue of $1,929 million to $1,944 million [13][14] - The company anticipates continued growth in recurring revenue, with expectations of an increase of approximately 12.1% to 13.1% on a GAAP basis for the full year [13][14]