Ceridian(US:DAY)2021-02-10 04:48Financial Data and Key Metrics Changes - The company reported fourth quarter revenue results above the high-end of guidance, with Dayforce recurring revenue excluding float revenue growing by more than 19% despite elevated COVID-19 headwinds [9][10] - Cloud recurring gross margin increased by 210 basis points to 70.9%, and excluding float revenue, it expanded by 380 basis points [10][11] - The adjusted EBITDA guidance was met while accelerating investments in product, technology, and sales and marketing [9] Business Line Data and Key Metrics Changes - Dayforce Wallet adoption is strong, with over 100 customers using it and 375 signed up in total, maintaining an attach rate of about 80% on new sales [12][13] - Customers using the Wallet experienced a 5% increase in recruiting close rates, a 9% reduction in time to fill open positions, and 42% lower voluntary turnover among employees using the Wallet [13] Market Data and Key Metrics Changes - The sales pipeline remains strong, with expectations that Dayforce recurring revenue growth rates will return to pre-COVID-19 levels above 25% by the second half of 2021 [11][12] - The acquisition of Ascender is expected to enhance the company's position in the APJ region, serving over 1,500 customers and 2.5 million employees, thus providing significant cross-sell opportunities for Dayforce [14] Company Strategy and Development Direction - The company is focused on expanding its global footprint, particularly in the APJ region, and is optimistic about international growth opportunities following recent acquisitions [14][30] - Investments are being made in product capabilities and sales and marketing to support future growth, with a focus on addressing global opportunities [56][57] Management's Comments on Operating Environment and Future Outlook - Management noted that the second wave of COVID-19 impacted sales cycles, but they remain optimistic about recovery in the second half of 2021 as employment levels improve [11][21] - The company expects to see a recovery in sales and revenue growth as the economic environment stabilizes, particularly in the U.S. [71][100] Other Important Information - The company is not charging employees any fees for the use of the Wallet, differentiating it from competitors [48][83] - The company anticipates that the impact of COVID-19 will continue to affect certain business lines, particularly PowerPay, which is under more pressure than Dayforce [100] Q&A Session Summary Question: Impact of sales in this quarter and spillover into January - Management confirmed that several large accounts closed in early January instead of December, leading to a strong sales performance in January [19][21] Question: Opportunities in digitizing HCM processes - Management acknowledged an increase in large enterprise opportunities but could not definitively state if it was due to more opportunities or their increased relevance in the market [22][24] Question: Guidance assumptions regarding unemployment rates - Management indicated that about 25% of sales come from add-ons to the base, with the majority of growth expected from acquiring new customers [27] Question: International expansion and revenue contribution - Management expressed optimism about global opportunities, particularly in APJ, and noted the positive impact of recent acquisitions on win rates [30][31] Question: Return to pre-COVID growth levels - Management refrained from providing specific growth targets but indicated that recovery in employment levels would influence growth rates in the second half of 2021 [34] Question: Ascender acquisition strategy - Management highlighted the importance of Ascender's local expertise and customer base in enhancing their position in the APJ region [62][64] Question: Pricing environment and competitive dynamics - Management stated that pricing remained stable in 2020 compared to 2019, with more flexible contract terms offered due to COVID-19 [95] Question: PowerPay's growth trajectory - Management indicated that PowerPay would face more pressure than Dayforce due to its focus on small businesses in Canada, which are still under lockdown [100]