Ceridian(US:DAY)2019-07-31 02:58Financial Data and Key Metrics Changes - Dayforce recurring revenue grew by 31%, and 32% on a constant currency basis [8] - Total Dayforce revenue increased by 27% year-over-year and 28% on a constant currency basis [9] - Adjusted EBITDA was $44 million, an increase of 23% compared to last year, with an adjusted EBITDA margin of 22.4%, up 230 basis points year-over-year [11][48] - Diluted net income per share was $0.04 compared to a diluted net loss per share of $0.58 in the same quarter last year [49] Business Line Data and Key Metrics Changes - Cloud revenue, including Dayforce and Powerpay, increased by 22.3% to $155.7 million [34] - Revenue from Powerpay declined by 1.4% to $21.2 million, but was up 2.3% on a constant currency basis [33] - Cloud recurring services gross margin expanded by 370 basis points year-over-year to 69.3% [11][43] Market Data and Key Metrics Changes - The average float balance for customer trust funds was approximately $3.39 billion, compared to $3.35 billion in the same quarter last year [40] - Income from invested customer trust funds was $20.3 million in the second quarter, compared to $16.2 million in the same quarter last year [41] Company Strategy and Development Direction - The company is focusing on product development and sales and marketing investments, with cash investment in product development at $15.6 million, or 7.9% of revenue [13] - A new public sector vertical is being created within the enterprise segment to leverage opportunities in North America [18] - The company plans to expand Dayforce payroll capabilities in Ireland and New Zealand, completing the ANZ region [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Dayforce revenue growth for the remainder of the year, projecting growth around 30% by year-end [60] - The company is optimistic about its ability to handle larger accounts and compete effectively in the market [70] - Management acknowledged potential impacts from Federal Reserve interest rate changes on float revenue but maintained guidance for the year [52][93] Other Important Information - The company was selected as a successful Gate 3 supplier by the government of Canada, allowing it to bid for future payroll and HCM business [16] - Dayforce was named a leader in workforce management by Nucleus Research for the sixth consecutive year [28] Q&A Session Summary Question: Factors contributing to Dayforce revenue growth - Management highlighted strong pipeline growth and implementation of accounts as key factors for confidence in revenue growth [60] Question: International expansion and repeatability of the model - Management confirmed native capabilities in multiple countries and expressed confidence in the repeatability of their expansion model [61] Question: Returns on increased sales and marketing investments - Management reported strong returns on investments, with significant pipeline growth and sales translating effectively [65] Question: On-demand pay demand and compliance - Management noted strong demand for on-demand pay features and emphasized their differentiated approach [67] Question: Competitors' payroll issues and market positioning - Management stated they are only seeing positive trends and have shifted focus towards enterprise accounts [70] Question: Government contract and capabilities - Management expressed pride in winning the government contract and highlighted the extensive evaluation process [75] Question: Float revenue and investment strategy - Management acknowledged the impact of interest rate changes on float revenue but maintained guidance due to overperformance [93] Question: Success in upmarket strategy - Management attributed success to product strengths and a focused go-to-market strategy in specific verticals [97] Question: Expansion into training and e-learning - Management indicated potential for future expansion into learning management and related content delivery [100]