Dayforce Reports Fourth Quarter and Full Year 2023 Results
CDAY
Dayforce® recurring revenue of $292.1 million, up 30.1% year-over-year in the fourth quarter, or 29.9% on a constant currency basis
Total revenue of $399.7 million, up 18.9% year-over-year in the fourth quarter, or 18.7% on a constant currency basis
Net cash provided by operating activities was $219.5 million for the full year of 2023, compared to $132.6 million for the full year of 2022
Annual Dayforce gross revenue retention rate of 97.1%
MINNEAPOLIS and TORONTO, Feb. 07, 2024 (GLOBE NEWSWIRE) -- Dayforce, Inc. ("Dayforce" or the “Company" formerly known as ("f/k/a") Ceridian HCM Holding Inc.) (NYSE:DAY) (TSX:DAY), a global leader in human capital management ("HCM") technology, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2023.
“Dayforce delivered another strong quarter underpinned by record enterprise go-lives and operating cash flows,” said David Ossip, Chair and CEO of Dayforce. “I’m incredibly proud of everything our team accomplished in 2023 and am confident about our path ahead as our entire community is fully united around a brand new Dayforce.”
"Our fourth quarter results were delivered predictably across all guided metrics," said Jeremy Johnson, CFO of Dayforce. "In 2023, we maintained strong revenue growth rates, showed improvement across all key measures of profitability, and delivered operating cash flow at record levels. As we look forward to 2024, we remain confident in our path to achieve our mid-term commitments on revenue and profitability."
Financial Highlights for the Fourth Quarter 20231,2
Financial Highlights for the Full Year 20231,2
Supplemental Detail
1 Dayforce recurring revenue and annual Dayforce revenue retention rate refer to the Dayforce platform. All other uses of Dayforce refer to Dayforce, Inc.2 The financial highlights are on a year-over-year basis, unless otherwise stated. All financial results are reported in United States ("U.S.") dollars unless otherwise stated. 3 Excluding the 2021 acquisitions of Ascender HCM Pty Limited ("Ascender") and ATI ROW, LLC and ADAM HCM MEXICO, S. de R.L. de C.V. (collectively, "ADAM HCM").4 Excluding float revenue, Ascender and ADAM HCM revenue and on a constant currency basis. Please refer to the “Non-GAAP Financial Measures” section for discussion of percentage change in revenue on a constant currency basis.
Business Highlights
Sales Highlights
Customer Highlights
Platform and Roadmap Highlights
Dayforce's innovations delivered simplicity at scale to help customers create better experiences, strengthen compliance, and embrace an open and connected approach to work:
Business Outlook
Based on information available as of February 7, 2024, Dayforce is issuing the following guidance for the first quarter and full year of 2024 as indicated below. Comparisons are on a year-over-year basis, unless stated otherwise.
(1) Other recurring revenue, previously described as Bureau, primarily consists of APJ region and legacy North American solutions.
(1) Other recurring revenue, previously described as Bureau, primarily consists of APJ region and legacy North American solutions.
Dayforce has not reconciled the Adjusted EBITDA or Adjusted EBITDA margin ranges for the first quarter or full year of 2024 to the directly comparable GAAP financial measures because applicable information for the future period, on which these reconciliations would be based, is not available without unreasonable efforts due to uncertainty regarding, and the potential variability of, depreciation and amortization, share-based compensation expense and related employer taxes, changes in foreign currency exchange rates, and other items.
Foreign Exchange
For the full year and first quarter of 2024, Dayforce's guidance assumes an average U.S dollar to Canadian dollar foreign exchange rate of $1.33, compared to an average rate of $1.35 for the first quarter of 2023 and $1.35 for the full year of 2023.
Conference Call Details
Dayforce will host a live webcast to discuss the fourth quarter and fiscal year 2023 earnings at 8:00 a.m. Eastern Time on February 7, 2024. The event can be accessed via direct registration link at https://dayforce.zoom.us/webinar/register/WN_TSU5KnEEReC_o9p9VC6C-Q#/registration or through the Investor Relations section of the Company's website at https://investors.dayforce.com. A recording of the event will be made available on the Investor Relations section of Dayforce's website following the call.
About Dayforce
Dayforce makes work life better. Everything it does as a global leader in HCM technology is focused on improving work for thousands of customers and millions of employees around the world. Its single, global people platform for HR, payroll, talent, workforce management, and benefits equips Dayforce customers to unlock their full workforce potential and operate with confidence. To learn how Dayforce helps create quantifiable value for organizations of all sizes and industries, visit dayforce.com.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this press release are forward-looking statements. Forward-looking statements give Dayforce's current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. Users can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements in this press release include statements relating to the first quarter and full fiscal year of 2024, as well as those relating to future growth initiatives. These statements may include words such as “anticipate,” “estimate,” “expect,” "assume", “project,” “seek,” “plan,” “intend,” “believe,” “will,” “may,” “could,” “continue,” “likely,” “should,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events, but not all forward-looking statements contain these identifying words. The forward-looking statements contained in this press release are based on assumptions that Dayforce has made in light of its industry experience and its perceptions of historical trends, current conditions, expected future developments and other factors that it believes are appropriate under the circumstances. As users consider this press release, it should be understood that these statements are not guarantees of performance or results. These assumptions and Dayforce’s future performance or results involve risks and uncertainties (many of which are beyond its control). In particular:
Although Dayforce has attempted to identify important risk factors, additional factors or events that could cause Dayforce’s actual performance to differ from these forward-looking statements may emerge from time to time, and it is not possible for Dayforce to predict all of them. Should one or more of these risks or uncertainties materialize, or should any of the Dayforce’s assumptions prove incorrect, its actual financial condition, results of operations, future performance and business may vary in material respects from the performance projected in these forward-looking statements. In addition to any factors and assumptions set forth above in this press release, the material factors and assumptions used to develop the forward-looking information include, but are not limited to: the general economy remains stable; the competitive environment in the HCM market remains stable; the demand environment for HCM solutions remains stable; Dayforce’s implementation capabilities and cycle times remain stable; foreign exchange rates, both current and those used in developing forward-looking statements, specifically USD to CAD, remain stable at, or near, current rates; Dayforce will be able to maintain its relationships with its employees, customers, and partners; Dayforce will continue to attract qualified personnel to support its development requirements and the support of its new and existing customers; and that the risk factors noted above, individually or collectively, do not have a material impact on Dayforce. Any forward-looking statement made by Dayforce in this press release speaks only as of the date on which it is made. Dayforce undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Dayforce, Inc. (f/k/a Ceridian HCM Holding Inc.)
Condensed Consolidated Balance Sheets
(Unaudited)
Dayforce, Inc. (f/k/a Ceridian HCM Holding Inc.)
Condensed Consolidated Statements of Operations
(Unaudited)
Dayforce, Inc. (f/k/a Ceridian HCM Holding Inc.)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Dayforce, Inc. (f/k/a Ceridian HCM Holding Inc.)
Revenue Financial Measures
(Unaudited)
a) Dayforce has calculated percentage change in revenue on a constant currency basis by applying the average foreign exchange rate in effect during the comparable prior period. Please refer to the "Non-GAAP Financial Measures" section for discussion of percentage change in revenue on a constant currency basis.
b) Other recurring contains solutions previously described as Bureau. Float attributable to this solution was $0.5 million and $2.3 million for the three months ended December 31, 2023, and 2022, respectively.
c) For the three months ended December 31, 2023, Professional services and other consisted of $57.6 million, $2.7 million, and $0.3 million associated with Dayforce, Other, and Powerpay respectively. For the three months ended December 31, 2022, Professional services and other consisted of $47.5 million, $3.5 million, and $0.3 million associated with Dayforce, Other, and Powerpay, respectively.
Dayforce, Inc. (f/k/a Ceridian HCM Holding Inc.)
Revenue Financial Measures
(Unaudited)
a) Dayforce has calculated percentage change in revenue on a constant currency basis by applying the average foreign exchange rate in effect during the comparable prior period. Please refer to the "Non-GAAP Financial Measures" section for discussion of percentage change in revenue on a constant currency basis.
b)Other recurring contains solutions previously described as Bureau. Float attributable to this solution was $2.1 million and $5.3 million for the years ended December 31, 2023, and 2022, respectively.
c) For the year ended December 31, 2023, Professional services and other consisted of $202.1 million, $13.8 million, and $0.5 million associated with Dayforce, Other, and Powerpay respectively. For the year ended December 31, 2022, Professional services and other consisted of $181.7 million, $16.2 million, and $0.7 million associated with Dayforce, Other, and Powerpay, respectively.
Dayforce, Inc. (f/k/a Ceridian HCM Holding Inc.)
Share-Based Compensation Expense and Related Employer Taxes
(Unaudited)
Dayforce, Inc. (f/k/a Ceridian HCM Holding Inc.)
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
The following tables reconcile Dayforce's reported results to its non-GAAP financial measures:
a) Cloud recurring gross margin is defined as total Cloud recurring revenue less cost of Cloud recurring revenue as a percentage of total Cloud recurring revenue. Operating profit margin and net profit margin are determined by calculating the percentage operating profit and net income are of total revenue. Please refer to the "Non-GAAP Financial Measures" section for the definitions of Adjusted Cloud recurring gross margin, Adjusted operating profit, Adjusted EBITDA margin, and Adjusted net profit margin.
b) The as adjusted column is a non-GAAP financial measure, adjusted to exclude share-based compensation expense and related employer taxes, amortization of acquisition-related intangible assets, and certain other items including $7.5 million gain related to the fair value adjustment for the DataFuzion contingent consideration, $5.9 million of foreign exchange gain, $0.3 million related to the net impact of the abandonment of certain leased facilities, and $1.3 million of restructuring consulting fees, along with a $0.5 million net adjustment for the effect of income taxes related to these items.
c) Income tax effects have been calculated based on the statutory tax rates in effect in the U.S. and foreign jurisdictions during the period.
d) GAAP and Adjusted diluted net income per share are calculated based upon 159.2 million weighted average shares of common stock.
a) Cloud recurring gross margin is defined as total Cloud recurring revenue less cost of Cloud recurring revenue as a percentage of total Cloud recurring revenue. Operating profit margin and net profit margin are determined by calculating the percentage operating profit and net income (loss) are of total revenue. Please refer to the "Non-GAAP Financial Measures" section for the definitions of Adjusted Cloud recurring gross margin, Adjusted operating profit, Adjusted EBITDA margin, and Adjusted net profit margin.
b) The as adjusted column is a non-GAAP financial measure, adjusted to exclude share-based compensation expense and related employer taxes, amortization of acquisition-related intangible assets, and certain other items including $5.1 million of severance charges, of which $2.6 million relates to cost of Cloud recurring revenue, $2.6 million of restructuring consulting fees, $1.4 million related to the impact of the fair value adjustment for the DataFuzion contingent consideration, $0.3 million related to the difference between the historical five-year average pension expense and the current period actuarially determined pension expense associated with the planned termination of the frozen U.S. pension plan and related changes in investment strategy associated with protecting the now fully funded status, and $3.8 million of foreign exchange gain, along with a $3.8 million net adjustment for the effect of income taxes related to these items.
c) Income tax effects have been calculated based on the statutory tax rates in effect in the U.S. and foreign jurisdictions during the period.
d) GAAP diluted net loss per share is calculated based upon 153.7 million weighted average shares of common stock, and Adjusted diluted net income per share is calculated based upon 156.5 million weighted average shares of common stock.
a) Cloud recurring gross margin is defined as total Cloud recurring revenue less cost of Cloud recurring revenue as a percentage of total Cloud recurring revenue. Operating profit margin and net profit margin are determined by calculating the percentage operating profit and net income are of total revenue. Please refer to the "Non-GAAP Financial Measures" section for the definitions of Adjusted Cloud recurring gross margin, Adjusted operating profit, Adjusted EBITDA margin, and Adjusted net profit margin.
b) The as adjusted column is a non-GAAP financial measure, adjusted to exclude share-based compensation expense and related employer taxes, amortization of acquisition-related intangible assets, and certain other items including $4.7 million of restructuring consulting fees, $4.3 million related to the impact of the fair value adjustment for the DataFuzion contingent consideration, $0.1 million related to the net impact of the abandonment of certain leased facilities, and $0.6 million of foreign exchange gain, along with a $22.2 million net adjustment for the effect of income taxes related to these items.
c) Income tax effects have been calculated based on the statutory tax rates in effect in the U.S. and foreign jurisdictions during the period.
d) GAAP and Adjusted diluted net income per share are calculated based upon 158.5 million weighted average shares of common stock.
a) Cloud recurring gross margin is defined as total Cloud recurring revenue less cost of Cloud recurring revenue as a percentage of total Cloud recurring revenue. Operating profit margin and net profit margin are determined by calculating the percentage operating profit (loss) and net income (loss) are of total revenue. Please refer to the "Non-GAAP Financial Measures" section for the definitions of Adjusted Cloud recurring gross margin, Adjusted operating profit, Adjusted EBITDA margin, and Adjusted net profit margin.
b) The as adjusted column is a non-GAAP financial measure, adjusted to exclude share-based compensation expense and related employer taxes, amortization of acquisition-related intangible assets, and certain other items including $33.7 million of severance charges, of which $19.5 million relates to cost of Cloud recurring revenue, $7.7 million of restructuring consulting fees, $4.6 million related to the impact of the fair value adjustment for the DataFuzion contingent consideration, $3.5 million of foreign exchange loss, $1.4 million related to the difference between the historical five-year average pension expense and the current period actuarially determined pension expense associated with the planned termination of the frozen U.S. pension plan and related changes in investment strategy associated with protecting the now fully funded status, and $0.3 million related to the net impact of the abandonment of certain leased facilities, along with a $32.7 million net adjustment for the effect of income taxes related to these items.
c) Income tax effects have been calculated based on the statutory tax rates in effect in the U.S. and foreign jurisdictions during the period.
d) GAAP diluted net loss per share is calculated based upon 152.9 million weighted average shares of common stock, and Adjusted diluted net income per share is calculated based upon 155.8 million weighted average shares of common stock.
Use of Non-GAAP Financial Measures
Dayforce uses certain non-GAAP financial measures in this release including:
Dayforce believes that these non-GAAP financial measures are useful to management and investors as supplemental measures to evaluate its overall operating performance including comparison across periods and with competitors. Dayforce's management team uses these non-GAAP financial measures to assess operating performance because these financial measures exclude the results of decisions that are outside the normal course of its business operations, and are used for internal budgeting and forecasting purposes both for short- and long-term operating plans. Additionally, Adjusted EBITDA is a component of its management incentive plan and Adjusted Cloud recurring gross margin is a component of certain performance based equity awards for its named executive officers. These non-GAAP financial measures are not required by, defined under, or presented in accordance with, GAAP, and should not be considered as alternatives to Dayforce's results as reported under GAAP, have important limitations as analytical tools, and its use of these terms may not be comparable to similarly titled measures of other companies in its industry. Dayforce's presentation of non-GAAP financial measures should not be construed to imply that its future results will be unaffected by similar items to those eliminated in this presentation. Please refer to Dayforce’s full financial results, including further discussion of non-GAAP financial measures, on the Investor Relations portion of its website at investors.dayforce.com.
Dayforce defines its non-GAAP financial measures as follows:
Source: Dayforce, Inc.
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