Ceridian Reports First Quarter 2023 Results

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Dayforce recurring revenue up 43.8% year-over-year, or 46.0% on a constant currency basis

Total revenue of $370.6 million, up 26.4% year-over-year, or 29.3% on a constant currency basis

Operating profit of $38.4 million and adjusted operating profit of $88.5 million

MINNEAPOLIS and TORONTO — Ceridian HCM Holding Inc. (“Ceridian”) (NYSE:CDAY) (TSX:CDAY), a global leader in human capital management (HCM) technology, today announced its financial results for the first quarter ended March 31, 2023.

“I am very pleased with our performance in the first quarter – as Dayforce recurring revenue grew 44% or 46% on a constant currency basis and we exceeded our profitability objectives,” said David Ossip, Chair and Co-CEO of Ceridian. “Looking ahead, I continue to be confident in our ability to execute and take market share as demand for our global people platform remains resilient.”

David Ossip

“The strength of the Ceridian community continues to grow – with 6,179 Dayforce customers live and continued expansion of our partner ecosystem,” said Leagh Turner, Co-CEO of Ceridian. “In this dynamic environment, we are seeing more global enterprise organizations choose Ceridian to manage their people operations and drive their transformations given our breadth and depth of product and relentless focus on customer experience.”

“Our first quarter results exceeded guidance across all metrics,” said Noemie Heuland, CFO of Ceridian. “We start the year with strong Dayforce recurring revenue growth and continued operating profit expansion. This gives us confidence to raise our Dayforce recurring revenue, excluding float and profitability targets for the year as we progress towards our mid-term commitment of profitable growth.”

Financial Highlights for the First Quarter 20231

  • Total revenue was $370.6 million, an increase of 26.4%, or 29.3% on a constant currency basis.
  • Dayforce recurring revenue was $271.2 million, an increase of 43.8%, or 46.0% on a constant currency basis. Excluding float revenue, Dayforce recurring revenue was $229.6 million, an increase of 27.3%, or 29.3% on a constant currency basis. Tax migration from legacy infrastructure to the same platform as Dayforce contributed approximately 600 basis points of growth to Dayforce recurring revenue, excluding float in the first quarter of 2023.
  • Cloud recurring gross margin was 77.3%, compared to 69.3%. Adjusted cloud recurring gross margin was 78.7%, compared to 75.5%.
  • Operating profit was $38.4 million, or 10.4% of revenue, compared to operating loss of $18.9 million. Adjusted operating profit was $88.5 million, or 23.9% of revenue, compared to $44.4 million, or 15.1% of revenue.
  • Net income was $9.9 million, compared to net loss of $27.4 million. Adjusted net income was $49.3 million, compared to $20.5 million.
  • Adjusted EBITDA was $105.4 million, compared to $57.4 million.
  • Diluted net income per share was $0.06, compared to diluted net loss of $0.18. Adjusted diluted net income per share was $0.31, compared to $0.13.
  • Net cash provided by operating activities was $11.3 million, compared to $5.5 million.

Supplemental Detail

  • 6,179 Dayforce customers were live on the Dayforce platform as of March 31, 2023, an increase of 186 customers since December 31, 2022 and an increase of 570 customers since March 31, 2022 or 10.2% year-over-year.
  • Dayforce recurring revenue per customer was $126,127 for the trailing twelve months ended March 31, 2023, an increase of 13.7%.2
  • The average float balance for Ceridian’s customer funds during the quarter increased 3.3% to $5.26 billion and the average yield on Ceridian’s float balance was 3.62%, an increase of 271 basis points year over year. As a result, float revenue from invested customer funds was $46.9 million. The allocation of float revenue to Dayforce and Cloud revenue was $41.6 million and $46.2 million, respectively.

1 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.
2 Excluding float revenue, the impact of lower employment levels in 2021 due to the Coronavirus disease 2019 (“COVID-19”) pandemic, Ascender and ADAM HCM revenue and on a constant currency basis. Please refer to the “Non-GAAP Financial Measures” section for discussion of revenue on a constant currency basis.

Business Highlights

  • Ceridian continued its expansion of the Ceridian Partner Network (“CPN”) globally, and plans to further equip partners to deliver on the value and vision of Dayforce at its upcoming Partner Summit in Chicago.
  • Ceridian was recognized as an employer of choice by Forbes Best Places to Work in Canada 2023, Diversio’s Top 20 Most Innovative DEI Companies 2022, and the Bloomberg Gender-Equality Index 2023.
  • Ceridian was upgraded by Moody’s to B2 from B3 on improving operating performance and stronger liquidity profile.
  • Ceridian released its 2023 ESG report, reaffirming its commitment to operating sustainably and maintaining the highest standards of corporate citizenship. Highlights include steps taken to combat climate change, ensure responsible innovation, and support Ceridian employees and their families.
  • Ceridian will welcome customers, prospects, and partners to its upcoming Ceridian Summits in Chicago and Atlanta. Attendees will learn how Dayforce can transform their organizations for the new world of work and deliver value at every touchpoint.

Sales Highlights

  • A humanitarian aid and community services charity in Australia chose Dayforce to support 27,800 employees, with plans to double this number over the next five years.
  • A U.S. provider of voice and data network communications with 11,500 employees in 30 states chose Dayforce as a single HCM platform to drive efficiency and manage workforce complexity.
  • A Canadian automobile company with 8,000 employees replaced its legacy platform with Dayforce Workforce Management, Industry Solutions, and Benefits to help reduce operating risk and increase data visibility.
  • A leading supplier of quality building materials and construction products chose the full suite of Dayforce products for its 5,900 employees across the U.S. and Canada.
  • A worldwide leader in tech-enabled creative production with 4,200 employees selected Dayforce for Managed Pay, Time, and Talent Intelligence to overcome global reporting challenges and help improve compliance.
  • A global maritime shipping classification agency chose Dayforce as its global people platform for over 4,000 employees in 56 countries.
  • A major international theatre organization selected Dayforce to unify pay and time across 4,000 employees in the United Kingdom.
  • One of Eastern Australia’s largest professional cleaning service providers with 3,400 employees chose Dayforce as a modern, unified HCM solution to provide real-time data visibility and streamline communication.

Customer Highlights

  • A multinational chemical and consumer goods company with 60,000 employees globally is continuing its implementation journey with Ceridian. The company recently went live with Dayforce Pay and Time for 1,100 employees in four more countries, bringing its implementation of Dayforce to a total of 15 countries and approximately 15,000 employees to date.
  • A global leader in contingent workforce management recently launched Dayforce to improve the experience and increase scalability across 18,000 contingent workers in the U.S.
  • One of the world’s largest payment processing corporations with 15,000 employees in 79 countries has gone live with Dayforce HR, Payroll, and Workforce Management in Ireland and Denmark.
  • A multi-brand retail company with approximately 11,000 employees at over 650 locations in the U.S. and Canada went live with Dayforce HR, Benefits, Time, Advanced Scheduling, and Learning for its U.S. population.
  • Kenya’s largest online supermarket with over 84 retail locations went live with Dayforce Global Employee Data and Workforce Management for 8,000 employees.
  • A global online gaming and hospitality group implemented Dayforce Payroll for 6,000 employees in the United Kingdom, and Global Employee Data across seven countries.
  • One of the world’s largest family entertainment centers with 5,000 employees in seven countries migrated its Australian operations to Dayforce for Payroll and Time and Attendance.
  • An American multinational semiconductor company recently went live with Ceridian Ascender PeoplePay for Payroll and point-to-point integration for over 1,400 employees in Malaysia, Singapore, China, and Taiwan.
  • Ceridian had more than 1,540 customers signed onto Dayforce Wallet with over 930 customers live as of March 31, 2023. The average registration rate was above 50% across all eligible employees and the typical Dayforce Wallet user transacts on average 25 times per month throughout a calendar year.

Platform and Roadmap Highlights

Ceridian continues to advance the breadth and depth of the Dayforce platform, with new innovations delivered in Q1 including:

  • A series of experience and automation capabilities to significantly reduce recruiting and talent development cycles including integrations to streamline onboarding, mass hire to automate high volume hiring, and instant access to assigned courses on the Dayforce Hub.
  • The launch of Agile Organization Management to enable human resource teams with real-time workforce planning, including during times of organizational change or mass data migration.
  • Enhanced Dayforce Data and Analytics capabilities through improved visualizations and reporting, enabling better, faster, and more actionable business intelligence.
  • Advanced Dayforce payroll automation with Payroll Elections Management that eliminates administrative time spent assigning elections to employees.
  • The launch of Integration Studio to empower customers and partners to build code-free integrations between Dayforce and customers’ ecosystem of cloud and on-premise applications, simplifying and dramatically reducing cost and complexity for integrations.
  • Continued Dayforce Payroll momentum globally with expansion into Latin American regions, including local support for Mexico.
  • Expanded vertical capabilities with Dayforce Industry Solutions, enabling complex rate calculations within industries such as construction, hospitality, and retail.
  • Overtime Equalization into Dayforce Workforce Management to improve fairness and equity when assigning and allocating overtime.

Business Outlook

Based on information available as of May 3, 2023, Ceridian is issuing the following guidance for the second quarter and full year of 2023 as indicated below. Comparisons are on a year-over-year basis, unless stated otherwise.

Second Quarter 2023 Guidance

  • Total revenue of $356 million to $360 million, an increase of 18% to 20% or 20% to 22% on a constant currency basis.
  • Dayforce recurring revenue, excluding float of $223 million to $225 million, an increase of 22% to 23% or 23% to 24% on a constant currency basis.
    • Tax migration from legacy infrastructure to the same platform as Dayforce is expected to contribute approximately 400 basis points of growth in the second quarter of 2023.
  • Float revenue of $38 million.
  • Adjusted EBITDA of $87 million to $90 million.

Full Year 2023 Guidance

  • Total revenue of $1,480 million to $1,500 million, an increase of 19% to 20% or 20% to 21% on a constant currency basis.
  • Dayforce recurring revenue, excluding float of $939 million to $949 million, an increase of 25% to 26% or 26% to 27% on a constant currency basis.
    • Tax migration from legacy infrastructure to the same platform as Dayforce is expected to contribute approximately 460 basis points of growth in fiscal year 2023.
  • Float revenue of $150 million.
  • Adjusted EBITDA of $366 million to $379 million.

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