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How Should Investors Approach Dayforce Shares Post Q4 Earnings?
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Dayforce (DAY - Free Report) reported fourth-quarter 2024 earnings of 60 cents per share, which beat the Zacks Consensus Estimate by 30.43% and rose 20% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $465.2 million beat the Zacks Consensus Estimate by 2.19% and increased 16.4% on a constant currency basis.
DAY raised its first-quarter 2025 guidance following the robust fourth-quarter performance, which bodes well for investors. DAY shares have appreciated 36.7% over the trailing six-month period, outperforming the Zacks Computer & Technology sector’s return of 18.5%.
In the fourth quarter of 2024, Recurring revenue (84.6% of total revenues) increased 16.1% year over year to $393.7 million. Recurring revenue includes Dayforce recurring revenue and Powerpay recurring revenue.
Dayforce played a significant role, generating $347.9 million in recurring revenue, representing a 19.1% increase on a constant currency basis. Excluding float revenue, Dayforce’s recurring revenue totaled $307.6 million, reflecting a robust 20% growth, or 20.4% on a constant currency basis.
Dayforce achieved recurring revenue per customer of $163,101 in the trailing 12 months ended Dec. 31 2024, reflecting an impressive year-over-year increase of 11.1%.
Powerpay’s recurring revenue reached $27.5 million, marking a 2.1% year-over-year decline. Excluding float revenue, Powerpay’s recurring revenue remained steady at $23.1 million compared to the previous year.
As of Dec. 31, 2024, the number of live customers on the Dayforce platform reached 6,876, representing an increase of 146 customers since Sept. 30, 2024, and year-over-year growth of 483 customers, or 7.6%, compared to Dec. 31, 2023.
As of Dec. 31, 2024, Dayforce had 7.62 million global employees live on its platform, reflecting an 11.4% increase compared with 6.84 million employees as of Dec. 31, 2023.
Professional Services and Other (15.4% of total revenues) increased 18% year over year to $71.5 million.
DAY’s Operating Details
In the reported quarter, gross profit rose 28.7% year over year to $218.6 million. The gross margin expanded 450 basis points to 47%. Adjusted Cloud recurring gross margin was 80.4% compared with 78.1%, an increase of 2.3% year over year.
In the fourth quarter of 2024, Selling and Marketing expenses were $93.5 million (20.1% of total revenues), up 28.6% year over year.
In the reported quarter, General and Administrative expenses were $96.6 million (20.8% of total revenues), up 65.7% year over year.
Adjusted EBITDA was $129.2 million, higher than the year-ago quarter’s figure of $99.2 million. Adjusted EBITDA margin was 27.8% compared with 24.8%, an increase of 3% year over year.
In the fourth quarter of 2024, the adjusted operating profit was $103.3 million, higher than the $78.9 million reported in the year-ago quarter. Operating margin was 22.2% in the reported quarter, expanding 250 bps year over year.
DAY Balance Sheet & Cash Flow
As of Dec. 31, 2024, cash and cash equivalents were $579.7 million compared with $494.1 million as of Sept. 30, 2024.
In the fiscal fourth quarter, the company reported cash provided by operating activities of $281 million, up from $200 million in the prior quarter.
Free cash flow was $171.5 million compared with $117.3 million reported in the previous quarter. The free cash flow margin in the fiscal fourth quarter was 9.7%.
DAY Initiated 1Q25 Guidance
For the first quarter of 2025, DAY expects total revenues, excluding float, in the range of $421 million-$427 million, an increase of approximately 13.5% to 15% on a GAAP basis or approximately 15.5% to 17% on a constant currency basis.
The company expects float revenues of $53 million in the first quarter of 2025.
Adjusted EBITDA margin is expected to be between 31% and 32%.
Image: Bigstock
How Should Investors Approach Dayforce Shares Post Q4 Earnings?
Dayforce (DAY - Free Report) reported fourth-quarter 2024 earnings of 60 cents per share, which beat the Zacks Consensus Estimate by 30.43% and rose 20% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $465.2 million beat the Zacks Consensus Estimate by 2.19% and increased 16.4% on a constant currency basis.
DAY raised its first-quarter 2025 guidance following the robust fourth-quarter performance, which bodes well for investors. DAY shares have appreciated 36.7% over the trailing six-month period, outperforming the Zacks Computer & Technology sector’s return of 18.5%.
Dayforce, Inc. Price, Consensus and EPS Surprise
Dayforce, Inc. price-consensus-eps-surprise-chart | Dayforce, Inc. Quote
DAY’s Top-line Details
In the fourth quarter of 2024, Recurring revenue (84.6% of total revenues) increased 16.1% year over year to $393.7 million. Recurring revenue includes Dayforce recurring revenue and Powerpay recurring revenue.
Dayforce played a significant role, generating $347.9 million in recurring revenue, representing a 19.1% increase on a constant currency basis. Excluding float revenue, Dayforce’s recurring revenue totaled $307.6 million, reflecting a robust 20% growth, or 20.4% on a constant currency basis.
Dayforce achieved recurring revenue per customer of $163,101 in the trailing 12 months ended Dec. 31 2024, reflecting an impressive year-over-year increase of 11.1%.
Powerpay’s recurring revenue reached $27.5 million, marking a 2.1% year-over-year decline. Excluding float revenue, Powerpay’s recurring revenue remained steady at $23.1 million compared to the previous year.
As of Dec. 31, 2024, the number of live customers on the Dayforce platform reached 6,876, representing an increase of 146 customers since Sept. 30, 2024, and year-over-year growth of 483 customers, or 7.6%, compared to Dec. 31, 2023.
As of Dec. 31, 2024, Dayforce had 7.62 million global employees live on its platform, reflecting an 11.4% increase compared with 6.84 million employees as of Dec. 31, 2023.
Professional Services and Other (15.4% of total revenues) increased 18% year over year to $71.5 million.
DAY’s Operating Details
In the reported quarter, gross profit rose 28.7% year over year to $218.6 million. The gross margin expanded 450 basis points to 47%. Adjusted Cloud recurring gross margin was 80.4% compared with 78.1%, an increase of 2.3% year over year.
In the fourth quarter of 2024, Selling and Marketing expenses were $93.5 million (20.1% of total revenues), up 28.6% year over year.
In the reported quarter, General and Administrative expenses were $96.6 million (20.8% of total revenues), up 65.7% year over year.
Adjusted EBITDA was $129.2 million, higher than the year-ago quarter’s figure of $99.2 million. Adjusted EBITDA margin was 27.8% compared with 24.8%, an increase of 3% year over year.
In the fourth quarter of 2024, the adjusted operating profit was $103.3 million, higher than the $78.9 million reported in the year-ago quarter. Operating margin was 22.2% in the reported quarter, expanding 250 bps year over year.
DAY Balance Sheet & Cash Flow
As of Dec. 31, 2024, cash and cash equivalents were $579.7 million compared with $494.1 million as of Sept. 30, 2024.
In the fiscal fourth quarter, the company reported cash provided by operating activities of $281 million, up from $200 million in the prior quarter.
Free cash flow was $171.5 million compared with $117.3 million reported in the previous quarter. The free cash flow margin in the fiscal fourth quarter was 9.7%.
DAY Initiated 1Q25 Guidance
For the first quarter of 2025, DAY expects total revenues, excluding float, in the range of $421 million-$427 million, an increase of approximately 13.5% to 15% on a GAAP basis or approximately 15.5% to 17% on a constant currency basis.
The company expects float revenues of $53 million in the first quarter of 2025.
Adjusted EBITDA margin is expected to be between 31% and 32%.
DAY’s Zacks Rank & Stocks to Consider
Currently, DAY has a Zacks Rank #4 (Sell).
Akamai Technologies (AKAM - Free Report) , Bel Fuse (BELFB - Free Report) and Arista Network (ANET - Free Report) are some better-ranked stocks that investors can consider in the broader sector. While ANET sports Zacks Rank #1 (Strong Buy), AKAM and BELFB carry Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Akami Technologies shares have plunged 19.7% in the trailing six-month period. AKAM is set to report its fourth-quarter 2024 results on Feb. 20.
Bel Fuse shares have gained 20.6% in the trailing six-month period. BELFB is set to report its fourth-quarter 2024 results on Feb. 18.
Arista Network shares have gained 69.7% in the trailing six-month period. ANET is set to report its fourth-quarter 2024 results on Feb. 18.