Dayforce Inc (DAY) AI Stock Analysis

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Dayforce Inc

(NYSE:DAY)

69Neutral

Dayforce Inc scores well in financial performance due to strong revenue growth and a solid balance sheet. However, technical analysis indicates bearish trends with the stock trading below key moving averages. The valuation is high with a P/E ratio suggesting overvaluation. The earnings call was positive, emphasizing growth and profitability, but corporate events present mixed implications with cost savings and efficiency plans. Overall, while financial health is solid, caution is advised due to technical and valuation concerns.

Positive Factors

Foreign Exchange Rates

Better foreign exchange rates partially offset the reduction in revenue estimates.

Government Contracts

The company is well positioned to be selected for the government of Canada opportunity.

Negative Factors

Growth Risks

Risks to growth from its Canada exposure and the company's expectations management historically are primary push backs to recent upgrade.

Revenue Estimates

Revenue estimates are reduced slightly across various categories.

Dayforce Inc (DAY) vs. S&P 500 (SPY)

Market Cap

$8.11B

Dividend YieldN/A

Average Volume (3M)2.24M

Price to Earnings (P/E)439.3

Beta (1Y)1.43

Revenue Growth16.27%

EPS Growth-67.39%

CountryUS

Employees9,600

SectorTechnology

Sector Strength40

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.11

Shares Outstanding158,262,360

10 Day Avg. Volume1,769,793

30 Day Avg. Volume2,242,179

Financial Highlights & Ratios

PEG Ratio0.18

Price to Book (P/B)N/A

Price to Sales (P/S)5.28

Price to Cash Flow (P/CF)28.70

P/FCF Ratio28.10

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$75.36

Price Target Upside52.77% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering13

Dayforce Inc Business Overview & Revenue Model

Company DescriptionDayforce Inc., together with its subsidiaries, operates as a human capital management (HCM) software company in the United States, Canada, and internationally. It offers Dayforce, a cloud HCM platform that provides human resources, payroll, benefits, workforce management, and talent management functionality; and Powerpay, a cloud HR and payroll solution for the small business market. The company also provides Bureau solutions for payroll and payroll-related services. It sells its solutions through direct sales force and third-party channels. The company was formerly known as Ceridian HCM Holding Inc. and changed its name to Dayforce Inc. in February 2024. Dayforce Inc. was incorporated in 2013 and is headquartered in Minneapolis, Minnesota.

How the Company Makes MoneyDayforce Inc makes money primarily through a subscription-based revenue model. The company charges its clients recurring fees for the use of its cloud-based HCM software platform. These fees are typically based on the number of employees managed through the system and the specific features and modules utilized by the client. Additionally, Dayforce may generate revenue through professional services, which include implementation, training, and ongoing support. Key factors contributing to its earnings include its ability to retain and expand its client base, the continuous development of new features and functionalities, and strategic partnerships that enhance its product offerings and market reach.

Dayforce Inc Financial Statement Overview

Summary

Dayforce Inc demonstrates strong revenue growth and maintains a stable financial position with low debt levels. While profitability margins have room for improvement, the company's cash flow is robust, highlighting effective cash management. The financial health of Dayforce Inc is solid, with opportunities to enhance profit margins and shareholder returns.

Income Statement

Positive

Dayforce Inc has shown impressive revenue growth over the years, with a Revenue Growth Rate of 16.28% from 2023 to 2024. The Gross Profit Margin for 2024 stands at 46.14%, indicating a strong ability to maintain profitability on sales. However, the Net Profit Margin is relatively low at 1.03% for 2024, which suggests that expenses beyond the cost of goods sold are high. EBIT and EBITDA margins have decreased compared to previous years, indicating some operational challenges.

Balance Sheet

Very Positive

The company maintains a healthy balance sheet with a low Debt-to-Equity Ratio of 0.009 in 2024, showcasing financial stability and low leverage risk. The Equity Ratio is at 27.92%, reflecting a strong equity base compared to total assets. Return on Equity is modest at 0.71%, indicating room for improvement in generating returns on shareholders' equity.

Cash Flow

Very Positive

Dayforce Inc's cash flow position is robust, with a significant improvement in Free Cash Flow from 2023 to 2024. The Operating Cash Flow to Net Income Ratio is high at 15.53 for 2024, signifying strong cash generation relative to net income. The Free Cash Flow to Net Income Ratio is also favorable, indicating efficient cash management and the ability to reinvest or return cash to shareholders.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.76B	1.51B	1.25B	1.02B	842.50M
	Gross Profit
812.10M	646.50M	473.20M	382.30M	341.30M
	EBIT
104.10M	133.10M	-34.30M	-54.40M	5.10M
	EBITDA
158.60M	264.60M	54.70M	23.10M	56.90M
	Net Income Common Stockholders
18.10M	54.80M	-73.40M	-75.40M	-4.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
579.70M	570.30M	431.90M	367.50M	188.20M
	Total Assets
9.12B	9.01B	7.92B	7.17B	6.70B
	Total Debt
23.80M	1.24B	1.25B	1.18B	711.90M
	Net Debt
-555.90M	673.30M	823.00M	809.20M	523.70M
	Total Liabilities
6.57B	6.61B	5.81B	4.94B	4.60B
	Stockholders Equity
2.55B	2.40B	2.11B	2.23B	2.10B
Cash Flow		Free Cash Flow
281.10M	105.10M	38.10M	-14.90M	-90.00M
	Operating Cash Flow
281.10M	219.50M	132.60M	48.80M	-30.20M
	Investing Cash Flow
-471.90M	-202.80M	-342.50M	-711.10M	38.80M
	Financing Cash Flow
59.60M	242.00M	870.10M	407.50M	565.30M

Dayforce Inc Technical Analysis

Technical Analysis Sentiment

Negative

Last Price49.33

Price Trends

50DMA

61.20

Negative

100DMA

68.13

Negative

200DMA

63.29

Negative

Market Momentum

MACD

-0.91

Negative

RSI

44.73

Neutral

STOCH

43.63

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DAY, the sentiment is Negative. The current price of 49.33 is below the 20-day moving average (MA) of 56.55, below the 50-day MA of 61.20, and below the 200-day MA of 63.29, indicating a bearish trend. The MACD of -0.91 indicates Negative momentum. The RSI at 44.73 is Neutral, neither overbought nor oversold. The STOCH value of 43.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DAY.

Dayforce Inc Risk Analysis

Dayforce Inc disclosed 44 risk factors in its most recent earnings report. Dayforce Inc reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Dayforce Inc Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
G	80 Outperform	$8.22B	16.44	22.15%	1.34%	6.46%	-16.94%
PAYC	78 Outperform	$11.25B	22.04	34.88%	0.76%	11.19%	51.03%
PCTY	75 Outperform	$9.77B	44.88	20.49%	―	15.96%	31.76%
WNS	72 Outperform	$2.88B	20.23	16.64%	―	1.07%	-13.39%
DAY	69 Neutral	$8.11B	439.27	0.73%	―	16.27%	-67.39%
PYCR	68 Neutral	$4.08B	―	-1.66%	―	15.72%	74.59%
Sector *	57 Neutral	$18.45B	9.41	-13.97%	2.74%	5.04%	-23.56%

* Technology Sector Average

Performance Comparison

DAY

Dayforce Inc

49.33

-12.91

-20.74%

Genpact

45.08

13.80

44.12%

WNS

59.31

9.67

19.48%

PAYC

Paycom

193.07

-8.65

-4.29%

PCTY

Paylocity

172.54

3.05

1.80%

PYCR

Paycor HCM

22.45

4.42

24.51%

Dayforce Inc Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: -31.24% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong revenue growth, increased profitability, and significant product innovation. However, there were some challenges in meeting recurring revenue expectations due to lower employee volumes and foreign exchange headwinds. Overall, the sentiment is optimistic with confidence in continued growth and profitability improvements.

Highlights

Strong Revenue Growth

Total revenue for 2024 was $1.76 billion, growing 17% on a constant currency basis. Dayforce recurring revenue excluding float grew 21% on a constant currency basis.

Record Q4 Sales and Start to 2025

Q4 sales exceeded expectations, with sales cycles returning to historical levels. January 2025 started strong, with sales growth expected to outpace revenue growth throughout the year.

Increased Profitability

Adjusted EBITDA margin was 28.5%, expanding 140 basis points. Free cash flow was $172 million, expanding 280 basis points. Adjusted EBITDA margin guidance for 2025 has been increased to 32%.

Innovative Product Developments

Dayforce Wallet revenue increased from $12 million to over $30 million in 2024. Multiple product innovations, including AI-driven capabilities and new compliance features, were introduced.

Improved Customer Metrics

Dayforce recurring revenue per customer increased by 11%, and the gross retention rate improved from 97.1% to 98%.

Strong Pipeline Coverage

Starting 2025 with approximately four times coverage of the sales pipeline compared to the sales target.

Lowlights

Q4 Recurring Revenue Miss

Dayforce recurring revenue excluding float was lower than expected due to lower employee volumes, contract amendments, and reduced print and tax filing fees.

Foreign Exchange Headwinds

2025 revenue growth is expected to face a 200 basis point headwind due to current foreign exchange rates.

Challenges in Employee Volume and Fees

Lower employee volumes and print and tax filing fees impacted Q4 revenue. These were attributed to muted seasonal spikes and less consumption than expected.

Company Guidance

During Dayforce's earnings call, the company provided key guidance metrics for 2025, highlighting a focus on sustaining growth and increasing profitability. Total revenue is expected to grow by 14% to 15% on a constant currency basis, excluding float. Dayforce recurring revenue, excluding float, is projected to grow between 15% and 17% on the same basis. The company aims to achieve an adjusted EBITDA margin of 32%, up from the previous guidance of 31%, reflecting a 100 basis point increase. Additionally, Dayforce anticipates improving its free cash flow margin to 12% of revenue, an increase of 230 basis points. Over the midterm, Dayforce expects to sustain total revenue growth close to 15% while driving profitability improvements, with free cash flow and adjusted EBITDA growth outpacing revenue growth.

Dayforce Inc Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Dayforce Inc Approves 2025 Management Incentive Plan

Positive

Mar 5, 2025

Dayforce, Inc. announced the approval of its 2025 Management Incentive Plan (MIP) by the Board of Directors and the Compensation Committee on March 5, 2025. The plan, covering the period from January 1, 2025, to December 31, 2025, aims to drive company results through key financial metrics and provide incentive compensation to eligible employees. The plan includes performance goals such as revenue growth, free cash flow margin, and sales per employee per month, with incentives split between cash and restricted stock units. Additionally, equity awards were granted to named executive officers, with vesting conditions based on company performance metrics and relative peer performance. The Board also approved an increase in the base salary of CEO David D. Ossip from $800,000 to $1,000,000, effective March 5, 2025.

Business Operations and Strategy

Dayforce Inc Announces Efficiency Plan for 2025

Negative

Feb 26, 2025

On February 26, 2025, Dayforce Inc. announced an efficiency plan to enhance profitability and sustainable growth, which includes a 5% workforce reduction to be completed by March 31, 2025. The plan is expected to incur restructuring charges of $18 million to $21 million and generate pre-tax cost savings of $65 million in fiscal year 2025, with the company reinvesting some savings into strategic growth initiatives for long-term positioning.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.