Citi has increased its price target for Dayforce (DAY, Financial) from $68 to $70 while maintaining a Buy rating on its shares. Although there are some worries about Dayforce's recurring revenue figures, excluding certain factors, the company's outlook remains positive. This optimism is partly due to a significant rise in bookings, which soared over 40% compared to the previous year. Such robust sales performance is seen as a potential catalyst for enhanced growth leading into 2026, according to the analyst's insights.
DAY Key Business Developments
Release Date: May 07, 2025
- Total Revenue: $481.8 million, up 11.7% on a GAAP basis and 13.6% on a constant currency basis.
- Dayforce Recurring Revenue (excluding float): $323.1 million, up 14.4% on a GAAP basis and 15.9% on a constant currency basis.
- Professional Services and Other Revenue: $71.3 million, up 46.1% on a GAAP basis and 49.8% on a constant currency basis.
- Adjusted EBITDA Margin: 32.5%, up 240 basis points year-over-year.
- Free Cash Flow: $19.5 million, up significantly versus last year.
- Operating Cash Flow: $49.6 million.
- Live Customers on Dayforce Platform: Grew 5.4% to 6,929.
- Dayforce Recurring Revenue per Customer: Grew 11.5% to $167,600.
- Workforce Reduction: Global workforce reduced by approximately 5%.
- Share Repurchases: $30.4 million of shares repurchased, approximately 519,000 shares.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dayforce Inc (DAY, Financial) reported a strong first quarter with total revenue of $482 million, growing 14% on a constant currency basis.
- The company achieved an adjusted EBITDA margin of 32.5%, up 240 basis points year-over-year.
- Dayforce's sales momentum continued with the best first quarter in its history, and the sales pipeline remains robust.
- The company secured several key new business wins, including large contracts with major companies across various industries.
- Dayforce's partnership with Microsoft, placing its platform on the Azure marketplace, enhances accessibility and procurement for enterprise customers.
Negative Points
- Dayforce Inc (DAY) incurred a nonrecurring restructuring charge of $29.2 million in the first quarter due to a global workforce reduction.
- The company expects a deceleration in total revenue growth in the second quarter before picking up in the second half of the year.
- Dayforce's float revenue is subject to interest rate fluctuations, with expectations of rate cuts in the US affecting future revenue.
- The company faces challenges in migrating customers from its APJ legacy business to the Dayforce platform, impacting other recurring revenue.
- Despite strong sales, the conversion of bookings to revenue takes time, affecting immediate financial results.
