Dayforce, Inc.

Thank you for joining, and welcome to the Dayforce First Quarter 2024 Earnings Call. I'm Jeremy Johnson, our CFO, and joining me on the call today is CEO David Ossip, Chief Product and Technology Officer Joe Korngabel, and our President Steve Holdridge. As a reminder, all participants are in a listen-only mode, and a question-and-answer session will follow our opening remarks. Now, before I hand the call over to David, I want to remind everyone that our commentary may include forward-looking statements. These statements are subject to risks and uncertainties that could cause day forces results to differ materially from historical experience or present expectations. A description of some of these risks and uncertainties can be found in the reports we file with the Securities and Exchange Commission, such as the cautionary statements in our filings. Additionally, over the course of this call, we'll reference non-GAAP measures to describe our performance. Please review our earnings press release and filings with the SEC for our rationale behind the use of non-GAAP measures and for a full reconciliation of these GAAP to non-GAAP metrics. These documents, in addition to a replay of this call, will be available on the Dayforce Investor Relations website. And with that, I'd like to turn the call over to David.

Thanks, Jeremy, and thank you all for joining us. Next to me, I have Steve, who will review customer and market highlights, Joe, who will highlight platform innovation, and then we'll hand the call back to Jeremy to provide details to our first quarter performance and updated four-year outlook. In the first quarter, I'm pleased to report another strong quarter for Dayforce. We grew both revenue and profit materially, and we exceeded guidance across all key revenue and profitability metrics. Day 4's recurring revenue of $337 million was up 24% including float and 23% excluding float, and total revenue of $431.5 million increased 16%. On the profitability side, GAAP gross profit was $205 million, up 28% from last year. Cloud recurring gross margin was 79%, up 170 basis points versus last year. and adjusted cloud recurring gross margin was 80%, up 130 basis points versus last year. Adjusted EBITDA was 130 million, up 23%, representing an adjusted EBITDA margin of 30.1%, up 170 basis points versus last year. We remain confident in the business with strong momentum across sales, product, and operations, and we have raised our guidance across all key metrics. As we look at the rest of the year and well beyond it, the HCM market opportunity is very large and continues to expand. Estimates of global HCM and managed payroll spending are currently in the $50 to $60 billion range and growing at over 10% annually based on a Dayforce analysis of IDC data. This continues to be a resilient and durable market of growth. Dayforce is well positioned to capitalize on this opportunity in front of us. as organizations of all sizes across the world need to be more productive and to optimize their technology and processes. Leaders need to create quantifiable value for their organizations and better experiences for their people with the platforms they choose. And Dayforce meets that demand by providing simplicity at scale. Simplicity at scale is at the core of our product innovation, particularly as we accelerate with our AI capabilities, with Dayforce Copilot for both our customers and inside our organization. As we've discussed, our approach to AI is built on our foundation of trusted compliance and a single source of data. We launched the charter version of Dayforce Copilot and have seen our initial customers and their employees utilize Copilot as an AI teammate to help supercharge productivity. We believe there are numerous use cases across our customer base to help them gain a competitive advantage by using Dayforce Copilot. Internally, it's been very exciting to see how Copilot has significantly enhanced the Dayforce experience within our own Dayforce environment, answering questions and surfacing critical company content to help our daymakers be more productive every day. Joe will share more on our progress shortly, but I'm very encouraged with our pace of innovation Finally, I'm happy to announce the appointment of our new Chief People Officer, Amy, who joined Dayforce and our leadership team this week. Amy brings extensive experience driving business growth through talent training and development, workforce engagement and exclusivity, and operational efficiencies. Welcome to the team, Amy. In summary, we had a strong start to 2024 and I remain excited for the year ahead. I'd like to thank our strong community our customers, partners, and daymakers. I'll now pass the call to Steve to discuss customer and market highlights. Steve, over to you. Thanks, David.

In Q1, we delivered balanced and consistent growth across customer acquisition, activation, expansion, and retention. We had strong results for sales, kickoffs, and go-lives. We ended the quarter with dayforce recurring revenue per customer up 19% year-over-year. and we now have 6,575 customers live on the Dayforce platform. From a sales perspective, we continue to see strong demand for Dayforce across the globe and saw an acceleration of competitive wins in our mid-market segment as a complement to the continued expansion in our enterprise segments we've talked about before. Sales pipeline remains healthy and we see steady demand for the Dayforce full suite platform in all regions. Our partner ecosystem momentum continued into Q1 with SI-led sales growth up 35% year-over-year. We continued to demonstrate the strength of our overall Dayforce platform, attaching full suite to nearly 50% of new sales bookings. We also saw continued performance across our customer-based sales motion, with customer add-on sales comprising nearly 40% of total bookings, including significant growth in our talent intelligence suite. And on Dayforce Wallet, we saw healthy traction with over 1,200 customers live and 1,960 new customers added in total. Average wallet registration rates continue to trend positively, remaining above 65%, and we continue with healthy wallet usage of about 25 times per month. We also launched two new revenue-generating features to wallet in the first quarter. Instant Transfer, which allows users to move money off the card instantly using credit rails for a fee. And Cash App Transfer, which allows users to move money to cash apps and provides day force with the interchange revenue. We received positive news out of the Government of Canada, which secured additional budget to progress the payroll modernization project. We expect to see continued investment in the program and expanded opportunity for Dayforce and our partners, with potential acceleration of related revenues in 2025. Now turning to key sales wins from across the globe in Q1. A large Canadian grocer is expanding its existing Dayforce partnership with the addition of Dayforce Talent to support more than 100,000 employees. A U.S. energy company with 17,000 employees has selected Dayforce for payroll and workforce management. One of the world's leading independent insurance brokers has chosen the full Dayforce suite for 9,300 employees in 29 countries. Western Digital Technologies, a global provider of disk drives and flash memories, is expanding its existing partnership with Dayforce by adding managed payroll for 8,000 employees in the US. Carhartt selected Dayforce as its global people platform for 3,500 employees across seven countries. One of the top 10 dental support organizations in the US selected Dayforce as a strategic partner to support 5,000 employees. Some of the key Q1 customer go-lives included an international real estate developer and property manager launched Dayforce Managed Payroll, Managed Benefits, Time and Attendance to 22,000 U.S. employees. A global manufacturing and retail organization with 65,000 employees across 56 countries extended its Dayforce use to include its Malaysian operations. Windstream Holdings went live with the full Dayforce suite for 9,500 employees across the US and Canada. A global analytics professional services company with over 35,000 employees in 40 countries expanded its Dayforce use to 6,000 UK employees. And a California grocery chain with 18,000 employees in 170 locations went live with Dayforce managed pay, time, attendance, and advanced scheduling. With that, I'm now pleased to hand off to my innovation partner, Joe Korngabel, our Chief Product and Technology Officer. Joe, over to you. Thank you, Steve.