- **Revenue Growth**: Dayforce recurring revenue +14% to $315.5 million, with 93% full-suite sales in Enterprise and 50% back-to-base sales growth.
- **Profitability**: EBITDA margin 31.7%, free cash flow $87.1 million (18.7% of revenue), up 500 bps YTD.
- **AI Adoption**: 50% of new deals include AI products, 17% include Managed payroll, targeting $1 billion free cash flow by 2031.
- **SI Success**: SI-led sales +80% Y/Y, 45% of new deals, with full-suite adoption rates above 90%.
- **Tax Benefits**: $40-50 million tax savings from One Big Beautiful Bill Act, supporting 13.5-14% free cash flow margin guidance.

**【CEO Summary Section】**
- Dayforce achieved 14% year-over-year growth in recurring revenue (excluding float) to $315.5 million, driven by full-suite sales (93% in Enterprise, 90% in Major Markets) and 50% growth in back-to-base sales.
- Adjusted EBITDA margin expanded 420 bps to 31.7%, with free cash flow of $87.1 million (18.7% of revenue) and year-to-date free cash flow up 500 bps to $106.6 million.
- AI adoption accelerated: 50% of new business included AI products, 17% included Managed payroll, and 60% included AI learning solutions.
- Largest customer go-live reached 300,000 employees, expected to grow to 500,000 by year-end, with WIP at record levels.
- Targeting $1 billion free cash flow by 2031, with free cash flow margin guidance raised to 13.5-14% from 12%.

**【CFO Financial Commentary】**
- Total revenue: $465 million (+10%), Dayforce recurring revenue: $315.5 million (+14%), Professional Services: $71.6 million (+23%).
- Adjusted EBITDA: $147.2 million (+27%), Free Cash Flow: $87.1 million (18.7% of revenue).
- Full-year guidance: Total revenue $1.935-1.955 billion, Dayforce recurring revenue $1.324-1.344 billion (+14.2-15.9%), Free Cash Flow margin 13.5-14%.
- Q3 guidance: Dayforce recurring revenue $329-339 million (+12.7-16.1%), Free Cash Flow margin 30-30.5%.
- Impact of One Big Beautiful Bill Act: $40-50 million tax benefit in 2025, $20 million+ annually thereafter.
- Pension plan terminations: $30 million Q3 charge, $5 million Q4 charge, with no impact on EBITDA.

**【Q&A Key Highlights】**
- **SI-led sales growth**: 80% Y/Y, 45% of new deals, driven by full-suite adoption (90%+ attachment rates).
- **AI pricing strategy**: Modular pricing for AI products (e.g., $10/month per employee for AI analytics), with 50%+ add-on rates in new deals.
- **Government contracts**: Canada HR/Payroll deal ($15 million+), U.S. federal contract progress ongoing.
- **Macroeconomic trends**: Employment levels +1% Y/Y, consistent with moderate growth in key sectors (hospitality, retail, manufacturing).
- **Free cash flow visibility**: 57% incremental free cash flow margin on YTD revenue growth, driven by automation, AI adoption, and tax benefits.

Dayforce Inc. (DAY) Q2 2025 Earnings Call Transcript

- **Revenue growth accelerates**: 17% constant currency growth driven by Dayforce recurring revenue. 
- **Profitability improves**: 32.5% EBITDA margin (up 240 bps YoY), $19.5M free cash flow. 
- **AI adoption surges**: 50% of new deals include AI Copilot, with 10+ new AI agents launching in 2025. 
- **Cost savings materialize**: $65M annual efficiency plan savings offset by $29M Q1 restructuring charge. 
- **Government momentum**: $72M Canadian government extension and new federal agency deal.

**【CEO Summary Section】**
- Q1 2025 total revenue: $482 million (14% YoY growth on a GAAP basis, 17% on a constant currency basis). 
- Adjusted EBITDA margin: 32.5%, up 240 basis points YoY. 
- Free cash flow: $19.5 million (vs. -$18.8 million in Q1 2024). 
- Key wins: 5 large enterprise clients consolidating 14+ systems into Dayforce, including a 61,500-employee entertainment company. 
- AI Copilot adoption: 50% of new deals included the feature. 
- Live customers: 6,929 (5.4% QoQ growth). 
- Recurring revenue per customer: $167,600 (11.5% YoY growth). 
- SI partner deals: Up significantly YoY, with 70% YoY growth in managed services business.

**【CFO Financial Commentary】**
- Dayforce recurring revenue (ex-float): $323.1 million (14.4% GAAP YoY, 15.9% constant currency). 
- Operating cash flow: $49.6 million; free cash flow: $19.5 million. 
- Efficiency plan: $65 million annualized cost savings (with $29.2 million Q1 restructuring charge). 
- Share buybacks: $30.4 million in Q1 (total $66 million year-to-date). 
- Full year guidance: 12% free cash flow margin, 12-13% Dayforce recurring growth (constant currency). 
- Q2 outlook: Total revenue $454-460 million, EBITDA margin 30.5-31.5%.

**【Q&A Highlights】**
- **Sales momentum**: Q1 bookings up 40% YoY, April bookings remain strong. 
- **Macro impact**: No change in retention rates; 80% employment level minimums in contracts. 
- **Azure partnership**: Dayforce now available on Azure Marketplace, enabling enterprise adoption. 
- **Government contracts**: $72 million extension with Canadian government, new federal agency deal. 
- **AI strategy**: 50% AI Copilot attach rate on new deals; launching 10+ AI agents in 2025. 
- **Float dynamics**: Expect mid-single-digit growth in average balances, 3.6% effective yield. 
- **FX impact**: U.S. dollar strength may add 2-3% to reported revenue, but EBITDA hedged.

Dayforce (DAY)-7 May 25-2025 Q1 Earnings call transcript

- **Revenue Growth**: 2024 total revenue of $1.76 billion (+17% constant currency). 2025 guidance: 14-15% growth, with Dayforce recurring revenue up 15-17%.
- **Profitability**: Adjusted EBITDA margin 28.5% (2024), targeting 32% in 2025. Free cash flow margin to reach 12% in 2025.
- **Sales Momentum**: Q4 and January sales records, 146 net new customers, 98% gross retention rate.
- **AI Innovation**: 60 Copilot units sold; wallet revenue grew from $12M to $30M in 2024.
- **Efficiency**: Professional services to break even in 2025; free cash flow margin to exceed 20% long-term.


**【CEO Summary Section】**
- Total revenue for 2024 reached $1.76 billion, growing 17% on a constant currency basis. Dayforce recurring revenue (excluding float) grew 21% on a constant currency basis.
- Adjusted EBITDA margin expanded to 28.5%, up 140 basis points year-over-year. Free cash flow was $172 million, representing 9.7% of revenue.
- 2025 guidance: Total revenue growth of 14-15% (constant currency), Dayforce recurring revenue growth of 15-17% (constant currency). Free cash flow margin target of 12% in 2025, with long-term goal of exceeding 20%.
- Key wins in Q4 included a 60,000-employee grocery chain, 18,000-employee space exploration company, and 66,000-employee retail cooperative. 146 net new customers went live in Q4, bringing total live customers to 6,876.
- Gross retention rate improved to 98%, with recurring revenue per customer up 11%.

**【CFO Financial Commentary】**
- Q4 2024 total revenue: $465.2 million (16.4% GAAP growth, 17% constant currency). Dayforce recurring revenue (excluding float): $307.6 million (20% GAAP growth, 20.4% constant currency).
- Adjusted EBITDA: $129.2 million (27.8% margin). Free cash flow: $171.5 million for the full year (9.7% of revenue).
- 2025 guidance: Total revenue growth 14-15% (constant currency), Dayforce recurring revenue growth 15-17% (constant currency). Adjusted EBITDA margin target of 32%, free cash flow margin of 12%.
- Professional services and other revenue expected to break even in 2025, reflecting automation and partnership efficiencies.

**【Q&A Highlights】**
- **Sales Momentum**: Q4 and January sales were record-breaking, with sales cycles returning to historical levels. 4x pipeline coverage at start of 2025.
- **Revenue Miss in Q4**: Impact from lower-than-expected employee volumes, print fees, tax filing fees, and contract amendments (total ~$2 million headwind). These were one-time issues.
- **AI and Copilot**: 60 Copilot units sold since launch in November. AI-driven features like direct-to-bank payments and report automation are driving adoption.
- **Canadian Government Deal**: On track for April 2025 milestones. No expected impact from elections or tariffs.
- **Margins and Efficiency**: Recurring gross margin improved 150 basis points in 2024. Free cash flow margin to increase by 230 basis points in 2025, targeting 12%.
- **Share Repurchases**: Plan to repurchase >1 million shares in 2025, doubling 2024 activity.


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