CDAY - Earnings call transcript Q3 2018

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Operator

Greetings and welcome to the Ceridian Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeremy Johnson, Vice President of Finance and Investor Relations at Ceridian. sir. you, Thank Please begin.

Jeremy Johnson

morning. good and you Thank

the call and CEO, Ossip, have today Arthur Gitajn. we CFO, Ceridian David On

that Before allow portion, statements. outlook, of This statements we activities, regarding our guidance, call, disclaimer begin, about to cautioned that or materially regarding information intentions, including previous me plans, light risks, and subject risks forth made maybe filings on assumptions statements. set achievements undertake to performance, significant expectations law. not the results, statements. We forward-looking could and is future goals to and Q&A us. revise reasonable current assumptions statements required ability underlying actual forward-looking our management’s may to you are and forward-looking to results deliver such could a factors include based future provide except performance as levels from these or this and or any on call any certain reliance to undue other place statement our those to available obligation future risks beliefs differ uncertainties to affect events of in for no in to on or Listeners Each currently by and are developments. forward-looking These statements refer update statements. information cause forward-looking and on We statements such

financial the well in will Ceridian MD&A as related and Relations the be the statements in release, and U.S. at the database Investor the the SEC’s on investors.ceridian.com. on Third EDGAR quarter SEDAR earnings as website Canada available database

the over unless otherwise call conference on to I dollars David. all noted. will U.S. reminder, that, a As discussed in this figures And call with turn are

David Ossip

third call. you everyone for joining Good thank and quarter earnings our morning,

grew end on Dayforce currency another strong revenue The third and third company the revenue year-over-year an XX%. remains year-over-year of execute from the grew as of grew year. increase customers a by X,XXX Market increase live for quarter of we quarter XXX of constant and basis, the cloud had customers from strategic on On We XX%. of same strong. revenue last the quarter, initiatives. period demand Dayforce to second Dayforce XX% customers and cloud continued XXXX revenue XXXX XX% at for our the quarter platform grew Dayforce was the XXX

of We also this EBITDA million. recorded adjusted Adjusted XX.X%. of we compared point last our in XX% to and net basis loss year-over-year income year’s million quarter net EBITDA to $X.X a margin increased XXX improvement achieved $XX.X

year Arthur guidance. guidance revenue spending We between strong this to portion lower adjusted remaining through are into to to over-performance high-end of to about of timing on third guidance QX walk and EBITDA quarter We of QX high-end results EBITDA The progression of attributed but the more $X.X exceeded million EBITDA our our our our million. QX I are by full XXXX range revenue exceeded the raising of A is and QX. primarily the our want quarter beat that adjusted is guidance range million. the about over-performance, expenses QX the due $X.X reflect QX by of adjusted $X results. range will our and third go detail, which

innovation out some $X Orlando will employees increase platform our allow people pricing. will access end INSIGHTS, analytics, about on-demand believe are applications The that QX and million addition, better we between earned the the wages continued had use the on-demand payment than I growth discuss pay an of reiterate, future tied and of attendees features, millions bonuses revenue customers QX, on-demand the additional was sales we bring of of support These of with in momentum. would expenses successful. commissions revenue years. taken the engagement live calculation anticipate support, surveys, continuous and near-term our benefit soon-to-be period. activation we continued HCM of pay the live, what will implementation on Ceridian At their that benchmarking, sales annual allows largest discussed particularly we INSIGHTS. data X,XXX movement available ever in customer decision to includes and this strong conference, sales we pay. our QX to use approved be Ceridian held market to QX to held go We this an additional our that like December with and Summit terms stories. QX additional the in and in payroll. be new of revenue But to based for We even compensation organization quarter make an success to recurring have to of $X position more to XX conference life product about our that the growth their advanced October, that In drive close will drive business hiring expenses to mobile planning, the first year, to help and presented adjusted market One and and recurring to of now excited innovation raising our in is to and succession expenses million guidance. are expenses year the Dayforce target Dayforce work the and full modules, us and EBITDA In and available be both that including we to before

Ireland and will of next the terms INSIGHTS, we and our native ANZ global And live native the as to Australian UK Australian you XXXX functionality regions. payroll out announced and ready also the have the we know, and major In help plan have The Ireland payroll. locations as of start Australia, our round to We customers payroll addition Ireland expand in solution additions already for our we New payroll UK year. using at footprint, to Zealand. to our to rollout Zealand of that New global payroll intend

we while am expand our functionality by continued quarter. payroll culture. additional a of received this to that also We to also we native great delighted like expect for some covered countries note pay expanding recognized having I to recognitions to connected be I would solution. the continue on

like are that fact, and Ceridian great example we culture of led of proud innovation to quarter, Place organizational the by am has has Work that Great how a us using To how as end, create allowed Dayforce very workplace in to an to the In Ceridian I was Officer, recognized Mother performance. this our recognized and year Chief the consecutive Working People Mothers’ of a congratulate Lisa award of fourth XXXX Best also was by the the named Mother XXX Year Media. also as a would winner was Companies. to Sterling, I Culture who Working and Working for

people Our Ceridian passion who success direct and of innovation represent dedication the the our cultural of of core excellence. a is our and at reflection

also and received awards reflect continued We several that services. product in our development excellence

a award Technology And Valley Research, year, Great was third Stevie management of advisory report also including Research’s in Silicon workforce UK, by and solution leader won Dayforce releases for payroll the payroll. Management technology Talent Constellation the at in recently recognized leading research and Matrix. of Employers. HCM Value straight Stevie Dayforce talent and the annual Ceridian’s sixth a Gold management. modules were as highlights Dayforce learning Awards and management We enhanced of latest firm, a for predictive functionality, analytics rollout compensation the Nucleus including the named the For The the launch Dayforce modules, new

customer automation the Experience Awards, platform. a received by tool, services. On world Association medal robotic Technology Dayforce for gold Software Dayforce class implementation an professional our review services the at won side, Star award HCM recent Customer process outcomes customer the enabling Activate Reviews, in Industry And innovation Service

Regarding customers. help make we and to opportunity in life organization transform third these our culture and and and be are summary, to work us are awards, better engaged that and an lies with for that all items. want customer-focused we delivering I the our close as pleased for very are with ahead. services final and products excited we proud In recognized quarter two the performance by innovation

reiterate billion be or to company or to cloud margins greater. to we that to We long-term service be gross want breakeven our with we margins and revenue adjusted calls. to about and spoken other greater, expect professional and goal, a be business I the of which aspire EBITDA be $X on XX% First, gross margins previous recurring have goal XX%

especially Second, to greater want I to thank partnership. over their I to customers our outstanding detail. want all you our I for in thank their continued and Arthur discuss efforts guidance financial our turn with employees for it results and to now will

Arthur Gitajn

morning you, everyone. and good David Thank

XX% increased to Dayforce As $XXX which or David to revenue September revenue or Cloud revenue Bureau grew XX%, which ended XX, XX%, includes the million pleased and and $XXX.X by by performance million and Dayforce grew by very in increased and mentioned, million we grew increased XX% Dayforce revenue, third a cloud total both with or both basis, On $XX.X XX% $XXX.X revenue, XXXX. million revenue quarter million. by to from $XX $XX.X by Powerpay, constant includes revenue XX%. total cloud our million, our are currency solutions

quarter third recurring driven million. the call, we other in results exceeded to range by professional a million to actual for the for high-end by $X.X was Bureau cloud for for the and EBITDA in the results our that and services revenue XX.X% cloud total growth our range $X million Of range of $X.X revenue, results was exceeded the cloud guidance the During by in am a revenue in the actual services exceeded million quarter of $XX I increase and Cloud customers attributable of provided our last the Dayforce. pleased high-end high-end actual report migrating the cloud XX% third and to or by revenue million, increase our XX.X% increase $X.X adjusted revenue revenue.

quarter $X.XX during increase $XX.X $X.XX the the constant on the year. dollar, XX of customer X%. trust Powerpay Canadian an to the in Sequentially, third the Excluding our average quarter X% excluding small the accounted market $XX.X%, declined QX the year. XX% revenue cloud HR solutions was services in XX% Cloud increased $X.X XXXX impact to the revenue last or the which of third The our year-over-year million. line cloud the quarter for Bureau funds to with On revenue compared yield balance points million. of was for revenue Powerpay, was in our increased the and revenue quarter $X.X of The this year. X.XX% balance third billion billion from revenue by compared basis our during the Dayforce, float recurring yield third up to by last payroll year million our average from for total QX decline third expectations. to average QX approximately was basis, migrations in third XXXX last compared quarter, Canadian quarter in a impact by currency business solution float in to

customer third As a invested quarter million to $XX.X quarter last $XX.X compared million result, income in from third the funds trust year. the was in

the and also We continued during our expand margins operating to third quarter. gross margins

to in costs. Dayforce XX% and from While year quarter on scale or cloud for services cloud million customers cloud third proportion in to growth XX%, to hosting services years year $XX.X support live our from of million the gross or more XX.X%, support an our XX%, margin of cost increase customer revenue to and realize last recurring quarter increased and recurring reflecting services the grew by $X our XX% last in the economies only ability this recurring third XX% than in increased X of

professional or productivity negative our increase $X.X increased to on customers. last other post improved quarter, last quarter of compared and costs, and by profit automation services due compared and continued new improvements and productivity Overall, implementing to and by revenue, go-live an to in of $X.X increase a $XX.X $XX the with increased in our due or and million, XX% XX% included third sales professional services the million $X the revenues $XX.X profitable increase we reduced from XX.X% of XX% the Selling, gross to revenue negative in XX%, and of services third in revenue quarter, profit primarily implementing up margin administrative million development SG&A in a in or reflecting processes. new trend increased by $X.X marketing is generated total and in $X.X were research last implementation quarter profit Continuing million, We professional $X.X and quarter from X% million customers, million costs of year-over-year. of XXX% million. increased realized professional to million XX% total in the Product use million other revenue cost third While $XX.X operating development primarily year, up year. negative $XX.X million experience increased representing $XX.X in to million the to last the expenses other XX%, $X.X improvements costs. million and third our year general consultants expense reflecting grew or operating implementation $XX.X management or an services of million to in and million

As Ceridian third million loss EBITDA a the million David to $XX.X year. to increased last million. tax XXXX second reduced $XX.X to notes discussed, due to during quarter by the expense million expense attributable last redemption a income by net reduced $X.X was net compared in $XX.X Adjusted XX% the senior million to $XX.X by from income net quarter $XX.X of Interest of year. million was and million of the income increased by $X.X of

$XXX a XX, compared cash debt debt. an had and cash cash of million, primarily XXXX, the million $XX.X million, and equivalents The attributable the million, $XX.X was balance compared we increase reduction IPO to $XXX.X XXXX. the $XXX of of refinancing our of December reduction are debt term and Moving as million, to to our of December September in total XX, XX, and increase XXXX, sheet, to $XXX million in

capital compared $X.X year. technology last through million of first for million months capital nine in XXXX months million, and and and Included in $XX.X the equipment. $XX.X software $XX.X first property $XX.X for the expenditures through million Our were million were expenditures nine to

I'm $XXX provides of follows: $XXX the million cloud the with now in expected months and performance would adjusted is the have. in now the now range our given to of $XXX that for the revenue year confidence million. time, be exchange Turning our be is as the to foreign the lines year fiscal assumes range going total remainder of to significant the expected million; $XXX is to our our fiscal for no up you to revenue as overperformance in for questions guidance $XXX now the our to the also David discussed quarter, this to nine million any million; open be third in to outlook us may in to to ask I of range expected outlook Thank million first EBITDA changes At $XXX full-year raise you. the the of XXXX, full-year of XXXX through rates. operator note

Operator

from Jaffray. Zukin comes Piper question the first Our Alex Instructions] [Operator line of from

line open. is Your

Alex Zukin

priorities of question and congrats OpEx Hi a potential new you on of guys. about the and hiring my for and with out-year? you quarter. what Thanks head she Could thinking impact for incremental talk good taking how maybe kind are about sales or maybe your the maybe on biggest is

David Ossip

morning us joining the complements. for thanks Alex, this Hey, thanks and for

the particular term business at disrupting segments more most support. have current segment slightly are been cultivate account will Leagh successful. that, CEO focus that requires Accounts. the well, on and of repeat will we we account. recently in very from how different with of well global Leagh we in of hiring that in you doing we sales terms Leagh the as in we Along we approach which market terms accelerate In to of now as we was us towards that customers, she in know market and strategic of are the SAP largest continue of where have a how approach will accounts market, terms joined Strategic HCM side we With look future the actual When marketing how a very growth the that

Australia we will on so addition, focused basis the are you business to both and also headcount we as UK see additional expand. look In in in and global growing a on

the will will you of any provide marketplace. sales how marketing that sales we increases terms I gradual the the headcount, of to headcount numbers we In don’t it be will increase our changes expenses. in dramatic headcount see and expect don’t

Alex Zukin

new around traction to any introduce Thanks. competitive And you on-demand environment continue particularly continue commentary observing rates see in it. any more as and marketplace, of Got continuous are you changes the pay? the this that win on functionality my follow-up, some one pay as you maybe just

David Ossip

in So XXXX. the pay released will on-demand be early

rates and the environment it in terms terms unchanged. In of competitive win largely remains

Alex Zukin

you, Thank guys. Great.

Operator

from Our Mark the comes with line next question Murphy JPMorgan. of

open. line Your is

Mark Murphy

I Yes. David. will to congrats add my you. Thank

a You go the do announcements where and had wondering on-demand opportunity monetize INSIGHTS out for just several am and you you I at the and initial intriguing stronger to recent product specifically strongest on do response largest pay? based revenue conference, see see responses the opportunity the

David Ossip

First, Mark, that which added The is quite in and already management of management XXXX. learning were new available that. few management, adding thanks for we At effectively compensation announced succession products saying follows a modules the also month to it pricing target sales. increase PEPM, to allows and provides go our also are us us and additional back already add-on per to that opportunity accounts live effectively employee an with per INSIGHTS, provide

earned on-demand the give future the of revenue released are the it wages. to access from In in calculated first increase pricing them what offer increase continuous terms competitiveness do will from us In opportunity it payroll. those and marketplace the accounts our to have another we market the calculation yes we existing But well precisely people now to an that on-demand of we I believe yet. we pricing, know as as words to allow haven’t should on and pay and

Mark Murphy

year? and that thoughts you level wondering have Dayforce time early and at getting you did am next And now said we XX% are that Great. you that what role for years I is year-over-year, your follow-up, see any noticed than have improve customers Activate of live in that a more products on if where playing believe this that XX% improvement as to Arthur of X I

Arthur Gitajn

Yes.

the the increase and us our to consulting bringing productivity negative it the and evidenced customers Certainly, implementation other. the helps experience again are projected in on margin services professional We efficiency including it’s of and improvements reduction by organization out. reports the in live also we haven’t Activate

David Ossip

Mark with product Hi to Activate all the Yes. just if add market. using of segments that I the in we are could now

helpful small for Activate benefit If you reduced and recall accounts handle product And the originally medium we it that of accounts margin to gross effort in configuration of customers expanded the and to as the and the support in larger cycle the been improvement has reduction been that segments. very of recurring. is get the easier times introduced product and for driving it we in well. another us the an sized consistent now makes the increase The beyond in has

Mark Murphy

very you Thank so Okay much. good.

Operator

next Our line the from of question comes Credit Zelnick Brad Suisse. with

Your line is open.

Brad Zelnick

you I mid-market Fantastic. and David, on differently, echo PEPM see customer of average my question My a the can quarter. congrats innovation pace for and pricing or us of maximum at adoption the growing you the the targeting? give on it Dayforce pace to the sense you what’s said a are great do versus relative average rate Thanks what current

David Ossip

around And effect would really in that live. are tends of pricing say sales or I are be seeing employee quarter firm say I it in X,XXX terms to we appears any would of quarters sales realized say, Brad, to the XX% add-on it’s I $XX the already the to be approximately target customers level, that $XX. with consistent would prior that or to on the pricing ACV

Brad Zelnick

forward? nice we reason see see similar for there, to improvement Thanks. there it’s And post is progression services professional margin wouldn’t Arthur, the any go-live moving just continued

Arthur Gitajn

ASC think would very we be ASC services to adopt XXX I we breakeven be which already. margin on our professional close XX%, under so year next XXX, Actually, minus as would

Brad Zelnick

guys. Thanks Awesome.

David Ossip

Brad. Hey,

and professional again margin consists three the Just on items. really line remember gross on that of I that services other

the that about professional year which already which to And in to have And again What’s attendance driving currently around and item, was and are related it at services percentage services shift the which professional XX. XX% margin other then have to improvement the currently effectively and I as a sits Last the are margin live QX that and services customer activation is you gross will rates of line that of margin to have services currently now live that XX%. is in already year is You the in we you other continue professional time is which sell grow, is continues services believe clock, accounts, overall customers mix. the now XX%. this XX%, services the gross of that professional improve. the

Brad Zelnick

appreciate color, the Thanks granular it. for I really

Operator

of next [Operator comes from Instructions] Our Lenschow line Raimo the with question Barclays.

Your open. line is

Raimo Lenschow

you longer for down my bit all, Thanks like is me congrats little from managed about accelerate further? little there, is some wanted question kind of a like Bureau also you – Arthur. term to what think increased bit, thinking migration Dayforce for gets kind here, of I more can taking more and the talk as powerful, obviously of And I first as you a like I David, follow-up a at in then am on then had numbers point but see there to the decline well. even

David Ossip

business for is today – that. the of majority thanks the the today cloud is the Raimo Again, business revenue.

revenue is of QX XXXX XX% of our of now cloud. As

In migrations the inside gave that to with about the last is the spoke terms XX% Bureau that at at from range of which we XX%. end is year, we it of

in came this I we quarter. think at XX.X% particular believe in I

Arthur Gitajn

Correct.

David Ossip

have. acquiring customers of as we more accelerating terms new we always focused are In migrations, on

out been know The about and that will inside other businesses. always or existing tax the to have to until accounts item decline our Bureau and new at as flatten you $XXX of Dayforce sales reaches decline have business around As basically or a net continue so, the that because it Dayforce million we we we will XX% point, expect mentioned add-on line accounts. that accounts standalone few

Arthur Gitajn

the in was I migrations QX months excluding then exclude though XX%, the a about migrations bit of the migrations, excluding of before comparison, year Bureau when add XX%. would declined Raimo, for last over and impact the revenue uptick about you even also XX%, nine decline we first the saw was little that decline an year

I think we’re in again, So line.

Raimo Lenschow

on was like, can kind and through for of unexpected you me cost you QX terms And – how much little kind bigger, then the of like sense. perfect. like bit much was how QX? QX, Okay, a of cost of example just moving on QX, it’s side from Arthur terms expected in conference the talk in the Makes knew

Arthur Gitajn

of do full much quarter, you with impact a a you QX. bigger has the the lot When timing to get A quarter headcount of hire in headcount. at end

Raimo Lenschow

Yes.

So that was performance? more the et of business it’s it kind and pretty much – conference you the cetera so really like like – headcount knew, it's then like

David Ossip

was in just in conference Raimo, the October. QX, it actually was

Raimo Lenschow

yes, but Oh, yes. meant. bit I I you what it know like that’s what knew like, I meant a little it’s

alright. Okay,

David Ossip

et over-performance but $X But the True, that timing QX. fluctuates increase as of guidance million the I quarter movement believe year. of and due with EBITDA also did approved the between and even with movement the to expenses $X I the But expenses, of we QX and mentioned additional the of was EBITDA our off for payments again, of towards QX about of cetera end well. the kind beat as million the

Raimo Lenschow

well No, Thank you. yes. Perfect, Yes. done.

Operator

Marcon question next the Mark with Baird. line Our comes of from

line Your open. is

Mark Marcon

the good and of on let what number was you you they suite terms on, morning, the that years, terms of clients the and over new regards Right, two differences to come have would me et how in of board, taking are of my the that the modules congratulations. new are year, broadening with quarter cetera? seeing I last in characterize wondering, add

David Ossip

Hi, again. Mark, thanks

the we uptick get say, towards We that of the, do I’d to add-on were PEPM well marketplace. actual an are sales As are about quarter launched and the each from and realized middle – we are see existing the I modules, compensation we as the able year. mentioned, base, generally to which of the sales management management learning XX%

to as as kind I back the the what realized So, it we for year-over-year up into price enough to reflect go but well. market, expect and the haven't is new future yet data had of would to

Mark Marcon

between been the some specific interest. and you lot about sales little hosting, stands of now, seems market been looks tracking? how in how to I’m and the pipeline right if to the that a bit regards be mentioned talk a can client then implementations, you’ve And Great. of how you you’ve INSIGHTS ago RFPs, getting wondering, know relative a new what I that year terms with sales, that of to events but

David Ossip

for So, million opening still preapproved product Mark for Dayforce mentioned commissions, well of are obviously with some strong to of bonuses see sales we and do very my as the which remarks, QX a the expenses I has to as demand that in $X sales. marketplace, the in tied and additional we

Mark Marcon

Great. And rate or another then in terms basis exchange a guidance, expectation the in side? in revenue Arthur, you baking on of cloud terms terms the of of of are growth cloud terms what’s you what terms in constant are in of currency of what expecting or in, – in way sort the rate the on

Arthur Gitajn

QX as result year-over-year are a Canadian a a right in erosion, that have rates. a of exchange we are you would little So of the we terms we would today assuming bit maintain of assuming further weakening further headwind in are exchange we now is in the what dollar and where so

Mark Marcon

Thank you. Great.

Operator

with from comes the question next & Furby Our William Justin line Co. of Blair

open. line is Your

Justin Furby

comments Thanks I during and prepared was growth in make just maybe XX.X remarks item recurring your just clear just house wanted I misheard, guys. are QX, keeping quickly sure cloud right? think want said think I first, be Arthur I to the you was that’s Maybe have XX.X to but

Arthur Gitajn

service on recurring professional on another. I and believe XX.X it’s and XX.X cloud

Justin Furby

know the would then that which sort longer of right guidance read. And guiding terms what recurring I think but few seeing guide cloud item a the Thanks. growth you And seems kind of recurring line I like your sense and between on give stable you sort little medium-term feel or maybe bit deceleration, last sustainable services growth, of growth David explicitly the it cloud for Great. then level is? the recurring, implied of like us is quarters you you and are high-XXs in on cloud term you seems that for recurring of Arthur just quarter-on-quarter, can just are for is and

Arthur Gitajn

$XXX gets currency for as to from that just your even commonplace I increasing XX.X%. take even value and would on we again, it dollar revenue dollar. constant on granted increased affect percentage, QX a sequentially will out time larger grew basic your actually with Canadian in we million which cloud revenue think of becomes math cloud weakening Well, the effects revenue Over $XXX.X so the basis point a the – million

have in the all are and seven Dayforce – will set we revenue new for We records every QX. cloud for new expectations by and again each by and our to set quarter we quarters going records last

Justin Furby

you three has Right. [ph] I feel guess, similar is if mid-XXs, and level no? been quarters, QX, this to explicitly guiding are fair high-XXs last was you the at think that your or and trade a look quarter in I Arthur, what like quarter XX% I

Arthur Gitajn

I think fair. that’s

Justin Furby

guys. Okay, very Thank fair you enough. much

Operator

[Operator the Turrin Deutsche next comes Bank. with from Michael question Our line of Instructions]

line is open. Your

Michael Turrin

Hi for questions. Thanks taking guys. my

or that we you customer to plus if can there XXX go-live think You base? reference expecting number around in way we around heard so are I you QX of that XXX there, that that adding make means that number the a that you right average that be last saw record have see sort been is to of of per so the size QX are consistently and segmentation about back year Dayforce comments could to think customers quarter, does I mean any

David Ossip

Okay.

look I customer is look to so basis, up the we was XXX, XXX was I customer. customers on. year-over-year. XXX size between customers actual average on QX a based is added XXX seen if to The of And customers XXX, So QX but add-ons a at Dayforce have QX average range of revenue that at and about harbor about of driven the was if amount number we XXX so seems the by live is activate a quarter-by-quarter the there on go effectively also we QX of size of

In QX, mentioned – I expect customers activation expenses of number of record of that related QX part terms coming would so numbers $X group. the in as have to obviously in of the we expenses positive tied out to additional of implementation live to the is the take of million see or we

Arthur Gitajn

XX% or of David combination is which increase for XX both compared XXXX Dayforce trailing and revenue in $XX,XXX of QX customer That’s increased average The increased the density. in XX $XXX,XXX a months said. of to trailing months was per as QX customer an size product $XXX,XXX about

Michael Turrin

seems That’s seeing, were then more confidence the a year touch QX are expecting. you revenue momentum EBITDA be raising which by of thanks. that’s us the implied number QX looking be full would some And some than imply the at might Well, than for in you guidance, the are good guidance lighter helpful. cloud but

as hit you heading I wondering two you can exit into balance on this trade-offs thinking year you how about are those just are if the the just what and of year? you the or am So

David Ossip

try me to let clear. Again, be Yes.

So within of our QX $X.X we million about will beat the high a that adjusted be – about $X end by towards EBITDA million. Two timing of guidance difference.

in accounts gave So activation the number additional $X previously of QX expenses then we an you commissions, of the out we pre-approved down $X effectively by related that in addition to related take have to can sales, million million. QX. And implementation expenses have bonuses,

Orlando be we We that in in also sales will the have an held added function. in continuing additional December summit to hire are and

$X time the the million we $X if basically we $X have take the even of year. with expense But take that and EBITDA million amounts out our million So guidance of you have that if taken increased what of QX additional that’s number. adjusted and you the pre-approved for

Michael Turrin

guys. Thanks Understood.

Operator

next Jefferies. the with of Samana comes question Samad line from Our

open. Your line is

Samad Samana

for Hi, good question. morning. taking Thanks my

ASC $X Arthur in that under to XX% is the then factoring First, billion follow-up? housekeeping a changeover XXX have margin XXX maybe just I And is a framework? adjusted that revenue, of question, EBITDA or at the

Arthur Gitajn

ASC the in implement numbers the comparable of to you prime give as And bringing all ASC will we first not quarter be XXX apples-and-apples next we comparisons. It’s period the year, restating XXX. again

Samad Samana

about just That’s of as then And about can Zealand New company help the payroll the opportunity Australia those of and you customers we maybe helpful. Thanks. and maybe rollout on think for live time Great. David native the expanded Ireland, the us maybe the into announcement revenue that? payroll and about how that and and now thinking the ramp being UK and think opportunity markets is selling revenue

David Ossip

Sure.

have terms of our growth, from over in that the to comes we number way existing in years. short-term obviously the of the growth last been So markets doing continued disrupt

more side is will the ‘XX would from XXXX. ‘XX like late growth, the In and terms driven movement I you that in to lead as longer that’s suspect time if or the term early strategic you would longer is late going that accounts. global say so I of growth be see into And to on XXXX slightly start and late

Samad Samana

Great. Thanks again.

Operator

Our from with line Richard Davis next of the comes question Canaccord.

line is Your open.

Richard Davis

thanks. Hey,

company you about interesting, in Canadian, so participate switched else products, I gig place there – you of more CEO market, a should workers, more segment how is is your guys participating had to means for that LinkedIn of I place, when jobs employment we know I at fluid that themselves that would in ecosystem if Powerpay so you mean stuff like of how it’s a kind everyone from people the of the with have of and worked which last look work that, economy, think breakfast that but they call kind so week you I at of kind So how that? work you obviously are space and UPS it’s restaurant hourly do in a in as

David Ossip

their immediately the that where can net gig us functionality payment for to Richard, as unique service clock-out announced economy, a wallet clock-in, get the and we the calculate people facilitate provide etcetera a them. we their digital to approved, we notable devices pay can allows on-demand effectively with earnings, INSIGHTS shifts mobile and at to Hey deductions, can

to clock-in, calculation unique record, believe net beat clock-out, the we HR we first product the that that’s of us. have quite from are anytime unique earnings our you this we in So modify part any that And and side. recalculate we the that’s continues regard

particularly we the demand raise companies The see that services see gig economy second typically area in that companies you from staffing of the or or in provide to short-term say provide as well. say they months. few for nurse And a up that we participate staff on-demand other they week a nurse is nurse so see might more we the obviously staff businesses, human where

Richard Davis

strategic and I can of provide you is I days, guide when that apply really this AI be look and just question just topic feel are but or accountability to ensure people, of there rails replicating intelligence One to to like going artificial any if stuff of kind kind guardrails there space? then a push AI these into don’t also the you anyway kind that’s because we that bias I know existing the is hot kind it ways of not topic answer is as hot is quick there missed,

David Ossip

that’s So Richard, question. good a

to the away not there moment. the it’s AI, not from word have people think I move because at the is technology

customers idea turn Dayforce, I to we will of have recognition which that too. you the no exist a some assist, or Within terms learning. deep and Most so basically in recognition tech is advances Google ask In areas that now hey am improvement Dayforce employees predictive technologies I allows really such we of of which lot voice had tech which is been have of will year-over-year. gaining a I have image Dayforce Alexa, Cortana is traction, hey our learning or hey when voice see today scheduled possibly say like the around and a machine using off. hey next lot Siri

that. about Sorry

Dayforce nicely. the So tech quite we have got voice

there what decisions quite determine also We the trying ML if of people We leaving to ML be go of to don’t risk using a of by a models organization. an area about programs don’t And people any sort tech. predictive of we that around bit might you like any into that of at tech used research make justifies we see and of obviously lot lab types evidence of lot do techs because empirical that. the a out

our in using text and data quite being that and the we to application functions, becomes able it use well able are text we support use should such we look NPS predict our we by data has predictive we seen we quite lot when with call received are continually in and clients areas people data use so of other of before issue at also which that. support customer the when are item the to that increases the to one of across a the resolve bit the use support We and scores to a customers where we a mind deployment a And people to predict usage a or kind how that’s out from labor predictive bonus a market of company. area have we give salary adjustments particular able are of in are data – some gender the required bias inside team, for data we such management if in if to starting diversity the compensation the objectives position determine strategic to the to and of are the where align at group. there actual labor compensation then of the to move by help understand objectives Look the We a thing a the actual managers terms at of of and merits various that’s now company. use people then is ranges that strategies are do worksheet there algorithms locality, really with look and or type any managers and helps types to do to again or aligned able same again

has of of Dayforce. product the from the very very outset well it of is use kind us inside predictive tech embedded been for So the

the types predictive continued learning and strong We using ML we and in text. the But about in is that way pragmatic look quite evidence. at a deep of advances there to of technology kind are other

Richard Davis

Got it, that’s you. super helpful. Thank

Operator

of Our Walter next Citibank. question comes with Pritchard from line the

Your line open. is

Walter Pritchard

Two talk as of for the Thanks. impact summit in and that it type type Hi, ‘XX. thanks. on forth. so about we expect move the expense how then side in of into should I of segments Arthur around pricing and could that summits we you – to forth, think QX and questions pace we us spend And guess there the so about on and how should accelerated spending unfold the

David Ossip

So Walter, let it. me take just

the of a to half what So latter similar summits, you in year. in cadence this see of type terms will the have done we of

Orlando. December in to summit had New York in are just in June, had believe we Chicago, now customer we our put and a INSIGHTS, that which conference then followed in another have going in in we to I then with So an another in is October in London, had perspective, we event summit summit we

suppose cadence that’s I months seems that the half terms year be similar X about forward. you think And that and be that see in a out model about to in the of of the will second will going you we probably so like pace to I spent could of have so kind one summits, this suppose seem or summit. we what it every, something So, I

In time, mentioned over terms new guidance really but pricing that we I not to of expect before up we as before that. PEPM the and haven’t go PEPM realized provided

Walter Pritchard

magnitude some you of been of able are that might value order on understand features? how the to prior the of some just to you rolling that have capture to out, some of us help features Maybe relate value on these

David Ossip

prior anything already depending a employee the announced. the It’s similar on month. per to per module we from that It few features could to dollars dollar be a

Walter Pritchard

Great. Thanks, David.

Operator

concludes This you. today’s Thank teleconference.

You participation. your time. your this may disconnect Thank for you lines at

Dayforce (DAY) 29 Oct 182018 Q3 Earnings call transcript