CDAY - Earnings call transcript Q4 2018

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Operator

Greetings. And welcome to the Ceridian Fourth Quarter and Full Year 2018 Earnings 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. to Vice conference Investor President Ceridian. like host, to Relations now Johnson, Jeremy of would turn over the your at I Finance and you, Thank sir. Please begin.

Jeremy Johnson

and evening. you, Thank good

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

to other We database filings Ceridian related investors.ceridian.com. EDGAR forward-looking update as as on required SEC's well and risks statements or results, on a ability goals future allow call, light other financial statements. statements. on statements We significant expectations deliver outlook, website are certain information any the to obligation differ Q&A management's the may guidance, could statements database Investor the the full refer and reasonable undue no provide any on affect the and Each or assumptions statements. and in for those about to statements intentions, this regarding assumptions Relations to include forward-looking at MD&A the from not release, plans, the materially and SEC is available SEDAR our Before we be forward-looking may be or as to to levels beliefs earnings information our events disclaimer by reliance Listeners law. quarter that forth in performance, developments. risks us. U.S. begin, based except statement The actual or such on with in portion, the year me Canada, uncertainties that are will achievements available of future and fourth This in performance activities, to such statements. of including you call underlying current could future these and our and statements forward-looking and cause to results previous to revise place forward-looking set on currently cautioned subject undertake factors regarding the These and made

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

David Ossip

Good quarter yearend earnings thank evening, for Thanks, joining everyone, you Jeremy. and call. our fourth

quarter We results are pleased XXXX. the the of from with fourth

the During constant terms the XX%. Dayforce grew a And XX% revenue taxes income We revenue revenue basis, of our year-over-year in revenue grew recurring a XXX year-over-year quarter. year-over-year. quarter XXX setting Dayforce since platform, of fourth on year in On from net with EBITDA and X,XXX adjusted an number the basis point in customers fourth of was customers revenue. record to a increase by before grew ended and Cloud continuing Dayforce from currency income by achieved fourth and XXXX of quarter XXXX. operations grew XX.X% revenue increase third added. The customers adjusted of the quarter, quarter, million December XX% was a and We $XX.X live the increased customers Dayforce XX, QX XX%. margin live improvement taken both EBITDA of Cloud XXX the XX%

grew adjusted XX%. and services revenue revenue improved XXX revenue total converted Total year-over-year. that recurring negative other year points increased margin $XX nearly EBITDA and XX% of Cloud XX% or margin margin million, the for year growth XXXX. revenue And to Gross and negative EBITDA, XX% year-over-year. Cloud to XX% XX%, from we basis XX% on grew into on $XX improved full and increased XX% over grew the adjusted For revenue from full Dayforce professional to and gross XXXX, by XX% services million

investment We development product XXXX. during continued our in

management was $XX XX% of launched XXXX, and and software including revenue. development, and research management, year-over-year to expense capitalized learning compensation In development, Our cash investment in up we succession X.X% million, planning. product development

features, and platform existing these advanced enable HCM of features Dayforce data functionality announced support, including In enhancements XXXX, our us new We benchmarking product Pay. benefits customers. to also believe broaden surveys, add-on near sale decision XX% will functionality our approximately and will were analytics, existing customers. term compensation to On-Demand engagement We additional and to sell our

We expand payroll announcements launches have and the similar of New expect payroll in be and launched payroll native are Globally, intend to XXXX U.K. the Australian Zealand live to launching cadence Ireland. that functionality we in product of into in XXXX, our XXXX XXXX. U.K. native also and In we to already and native customers

intend In to countries addition, we the expand solution. connected pay Dayforce by covered

approximately employees. And marketing than XXXX with vertical, and XXXX in $XX services we million a year. investments company sales services vertical, services employees. health a sales a our signed saw professional employees. larger QX, more In health segment, a closed leader fiber customers. a These XXXX. and employees electronic the contributed additional to signed with in some from during strong we more approximately strong than XXXX record In producer we summary, coax a a X,XXX verticals, and sales hotel and XX,XXX an invested U.S. who the compared also retail, service sales quarter more in In cable XXXX, care record than and In closed nursing was chain retail was and the QX and XX,XXX with We throughout employee professionals. demand the human has restaurant with XX,XXX X,XXX financial major hospitality connectors manufacturing we and financial chain of we optic and care XX,XXX

in inclusion, I awards awards, with for leads We believe places for certification recognitions. our millennials, customer and with to some products, our XXXX, recent and Employees' record for U.S. are We we employee U.S. received the places highlight industry like I'm both are now number engagement. of and marketplace. workplaces for team great of lists including services briefly our to work women best to on very In for experiences. culture pleased and Glassdoor strong a best best and continued our great Awards the performance both pleased would and the Choice seeing we that XXXX in especially sales Canada, for in demand for the the engagement Canada presence technology.

an We how has now results to will culture of it financial guidance I created you innovation in to a discuss Ceridian turn performance. our with and example detail. and Arthur using at over Dayforce are greater of

Arthur Gitajn

I'm full Thank by guidance take results. a fourth on you, provide our evening, David, both Then, increased And financial by to results. to or from I'm going and basis, both a by grew Cloud good revenue, Cloud Dayforce by Dayforce a revenue, On million in the XXXX. includes $XXX.X which revenue million Dayforce. finally, XXXX few XX% Starting revenue Cloud with million. going $XX and million. grew Cloud I'll everyone. results. total and to was constant a highlights growth and financial services financial for $XX.X attributable to And or about $XXX.X our year cloud our revenue XX%. which some by talk provide XX% solutions, Dayforce quarter customers to to XXXX XX% to revenue minutes Powerpay, million increased includes migrating fourth increased our XX% to revenue million million. quarter XXXX Bureau total Cloud driven currency grew quarter total XX% fourth $XX $XXX.X revenue revenue. $XX.X recurring by million XX%, Bureau in and increase in in or revenue Cloud increase professional revenue, other $X.X was the or and XX% services Of XX% increase

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

sheet while a value funds from compared the of income XXXX, invested was balance fourth trust million million last balances that was day As the as funds the end-of-year $XX.X the was decline December in balance sheet result, a of billion customer are value $XX.X customer was a business higher to XXXX and balances. quarter December trust XXXX. $X.X Friday, the The than The Friday $X.X to year. of billion quarter XX, of of of as fourth funds in compared reflects day the business Monday Monday, last fact XXXX XX, last customer trust in

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

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

to million and And other professional increased other live in the year X%. $X.X professional improved go revenue and services fourth professional and an new While in grew only negative services profitable customers. gross negative improvements by services professional other reflecting less from XX%, productivity last margin costs increase million on than XX%, or post services and our or $X.X implementing in quarter XX% negative

offering last million primarily development or in increased as initiatives. As and to our quarter second XX% calls, associated these adjusted in research profit an to million associated $XX.X G&A a year, secondary year-over-year. the share-based continuing the quarter in quarter fourth of in costs fourth compared percent half $XX.X discussed quarter last EBITDA And development fourth to marketing and We XX.X%. of due expenses company. earnings expenses increased November, fourth to profit margin million operating million taxes $X.X the marketing million and up expenses with costs and XX.X%. to XXX EBITDA increased million and $XX.X from million, or our with of the marketing an to compensation stepped last $XX.X by compared management operations million. XX.X% Sales $XX.X we our to before XX% $X.X in increased in improvement public $X.X by to revenue income being by year. XX% $XX.X was a and and points $X.X $XX.X from results increased improved million third million, the sales $XX.X a and million increased or to of of Adjusted investments income basis and $X.X expenses XX% quarter year, loss we and realized million, Product million operating increased reflect second sales on and up in

to and million our revenue financial Cloud or or which now Cloud both $XX.X million. revenue XX% more our than includes Powerpay, results. revenue, and $XXX.X XXXX year million. revenue, by $XXX.X to full by both XX% total $XXX.X solutions, Turning by or XX% Dayforce million. from increased million $XXX Dayforce million increased to which $XXX increased Bureau includes And to

as our on an the Foreign year-over-year currency impact rates immaterial full Canadian growth dollar basis. flat year on was had annual revenue relatively an

Bureau $X.X we our Cloud to of the end primarily XXXX, report for revenue due $X.X recurring And up revenue compared year the of Cloud which the million. in range was last XX.X% million. went by from in our provided in overachievement, pleased was XX.X% adjusted total to XX.X% XXXX year the exceeded for EBITDA actual high guidance high and for results revenue exceeded and XX.X% was customers in live full retention that impact to XX.X% during end million XXXX. I'm the of retention the call, XXXX to compared $XXX.X by full XX.X% end actual the XXXX. our revenue range who includes of XXXX. Annual annualized million at $XXX.X During results XXXX, revenue, and XXXX, And XX.X% or

We to margins XXXX. expand continued during

in in services from XX%. to professional XXXX from negative recurring margin EBITDA our on XX% increased margin XX% or XXXX. adjusted to services And million Cloud $XX.X in improved in on expanded XX.X% increased XX% XX% gross gross margin to and basis nearly to Adjusted other XXXX. XXXX $XXX.X XXX and million, negative points EBITDA Our by

Moving the balance sheet. to

interest $XXX.X $X.X in cash had refinancing our positive million in cash higher million XXXX. and $XXX.X XX, to flow $XX And December compared total XX, our reduction December offset in XXXX. successful of $XXX.X proceeds reduction was and million, of by debt. cash increase the increase the expense, attributable XX, partially cash of year of XXXX, equivalents IPO-related million of first to the debt third in was primarily of debt The first positive cash of $XXX.X to free million a free $XXX.X to term quarter. half and IPO and our from half fourth an of attributable primarily in free flow cash we of of was the flow As items XXXX, million million December million quarter to as Negative which $XX.X $XXX.X and XX, million, December compared were

XXXX XXXX. million in and expenditures in expenditures million were $XX.X for the capital $XX.X in equipment. million compared million million $XX.X technology to software for Included property $XX.X and $XX.X in were capital and Our

to for guidance. full first now quarter Turning and underlying XXXX. assumptions to outlook X I year our critical the highlight our want

guidance our X reflects ASC this adoption XXX the of effective year. First, January

X been amortized quarter as standard sales forma years, be certain force previous XXXX XXXX on paid year a the the with of in and results the for to To bonuses other facilitate over and and if increasing ASC effect comparisons reducing commissions noted effect. we as will and selling of adoption recurring services calls, revenue pro and had has provided services professional new in such period. the we've expenses XXX As prior revenue, each

dollar Second, reflects to U.S. guidance of dollar our rate Canadian $X.XX. exchange the

so Third, be our Bank the of or funds during will Fed changes in no to XXXX, any or the Bank our upside of guidance rate funds also Canada assumes U.S. year Fed rates increases the Canada guidance. during

practices, would approximately investment investment based in points following of current rate XXX increase. million increase on rates months revenue a float reference, increase over XX For market basis by $XX an the

guidance to million, $XXX to total million. $XXX in and respect revenue year with to fiscal of in be range range be Cloud Now for of $XXX to the adjusted of $XXX the million $XXX we to million expect EBITDA $XXX full to in million the XXXX, range revenue the million be to

For per those year outstanding and of for you EPS, average $XXX $XX for million expense quarter, of income million for at the modeling tax expense year of looking year. of shares $XX net approximately approximately approximately interest weighted million the million approximately the we're $XX or diluted

points. continue XXXX XXX basis full XX.X% expected QX between revenue margin ASC XX be XXXX of the adjusted to range of to to million. revenue to quarter to million XX.X% be $XX range EBITDA to EBITDA and to Cloud of XX.X% to in under For compared is to million and On $XXX adjusted by first expect total of million in XXXX, expect QX of EBITDA basis, a we to million million, revenue in the be of in the $XX be $XXX the we XXX. our as adjusted to margin range restated $XXX $XXX expand year

QX However, first not adjusted for lower and investments going for ask up At Thank year operator lines compared quarter time, certain company the slightly to sales public I'm this marketing. to margin which questions. current open our is our in and the EBITDA you. and before reflect expenses guidance did last R&D the IPO, to

Operator

comes of question Murphy from first JPMorgan. your Mark from -- line first Your Instructions] [Operator the line

line Your is open.

Mark Murphy

on congrats nice a year. and much very you Thank the to finish

to new been you most other logos - segment. the in continuous heavy driving So that larger might do booking And payroll it. are curious attribute with what hourly versus I'm interest mentioned on employees? any David, customer strength of factors have I you believe QX to larger those growing that extent the

David Ossip

Nice So thanks, speaking you. Martin. with

payroll make first anytime exception, the The continuous is size messaging even account that around mid an compliance does HCM as efficient well particular better that benefits as in exception. the they I have which, point the and resonate are of efficiencies market of calculations, our same larger it processes the to better with other company, would because thousands than calculation, leads account with you more

release, high about has salaried more mix wins so on that employees, a employees. that the spoke financial organization XX,XXX the terms I I hourly. did focus not of That, In is a with in of believe, than services very press we a

hospitality, We obviously, By organization. a a salaried. nice health chain, a between large And also there some there will And speak fast some also that and spoke hourly. a blend. employees. with there's the an retailer over large We customers higher spoke announced mix about chain. be about retail spoke They customers you've of hotel be nice customers care mix have X,XXX have way, we about a we some a retailer. salaried Again, large would we the some wins will manufacturer, hourly in a food -- got And hourly. I probably multiple did obviously a have with X,XXX, and do between had that. also that mix about XX,XXX-plus quite But summary, and a who in which then large salary

Mark Murphy

Okay.

Just better incremental where year to terms engine more it's of and countries plan talent on to data you investments ability think Or better that this side? make additional in as do you to focus in core just do payroll follow-up, see launching more payroll a on monetize? critical you quick management value, strategic the

David Ossip

latter good additional announcements you'll Mark, blend at XXXX, you So see a made functionalities. the actually of talent between in that focus if there's the on look we've the half quite product

on benefit we -- also released of about Even end now the which I talent last obviously some compliance launching we're which if planning, the decision support. we year, is surveys, modules the side. succession of talent. like we at for be So at go is look example, we'll benefits, talking engagement When into when XXXX,

leveraging on the calculation, opposed continuous as applies that focusing recruiting, well, belief, which between really, payroll So honestly, very in the quite a you even compensation applies there quite talent advantage. we And typically and into product. compliance look of module, us by some user experience and modules at bringing believe which, is the to our nice well we're when like differentiated you gives up a the end pieces as obviously, with that

Mark Murphy

you Thank much. very

Operator

next from Jaffray. of the [Operator Instructions] from line Piper question Your Alex comes Zukin

Your open, is line

Alex Zukin

Arthur. follow-up taking then for Thanks guys. for a Hey, question. maybe and One David for my quick

seat that priorities update where should now has the attracting it And do months, of maybe give David, incremental enterprise in So her you from is And you're enterprise, to been ramping? 'XX? can us for in be a org think Leagh about biggest seeing about we for kind how expect what around six now? an sales you year how that talent, success

David Ossip

Great.

been us X with had we're months year. of with half delighted Leagh impact organization the latter she's on the So has the in and for now, the just that about

taking a the priorities go-to-market of that strategies, leveling by up the industries upper in. was of record on what lot go for the in group like, the of focusing A well to are, QX market Leagh services in inside out, approach quarter and of lot a other, our much that to sales and as Leagh's strategic market. and more other been I are we the would end as we've As success domain we seen of you professional the pointed verticalized a saw all aspects wins term her substantial Also, of have us, market. particularly if

Alex Zukin

Arthur. follow-up a quick just for Perfect. And then maybe

the Cloud number. ARR at Looking

we elements to how I cadence grew explicitly of about think next this at the deceleration particularly before. about guiding know there organization? are look slight things year growth of not you're year-over-year the from XX% you FX think into we that any given XXXX, should sustainability sales I for when next should we that in XX% But other ARR. year? the year, or like think And up leveling a the

Arthur Gitajn

The Well, XXXX dollar $XXX dollar in guide was the dollar increase in absolute million. I would increase was absolute $XXX you absolute look to XXXX The million. at increases.

But big. In larger. to think has I number so actual The dollar are a only move the if that gotten to It's so the getting needle. but hard way. growing been kind you trend look of increases not denominator now we've increases, you of the it are at can fast. continuing we areas increase

Alex Zukin

guys. Thank you, Perfect.

Operator

Bank. line question the next comes of Turrin Your from from Michael Deutsche

Your line is open.

Michael Turrin

a anything a customers bigger there are big afternoon, Dayforce Live now as just needed? handle saw increase. Good And be thanks. unique of is onetime geared I'm throughput you might wondering, to customers or there?

David Ossip

emphasize So would Mike, are let me like take There a few things that. over of I here. kind to

our that first saw is last teams in efficiencies we The year. tremendous implementation

I In QX comparison we in number of a live. tremendous that fact, taken even to was XXX were year-over-year, accounts saw we live. headcount implementation, customers we that took 'XX, we increase 'XX, down live that customers. in the believe, though in QX took In had the that increased XXX of

XXXX. The in point you per we've other customer was the average per average that XXX,XXX And an XXXX. from revenue XXXX area an to XXX,XXX in between per actually per to client, probably that you to at XXX,XXX in XXXX, add XXX,XXX the increased number increase that is XXXX customer, that client that the revenue per and In customer. in about if and and increased see seen was I'll per we incremental will it customer, XXXX look revenue

went by revenue up X new client added incremental years. those about between XX% the per So

of an other to each had is anomaly? so spoken in terms and I'd the We we as the record be like seeing we as to well add one and about we also actually to that believe in a - No, one for the QX activations. revenue guided quarter had very pleased that anomaly. to drove other. client. had don't actually expected ability us And that? that Is we're that with onboard that activate we're increased per an getting increase we're What customers the

activation But slightly XXXX professional unlike professional do the go and the increasing headcount professional and the up we of in in expenses, to We this demand XXXX, requirement. in services we other in year actually where to XXXX our are, and services the services expect handle decreased number resources. headcount

Michael Turrin

go color change plans acquisition follow-on, I'm Thanks, Thanks. any we're way the the all One private XXXX your in priorities? your of David. direct quick recent sure Does way about one thinking great and wondering. competitors of That's there. you're

David Ossip

The short into is it'll a marketplace. short-term We answer the believe have no. don't impact

Michael Turrin

Okay. Thanks, guys.

Operator

of from from Your comes line the Lenschow next Raimo question Barclays.

is open. Your line

Raimo Lenschow

you which taking with? - examples the for is in Can a your customers customers talk of of talked my Congrats evolution is you is of kind as bit it that, gave talk And Thanks a you terms me talk you through customer are that kind of you The you seems can dealing Thank that's like question. bigger. of thinking little that David, up? about. please? from plan? you - get well. kind size about that, the Or your of about pulled getting you. Can part to

David Ossip

Sure, Raimo.

increase density is by and the driven module in increased revenue largely So per services. client

towards As driven we be the move look we increased strategic believe size also by much XXXX, it'll as we into market. more

to market strategic is twofold. Moving the

larger the First, brought based on messaging you into the we been if success, database. in calculation the like, we been single where have opportunistic accounts continuous a have of

The organization, target can specific we're tailor in technology. of where of of value second added verticals much part, more the the with disciplined in benefits taking a terms and sales message how a strategic we accounts the approach taking to Leagh we more approach the joining

Raimo Lenschow

Okay, perfect. Thank luck. Good you.

Operator

from Marcon the line question R.W. comes Mark of Baird. next from Your

line open. Your is

Mark Marcon

who to Are you with of obviously, what's seeing -- to Good impressive. Arthur were and change these key continuous in winning Wondering talk are? terms some if and The larger afternoon, my about the you congratulations. for just and regards wondering me a But who of in, the the a the RFP causes clients the drivers, get and add from. both winning. bit what you and who of module the what robustness, incumbents is of are David seeing pipeline terms features, you driver calc invited you're key in let little some can

David Ossip

to speaking as Mark. Thanks, well. Nice be you to

strategic sector, has point increase been deals. that make is into in are most accounts and referenceability has Net I'll year-over-year. increase pronounced we've which influenced first our And large means where seen that in market the brought Promoter customer Scores that The we satisfaction in an the obviously our

partnerships firms we SI The been and have relationships advisory investing second piece with in is, firms. in developing

FYI, and led see an over scheduled year, April then as our higher well. to quite Those expect good conference actual to as Just deals pipeline attendance we obviously obviously, for we this there. partnerships influencing partnership early the had and have

Mark Marcon

and can you're talk up any against you change? about there's if big going And who

David Ossip

The competitive all. obviously of payroll at some the We do nature hasn't changed companies. of replacements other

We also replacement legacy also It still -- a bit see old the replacements hasn't of technologies. ERPs. really we see of of quite

So we regard. any market that seen in changes haven't

Mark Marcon

you. Thank Great.

Operator

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

Your line open. is

Brad Zelnick

[ph] Numbers remainder in the half the first and year? of throughout the

David Ossip

it? I'm most I catch of the repeat didn't question. sorry, Brad. Could you

Brad Zelnick

I'm now? sorry. Can you hear me

David Ossip

Thank we can. Yes, you.

Brad Zelnick

Excellent, yes.

lives into we throughout first record off pipeline the of think especially number the cadence in So of based a of half in and coming wins go QX, how should XXXX? on the the current that year about have, you

David Ossip

live. don't of a the Brad, fluctuation number of the I lot terms take into accounts of quarters between There actual give in guidance we quite count. think is we

in accounts have signed XXXX. obviously which able on the record to sales demand based customer We spoke means do availability those also earning in of terms on live are the based are prior scheduled calls go we that customers can typically And is kick quickly backlog implementation, to client off as not of We the of when as team. a actually obviously the but live we but throughout strong projects would entire very QX was our be I seen to. goal I as XXXX. the take the said, previously and But quarter, a have in

Brad Zelnick

a follow-up. That's quick helpful. And just

for speak But Can retention in you downtick. are what Dayforce maybe we if at look rates best Your Cloud year-on-year, a class. and retention what that slight specifically, there's was? to explains

David Ossip

Sure.

the slightly by point think guidance in out XXX%. to retention fact, line we industry. with the can't I XXXX to number of that midpoint a actually for was I It's gave high. than speak looking well above is our -- which range basis, was So that why in XXXX exact specific We reduction though I XXXX. higher in is actually term to rate net XX% longer exactly good very gave. at so the to would is a as our What XX%, as

Brad Zelnick

so Excellent. Thank much. you

Operator

of next from from line comes question Justin William the Furby Your Blair.

Your line is open.

Justin Furby

just Hey, And percentage guys. the of thinking Arthur. 'XX the a you are to can follow-up in Fabulous growth guidance? And in for growth the trajectory? David, quarter. your as got How embedded Powerpay terms quick in between a growth? about think of XXXX your you for sense give in business then and you contribution Bureau Dayforce a start, what I've

David Ossip

Sure.

on of growth a XXXX. the X.X%. of of the basis, look is balance, of differences, growth would Powerpay X.X% And if XX.X%. historically basis, QX of in and if look the the and is was Cloud revenue majority the on XX% Cloud was Dayforce majority from GAAP the Dayforce rate revenue, rate QX, come 'XX. into grew at constant growth the the the Cloud obviously, of constant GAAP at a revenue obviously Dayforce. terms I the of grew And that continue expect from Powerpay by basis, the basis, look in currency by growth a vast On Dayforce, on would in So of Dayforce I I terms it growth currency you majority a to as If obviously of coming

Justin Furby

from David, mix for 'XX the And the coming what then and assumptions the of percentage is. Bureau, of Okay. that in terms

David Ossip

Sure.

Arthur, to mix what to continue XXXX? Bureau have given we the the obviously, to decline guidance in And expect, We we in be drop. of to expect Bureau

Arthur Gitajn

XXXX. in in from XX.X% the guidance. -- given we've in XXXX, can XXXX in You But total Cloud retention the infer Bureau revenue versus was XX.X% the XX.X%

excluding Cloud Dayforce. XXs, Migrations 'XX. XX% in same, So migrations to accounted for increase we be Dayforce assume high the you revenue can to the continue in approximately of in our to and

something expect XX% in should of You XX% forward. going the neighborhood to

Justin Furby

to Ulti, for are sort as bookings, QX. customer for it your Okay. look of And I That's through you Arthur, include and ARR, live helpful. biggest? then, wouldn't the on I was Thanks, like What bookings rate of just seasonality just be of it's what the of And you remind ARR. right? in you it us, go your which guys? new of you define most is quarters QX the like just it, terms think think the a year, does way that clear the can QX it run looks

David Ossip

the us. be It will for same

Justin Furby

Okay, Thanks, guys. Nice perfect. quarter.

Operator

from [Operator Instructions] Samana the comes of Your Samad line question from next Jefferies.

is open. line Your

Samad Samana

I question. Thanks that customers INSIGHTS, I rolling David, of pretty have in how think you're for follow-up. they're have that the was On-Demand that about was one monetization we model XXXX. guys should were pricing solution you at that. think for potential Pay if things And the and taking determined the a my Hi. early when about of that opportunity curious then out -- excited we a I

David Ossip

Sure. I appreciate the question.

in disclosed stages We haven't do the market implementation in of customers with pricing, we but now have are early that several the On-Demand.

Samad Samana

is Great. have is standard be it the on any helpful. pricing And model maybe there is? what PEPM then or Maybe wages? Or you disclosed it based would color

David Ossip

market. sort per pricing per be we model, amount employee would dollar month disclosed in the It of but the haven't

Samad Samana

follow-up, at nice-sized units the users a consistent I'm about really about these of or the thinking of And we're was same grew versus deals. year-over-year. called year Should number curious, you've a then lot live we was they I -- customer, number think to customers as live total average of in next of terms this wondering, look if out do you've helpful. per expect highlighted increase? Or you we that how about you That's a employees growth model? live get live employees as the average year in Great.

David Ossip

obviously increase customers XXX the XXXX, saw taken customers was XXXX, an users, to from 'XX increase and obviously in were that on of between live XXX, were in which in saw at we live total an So XXX it as an which taken increase compared that of that taken if users I we XXXX across look were XXXX. XXX,XXX live and

So that number been in accounts activating. the you've upward year seen trend we've an per of

trend earlier, obviously go has can given to the we'd historical as you guidance, of number year, haven't We but see mentioned the customers been. into expect live what to I next

Samad Samana

taking Thanks for my question. Great.

Operator

question next from Sachs. comes Merwin Goldman Your Chris from line of the

line Your is open.

Chris Merwin

for my questions. Thanks Okay. taking

comment, earlier about a David, follow-up a revenue client. just you So per on made

I got as to to in about opportunity can Arthur. just Maybe density the continue and you module 'XX, the shift think over R&D follow-up fiscal invest products. should thinking new out you at I've for the driver but the called for frame more for be we a it upmarket least us roll than how And you term? PEPM so out as related main long

David Ossip

for thank Chris, that. you

at bit more I So If XXXX. look color. a between employees it customer, and was the number per of largely XXXX constant

X,XXX end X.X base 'XX right million versus do X.X XXXX at a in on active base customers the users of employees You yourself, over of X,XXX. can the million of math a

customer to $XXX.X accurate if increases, the XXXX it look The do in in per if XXXX, so look more And numbers, revenue you from slightly of XX%. you that we a $XXX.X a we customer the you so and per actually the different, almost at nice again, in gives increase out if thousand bit obviously client, you at which to thousand XXX, per want median, increase saw obviously, about averages information.

by So the again. And that you the the new increased increase see over driven and getting the there add-on was we're from PEPM that clients.

move the per you get sure which and to If that for in the XXXX, customer, opportunity such, effectively by per our new cadence revenue very about I always on we building we go additional them to time, features sell as them. grew release Dayforce I into to been that features incremental we the spoken then up that customer We happy. look year, was of in which regardless future. the The platform and XX% the expect XXXX. marketplace, is about would And of payroll they're we the as client the at incremental continue OHR said, per X in benefits making products to upmarket. $XXX,XXX and revenue we work [ph]. as go X $XXX,XXX new back our to We've And has expect cadence them

and is now would go-to-market a market, to and go for all [ph] X,XXX involves of Leagh as that above -- defined go-to-market number average segment by from to success realization vertical the should the We employees organization the joining implementation having we've way, the that strategic that employees, plan the so us to in up. sales see The extends support. strategy a the expect second more more strategic of for it, particular accounts, focused customer of with and way point a more

Chris Merwin

just negative for And Arthur, looks under services were like Thank XXX, margins And I called that. XXX you XX%. out under for 'XX. professional gross then you think negative XX% in

trajectory XXX especially the just to getting professional to customers can see live? you the professional we So Thanks. share we shift margins services mix over of already services breakeven, think as change that you as through transition, the gross of anything related have

Arthur Gitajn

Sure.

XX.X% So gone year would XXXX, have for the XX% services XXX. full from we the under to margin negative negative professional see

negative negative would full QX XXX. negative a last the XXXX, before margin in have a After improved. were XX.X% year, -- increased professional XX% at to For would in And have believe, services year XX.X%. I from at XXX, XX.X%, we're, tens, we're we

I think the XX% minus we're probably forward. So breakeven we're -- that range the in going in to

Chris Merwin

perfect. you. Thank Okay,

Operator

question next comes the line of from Partners. Your Amladi Guggenheim from Nandan

open. is line Your

Nandan Amladi

my for you. Thank taking question. Thanks

of as it you customers changes to through, environment? process, their XXX-plus David, tend cycle, average. behavior number macro the relates to selling you any go the in decision-making of your seeing the I sense steps have any really in know of little to the bit larger, in So that of sort be Are

David Ossip

QX with seen quarter. buying very and you've others, As is a us obviously, healthy

I macro So look pipeline I I if at into see haven't the seen any don't XXXX, any either. changes in environment. And the

Nandan Amladi

you. thank Okay,

Operator

Your line Walter of from Citi. next Pritchard comes from the question

Your line open. is

Walter Pritchard

XXXX? one questions. a Arthur. is contribution - Two thinking any update I on market rollout, follow-up. thanks. for the there David, in for your then U.K. to about One terms of had David, And Hi, for timing,

David Ossip

the native on lives issued go a days our that we a few press announcing payroll product. of release So a in couple ago U.K. we've had

that see beginning get are customers product. U.K. we activated on major So to now

having be time summit believe, the I U.K., will frame. within May another We in the

so we are seeing development obviously And and market pipeline demand.

happy ramping We've organization up the U.K. the So we're sales moment. in quite at also begun the

pertains the obviously the to obviously and the be it of into XXXX, would XXXX. end towards impact As year

Walter Pritchard

expect Great. it accounting professional takes hold? look allocation And it did to we look then, it XXXX, we as the XXX should to XXXX roughly as services relates at in the Arthur, after like

Arthur Gitajn

Yes.

fair a is QX think I again, indicator. Yes. think, I

Walter Pritchard

of ramp then forth, actually, last XXXX? to Okay. on kind related up should your on Great. efficiency as sale we think if side, just getting you're investments. that It through how And investments it wondering about you think like one the And course of - so your about I'm the you especially looks QX. did and the

David Ossip

QX expense 'XX actual of the million look QX 'XX. see in the was to marketing of numbers, $XX.X as in $XX.X we you'll million compared at and if So that sales

bit. the QX. we it a of actual into The quite a we booked have So which October, as increased customer is drove that obviously increased for there conference, lot well our spend falls reason so in which commissions, it's

going step. Going in forward, be and aren't marketing, invest big to sales we'll but a continue the changes to

be focused continue returns. very So to investments high have that

Walter Pritchard

great. Thank much. Okay, very you

Operator

for I David now over the to call Ossip closing turn back remarks.

David Ossip

joining for our look forward today, future call conversations. the everyone, you, to I and thank Just

Operator

That conference today's concludes call.

disconnect. may now You

Dayforce (DAY) 6 Feb 192018 Q4 Earnings call transcript