CDAY - Earnings call transcript Q3 2019

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Jeremy Johnson

Thank you and good evening.

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

Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call including the Q&A portion may include forward-looking statements about our current and future outlook, guidance, plans, expectations and intentions, results, levels of activities, performance, goals or achievements or any other future events or developments. These statements are based on management's reasonable assumptions and beliefs in light of information currently available to us.

to reliance not such cautioned are place on undue statements. Listeners set risks statement to that those statements. is forward-looking and differ in subject from results Each actual to uncertainties such our could materially forth cause on refer our information the certain future ability for risks performance We the other factors statements deliver underlying regarding to and filings significant our with these you that SEC forward-looking and assumptions statements. and previous could to affect

made statements this or law. to We as revise be call undertake no to may forward-looking except obligation update any on required by

the Form Relations earnings the MD&A in database The and website filed will EDGAR Investor third quarter well U.S. release as furnished Canada in on been financial quarterly with on at the and report and the available the on SEC Ceridian and SEC's be XX-Q, SEDAR statements the investors.Ceridian.com. as or related the have database

call otherwise As this on a U.S. conference in all unless figures reminder, are dollars, discussed noted.

will over turn And with the that, to call I David.

David Ossip

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

a We pleased on with momentum year-over-year basis third currency increased basis. on Dayforce on GAAP XXXX. Dayforce on basis currency very strong, constant XX% Total Dayforce XX% both and professional from constant basis. including services results a and with XX% of revenue remained quarter recurring and the a revenue, by growing the by are other, a GAAP

constant recurring XX% by revenue a Including and XXXX. basis. the As we both for revenue quarter since total had time, growth on basis revenue Cloud and grew expected, first third Dayforce the Powerpay, Dayforce Dayforce both a GAAP on the currency total for reaccelerated. growth revenue XX% exceeded of

gross margin other of points Dayforce that increase X.X%. XXX the XX.X% professional standpoint, from Count. XX.X%, on XXXX we pleased Customer basis year. EBITDA since and X,XXX of Cloud basis to increase a services were and million, XXX services XXXX. net quarter to expanded from customers XX.X%, We compared EBITDA a September of year net to to platform, with of From the compared negative live quarter recurring an adjusted of second XX, profitability customers to on and a Moving ended customers Adjusted XXX $XX.X improved and increase margin an XX.X% gross was margin XXX last was points last year-over-year negative increase the

product onto investment, development marketing. and and Moving focused areas our sales of

quarter and Our increase revenue, $XX.X third in continuation was investment XX.X% of and an by during marketing expense our development, $XX.X were and or X.X% million to This the quarter million compared of of represents XX%. million, of capitalized cash product of research territories. in software an grow including expenses Sales a development enterprise segments to up of or approximately growing global investments XXXX. the revenue, third XX% increase and $X to development

Also Australian of quarter, workforce and acquisition followed the summits to Dayforce announced enterprise customers. in of during a the with full XXX the acquisitioning we management and suite Sydney provider our Melbourne of series RITEQ the RITEQ, We an acquisition solutions.

across enhance our to acquisition and the of with knowledge Dayforce countries reach expansion, breadth used remain to which move base potential the within can region. years. provides and far, believe can accelerate presence acquisition and excited this The an of wealth Dayforce strategy success in the have We of three a Dayforce customer to about ANZ the thus the type be of seen significant XX solid believe a next in We global can localized our region, median this offering. nature we globe replicated be to

third in sales the the Moving onto quarter.

quarter. spend highlighting beginning with North wins, strong I the in wanted demand some a of and this to traction see key few We the America minutes continue to

services, new community-based a data experience and the customer manage processing and our payrolls. access onboarding them won we workforce makers employee purchased management and over the large XX,XXX empower capability. real-time and the delivering provides home with help Dayforce full account summit. of streamline an features employees. First, large consistently will attended HCM suite track managers healthcare from complex XXXX to Dayforce to experience our Conference market to account winning Each Decision our was that record company and Insights that

scale is in and retailer selected San example had and private acquired was a approximately more with wage the had footwear the system. workforce XX,XXX on online our seeing XX,XXX workforce recently market. globally. it large a in They in We We business, locations well advanced company large The for administration significant They seeing clothing HR for over And The we're benefits management women's aging also an a won won Dayforce across time major UK pay with employees as and America. the chose an we're This momentum employees. payroll, and and the and retail an in-house company retail Francisco. the XX we based payroll benefits retail company further having largely Dayforce channel a management. win which great brands, as in was X,XXX wholesale of a struggling benefits in highlight managed than equity impact and with HR, North had wins model the few attendance. core with growth and Australia

lifestyle experience, for at Australia, functionality the with and workforce the the solutions company chose talent The and over our to right different people third-party systems performance engaging business. replace platform. management. right largest team trying region. a these user their Dayforce to with The wanted was data time its to using to control end modernize management than spend. X,XXX systems that get to management. Zealand. allocate of to the best-in-class them double time its improve stores we and footwear and payroll, workforce operator help needed employees, the leading size Australia and single They a a with HCM strong would we The Dayforce organization labor company end manage UK, New access and to the handle In retailer, deal multiple fitness X,XXX in XXX signed help across to won facilities more of In chose The while employees

I Canadian also government provide update the like opportunity. to would on an

next-generation a to human that resources solutions projects and will federal government, CADXXX they million had real As the and system. their enabling to June, of a September, In solution. with potential government deliver resources a signed These in time human Canada build the projects detailing issued business release complexities pay we of and us fact other pilot future secured government's payroll, the for for two vendors. background, government test contract the pilot co-design against pay HCM against and the press

time believe well are after and replace the to positioned continue government's more federal uniquely employees We to we that system X,XXX deliver qualified on existing to payroll due and than in and Canada. to

the We are in will we pilot contract currently formal on believe project XXXX. project work working begin for for we pilot government and secure to a the

calculation conference in the X,XXX to of to importance presentations new spoke which customer data and Intelligence, about would Vegas I the including: spend announced The of week October products and like was in successful event HCM predicted great XX. a INSIGHTS XX Intelligent the few which through combines and date. attendees our tailor key held over employees continuous Dayforce request recapping each identify Las customer and the over minutes with Dayforce technologies sessions. with three same XXX normal differentiation We and over customers allowing Wallet, wages the our configurable process worker payroll time access their branding measure their day process; Dayforce styles; content and and HCM payroll experience for Hub, and with widgets Dayforce earn metrics of a each pay, which their to to leverages their allows before

product enhancements the employees, company us on-boarding We also the to ability off the the process product. documentation, modernize our the announced give revenue existing in into customer the in continue The and strength will We the efficiently. launch these Powerpay manage Powerpay of base customers and growth manage sensitive to future. along of with believe enhancements, their secure enable time Powerpay enhancements

performing team, provide continue December Form XXXX. planned onboarded a by the end X-K, as and the be his CFO Gitajn, of Crawford until our who'll we has announced of enterprise and XX, until at space, we XXXX via of support the launch On until replacement. Leagh with markets. employed will he Value our And global the in depth welcome sales to our in execute Turner. significant a to we retirement then Bill Officer on company search Bill's the Ceridian for end reporting a high December HCM we Chief this to evening the global June leadership the CFO, of finally, our continue continue functions side, led will ambitions the as CFO, new in consultant XXXX Ceridian Arthur the way as Ceridian have as people experience the to fully will Arthur

discuss it over I financial guidance you our results greater to now and will detail. with turn Arthur to in

Arthur Gitajn

$XX.X evening, going from I'll guidance XX.X% XXXX I'm increased our good to and and minutes a cloud results, Canadian third XXXX David, for everyone. then you, take third XX.X%. Dayforce Powerpay, million. a platform revenue basis, constant market $XX.X Revenue HCM X.X% cloud flagship increased currency from the $XXX.X million Dayforce small talk our full Starting our with quarter HR results increased the for to year about payroll our solution or and by provide financial quarter to XXXX. to by fiscal financial On Thank revenue million. business few

which $XXX.X on total basis, revenue, million a by Bureau both currency increased revenue a On revenue, XX%. and currency XX.X%. which Powerpay our $XX.X revenue to includes Cloud by Cloud from basis, constant XX.X% XX.X% increased Powerpay solutions increased Cloud constant Dayforce and $XXX.X both X.X%. includes revenue million, currency or a basis, to and increased million. $XX.X On constant or revenue total million increased And

$X.X Canadian end the dollar, revenue the the XXXX $XXX,XXX, our constant million average Total and for solid effect range was $X.X with range exceeded revenue by revenue on to of $XX the against of dollar of exchange of and range assumed rate adjusted to currency reducing high million by $XXX due results. $X.X million quarter the dollar U.S. on dollar weaker primarily Even high $XXX our quarter to million million the by constant high to which basis. $XX third $XXX exceeded Cloud to by million of by for $X.XX. million rate guidance cloud $X.X the end Canadian guidance U.S. million the basis, a million had our weakened during by million EBITDA guidance Our guidance The currency exchange exceeded Canadian and end dollar $X.X and $X.XX. revenue $XXX the a million

customers was recurring $XX.X or migrating increase million to growth third in services services a Bureau by revenue revenue increase and million $X Cloud the a Of Cloud in quarter total XX.X% and XX.X% the was driven Dayforce. professional in increase in revenue. Cloud Cloud attributable other XX% to revenue,

of Excluding of of migrations revenue quarter Bureau which in revenue impact the for total third the $X.X with quarter the in declined from expectations. XXXX million Cloud or X.X%, revenue our by was third XXXX. of solutions XX% to Dayforce, in XX% line with compared accounted our

approximately funds in of was average billion to our points year. The the basis balance quarter $X.XX for the was average customer the during the compared of quarter our billion quarter increase during third balance quarter last compared average float XXXX. float The third yield XXXX, of third an third trust yield XX in X.XX% to on the $X.XX

trust September from the third billion, quarter the XXXX. customer million $XX.X balance The invested was at in last unchanged $XX.X year. XX, in quarter balance income the funds value from of compared was customer million funds $X.X sheet December relatively which result, XXXX a was of XX, trust to as As third

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

post XX.X% Cloud of negative negative experience use of consultants negative implementation Our new in million quarter in or Cloud services reflecting third quarter or also compared in improved and the automation the year to due year. other to in Activations quarter go-live $X.X costs professional last and million on of to other our the margin customers, professional productivity XX% $XX.X quarter increased million and third year. implementing Cloud Cloud improvements professional And costs other quarter last of third third other the and our processes. compared million to services gross professional to services other services the to $X.X XX% revenue costs or X.X% to services XX% continued in of and XX% implementation increased $XX.X the services third and of or professional in the professional costs last in increased

invest to sales development of support continue increased and a $XX.X growth management expenses expenses We million to to marketing and $X product development long-term expenses increased research in and in and and and sales million $X.X Dayforce to million marketing and to increased $XX.X million. from percent Sales revenue and or XX.X% marketing XX.X%. of or XX.X% by XX.X% as

isolated of to $XX.X our this incident correct service create October recorded customers although $XX.X impact any for XX, unrecovered only impact the this isolated as for excluded on from million as adjusted within million loss financial in the G&A. $X.X this amount been adverse which $XX.X our to to did $XX.X had underlying September not third a through today, is compared payroll million profit has XXXX and million we a increased quarter issue amounts. in year. last XX, million incident G&A and the of corrected filed disclosed EBITDA, identified in it incident fiscal the problem customers reoccurrence, attributable the expenses increase prevent to The We've exposure of most operating on an was funded XX-Q G&A remains earlier

of efforts we subsequent incident, future our adjusted Correction impact recoveries profit to service periods. as expect impacts in EBITDA a when QX which this exclude recoveries We'll of be report operating operating up reduction any recognized have going been profit on to expense million, and isolated XX.X% detail are recoveries $XX.X have results. the year-over-year. G&A we will would Excluding additional and positive any from material further

or EBITDA XXX Adjusted EBITDA $XX.X million to approximately to XX.X% from increased adjusted XX.X% and basis million by $XX points increased margin XX.X%.

quarter assets a compared our the able valuation in we given Including and profitability consistent our income future, the year. the $X.XX $XX.X therefore, expense $XXX,XXX we've was forwards our share million deferred recorded than quarter. During in net this we per year third $XX.X this forecast quarter of tax benefit $X.XX quarter diluted determined not quarter, the per more carry and tax the and, other Adjusted to $XX.X will we year. for IPO loss of offset third This net compared that during it's tax of tax be quarter diluted benefit, net in believe by effect partially net benefit last third income this the year and per $X.XX net released to in was $X.XX last share income the in the to third share operating diluted that our utilize likely allowance. million million was third of of since tax we aggregate

and of XXXX the equivalents million, of debt total as $XXX.X XXXX, to an compared September compared to XX, $XX.X SeptemberXX, reduction and $XXX.X balance million of as of cash of to we December had $X.X December XX, increase our XXXX. cash XXXX, million XX, sheet, million Moving a was

property technology, and Our million expenditures $XX $X.X were equipment $X.X of million XXXX. software capital $X.X capital Included software were compared in in million $XX for million XXXX was expenditures in the for million million in $X.X to QX, and development. capitalized and QX, which

full first we in now for fiscal our the full year fiscal Turning guidance. three revenue our quarters, outlook our are XXXX, given year to the XXXX raising performance

Cloud million, increase a an constant to a of XX.X% $XXX on to revenue million we the on XX.X% $XXX expect in be of currency Specifically to range basis, basis. currency constant

on revenue $XX.X of to revenue $XXX of range be Assuming total range XX.X% to of million, the million, to $XXX.X constant XX.X% a increase expected to is expected Powerpay be $XXX $XXX.X million of Dayforce basis. currency approximately revenue to in million is an And the million. in

the estimated rate is approximately federal rates at continuing ensuing end digital reduction wallet, X, adjusted on year change we February months. XXX Our and revenue basis full have point of interest We're to XX basis in we guidance $XX the full-year million float growth October. point an incorporates discount in revenue Each in and EBITDA provided over range XXXX. invest sales to impact the XX expansion are reaffirming the the global on the

to We million expect adjusted be XX.X% range million to in EBITDA $XXX increase of of XX.X% the $XXX an or to year-over-year.

back to operator will to Thank I'm hand and questions. we At call the open going you. line this the the for time,

Operator

from And comes Instructions] question [Operator Jefferies. first you. Thank Samad with Samana our

Samad Samana

great questions and quarter. taking on Hi. congrats my for a Great. Thanks

could I public company more Canada know doing an drawing I on guess the sector heels maybe announced contract, on a vertical involved if the So interest you're given I of update public that the first, this in was sector, you I give is contract? team. could if how wondering that that on us the Canada David, if from new and you're

David Ossip

Samad. Thanks,

excited about and correctly. know, ago. subject helping probably a vertical public about are people experienced you sector did As very government matter a did paying quite in we the Canadian its we in bring the expert quarter launch We new

subsequent build, the it that in but impact We We'll particular to seeing report and vertical. talk traction about of already it's too quarters. demand are increased really obviously pipeline early more in on

Samad Samana

Great. maybe a could And then I just if question. ask follow-up

acceleration company the large announced about into of and won in live. start it we're like you. I we and How go XQ is customers seems on of you larger seeing that XXXX number executing larger to quarter the XXXX? it's know, but then early acceleration, think Thank thinking you that the this that, and terms In about too logos should

David Ossip

will confidence, by very we're end I given can that that provide QX Dayforce obviously as the but over revenue a be is out for on services total little my at Dayforce XXXX, go guidance we believe and we a QX. accelerate the professional I talk the there. I the revenue revenue into did the quarter in typically of go did with We QX working get and and of at live is driven that well about that Dayforce Again, continue QX, Well, of recurring. mention high you are lives the contracts in expect obviously we speak as acceleration to to to end degree don't know, point what determined mostly recurring by the today really

Samad Samana

helpful. questions. That's for taking my Thanks

Operator

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

Mark Marcon

me of some let you of how mix from add wins that afternoon, the bit quarter, was mentioned about coming a the Good that came of some older really legacy XX,XXX of they terms you some I with first implementing. my in that talk you wondering is could And this congratulations. that mentioned the there? players big XXX employees roughly client was then specifically up changing? Are or typically big the win the or ended wins, the old composition little what you of

David Ossip

Sure.

was usually not is first different accounts in The typical that the we of quarter we we be not the of XXX would in number composition expect So those the across what that sold quarter. verticals. activated and would for all, accounts XXX accounts quite the the that

home-grown systems and service. of be more antiquated all competitors not the of competitor would hasn't time, direct they'd technology more that that legacy we're it replacing, a the changed, about of other half half types in or systems be be the the whether it'll time, be may terms In it the

large think, they attendance vendor And In it the combination believe, side. time on was the I'm certain, healthcare had an system, the on and but a management that ERP is I of payroll replaced company, we of the large not that side. I workforce a case

them the did obviously also suite full We for talent too.

Mark Marcon

bigger in then some wondering the their was I'm of conference the from about on-demand a can terms talked if you your And what interest you wallet more clients to talk in bit Great. of and about you there? capabilities. pay the little feedback

David Ossip

the QX the So in we excited Card, high. the Dayforce client very The of Dayforce year. of next from reaction in be very Wallet the base has obviously will wallet are obviously which about been launch inside the

started orders expect in have We the next and it activation of to very I quickly year. for wallet will take QX, grow

Mark Marcon

to then bit the nature just And isolated just do and you Really, detailed about talk it's that's little what the incident, recoup a great. but underlying was you in funds? can Q, the the expect

David Ossip

Arthur? So

Arthur Gitajn

Yes.

recover, underlying So charge resulted issue. in September we Thursday, than didn't of about had incident them customers. remaining for again exposure to to We results. speculate the duplicate material the may the full portion how any isolated much we recoveries create we'll additional impact customers. rather and will for our $XX.X With respect with their QX a we adjusted EBITDA in those the but we booked on The on the identified our identify incident of problem. expect more any an do loss U.S. payments financial XXth payroll a the in adjust and million, amount extent We operating corrected from their and

Mark Marcon

was a incident? And it single

Arthur Gitajn

Isolated incidents and fully remediate.

Mark Marcon

everything as this Great. nice remediate. you and just such announced for time. Fully a commend say want way that the you to as Arthur with well congrats lead And

So that's fantastic.

Arthur Gitajn

Thank you.

Operator

Daniel next question comes Citi. your Jester with And from

Daniel Jester

Yes, hi, afternoon everyone. good

the to some expansion, layering about couple characteristics that couple talk mean, of So about aspiration over But years. the of of the Can in some that should next over you just XX the I looking obviously, how market at? would about in years? the think on you’re get to you we talked countries today. the next you of international be

David Ossip

Sure.

when Canada. our as the kind U.S. and reminder, that a was addressable XXXX-XXXX, look I just So identified market about of in of outside at market of again, we half the

to culture from so the localization. designed obviously be platform we with that and very nature everything the deals beginning language global And to from in

currency, XX supported, formatting. state We have languages already FX, over

And same jurisdictions. Canada Dayforce the of U.S. we are it We could way and extend new the both difficult in launched the that when it we first in jurisdictions. very easily XXXX, into we rule engine a at built which for also time very launched both

additional product extending of jurisdictions Since us build already the million these million various we've types probably about to to allows of privacy workforce Europe jurisdictions $X then, each so compliance that GDPR a now also into built -- GDPR direct with From four cost data for management, that's protection structures on different and the dealing jurisdiction. policies the $X full global the particular time the rules, all work across that is into of We've we've expanded to have a we'll which us adhere and UK. to full and product global the countries contract of you basis. perspective, take various out by

Our competitive plans distribution, for Ceridian expansion back able to very were good capability most an likely will obviously, on opportunities their had that such into where involve knowledge, most Dayforce then but a platform in who some case, technology. have deep into domain the M&A where and believe have organization with didn't did very can there we the there that at people partner, find penetration modern particular out domain distribution XXXX-XXXX, companies basis many that extend similar We as the had leveraging that to the jurisdiction, Ceridian what are in with Dayforce market. time accelerate to very global knowledge using we and their our and particular

Daniel Jester

Great. in Canada That's for the And Powerpay on announcements enhancements Thank the you application. then made, helpful that context. really the for you.

to that you. the Thank you get we I reaccelerate to there? digits or aspiring single that past should least expecting there in or up you're in more toward future growth high maybe think the you've enhancements the business enough to said in over be at Are time. particular these hoping

David Ossip

the of enhancements. start a It's Thanks.

gives the us some this HR Powerpay talent customers. for So basic and capability

We back new platform. we the As Powerpay as we base organizations us in And a functionality to you us well. different give to pay future close out people Powerpay product. immediately the the go go This XX,XXX and as offer a back allows know, more monthly about have higher a to it'll them that capabilities, that that to million particular fee. base to build talent more use on at ability

Daniel Jester

much. very Thanks Okay.

Operator

[Operator comes from Instructions] Our with next Mark question JPMorgan. Murphy

Unidentified Analyst

they with David, of what it some once Thanks about in mix. be ops? now services customers INSIGHTS and to your What it Mark very we questions. that at in some taking Ceridian attractive our Ceridian of or or has were what being [Indiscernible] larger used competed, so and involved SAP more that said to behalf only Workday partners on part is of started ops, spoke do see it these that in of for those that maybe big some who makes than Oracle, of you're Murphy. big

David Ossip

very larger is So time see the to it things we the verify the in could them built would we are When structures. way engine, that what gives HR to is more a accounts where we segment, greater that a more much time because large earnings. the to sheet, valuable engine this, is differentiation we on scalable The very similar we call a data time to with customer, record than be XX,XXX enterprise few so designed The rule platform, this that calculation employees the it payroll very that continuous data efficient every changes, global. highly are able Dayforce workforces, that correct. recalculate net scale in we the the

end the pay of done. allow effectively instead they They the pay beginning. we the until at data the and audits, are can run payroll the their the staff means the end access do their immediately. of edits you cycle, of at As to waiting cycle, And very that their remember, adjustments

pay payroll data, engine organization to employees organizations to any organization -- fees. Dayforce leveraging the verify employees generation access to their allow the slips people that also and allowing their view useful allows now The accurately. obviously the earned to business at people with during what money more direct a much more and benefits payroll the much as view the which pay own apply to Wallet, the staff of is and early without much of to before again we and ability time like to to preview for allowing the enable transferred, inside We day them the access verify calculation inside obviously time well they've the pay information money data continuous all the active end are that each to cycle employees for gives it

Unidentified Analyst

can business, And the mean That's and latest high thoughts on a the helpful. maybe that XXs Bureau from to Arthur, I basis. Thank one David. about then roughly change revenue you, that's the declining in state your teens of decline? Any consistent steady for the low you share been

Arthur Gitajn

No, migrations excluding about decline was was expected. no. X.X% which Again, as the

you in expect would it's was XX% in of range if be we And range. been also line. it the XX% the and the in contribution to to think that I to go XX% Bureau XX% likewise back, Cloud, to

Unidentified Analyst

Okay. expected and how in But no drastic it's that changes been--

Arthur Gitajn

but less is less XX Cloud issue. revenue. it's really line and of and on just of and impact the crossed now becoming total our It's business. XX% of -- less less an we No, ago, less XX% it's obviously months -- the an

Unidentified Analyst

Thanks very much.

Operator

next question the Guggenheim with our Nandan Partners. of comes And line Amladi from

Nandan Amladi

Hi, good afternoon. Thanks for taking my question.

Arthur, services like engaging will So the integration improving to for trajectory margin over has community that been that XX of months? What next now professional a implementation. perhaps look the say the steadily, gross you're but XX first on to system do partners

Arthur Gitajn

more the forecasting Well, third-parties right effort but have to XXXX to a mean in engage again, I now, professional services not implementation profitable function. we're part is of

Nandan Amladi

David, for some XX indication and touched of follow-up of a three get versus to And development balance on in years making countries organic to perhaps to Any expanding you the okay. the acquisitions? Right, reference acquisitions there.

David Ossip

technology. we're remember, an acquiring do a see not and we when even I think for combination, you'll acquisition,

on would to base We development those developers Dayforce playbook look sell did three help would do mode. out stop what the stories similar to maintenance momentum, engine and to market stop their over it stories have We the migrating period, then more obviously and customer and build Dayforce distribution immediately. is we'd to handle the we a user their very almost into very would on at proper knowledge, a people and the out using quickly a there enter build the network new Ceridian. with So put such. of five-year their products, rule with a any Over to to leveraging the we use user

Nandan Amladi

Right. you Thank

Operator

Pfau Our next William from question comes Matt Blair. with

Matt Pfau

markets those Australia on those was to you U.S.? question. my and the win markets you've versus wondering now then are the rates how relative terms ask quarters. that in for U.S.? Hey what the of Wanted characterize and them guys. in And seeing to would payroll been Thanks taking in you competitiveness I markets UK the of several for for

David Ossip

Sure.

So see starting Canada, I'll by really a on even and basis. in -- that only we U.S. the first competitors two consistent

America, and it's we similar the I As to in the there do. behind Australia, XX five play UK argue the UK behind market aren't type another I that I look XX are technologies vendors UK. that parallels, people When -- that would the North are we American when seems pattern many years probably actually whether to that in segments the that, be UK, a probably players they go the Australian it'd North compare it the years that global, of the the at

in major the to one the, So we UK around resonates what markets to the all gives the calculation the whether be verify management that the that well rule engine allows platform advantages across use are much Australia. space time validate one correctly. in and having larger the paid X,XXX in us more of that continuous particular and having employees exceptionally for them it'd of human And also people capital that getting a call, customers, cases fees to differentiate database, worker, end-to-end full the Dayforce up functionality obviously

Matt Pfau

with brand there you're -- of maybe markets? the And in some America Ceridian time known awareness these in that any sort it. of gain name investments some Got newer or in takes it than probably those since I North is better to brand guess markets

David Ossip

see very the in M&A workforce we that, as called Australia a we where acquisition a an that management of getting a several with RITEQ and in market company RITEQ in did a and following one in a as acquisition close very in. has quarter, the acquired the last good New the HCM comes That's immediately In two that's And and presence as primarily particular Zealand Australia hundred question -- targeting we player. that little in the strategy well. customers quickly customer did the a good Summits, very top we a and bit in recognize base one Sydney of of way Melbourne

Matt Pfau

Thanks I questions. lot a all taking my for That's had Great. guys.

David Ossip

Appreciate it.

Operator

question next from Needham. your And Berg Scott comes with

Scott Berg

a you, that mostly further and the good standpoint salesmen really long back maybe demand thanks of at aspects a heard today? I multi-year to Hi trends term ability X-year quarter do would XXXX you a as another is David in even space. questions. to really some your strongly competitive would How on overall And different with plan space take commentary HR of five the for segment after Arthur. think you my indicate but step consider a a Congrats run. in don't to if good David in and starting that from for penetrate taking was the run, what the guess be you we Tech in the not strong is this just

David Ossip

our would X% at looked market than probably today. think less market I have the If share penetration that a U.S. we I in

scalable live up. of have solution robust number some we slightly have and can I think we're the probably actual is would to we've you that in technology the customers with now verified continuous customers and most the of years the competitors I has, and both the over other what have we end the a taking space that's XX end of healthcare our discussed very as proven in of set a I with on calculation, ahead obviously that obviously the we wins five customers has see The and are out size that feature the live product. retail investors accelerated think banks two in differentiated that to X,XXX argue gone is of the quite

compliance very payroll, you'll and in think see we're grow core of more I that time be which our us benefits, strong. of all market, capturing application first what would where So

see really side, market our the of compliance the On learning less share particular obviously recruiting, fortifying management, are and we various is markets management, compensation on talent our than offering around management side. we performance

also we UK very we're we've Australia we can potential where in it adjacent begun And good in see probably just markets also is global or tremendous in build still the really on M&A into growth XX side, And we're the next expect with do There the that. to the will some then those and growth XX in you all, future. I for long-term and So think having excited is months. very over continue some and I there's potential very in the positive, traction activity wellness. be markets to don't around the the and play to and at what in financial Wallet Dayforce

Scott Berg

a there. tracking perspective, we then from helpful Quite follow up Dayforce multi-year about Arthur. of kind intermediate How Excellent. should And gross from or a margins think trending term trend. perspective

make year-over-year, but nice already substantial jump revenues obviously up of portion Dayforce had You've revenues. total a

what like trying high that look understand you. maybe trajectory current the Thank Just actually from to level? can

Arthur Gitajn

So XX% more more years than margin we experience, hosting support, live on and by if fewer in live the of is two increased we support our than on Cloud for recurring economies than of services customer The tickets. know on to cost from support addition we really have gross actual years. more customers live get year-over-year customer a two of is also for and is for customers years, customer the hosting. customer we in than two continue And scale number economies side more of to and phenomenon have scale,

Cloud well. expect to to to and would trend the on margins on expect continue professional services would toward we as breakeven So continue gross we expand likewise recurring services,

Scott Berg

Thanks good helpful. congrats Very a again quarter. and on

Operator

from our And Instructions] with Panigrahi question next comes Siti [Operator Mizuho.

Siti Panigrahi

my for Thanks taking question. Right.

international and Just umbrella. RITEQ you also different expand And see your your Australia under competitors. it UK that native to sense good go aggressive expansion, wins to over in the some following makes on your given countries for the now advantage payroll and of in notable technology on up XX and

that talk expect if percentage how the grow could now you revenue, revenue years? of international in is a in that how much do to right wondering as few next and Just you about

David Ossip

is report So the be growth XXXX revenue. said it of a percentage have would come But overall on the we most our don't what further our global an believe international the true XXXX impact and from of as we you'll from in to revenue I the enterprise market major that expansion we beyond. in success believe markets. impact in in see -- penetration that you'll In in XXXX, see and and the

Siti Panigrahi

And on side that's definitely employer/employee industry, have a offer to offering the emerging you than some right in an differentiating transaction. who competitors that's Okay, helpful. now payroll or loans seem very guys your team but On-Demand now per and charge pay of

planning also with you customer sort got announcement On-Demand from is monetize you for that? feedback are and to that wallet big So digital could that you how opportunity you tell us and how what of

David Ossip

Sure.

immediately the have submissions Card do Dayforce employee, employee a which an fully necessary Dayforce Wallet is all Dayforce solution. a way card that with say a day the So we differentiate do that from the payroll remittances loads we we same a time each that means of for and the and we compliance

way and employee for employee the cycle payroll don't perspective, that pattern have charge change customer it perspective don't employees have and a any go-to-market that they we've to to in we do direct their take from the a able end we an U.S., their From actual funding, way we the they it don't additional an either. the still fund fees in to at out of been to the offer the

quick see we believe very of product. So adoption we that, with should the

we've of demand customers In I a earlier, as mentioned terms seen have penetration, who seen from high it.

appreciate the we I very come successful particular I a proper can to the to that those at it'll testing, research both that necessary makes that product a do companies. launch and believe time think proper we be employers the way sense QX. consumer workers And in that the customers took launch tremendous the and the so

Siti Panigrahi

David. the Thanks, up Keep work. good

David Ossip

you. Thank

Operator

Raimo from Barclays. comes question Lenschow with next our And

Raimo Lenschow

oh that direct cheque was David and from in. that. I you think my it everyone squeezing few Do against god, like, kind thanks subject. back we Hey, like to me deposit a if for of years of was move know, kind you stay on can it when pushing about

different payroll, kind think, a is or Would on this of, that you has now what of agree same if kind it's be with of you just that with of you day moved feels kind it evolution like a step? technology you do it of kind possible next and should almost the the industry. Now

David Ossip

makes Look XX% almost We Raimo, of to live I out that sense. there know people think paycheck it all tremendous paycheck.

when do of will are, currently flexibility. much for within I paid or get years norm the it's that you've do expectation our earnings the of and allows the financial when the than want and for time. the continuous them back especially day the has younger for net this sophistication XX become remittances we yours, it's that office a that all if period reason it know completed that obviously I also calculate work they you've employee the to over money, generations helps people on that can our and of survey us We movement. perspective, earned XX% From calculation know the and the we the that people companies. day believe five a them frequently the who is work years more that to of same don't money

you So offer why reason there workers to is can't benefit today. technical no this

Raimo Lenschow

call in too like get it's, remind technical and your do I earnings mean, I say are like note, like kind that on some us then And we terms to on how to do whereas just continues. to old okay. of want Yes, are don't Can of set it up approach? like oh! to the a from of starting this continuous different but you able technical to competitors going be is

David Ossip

like calculations do to There's doing are attendance of have that and continuous continuous properly. and change time that retroactive amount during a you that do the sophisticated adjustments, have you calculation robust employer. the -- means make top a determining order have you to you In engine a can if that the time calculations, in you backwards to money M&As it and very

paid or you to unpaid that. paid, have to to a code you If time recalculate unpaid from change

to as do beginning requires a And design have records time type working well the to that that the because can to just going very a change from side not benefit have You current and calculation. HR period. do to it's you're that the lead the of that side in

So to others for that. the do

have benefit we the I know, you'd on attendance, many calculations They eligibility to out various then functionality and and the jurisdictions do do of they have you back that side. there there that and management out payroll develop the they'd also thousands as are benefit, the end Build types very there. time build as of have proper out first would offer the do remittances robust to full that to vendors of their do that that well. the same engine do and calculations to tens to aren't have then they if build the module HR tax which think type for out the even workforce of

So people I and to do it time to do for long think it it's a quite think would take complicated as I well.

Raimo Lenschow

Okay, perfect. Thank you.

Operator

Chris And our Goldman from comes next with Sachs. Merwin question

Chris Merwin

should weren't David, we much. about seeing live there very And quarter, projects. how strategic those look know accounts Are going tailwind for Thanks. going customer per more that potentially implementations and talking can you a I Thanks as given, particular bigger Okay. some in about think strategic be fourth sort time, taking there? are to to the accounts. to also on we of revenue place the

David Ossip

Thanks.

of noticed -- more size when very, well. segment accounts we because And project quarter of think to the be the account accounts kick-offs on management put and management. actually to to do especially gives have and decision their you each onto the program for carefully. and I enterprise is segment we it you the get and perspective, think the our like quite particular going planning, our we the very monitor with number implementations both us the of sometimes the a where So biweekly the basis, enterprise that meet The needs accounts. in project From forecast appear go-lives their of

So typically project from client a typically the nicely, large program manage third-party very, the you and have or side. on the side, management very fire resources harping often accounts team, you and customer the have management

comfortable the said you quite XXXX. with There to in see enterprise feel customers impact we enterprise And So I going would some expect live. from some segment. as earlier, accounts that are particular

Chris Merwin

I I you just before organic. be how between to required. mix as international. over then manage investment trajectory how going relates I about But into and a there about XX mean know opex to talked think term margin you you the think going And Okay, long we about getting that? the to Thanks. the that great. impacting is guess and countries are And do as it M&A and how

David Ossip

points on. QX, I If recurring this would went look the on the on where I points leverage most went we you if get So anything we basis points. up where on gross We it And business. we and we up it focus me scale do at as really than at particular know the QX, basis went more XXX I profit the look by focus that's XXX up gross quarter, that else. basis recurring profit ask If if year-over-year. by by we XXX it look at

on recurring you'll so improve. And gross to profit continue see the

go that overall will growth then at would into In on versus but to we invest and profitability. of see the same on the expect recurring will foremost, of into markets terms determine gross on remainder, we'll organization focus up. the time, we how much And that investment, profit the we new take

Chris Merwin

you. Thank

Operator

from question And our last Fitzgerald. Kootman comes Drew with Cantor

Drew Kootman

squeezing taking Hi. me in Thanks questions and here. for my

was if or pipeline So the you've guys forward just lot as products talked about -- I you talk the what as or see you and wallet everything. far could moving applications? curious for about a

David Ossip

Surveys, next taken and that pulse next release. that be the every in new is GA be Well, -- release to will three module surveys we become and that The year, probably modules. engagement to two will will

we'll to We from a positive will impact obviously begun showing our begin. and that We've we have pattern that customers. customers the we get already on that expect

recruiting and the we able to also as begin. modules to plus just features the for we're get where the increase higher pattern for to plus those pattern for modules release existing new are plus benefits, get customers back benefit and a we beginning existing We go well have recruiting, as to base

to investments So those of continue types you'll see going forward.

Drew Kootman

then, just to look positive the client curious just of on either how how total impacts when and retention you enterprise And go rates Great. or it negative?

David Ossip

in XX% out for expected. that and as XX% We this don't gave retention we're tracking and segment on right based break and we middle guidance the year between

Drew Kootman

you. Thank Got it.

Operator

today’s participating. for concludes you this Thank gentlemen, call. and Ladies conference

now may You disconnect.

Dayforce (DAY) 9 Nov 192019 Q3 Earnings call transcript