CDAY - Earnings call transcript Q4 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Ceridian Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator Instructions]

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

Jeremy Johnson

evening. good and you, Thank

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

Before available in on such Listeners those allow to actual portion, future reasonable from is any statements. set outlook, materially currently and of This and of statements based cause place statements we statements. on that activities, regarding to These our risks uncertainties statement us. events beliefs guidance, cautioned call, reliance disclaimer light forth begin, about or to intentions, are including management's forward-looking not or me subject plans, in to performance, are expectations developments. to the differ statements. results, and goals results could information assumptions other undue Each such Q&A current may and forward-looking a include future provide levels forward-looking or achievements

our We affect required no to regarding underlying these undertake significant obligation assumptions information except refer forward-looking with other statements. revise statements or call deliver you to law. be that any for and as and to on the by and made to SEC We ability the future risks performance this factors statements may previous forward-looking on filings update certain our could

in as as our at website U.S. report on Canada, X-K database Ceridian Form the and quarter Our in Form current year the the database well X-K fourth the release. on Investor full EDGAR investors.ceridian.com. SEC's The contains SEDAR earnings and will on available Relations be

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

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

David Ossip

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

customers for XXXX. both a a quarter, new quarter from we the very faster, of new currency for taken Dayforce are GAAP basis. to currency XX% on $XXX the records a on pleased of grew up total excluding the live. even Dayforce fourth revenue on revenue We and value basis. and and total XX% revenue, constant value of sales In the set up And XX% fourth million constant with grew was float the basis results

saw only float by On the Dayforce excluding recurring X,XXX and live, customer average Dayforce customer. and were already up on a both we also major recurring global success to XX% revenue, XX% our revenue Dayforce And live in on enterprise, was the a side, a million. sale GAAP on ended and add-on currency live, increase more up driven markets Dayforce with than and revenue customers Not constant revenue a basis. customers quarter per GAAP constant increased the basis. $XXX,XXX more basis on global and the XX% in customers. increases XX% currency segments by Dayforce do to active but basis We have of X.X increase per users we saw we to XX% This

to deal enterprise, Australia, new of primarily a by of driven compared sale grew XXXX. average And sales, in The XXXX we XX%, average U.K. grew size more than where size the XXX%. global and growth deal saw XXX% in by by

customers. EBITDA we been of over fourth improving margin to in cloud In year. an Benefit negative margin management. sales from and are points was standpoint, In XX.X%; last gross $XX.X expanded was that X.X%. Successful support approximately over additional X.X% of our has launches a fourth been quarter a addition, decision positive product positive, million, other XX.X% recurring to quarter, year-over-year professional services pleased management very of XXXX to to of has increase and a our services sold and module basis learning decision From the functionality Dayforce the XXXX existing XX% sold gross sales adjusted compared support profitability XXX were customers, to benefit during include to and learning XXX customers. XXX

Moving on to development. product

Our development, fourth X.X% to $XX.X expense software and investment including capitalized XXXX. of quarter, and fourth XX% quarter development or of during compared development of million the the revenue, was research product in an increase

previously year-end. shortly, areas we we'll Dayforce so Wallet, do hundred throughout discussed, customers initial to continue live investment we customer will include XXXX, and investments in XXXX. of growth to begin which accelerated As several expect Dayforce The and implementation have by

currently hub. And breadth Another engagement area as of and investment payroll are strong new additional modules poll now engines the expect and with area have such surveys, major customers Dayforce surveys intelligence We of payroll and for U.K., Zealand. Canada, live several building is Mexico Ireland, traction employee the final Australia in with including the client New we markets. for payroll is Dayforce major Mauritius. of native U.S., base. the We and global investment Germany, expanding have already benefit And the building engagement and countries, offering, six across

We expect XX to have within native for years. a payroll countries few over

XXX seven in coverage payroll provide who of global we us addition, a In partners, network countries. have with

HR, platform, time, and one October, to for and the components marketing suite. million payroll to into company's with we platform a on the quarter. Moving capabilities expenses of to key December, In $XX.X to service moving enhance of a with to The up a the company $X.X from our about flexibility, largest entire for approximately integrate for premier its deal the was sales Canadian a history providing and grow the an broke U.S. the bring strategic employees, single commission efficiencies core in XX,XXX XX% revenue, XXX,XXX systems another using legacy fourth fourth cloud will Dayforce Tier fourth and is other Dayforce and employees. million, single talent over the that with were record. other legacy while quarter, marketing. HCM and flexibility quarter XX%. wanted set in the its record and their and locations we consulting X,XXX deal company during signed by quick won increase we homegrown In represents new on-premise we Dayforce systems. when sales restaurant consistently revenue This Dayforce. investments sales solution from largest of continuation In for Sales record in HCM revenue or popular history, a

Additionally, locations, functionality allowing Dayforce its workforce, increase and helping maintain all to and mitigate throughout efficiency restaurant HR while company compliance the will to consolidate engagement its improve for risk.

more in more In integrated employees. than seasonal food X,XXX these operators, specialty with with manufacturer XX,XXX X,XXX employees large such X,XXX employees, had company nearly U.S. addition than to with two than with a and X,XXX a plastics with amusement we in U.K. management large more more a the wins, many and successes, healthcare employees, park of other the also record two than as other business the employees one

are Customer responsibilities, lead to customer take turn as services, making Officer, We Armstrong reporting to we implementation, I to organizational call the including customer I In COO, continue Global our changes global to personnel for capacity, and promoted Arthur, Chris Chris support, Before structure some our optimize Office, support on discuss our have Customer aggressive will organization. to as over President relationships. our the back-office Turner. growth and professional we additional Chief want this to targets we Leagh operations

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

Arthur Gitajn

solution our talk a to I'm highlights minutes market, I'm basis, everyone. full David, fourth Powerpay Thank fourth going evening, declined constant by few take of increased to XX.X% our The then and revenue some to $XXX.X On going currency $XX.X in good Dayforce on revenue the due provide our a the financial a for quarter about million. business you, On to results million and quarter XXXX $XX.X year for XXXX. small platform year. Revenue Powerpay first payroll and XXXX year-over-year fourth basis, Revenue the of from XXXX higher Powerpay, HR HCM Starting results. flagship cloud X.X% Canadian our or from X.X%. by provide increased is financial currency the decline declined financial XX.X%. guidance with I'll quarter quarter finally, results. Dayforce to primarily million. to XXXX And our constant revenue full cloud

fact a and number million, and $XXX.X revenue quarter And processed by Monday from XXXX of from Powerpay December or includes Dayforce XXXX. increased spoke XX, million. revenue in our and both first As constant also total which includes customers revenue XX.X%. XX.X% year, $XX.X Powerpay, XX.X%. to million a XXXX Bureau their XXXX revenue, constant cloud solutions, last cloud about fourth increased total a which On basis, to currency or increased basis, XX.X% benefited on by both a revenue, we Cloud $XXX.X and currency was million the $XX payroll revenue that increased

XXXX for assumed exchange to guidance a dollar Our Canadian rate dollar $X.XX. of U.S.

$XX.X adjusted range guidance $XX.X by in revenue guidance on exceeded the range. million to the quarter basis. cloud million the high the $XX migrating of a our professional services recurring the in million $XXX And million, range range revenue million increase customers EBITDA dollar, $X.X other services exceeded increase with weakened by during high million was total of dollar million our revenue our revenue, fourth against the right the high guidance the $X.X came effect Total the million increase constant was quarter Cloud XX.X% million Of end Canadian and exchange $X.X for by Canadian a revenue in cloud $XXX guidance $X.X of Dayforce. million. The and quarter, million $X.X end in XX.X% the in average million $XXX our the revenue to of or of million. had million to fourth revenue. revenue cloud which constant Bureau a $XX to dollar end cloud middle to reducing the attributable currency and An currency by by by was of XX% $XXX basis, $X.XX. cloud a Even rate in cloud and weaker driven exceeded U.S. $X.X on

of declined to million our was which with revenue from Excluding line by migrations or expectations. the in $X Dayforce, Bureau solutions XX.X%, impact

yield XXXX. XXXX. in of XXXX our accounted the float in fourth year. compared was quarter the the XXXX, a for compared in compared The balance fourth quarter to Cloud decline to yield our $X.XX of in customer the quarter during X.XX% to revenue funds The billion basis was fourth fourth the $X.XX quarter for points last average billion XX% of of XX% quarter float our of approximately fourth the trust total during the quarter balance of eight average on fourth revenue average

the The invested to funds as customer customer from December of billion million was as balance of the trust billion fourth compared compared $X.X of XX, XXXX. of to quarter result, of As sheet $XX.X XXXX, million in was quarter in income trust $XX.X XX, funds fourth a value December XXXX $X.X XXXX.

expand during quarter. our to fourth continue the gross margins We

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

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

and to We $XX.X XX.X% Product growth by marketing and research development to invest long-term support $X.X in in expenses and development and million or million. management Dayforce. sales increased in continued to

EBITDA from expenses as $X.X million G&A XX.X% to $XX.X $X.X the quarter to expenses capitalized and million. million addition, increased software attributable XX%. million percent and by million, $XX.X $X.X increased million. X.X% $X.X to fourth to last marketing year increased from Adjusted $XX.X to $X.X million, in to expenses or compensation or and revenue million increased marketing sales primarily development share-based of million In increased Sales costs million. by of XX% a $X.X increased $X.X

decline And in XXX approximately basis primarily growth to and and points the marketing. due XX.X% from adjusted EBITDA margin revenue declined in sales to percentage XX%, float investments

XX.X%. revenue basis, $XXX.X from Dayforce XX.X% Turning payroll revenue constant to XXXX results. compared by XX% impact our increased went XXXX. up currency during to XXXX, X.X% market, includes to or million from revenue constant Cloud to full by million. or and solution revenue cloud now $XXX.X for million retention end HCM revenue, solutions, our to of or basis, live annualized million XXXX XXXX. cloud increased small a $XXX from increased basis, XXXX, constant XX.X% in includes platform on million. revenue, million Annual which or and year a Revenue customers Bureau $XXX.X On both recurring cloud total a revenue XX.X% year financial by million And $XX.X both $XXX.X from $XXX.X who full or our at a on recurring revenue, Revenue X.X%. HR the in of by Cloud business our increased On million. revenue currency XX.X%. Canadian million. annualized which in Powerpay, total XX.X% revenue Powerpay, currency increased Powerpay includes basis, to ARR, $XX.X Dayforce which Dayforce Cloud And increased was the constant flagship declined currency and cloud XX.X% And $XXX XX.X%. was the increased

We expand during margins continued to XXXX.

our services recurring XXXX XX.X%, Cloud from X% in in to other and improved on and professional on from negative services XXXX. XX.X% margin increased in negative gross margin gross XX.X% Our a to XXXX

adjusted increased Adjusted points $XX million, diluted EBITDA XXXX XX% of $XXX.X and increased in million $X.XX share income expanded for per Adjusted basis by XX EBITDA year-over-year. to net to XX.X% or XX.X% XXXX. margin

to Moving sheet. the balance

obligations of million had $XXX.X $XX.X an XXXX, XXXX. compared as our increase in we million equivalents total debt XX, $X.X of and million, million, XXXX, financing cash primarily due December to increase of lease an XX, And December of million was $XXX.X XXXX. December of As XX, $XX.X of cash to

to net XXXX. Our December was XXXX as of X.Xx leverage of ratio as XX, X.Xx December compared XX,

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

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

Canada federal in U.S. funds assumes First, the during rates changes guidance our XXXX. or no the of rates Bank

any or So Fed impact guidance. Canada year our funds changes during will of the Bank

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

to USD impact during revenue expand globally, beginning for to the we basis in CADX.XX. for prior rates CADX.XX foreign rates on XXXX, currency XXXX with and does foreign change Second, constant the growth presented, using to fixed a X USD as all currency Instead XXXX, exchange which on impact was XXXX, revenue quarter X this average effect way comparable simplify note in disclosures disclosures our calculate a period. will of exchange the currency applicable reflect exchange we using that Please changing the a not constant first reporting of we're of we basis results. on recalculating report fluctuations periods rate the constant

related As to the it reported. guidance based be subsequent during disclose recent quarter guidance on based guidance, foreign average foreign rates fiscal change guidance the to most foreign issuing the fiscal any most exchange rates we'll and in periods, the relates fluctuations. impact exchange will during average the of quarter In exchange our update recent on reported we'll

reflects currency the was our year of quarter first to X So CADX.XX. guidance in which effect full foreign and quarter XXXX XXXX, fourth during USD rates exchange

guidance. moving year XXXX to Now full the

increase basis. the basis million on to currency constant XX% Dayforce XX% revenue and approximately million, expect $XXX the an both of $XXX We GAAP to of

both to basis. XX% the on currency expected float Dayforce is and to Excluding GAAP basis constant grow approximately revenue the XX% revenue,

of to both basis. expect of on We currency $XXX basis million the million to or and GAAP an revenue cloud $XXX increase XX% constant approximately XX% the

Excluding basis currency to to expected a basis. float XX% GAAP XX% cloud revenue, approximately grow on is constant revenue and approximately a on XX%

$XXX $XXX and GAAP million of on basis. revenue approximately basis an total currency of to the constant the increase both expect We million XX% or

and Excluding currency on constant total to GAAP XX% grow the basis both revenue, basis. approximately is the to float revenue expected XX%

revenue million in in total revenue. to revenue million revenue. be Dayforce $XXX decline growth, million to will million total of million XXXX expect be million is $XX expansion acceleration represent enterprise increase or reflected to Of cloud will compared X%. total We float adjusted segment drive $XX XXXX be an revenue, investments float Reflecting EBITDA Wallet, future reflected to the expected of Dayforce float $XXX in which X% of to a in $XX.X including the and globally, million $XX and approximately of XXXX, would the $XX in a

approximately revenue, float grow adjusted EBITDA Excluding to XX%. to is expected XX%

you approximately depreciation approximately an the rate year $XX share, we to and federal expect $XX and erosion per those quarter. the for of year per and million the million of amortization Total XX%, average our million or million of reflects plus $X of for new for to of weighted impact earnings For and expense approximately statutory approximately estimated million modeling net tax year; of tax which of approximately XX% the $XXX full diluted XX%, outstanding interest $X shares anti-abuse for the quarter. $XXX state first the base million U.S. effective rate

both the basis. increase $XXX to a XX% basis of million $XXX an XXXX, a Dayforce GAAP first million of expect of and or to For constant we revenue approximately XX% quarter on currency

a Dayforce XX% approximately basis. revenue, and GAAP constant is currency a revenue to on float grow expected both to XX% Excluding basis

of to We a basis expect on $XXX XX% currency GAAP basis. approximately $XXX million both increase cloud constant and million an or a of to revenue XX%

constant approximately and XX% float on to basis. GAAP to XX% expected XX% grow cloud is revenue approximately XX% a basis on revenue, currency a Excluding to

revenue X% increase basis a to basis. approximately a constant to of to an currency million We XX% expect GAAP $XXX or of and X% on $XXX X% million on total

Excluding to to XX% is float and approximately basis revenue, to total basis. a currency XX% XX% revenue on grow on expected constant XX% a GAAP

float adjusted to QX we revenue And within will Dayforce revenue. revenue million of $XX We $XX approximately to million which cloud million, $XX and expect be of expect decline reflected reflected X% a in $XX total of $XX million EBITDA be X%. million, will of

expected XX%. adjusted X% grow between Excluding revenue, and EBITDA float is to

going this remarks. to back to call time, some David I'm At concluding the for hand

David Ossip

would like before open Thanks, we to few things speak Arthur. about I a up it questions. to

we'll in and so earlier, throughout As accelerated do to we I mentioned XXXX investments the continue XXXX.

we just While XXXX performance flows XXXX, in the Arthur impact to float as almost the headwind we includes revenue float bottom approximately a as the issued we the revenue provide in three results, Because adjusted excluding the EBITDA business, anticipate clarity rate our Fed million. income around the benefited of with X-K are guidance from first float. of of of we guidance providing line, quarters increases and float XXXX $XX of To without an float December showing impact covered, XXXX, our And income. well. headwind of directly the

adjusted Excluding is guidance the float, compared we at XXXX. end of expect XX% which to to an top by EBITDA XX% year-over-year, to acceleration grow

to On moving aggressive are reflected is strategy, in million the this and an guidance. we end-of-life Bureau side, $XXX our

in in focused Finally, support services massive the we we continuing our see are areas. investments opportunity of development, to sales and product amount

services; Dayforce our revenue revenue healthcare, our adjusted finally, HR, we retail, first, into XX%. $X margins IPO, per building of existing customers winning fourth, since longer third, globally are as countries; the The client enterprise Our XXXX of adjacent major that by management and services, more markets, up moving hospitality, Consistent professional such more in we will strategy verticals, core manufacturing, the market confident growth and in with including platform; financial functionality expanding Dayforce includes: in messaging term, and to EBITDA exceed into recurring payroll second, by adding government capability for markets; workforce new and our billion more exceed Wallet. extending increasing

line that, you. will to With ask open the the Thank I operator up to questions.

Operator

Nandan comes with [Operator first of Thank from the you. Guggenheim Amladi Your Partners. Instructions] question line

open. is line Your

Nandan Amladi

my Thanks for question. taking

drop customers moving migrate for that mentioned you to pretty many are guidance moved the sharp saw quarter. of We How the the off. aggressive you're of toward So more end-of-life? to the cadence fourth $XXX all at end-of-life. in you this that implies million successfully? just Bureau that changed able those of as a Has David, you've

David Ossip

to if If the constant guidance on see Well, as XXXX. into see, that has can quarters amount the four we -- from last the Cloud migrated we've continue that a at the Bureau right. rather All the you'll you over you and look with been between, given dollar look at the remaining that basis which million, $XX for $XXX say, remember, a million, the stand-alone there $XX the for in $XXX million there's Bureau which small delta. a payroll and is about business, business is half million Bureau accounts cloud product, the there business, that, insight for and then are we've of

the left aggressive strategy. Bureau is a isn't sense does and reality a perspective, compliance it maintenance have the from And So end-of-life much that in there from make the that to perspective payroll business.

Nandan Amladi

the a in And the is terms is cycle customer so markets motion Okay. then market, on? selling you're follow-up a this on you're the different the of How after, and sales entering, in of both topic. that going the different size international international

David Ossip

average we're on is size business seen the than very global XXX% of year-over-year. we global look a grow see we larger growth business, North We've what obviously that probably happy. average than the the in America. of bit If the So little accounts at by

see sales America. of what is cycles, in we quite to terms North In consistent

Operator

you. Thank

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

open. is line Your

Samad Samana

evening, Hi, for thanks taking my good and questions.

I think in we were recurring ex expecting I So based David, in float acceleration the on quarter. one think, the quarter, last further of Dayforce that, things revenue fourth

as but reconcile maybe curious just customer And kiosk slowdown? color what that we'd as maybe drove a some that XXXX a it, deceleration if Dayforce growth? does revenue delays, it's know And quite love just question, recurring was we timing had revenue the investments how impact jump in I well. accelerating? export If fourth possible. I'm do how the are on there quarter So any long

David Ossip

Sure.

business, XX.X%. at So business. In look ago, the year accelerated an to XX.X% the If look we On recurring obviously, XX.X% let's before. dramatically the float in the a revenue quarter, year 'XX, at quite ex and the QX at in up float of XX.X%. the total were from came ex we on Dayforce Dayforce just basis, Dayforce overall we

So gives that little basis. XXX a some year-over-year. are the bit get from basis, and quarter-over-quarter On an to a there takes complicated acceleration XXX

can the in Some without services in between revenue recurring. Dayforce effectively see you in, Dayforce would in and movement fact, between total that the of with the very the Dayforce and we overall, professional say well Dayforce But I the float. recurring are happy as or revenue with

Samad Samana

And Great. on-demand sounds a impacting excited bit, it is you expectations That's that into already helpful. your the hundreds then results? what expanding we switching And have on embedded eventually maybe customers should that. guidance? side, think How -- little revenue the about mentioning gears just of pay quite about the like company

David Ossip

sure. Yes,

Dayforce be of as Wallets it of So going that in $X we've XXXX, I more it I the are million, the almost expect guidance the year dollars investment look to XXXX year-over-year, come and largely the investments it's to in that's would from time reflected we've more the XXXX. previously, into that Dayforce given. at an terms benefit Wallet. than mentioned frame, really up when so in investment comes to the EBITDA see If

is live that customers year hundred high, exceptionally expect the will on several QX. I on I've of implementations Dayforce the would of to and started going group Wallet, mentioned, end just with the end after In terms progress Dayforce the first Wallet for be Wallet. Dayforce the The us live for demand we've the as

Operator

from of Jester comes Your Citi. next the Daniel question with line

is Your open. line

Daniel Jester

you Thank couple ones taking Maybe me. of quick just a question. Great. for for my

contract? of don't First, with from the to be we growth you fall? able I the -- like And of it in it looks speaking then for thinking any math from kind Powerpay, quick Canada, a have the your did, the there. baked of secondly, looks are about XXXX that there, regards should the government And for to XXXX lot you could revenues to be kind guidance, like how share expectations cadence you would Canadian what updates

that? be wondering kind update we So you for thinking us I'm if just should can about how of

David Ossip

Sure.

On too Canadian the it's early to still tell. government,

terms perspective, we'd I a will assignment Ottawa shortly. requirements task the government be in on decision the of a by three expect to will the and year that which this the qualified believe, is Powerpay, QX, remember doing in us. in vendors, about week QX. put of half the the oral government processing we followed million fallen process As last usually presentations, have had that that out And team That, revenue will in final several that includes $X first to other bid make would

a if perspective, the growth business look year-over-year we the at other consistent saw slight it actual So quarters what from we in we had in Powerpay of kind with the in year.

next single-digit it of a yes, year, low terms will grower. be In

Operator

Thank you.

Your next Mizuho. comes of question line from the Siti with Panigrahi

Your line is open.

Siti Panigrahi

this think sell-side segment. up. into definite Thanks share has for gone taking more you as about the leverage my into Could performance And question. you I quarter? just dig the want to Enterprise XXXX,

expectation that your what's segment? from So

David Ossip

the the specifically, So overall, size look the wins of If significant we I significantly size had you went can customer at by see XXX% that quarter, year-over-year. that In the some the amusement the year-over-year. over aren't segment, average has players increased up the quite with of deal XX,XXX about employees. a average signed enterprise and locations revenue We yet industry. employees. numbers. well-known in one consulting We reflected signed XXX,XXX company with Tier park in quick number We signed a over service a about restaurant X,XXX

of One in with employees XX,XXX them total. about

QX, -- in And you was year-over-year, year-over-year. we're customer, $XXX,XXX average at size, added you client, the revenue up increased that's market. per been you into client. if that look look I done terms up $XXX,XXX see average up. the per per XX% well deal to revenue up we've year, this revenue average we've we're year can at gone moving the incremental the has Dayforce of So incremental tremendously look in obviously If When it last at in and the

next So trend that going year, into I would expect to continue.

Operator

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

is Your open. line

Mark Marcon

and afternoon, thanks taking my questions. Good for

as growth trajectory But we expectations, revenue the reiterated all opportunities different we're the or priority mentioned of the setting on head should How margin about is should billion to of that think XXXX. the we we target lots there's You you when for given areas think invest. that and $X there? Obviously, about how have?

David Ossip

as XXXX begins Wallet last earlier, in in year. mentioned additional an that Wallet the will really about without So in number versus the $X Wallet, I the reverse million the growth largely XXXX. benefits Dayforce Dayforce That I we are from XXXX. mentioned investment investing into seeing is obviously come revenue the XXXX. which in year Dayforce to

$X see future once should we've given improving years. guidance XXXX. of as as EBITDA bit we the the we go revenue margins We to remain in as that EBITDA expect XXXX, that again remain long-term just consistent with the XX%, market, the we exceeding quite lagged -- margins pointed a billion. we up And throughout $X long-term out, the with would little you you Mark, billion exceed mentioned So into

Mark Marcon

Great. color line Bureau, And us just with end-of-life then little can on time bit a to the more the give regards strategy there? for you

David Ossip

take for about million? migrating you numbers look $X million $XXX product, that Jeremy, somewhere million Well, around or tax, say, it for out, subtract small and $XX given $XX so the for year, the backwards, what about -- again, at the million, is $XXX if another you business you the million we're

Jeremy Johnson

A quarter.

David Ossip

that to A end-of-life. quarter. the there's in the end not of At left year, bureau much

Mark Marcon

future And really wins of is you're about who who Can it. of there any then against wins. talk from? toward look mentioned impressive the change came number a terms you you up as going composition opportunities? in you Got of those And

David Ossip

at components we deals, When particular these of probably into types more the of there used that clients. legacy is go those are larger

a were wasn't point they another solution. I to it service moving restaurant, from to had was? company, and believe cloud payroll you solution they do I replacing, that we if their tried legacy The implement that quick are So Jeremy, who believe case, know consulting I the successful that in

Jeremy Johnson

I don't no. know. No,

David Ossip

Yes.

kind solution they it's think I legacy of had beforehand. that a

Mark Marcon

the for Thanks color. Right.

Operator

Cantor next line from comes Your Kootman Fitzgerald. of question Drew the with

is open. line Your

Drew Kootman

around the years, curious, kind that? Hey, big five to think if for Longer thanks just wallet. going taking penetration? of it was term, look we question.I three, back anything could be my how the you Just with

David Ossip

Well, of about earnings say, from total the look it year, of move net payroll billion funds to if know, at $XXX out as potential, paid the half $XXX around we billion is employees. a that, we in you

we make previously, on wallet. As the we've about discussed to on spend X.X% expect all

really lot at $X.X and its revenue. XXX%. reach you're $XXX line. penetration, worth XX% million increase at obviously, about will top for won't bottom billion potentially looking it So take But a to of and we about we penetration, penetration, of And guess, line every the time XXX% of

start As more that. we once to the based on disclose it, start of people using the are usage we'll get days wallet

Drew Kootman

that And be But looking that. around are for and professional it curious just positive thoughts I your to guys forward. you that margin. I flattish services the Perfect. know gross guys you moving were looking now? then moving at was what forward know But talked about just

David Ossip

million. to us So in XX% the took revenue. saw for revenue on by at the as year professional services, of other of year-over-year, and we up a reflected in In to of we record you tremendous services a amount look jumped $XX.X was was QX of jump If that $XX.X obviously, terms live QX, professional it in last is it million. recurring well. which That new 'XX, really QX

In over terms X.X% year. tremendous progress XX.X% the group, this went other profitability positive -- on also being that effectively year negative the to professional gross from there. and again, sorry, to margin services of of negative We last

up expect really, to really around breakeven. terms a On of it So go-forward basis, XXXX, I really in would be nicely.

Operator

Thank you.

with Scott Berg question of Your next comes line the from Needham.

open. is line Your

Scott Berg

with strong on that Was record dig that comments sales modules selling seats? the a do everyone, last more you value driven bit. little driven Or customers your -- it's that you them quarter hoping of on more think released was a into two several new incremental quarter. by you of the I sales, in the Hi, of years? adoption larger three a now could over sales to the Congrats or just David, by you've lot

David Ossip

already there. In at are features If at lot payroll the of a consulting the sold looking adoption So the of restaurants, you look it's that quick a it's combination that I now we over of we deal have case inside largely of our organization, platform. the service a both.

when to populations. year see bigger employee as for example, the XXXX, came However, of you had that employees, it wins we Last progressed can you record at that would if number. the restaurant, we would But headcount. a amusement terms when have bigger service the have in employee at employee said and Xx been year, of almost look a quick I XX,XXX you're the park in number look

So the both. it's is answer

Scott Berg

in then the all help or shown Do is initial wanted of And be see customers or would any to have can those interest from. on maybe coming the questions you anything commonalities employees, us in that your Helpful. you the where understand wallets. industry about product have interest it. across there Got But it type unique today, another something helpful? if several size an also

David Ossip

shows gamut. the It's I of large we've beforehand the doesn't the all struggled internally across And lot XX% studies also seeing individual seeing a I've common -- people come a generally across being small about part it about have showing part-time all a all salaried spoken really and of studies in from We're point employees. is as it's across the finances, their organizations this hourly hourly pain we're bridge timer, or salary, the well. really there that relatively a organizations, market uptick a but right in paycheck-to-paycheck done to publicly interest. that seen have

Scott Berg

queue. Super helpful in back jump the

Operator

next Lenshow of Your the with question comes Barclays. from Raimo line

is open. line Your

Raimo Lenshow

was question that customers, that big way, then look mean say bigger Because will Big from people large customers? just the going the In you see wins of call the very going -- are question than A for there? on number in I Coffee what there and additions have adds you. the next And etc. on I in can And lot what's of will there. people markets also basically what Thank around, the a kind can past? -- of you does the got the The in lot U.K., like that I'm it going implementations the and you one chain, a go-lives of answered for a I like, of How customer like a couple like lower QX. international sure had be there slower the on customer

David Ossip

Great.

previously, the in is them of year. first terms going we've So half which expect of to the implementation this would obviously, very go well. coffee, in discussed to I live cost

few they a live. months, in should just So be

I the think of the implementation. progress happy with they're very

In Jeremy, we terms of the move up customer market, in as to yes, of added, QX if customers the year XXX this I look XXX. compared account, at

now, versus you XXX,XXX up of in XXX,XXX have employees the we users the look at we're XXXX that live users system number the took on if we XXXX. active However, in

right, customers the So XX% XX we've more smaller per than of employees again, up obviously increased the that's live, year-over-year -- It's that. in up XX% revenue trailing by add is a to XXX. the on number It's reflected customer, incremental XXX to versus XX% And taken actually, it's that both is in reflected overall. also Dayforce by XX customer, $XXX,XXX. which Dayforce per months revenue on

Operator

next with comes line of the from JP Your question Murphy Mark Morgan.

open. Your line is

Matt Coss

Hi, good Murphy. Coss behalf Mark of afternoon. is on Matt This

or native a savings build build-outs? expect and build out as can countries? some dollar investment that you you Or require this As learnings you native time there and Mexico do to is similar and these for of leverage out prior payroll Germany to you Mauritius, compared for payroll length

David Ossip

question. that's a great So actually

of our in very also other in establish R&D there build to our well countries expenditures as active the grow but global two we're the -- in that countries new said, in incremental the and only and those Mauritius, is look in outside that Canada And to I those plus to continuing as it's operation the for at invest to is investment sales plus spend of and U.S. countries, year, four reflected out XXXX. an as the -- in. in an I compared if which, really So about EBITDA not additional XXXX, investment guidance, $XX million

Matt Coss

And helpful. in services margin the kudos can state services forward, pro again, side, we That's going there the pro or services a gross expect on sort for growth steady Is on of margins. Okay. professional that the gross roughly? ceiling a

David Ossip

a it on basis model would going I breakeven forward.

Operator

you. Thank

the of with question Pfau Blair. next comes Your William Matt from line

Your line is open.

Matt Pfau

thanks guys, my question. Hey taking for

then acquisition out? business playing strategy ask Is in your And to business gain thoughts how to on the Australia is Just and your wanted foothold RITEQ are to thesis that on acquisition what with countries? that use the a additional continuing progressing?

David Ossip

forward, -- expert expertise We're the a component have workforce pleased component, acquisition acquisition. we In typically component. had required of RITEQ business, people would that global for talented Australia look typical management and a really with going management. continue were the acquisition of on our growing who a the New Zealand progress Dayforce to the footprint. very RITEQ Remember, the workforce large acquiring only we with that not would payroll And

to somewhat different it's acquisition. RITEQ So the

Matt Pfau

Right.

I lot. all So had that's a guys. Thanks

Operator

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

open. line Your is

Brad Zelnick

on Awesome. seem mentioned Thank for in is differentiated and Can only recently their the and acquisition-led David, and understand yours your all why from offering strategy They international on international And to of XX% that's international? help us you differ how so much just HCM who pursuing success. footprint strategy. the displacing? competitor pure-play in you may size you're international. other fitting growth. the congrats me about Kronos be

David Ossip

a really global management. Sure. is on Remember, basis Kronos, workforce

at do and global we majority native I moment world. connected Of population engine the look another any in Kronos and of for accounts active attendance partnership gives of as countries of globally. six a We're dozens is on has well us the at time. scheduling. workforce not we had And working countries, the at coverage our -- management partners Dayforce which seven the that payroll when some active through the which, moment. in have pay, XXX time with that basis, whereas Dayforce in we've our quite So countries for global capabilities we believe

think quite I So we're differentiated.

migrate acquisition Dayforce cuts an native which to a that be companies on including strategy, their capabilities. across global that presence acquisition time, solution their on system, tax that all acquire customers and strategy management, terms right have In legacy capital effectively over is our the human and but to would of technology payroll single have salespeople

Brad Zelnick

Yes.

new you've you quickly and of fact, we In over their Are got to how up RITEQ that customers migrated pre-existing noticed platform localized? all the XXX now running. integrated

David Ossip

are customers customers, management do their with And remember, RITEQ time No, that. take the only. workforce to it will some

to the Dayforce implementation an But platform. resources onto there's for New have we and not team. R&D but RITEQ So also in leveraging Zealand, the Dayforce capacity them Australia the the are integrated capability people, upsell also move into been R&D only

Brad Zelnick

other? if is wide float I guide, in adjusted appreciate XXXX margin compression range, a to EBITDA the here. investment But your be look greatest time good a it at float way ex would this margin comments just It's of philosophy to an just swing to consider sneak the can you a you If of a looking time perhaps even XX% one that have And again, factors that fairly give what could versus to from and expansion. us ex sense And the that priorities range I see when that the XX%. investment remind And the considering and investment revenue quick one would the again, follow-up anywhere us payback? ranging of, you I the year. line

David Ossip

Sure.

regularly I additional the a put vertical, year Wallet. additional If at of little over a of on R&D in invest this probably the there's government business. we guidance, we're an Dayforce if expense $X to there's that So effort done bit an break look million investment additional into in today about $XX almost out, call and in what million is were $X that. million we've I've the the investing which EBITDA it that I would above And

global or spread and of active which additional U.S. Canada. above sales between operations, countries countries side, spend, $XX I as we the of have is On it's marketing four R&D, outside that and mentioned, million given six

is investment million of go currently it's for three is we're as outside go certain again, might as enterprise verticals. then mentioned, $X points. beyond we to to a our the margins The a outside with and deeper float. is XX well. sales flat headwinds the enterprise-specific for see, basis of EBITDA industries that We playing, about side have an investing team we're year. the increase to in effectively -- particular XX the another the year of as EBITDA another you hold XX% about in And we this margin. in year We strategy out out those marketing XXXX, business, trajectory the above which building continue then wider intent this building slight long-term to that We're features in that building also And we'll and bit there

Brad Zelnick

appreciate and questions. taking you much the so Thanks

Operator

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

Your line open. is

Chris Merwin

squeezing Thank me you on here. for

to driver. couple a of obviously, a called we I a XXX It But really healthy you for back growth as was as know just you've out guess, I bit. bring So on as And growth larger questions. services? for customers, is see more you paying on bring pretty should year? the say XXXX, it continue we to in strong of there. that those they're fair segment large significantly come continuing for kind you the customers to services that seen in

David Ossip

inside, So number of lines. are a look at there remember, when services, we

already is services professional that to live. customers have are which You services,

clocks, went you look which You on the activations, It to 'XX, is from XX%. also an from taking to the went the we are the we hardware clocks we you'll from have services professional And breakdown then of If and of QX And quarter that to effectively live. see customers same. that at sell. XX% effectively the was XX%, had which clock XX% quarter. down of in inside XX% activations increase with XX% kind have

that's, as are see As are growth obviously, expect to the more to services on we customers already go that would I using continue customers professional continue forward, to products. the live, live more

continue the We'll see those and an activations to there's we go to customers. increases in services So forward. sell as need to opportunity

in So business, dollar really to would basis, year. it clock an expect that around I to a XX% you'll basis, of increase mix range kind that QX of down And from and that. to in comes the see the a of from continue future a continue

Chris Merwin

Great. sales And more just one on efficiency. then

tailwind in and are percentage you actually segment the go continue after mid-market efficiency as a that efficiency seeing to a that you mix, time? logos, enterprise be in As grows these sales have could as large you same of as to with the

David Ossip

a XXX particular 'XX. going and to about QX, deals. XX%. continue paid it largely sales of Well, about expect we reflects up marketing that in I is the record forward. and that it's to for the QX And on and efficiency, efficient That had was we quarter, sales our we'll basis commissions marketing relative because those sales sales out points on be

Chris Merwin

Thank you.

Operator

further time, gentlemen, and at there concludes you call, you. thank questions conference now this no today's Ladies disconnect, are may this

Dayforce (DAY) 5 Feb 202019 Q4 Earnings call transcript