The paragraph is an introduction to Dayforce’s First Quarter 2025 Earnings Conference Call and Webcast, hosted by the operator and David Niederman, Vice President of Investor Relations. Participants on the call include CEO David Ossip, CFO Jeremy Johnson, Strategy, Product and Technology Officer Joe Korngiebel, and President and COO Steve Holdridge. The call may feature forward-looking statements with associated risks and will reference non-GAAP financial measures. Relevant documents and a replay of the call will be available on the Dayforce Investor Relations website. David Ossip starts by discussing the company's results and future outlook, followed by Jeremy Johnson providing further financial details and guidance.

The company's sales momentum has continued strongly from the previous year, with the first-quarter total revenue reaching $482 million, a 14% increase on a constant currency basis. Dayforce recurring revenue grew 16%, and the adjusted EBITDA margin improved to 32.5%. Free cash flow rose significantly compared to the previous year. The company's HCM software, Dayforce, which consolidates various applications into one, remains attractive to customers for its ability to streamline operations and deliver ROI, even during economic uncertainty. The sales team achieved outstanding results with the best first quarter in the company's history, and expectations are high for continued strong bookings in the first half of 2025. Sales growth was robust across segments and geographies, with existing customer sales increasing by 30%.

In the first quarter, the company achieved significant business wins, securing the Dayforce suite as the HCM solution for several major clients across various sectors, supporting tens of thousands of employees. The number of live Dayforce customers grew by 5.4% to 6,929, with an 11.5% increase in recurring revenue per customer. Partner efforts, particularly with system integrators, exceeded expectations, and a new partnership with Microsoft was announced, placing Dayforce on the Azure marketplace. On the product side, the company successfully extended its AI copilot feature to iOS and Android apps, with 50% of new deals including it.

The paragraph discusses recent enhancements and updates made by the company, such as improvements to talent modules, learning and recruiting workflows, and new direct-to-bank features in Dayforce Wallet. Compliance remains a priority, with new features for compensation management and adherence to statutory requirements in various countries. The engagement with the Canadian government continues, with a 15-month contract extension for configuration work. Jeremy Johnson then reports on the company's strong first-quarter financial results, highlighting top-line revenue growth and expanding cash flow margins. The company has updated its financial reporting format, removing certain details and simplifying revenue categories, and will no longer refer to "cloud" revenue or profitability, since 96% of recurring revenue is from Dayforce or Powerpay.

The paragraph outlines the financial performance and strategic initiatives of a company for the first quarter. The company reported a total revenue of $481.8 million, reflecting an increase both on a GAAP and constant currency basis. Key highlights include a 15% increase in total revenue excluding float, a 14.4% rise in Dayforce recurring revenue, and a significant increase in professional services revenue. The company achieved an operating profit of $31 million and a notable improvement in free cash flow. Additionally, an efficiency plan was announced involving a 5% reduction in global workforce, expected to save $65 million by 2025. A restructuring charge of $29.2 million was incurred for this plan. Furthermore, the company engaged in a share repurchase program, buying back $30.4 million worth of shares during the quarter, contributing to a total return of $66 million to shareholders.

The company anticipates buying shares in 2025 to reduce dilution from stock-based compensation. The first quarter showed strong sales momentum and solid demand, aligning with expectations. Customer retention remains stable, and employment levels are consistent with forecasts, which directly affects revenue due to the company's per-employee billing model. They have minimum contract levels to mitigate risks. Interest rate expectations have shifted, with three rate cuts now anticipated, but first-quarter float revenue exceeded expectations, allowing the company to maintain its full-year guidance. They foresee mid- to low single-digit growth in average balances and a 3.6% yield. Foreign exchange rates were as expected, though recent tariffs have weakened the U.S. dollar, impacting revenue and expenses.

The company updated its Q2 guidance to reflect average foreign exchange (FX) rates from April, while maintaining the original assumptions for the rest of the year. The guidance includes constant currency growth rates for clarity and indicates that the company is hedged against FX impacts on an EBITDA basis. The full year 2025 constant currency guidance is reiterated, with expected total revenue of $1.929 billion to $1.944 billion and varying growth figures for different revenue streams. For Q2, the company forecasts total revenue between $454 million and $460 million, and provides specific growth rates and margins. Following this, the Q&A session begins, with the first question from Siti Panigrahi of Mizuho Securities.

In the article paragraph, David Ossip discusses strong sales performance and customer feedback regarding HR and payroll projects. He highlights that Q1 bookings were strong, aligning with Q4's performance, and April bookings also remained robust. The expectation is for first-half bookings to increase by about 40% year-over-year, which promises confidence for future years. Add-on sales saw a growth of 30% year-over-year, indicating more new customers for Dayforce. There is an emphasis on full suite deals, making up about 50% of total deals, with nearly 100% adoption in major market segments. SI channels and managed offerings are also growing, with SI prime deals at 50% and managed offerings up by 70% year-over-year, but still comprising less than 10% of sales, indicating significant potential for growth.

The paragraph features a discussion between Scott Berg from Needham & Company and David Ossip about the company's recent performance and future outlook. Despite broader economic concerns, the company has not seen any negative impact on buying decisions. They experienced a strong Q4 and Q1 in sales, leading to increased project kickoffs, which boosts their confidence for future growth up to 2026 and beyond. David Ossip notes continued demand in the enterprise segment, highlighting their largest deal ever with a government agency, similar to a previous deal with the government of Canada. The company is successful in selling full suite deals to large enterprises, evidenced by a contract with a company with 62,000 employees. Sales performance remained robust across various segments and regions, persisting into April. Mark Marcon from Baird comments on the improvement in free cash flow margin.

In the article paragraph, Jeremy Johnson explains the company's revenue growth dynamics, stating that in the first quarter, total revenue rose by approximately 14% in constant currency, amounting to a $58 million year-over-year increase. This growth was primarily driven by Dayforce recurring revenue, professional services, and some contributions from add-ons and APJ business migrations. While professional services saw a strong surge of about 50%, it is expected to decelerate in the second quarter. Revenue growth is projected to slow slightly in the second quarter due to seasonality, particularly in Dayforce recurring services, but is expected to pick up in the second half of the year.

The paragraph is part of a conference call discussion involving multiple participants, including Mark Murphy from JPMorgan and Kevin McVeigh from UBS, addressing several topics. Mark Murphy asks about industry trends affected by tariffs, including sectors like airlines and energy providers, and if trade tensions are impacting forward indicators or employment levels. He also inquires if customers can use Azure credits to purchase Dayforce. David Ossip responds that customers can apply their Azure credits, part of a beneficial partnership, and notes no tariff impacts have been observed. Kevin McVeigh then asks about a Canadian contract, querying its extension and financial details, to which David confirms signing a similar federal agency contract in Q1 with another government, akin to the Government of Canada deal.

The paragraph discusses a government contract extension signed by the Government of Canada, worth CAD 105 million (USD 72 million), primarily for services over the next 15 months. The discussion then shifts to a conversation with Samad Samana from Jefferies regarding the company's 2025 guidance. Samana inquires about the factors that might help achieve the higher end of their projected growth range of 15% to 17% constant currency, considering a strong start to 2025. David Ossip explains that their revenue is modeled based on ongoing projects with customers and highlights that strong Q4 and Q1 sales should benefit the second half of the year as portions of the projects go live in October and December for fiscal year '26.

In the discussion, Jeremy Johnson emphasizes that employment levels are a key macro factor, which is currently stable and hasn't impacted expectations. The business is performing well, with strong add-on sales, go-lives, and retention, especially in the wallet segment. Raimo Lenschow from Barclays asks about the timing of go-lives in Q1, noting the impact of Q4's strong performance. David Ossip explains that the timing of go-lives can vary year to year depending on payroll period alignment, which can cause differences in quarterly results. Jared Levine from TD Cowen is introduced next to ask a question.

In the paragraph, Jeremy Johnson discusses the company's recent efficiency plan, highlighting the primary expense items in the income statement and how the company expects to benefit from the plan. He mentions that the plan will result in cost savings of around $65 million in the current year and $80 million annually. There will be a reinvestment of $10 million into specific projects. A nonrecurring restructuring charge of $29 million was incurred in the first quarter, covering severance, employee benefits, and noncash stock compensation. The company aims to leverage general and administrative expenses while improving product, sales, and marketing cost efficiencies. The savings are included in their 2025 guidance, with $11 million in restructuring charges paid in Q1, leaving an $18.6 million liability.

In the article paragraph, David Ossip discusses the company's strong sales and pipeline, with Q1 bookings being robust and expectations for continued strength in Q2. Year-over-year sales are expected to increase by about 40%. Ryan Krieger, filling in for Alex Zukin, asks about the impact of AI, specifically around the Copilot feature, now called the AI assistant. Ossip mentions a 50% attachment rate of the AI assistant to new deals, which is promising. The company plans to launch various AI agents in the domains they operate in, such as HR, payroll, time, and talent, throughout the year, providing opportunities for further revenue or product uplift.

The paragraph highlights the expansion potential within the company's existing customer base of nearly 7,000 clients, focusing on upselling an advanced experience hub with AI capabilities. The company leverages a single database and code base to integrate AI across all levels, benefiting employees and administrators. In the earnings call, Brad Reback from Stifel inquires about improved sales force productivity, questioning if it's due to increased win rates or pipeline growth. David Ossip responds, noting a significant increase in win rates and market resonance with their technology, which includes a unified code base and database, allowing for comprehensive solutions from hiring to retirement. This approach, initiated by Joe three to four years ago, is gaining market traction.

The paragraph discusses the company's success in securing full suite deals in major and enterprise markets, which is contributing to increased win rates and accelerated sales. The company attributes its success to its differentiated approach in its target segments, a robust global payroll operation, and strong managed services, particularly in payroll and benefits, which have seen a 70% year-over-year growth. Effective sales execution, led by Sam, enhances the value proposition for customers, resulting in a strong return on investment and improved customer experience. Additionally, the company is capitalizing on AI advancements due to its well-structured data set and single code base. The narrative ends with optimism about future sales performance. The passage transitions to a question from Daniel Jester of BMO Capital Markets regarding seasonality in free cash flow and a new contract with the Government of Canada, addressed to Jeremy Johnson.

The paragraph discusses the seasonality of free cash flow for a company, noting that the first quarter typically experiences lower free cash flow due to expenses like employee bonuses and annual subscriptions. The company expects this trend to continue as it aims for a 12% free cash flow margin. Regarding a project with the Government of Canada, there is positive progress, which boosts professional services revenue growth. Concerns about recent elections affecting the project have been mitigated, providing reassurance about the revenue stream. During a Q&A, Zane Meehan asks about the utilization of the company's wallet feature by employees, though the paragraph does not provide an answer to this question.

The paragraph discusses a financial product that provides on-demand pay through a digital wallet and a Mastercard, primarily targeting unbanked employees in the U.S. This product allows employees to avoid check-cashing fees and payday loans, offering immediate access to wages and a high utilization rate of around 25 times per month with an average spend of $25. The service includes direct deposit options and immediate transfers through AFT and IFT features, enhancing financial accessibility. The company has seen considerable traction, especially after expanding their services to include direct-to-bank capability, allowing employees to transfer funds to any debit card for a fee.

The paragraph discusses a company's financial growth and new capabilities. It mentions that revenue has been increasing by a few thousand dollars each day compared to the previous year, and the company expects to generate several million dollars. A new feature for on-demand transactions to direct deposit accounts has been launched, primarily benefiting bank employees. The company anticipates positive impacts on its wallet revenue, similar to past features. During a Q&A session, Bhavin Shah from Deutsche Bank inquires about migrating customers from the APJ legacy business to the Dayforce platform. Jeremy Johnson responds, highlighting a decline in recurring revenue as customers shift platforms, but notes an average uplift of 50% in contracts post-migration, which is expected to enhance company efficiency and profitability.

In the paragraph, Michael Turrin asks David Ossip to comment on bookings, the competitive landscape, and consolidation opportunities. David responds by stating that their win rate has nearly doubled year-over-year, indicating strong product performance and market share growth. Despite holding less than 4% market share, they are optimistic about becoming a significant market player. Their unique single database model simplifies systems and reduces costs for clients, enhancing decision-making through accessible data and advanced technologies like AI. He concludes that their product is differentiated, and there have been no significant changes in the competitive market.

The article discusses the company's current competitive market set, which includes another HCM provider facing challenges and typical ERP players as they move upmarket. They are experiencing success with full suite sales from emerging to enterprise levels, including large enterprises like a 62,000-employee entertainment and leisure company. The focus remains on organizations with frontline workers, emphasizing continuous calculation and compliance leadership. Last year, they introduced over 900 compliance features, highlighting it as a strong differentiator along with their competitive talent, data offerings, and managed services. In a Q&A session, Allan Verkhovski from Scotiabank asks about trends in SI priming implementation. David Ossip emphasizes the importance of building a strong SI ecosystem, and mentions specific targets set for SI involvement in sales and project kickoffs.

The paragraph discusses the different levels of System Integrator (SI) partnerships, starting with Tier 1 partners like E&Y and CGI, which are primarily used in large enterprise spaces such as the Government of Canada. In major and emerging markets, other SIs like BDO are brought on to deliver value. The use of SIs helps the organization scale efficiently and build a strong pipeline. The speaker expresses satisfaction with the current state of SI partnerships and concludes the call with thanks to employees and participants, while looking forward to the Q2 call.

This summary was generated with AI and may contain some inaccuracies.