Company Reports

Narrow-moat Dayforce kicked off 2024 with a solid start, as top-line growth and profitability came in marginally ahead of our expectations because of strong customer acquisition, improving scale based operating leverage, and upside from interest income. Following the result, we have tweaked our near-term forecasts to align with updated guidance; however, this is immaterial to our valuation. Shares fell sharply after results, despite Dayforce marginally surpassing consensus earnings per share estimates. At a sizable discount of 34% relative to our unchanged $86 per share fair value estimate, Dayforce shares screen as attractive. We maintain our belief that the market is underestimating the firm’s unyielding growth in enterprise markets as it continues to chip away at market share from legacy incumbent human capital management providers.

Dayforce offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Dayforce derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Dayforce offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Dayforce derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Narrow-moat Dayforce reported a solid fourth quarter, which fell modestly short of our top-line growth and profitability expectations. Following the result, we have adjusted our model to align with updated guidance and maintain our fair value estimate of $86 the increase from our model roll forward offsets our moderate adjustments to our near-term assumptions. Shares traded down upon the results, and at current prices, Dayforce the stock trades at a 22% discount to our fair value estimate. We reiterate our long-term thesis that the market is undervaluing the firm’s momentum in the enterprise and international space with the potential to displace incumbent HCM providers.

Narrow-moat Ceridian reported a strong third quarter, which surpassed both our top-line growth and profitability expectations. Following the result, we have lifted our near-term assumptions to align with updated guidance and raise our fair value estimate to $86 from $83 primarily due to the time value of money. At current prices, Ceridian shares trade at a sizable 28% discount to our valuation, and we continue to believe the market is underappreciating the firm’s ability to displace incumbent providers and take further share, particularly in international markets.

Ceridian HCM offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Ceridian derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Ceridian HCM offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Ceridian derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Narrow-moat Ceridian reported healthy second-quarter results, with both top line growth and profitability coming in marginally ahead of our expectations due to higher-than-forecast interest income. Following the result, we have lifted our near-term assumptions to align with updated guidance, however, our longer-term forecasts and valuation remain intact. At current prices, Ceridian shares trade an attractive 19% discount to our unchanged $83 fair value estimate. We continue to believe the market is underappreciating the firm’s ability to displace incumbent providers and take further share, particularly in international markets.

Ceridian HCM offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Ceridian derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Narrow-moat Ceridian reported a stellar start to fiscal 2023, with top-line growth broadly tracking our expectations but profitability surprising to the upside. Following the result, we have lifted our near-term assumptions, however, our longer-term forecasts and valuation remain intact. At current prices, Ceridian shares are trading an attractive 24% discount to our unchanged $83 fair value estimate. We believe the market is underappreciating the firm’s ability to displace incumbent providers and take further share, especially in international markets.

Ceridian HCM offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Ceridian derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Ceridian HCM offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Ceridian derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Narrow-moat-rated Ceridian reported another year of solid growth in 2022 aided by resilient revenue retention, increased module attachment, and a continued skew upmarket. Following impressive sales momentum in enterprise and global markets, we have pulled forward our revenue per client forecasts and now expect average growth of 13.5% to 2027, from 12.0% prior. This will be largely offset by lower growth after 2027 as the average client size increases at a slower rate. Simultaneously, we expect rapid growth of employees on Ceridian’s platform to drive scale based operating leverage ahead of our prior expectations, partly offset by pricing pressure from larger clients. Nonetheless, our longer-term forecasts remain intact, and we maintain our $83 fair value estimate. At current prices, Ceridian shares screen as fairly valued.

Narrow-moat Ceridian enjoyed continued momentum in its third quarter despite challenging macroeconomic conditions and foreign-exchange headwinds. Group revenue increased 23% year on year, or 25% on a constant-currency basis, reflecting strong client wins, a further skew upmarket, and higher module uptake per client. A greater contribution from ultra-high-margin interest income revenue, customer service efficiencies including greater automation and lower labor costs, and greater operating leverage on a larger client base supported impressive year-on-year adjusted EBITDA margin expansion of 480 basis points to 20.1%.

Ceridian HCM offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Ceridian derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Ceridian HCM offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile, cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Ceridian derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Narrow-moat Ceridian enjoyed continued momentum in the second quarter of fiscal 2022. Group revenue increased 23% year on year on a constant-currency basis underpinned by healthy client growth, a skew to larger businesses, greater module uptake, and resilient retention. Adjusted EBITDA margins expanded an impressive 460 basis points to 20.5% on further realization of customer service efficiencies including greater automation and lower labor costs, and contribution from higher interest on client funds and module uptake.

Narrow-moat Ceridian enjoyed robust first-quarter results, underpinned by healthy client growth supporting a 25% increase in year-on-year cloud recurring revenue and an uptick in higher-margin payroll and seasonal form filing revenue. While Ceridian’s top-line growth was aided by greater module uptake and a skew to larger businesses, we expect the company outpaced industry growth, resulting in modest market share gains. Ceridian’s adjusted EBITDA expansion was ahead of our expectations, supported by the realization of customer support and sales efficiencies, resilient retention, and a modest contribution from higher interest on client funds.

Ceridian HCM offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay, and legacy Bureau products. The company has taken share of the expansive and growing HCM market through the appeal of its agile, cloud-based solutions that offer an alternative to legacy on-premises solutions or solutions cobbled together using multiple databases or platforms. Ceridian derives most of its revenue from Dayforce, which is geared to larger enterprises wishing to streamline human resources operations across multiple jurisdictions and leverage the platform’s scalable infrastructure.

Ceridian's fiscal 2021 results reflected a bounceback in labor markets and continued investment in long-term growth. Revenue was in line with our expectations, however, gross margin was weaker relative to our forecast due to higher expenditures related to global acquisitions and onboarding new clients. This underpinned a weaker GAAP loss per share of $0.50, relative to our forecast of $0.25. Our medium-term forecasts remain broadly unchanged, and we maintain our $80 fair value estimate. We expect GAAP loss per share to improve to $0.27 in fiscal 2022 as operating leverage and margin upside from greater module uptake is partly offset by continued investment in sales and marketing and product innovation. After a significant market correction in recent months, Ceridian shares are trading in line with our valuation.