Ceridian Hcm ((DAY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Ceridian Hcm exuded optimism as the company reported strong revenue growth, increased profitability, and innovative product developments. Despite some challenges related to recurring revenue and foreign exchange headwinds, the overall sentiment remained positive, with confidence in the company’s ability to continue its upward trajectory.
Strong Revenue Growth
Ceridian Hcm reported an impressive total revenue of $1.76 billion for 2024, reflecting a 17% growth on a constant currency basis. A significant highlight was the 21% growth in Dayforce recurring revenue, excluding float, indicating robust performance in core business areas.
Record Q4 Sales and Start to 2025
The company exceeded expectations in Q4 sales, with cycles returning to normal historical levels. Furthermore, January 2025 showed a promising start, with sales growth anticipated to surpass revenue growth throughout the year, setting a strong foundation for continued success.
Increased Profitability
Ceridian Hcm achieved an adjusted EBITDA margin of 28.5%, marking a 140 basis point expansion. Additionally, free cash flow reached $172 million, expanding by 280 basis points. The company has increased its adjusted EBITDA margin guidance for 2025 to 32%, reflecting confidence in further profitability.
Innovative Product Developments
Dayforce Wallet revenue saw a substantial increase from $12 million to over $30 million in 2024. The company introduced several product innovations, including AI-driven capabilities and new compliance features, enhancing its competitive edge.
Improved Customer Metrics
Dayforce showcased a strong performance with a recurring revenue per customer increase of 11%, while the gross retention rate improved from 97.1% to 98%, indicating high customer satisfaction and loyalty.
Strong Pipeline Coverage
Ceridian Hcm enters 2025 with a robust sales pipeline, approximately four times the coverage compared to the sales target, positioning the company well for future growth.
Q4 Recurring Revenue Miss
Despite the positive trends, Dayforce experienced a recurring revenue miss in Q4, attributed to lower employee volumes and reduced print and tax filing fees, impacting expected revenue outcomes.
Foreign Exchange Headwinds
The company anticipates a 200 basis point headwind on revenue growth in 2025 due to current foreign exchange rates, which could pose challenges to achieving target growth metrics.
Challenges in Employee Volume and Fees
Lower employee volumes and print and tax filing fees negatively affected Q4 revenue, with muted seasonal spikes contributing to less consumption than initially expected.
Guidance for 2025
Ceridian Hcm’s guidance for 2025 emphasizes sustaining growth and increasing profitability. The company projects total revenue growth of 14% to 15% on a constant currency basis, with Dayforce recurring revenue expected to grow between 15% and 17%. Aiming for a 32% adjusted EBITDA margin, up from the previous 31%, the company also anticipates improving its free cash flow margin to 12% of revenue.
In summary, Ceridian Hcm’s earnings call reflected an optimistic outlook, underscoring strong revenue growth and enhanced profitability through strategic innovations and customer satisfaction. Despite some challenges, the company’s forward-looking guidance demonstrates a commitment to sustaining growth and driving further improvements in financial metrics.
