How Should Investors Approach Dayforce Shares Post Q4 Earnings?

Dayforce DAY reported fourth-quarter 2024 earnings of 60 cents per share, which beat the Zacks Consensus Estimate by 30.43% and rose 20% year over year.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Revenues of $465.2 million beat the Zacks Consensus Estimate by 2.19% and increased 16.4% on a constant currency basis.DAY raised its first-quarter 2025 guidance following the robust fourth-quarter performance, which bodes well for investors. DAY shares have appreciated 36.7% over the trailing six-month period, outperforming the Zacks Computer & Technology sector’s return of 18.5%.Dayforce, Inc. Price, Consensus and EPS Surprise Dayforce, Inc. price-consensus-eps-surprise-chart | Dayforce, Inc. QuoteDAY’s Top-line DetailsIn the fourth quarter of 2024, Recurring revenue (84.6% of total revenues) increased 16.1% year over year to $393.7 million. Recurring revenue includes Dayforce recurring revenue and Powerpay recurring revenue.Dayforce played a significant role, generating $347.9 million in recurring revenue, representing a 19.1% increase on a constant currency basis. Excluding float revenue, Dayforce’s recurring revenue totaled $307.6 million, reflecting a robust 20% growth, or 20.4% on a constant currency basis.Dayforce achieved recurring revenue per customer of $163,101 in the trailing 12 months ended Dec. 31 2024, reflecting an impressive year-over-year increase of 11.1%.Powerpay’s recurring revenue reached $27.5 million, marking a 2.1% year-over-year decline. Excluding float revenue, Powerpay’s recurring revenue remained steady at $23.1 million compared to the previous year.As of Dec. 31, 2024, the number of live customers on the Dayforce platform reached 6,876, representing an increase of 146 customers since Sept. 30, 2024, and year-over-year growth of 483 customers, or 7.6%, compared to Dec. 31, 2023.As of Dec. 31, 2024, Dayforce had 7.62 million global employees live on its platform, reflecting an 11.4% increase compared with 6.84 million employees as of Dec. 31, 2023.Professional Services and Other (15.4% of total revenues) increased 18% year over year to $71.5 million.DAY’s Operating DetailsIn the reported quarter, gross profit rose 28.7% year over year to $218.6 million. The gross margin expanded 450 basis points to 47%. Adjusted Cloud recurring gross margin was 80.4% compared with 78.1%, an increase of 2.3% year over year.In the fourth quarter of 2024, Selling and Marketing expenses were $93.5 million (20.1% of total revenues), up 28.6% year over year.In the reported quarter, General and Administrative expenses were $96.6 million (20.8% of total revenues), up 65.7% year over year.Adjusted EBITDA was $129.2 million, higher than the year-ago quarter’s figure of $99.2 million. Adjusted EBITDA margin was 27.8% compared with 24.8%, an increase of 3% year over year.In the fourth quarter of 2024, the adjusted operating profit was $103.3 million, higher than the $78.9 million reported in the year-ago quarter. Operating margin was 22.2% in the reported quarter, expanding 250 bps year over year.DAY Balance Sheet & Cash FlowAs of Dec. 31, 2024, cash and cash equivalents were $579.7 million compared with $494.1 million as of Sept. 30, 2024.In the fiscal fourth quarter, the company reported cash provided by operating activities of $281 million, up from $200 million in the prior quarter.Free cash flow was $171.5 million compared with $117.3 million reported in the previous quarter. The free cash flow margin in the fiscal fourth quarter was 9.7%.DAY Initiated 1Q25 GuidanceFor the first quarter of 2025, DAY expects total revenues, excluding float, in the range of $421 million-$427 million, an increase of approximately 13.5% to 15% on a GAAP basis or approximately 15.5% to 17% on a constant currency basis.The company expects float revenues of $53 million in the first quarter of 2025.Adjusted EBITDA margin is expected to be between 31% and 32%.DAY’s Zacks Rank & Stocks to ConsiderCurrently, DAY has a Zacks Rank #4 (Sell). Akamai Technologies AKAM, Bel Fuse BELFB and Arista Network ANET are some better-ranked stocks that investors can consider in the broader sector. While ANET sports Zacks Rank #1 (Strong Buy), AKAM and BELFB carry Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Akami Technologies shares have plunged 19.7% in the trailing six-month period. AKAM is set to report its fourth-quarter 2024 results on Feb. 20.Bel Fuse shares have gained 20.6% in the trailing six-month period. BELFB is set to report its fourth-quarter 2024 results on Feb. 18.Arista Network shares have gained 69.7% in the trailing six-month period. ANET is set to report its fourth-quarter 2024 results on Feb. 18.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Akamai Technologies, Inc. (AKAM): Free Stock Analysis Report Bel Fuse Inc. (BELFB): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report Dayforce, Inc. (DAY): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks