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Ceridian HCM Holding (CDAY)

Participants
Jeremy Johnson VP, Finance and IR
David Ossip Chairman and CEO
Arthur Gitajn CFO
Jesse Hulsing Goldman Sachs
Mark Murphy J.P. Morgan
Alex Zukin Piper Jaffray
Karl Keirstead Deutsche Bank
Siti Panigrahi Wells Fargo
Mark Marcon Robert W. Baird
Walter Pritchard Citi
John DiFucci Jefferies
Justin Furby William Blair
Call transcript
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Operator

Greetings and welcome to the Ceridian Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeremy Johnson, Vice President of Finance and Investor Relations at Ceridian. sir. you, Thank ahead. Please go

Jeremy Johnson

and good you morning. Thank

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

in Q&A call, Before we ability previous current underlying levels statements. forward-looking the of is forward-looking a us. regarding and disclaimer events uncertainties of begin, allow and Listeners and are results based goals currently me could This subject assumptions to differ future actual filings significant reasonable plans, these activities, call, assumptions to risks refer no risks, certain and performance and cause as that intentions, and statements beliefs affect performance, our include achievements, forward-looking could you place to may by statements. light for such on statements future provide available cautioned may We and set information our forward-looking expectations regarding materially be portion undue about any revise to risks on the to or results, including on to this forth such obligation made forward-looking statements, to required are These statements factors from to any not to statements. or call, those deliver developments. on other except statement undertake We information update in future of that law. statements. or reliance management's or Each

the the at available on MD&A as in The second U.S. Relations as database be quarter SEDAR database the Investor Web-site earnings the Canada, will release, Ceridian and the statements, and SEC's financial on related EDGAR investors.ceridian.com. in well

noted. call that, U.S. on David. discussed over I dollars, this will all unless reminder, are a the As in conference to turn figures With otherwise call

David Ossip

of morning improvement basis continued which report Revenue growth Ceridian growth EBITDA joining in everyone thank achieved Thanks and to a margin. another call. earnings second our the customers XXX live and during on our flagship adjusted increase the had point same I drove date cloud over of Jeremy. from reflecting HCM market an adjusted last cloud of platform, had strong XXXX revenue end We that XX%, of of demand. quarter am XX% XXX We EBITDA Dayforce, pleased quarter, for quarter. the first quarter XX% you customers from quarter, our of Good platform XXX strong and an customers from the at Dayforce the second increase grew year. X,XXX the

people, part Leagh second growth I'm initiatives Strategy Officer. product, been acceleration of As we as as half process the have the respect to our for I XXXX. include initiatives the investments evaluating into These in investments of and Turner mentioned appointment several in announce investments to of Zimmer last Erik XXXX, quarter, as people, and planning sales. President, With of Chief thrilled in

times of the in SAP's was COO our development in was H. the SAP and design and Customer Chief very as recently for that Officer hours pleasure to over in Lee's Erik T. Operating In and served had help COO of globally. addition, as the Canada. expand which of a Strategic experience had brings growth with and Leagh involved President customers. of reduced most Global serving a working experience the Dayforce over Director senior roles decade, software Elliott has many SAP's as within Officer of Operating H. and implementation of Program EMEA past has years seven separate his Erik technology, role Managing cycle Group. Activate continue drive I've that joins and will Lee. roles decided until XXXX. XX Leagh we years Chief of Paul to significantly expertise over to T. and prior from breadth last Erik Operating have in industry leadership the our with us and May of us

the Erik are both and Leagh team. Ceridian welcome to very excited We to

Prior we to first services have payroll the North of of to with buildout at Steve's In With are product in our Steve major payroll customers gross past completing added Grbavac. Services Head we functionality was expand improve going the U.K. Ceridian, Australia Services, to after and major optimize as overall as Steve live go-live customers our profitable addition, year. Resources. next completion the to America Services Weintraub post reporting NGA professional and VP margin. Professional in respect Human this initiatives, quarter, of President, expect organization early they accelerating focus Adrian delivery Services, of Professional is Professional to

INSIGHTS. sales, sales are September, around which We of in we we'll and of modules, Dayforce highlight for Chicago emerging customer the big this held business at at are we'll the conference, across and And in Hawaii additional London we on-demand process be number including are a that initiatives we adding other which economy October demonstrated capabilities development August. and year, week, the INSIGHTS. be marketing, organization, will our at increased and to building and respect in of late summits will planning including have marketing, annual talent also headcount With pay host our in which additional HCM accelerating development succession next

and with what conferences discuss day to working to Now companies with customers connect been selected at experience they existing us. their leaders why HCM prospective makers has Ceridian summits decision designed are our one-two and

in finance of an of mortgage that Denver. attending out summit As after HCM an X,XXX-employee recent from a a selected HCM us shortly example is Chicago company based win the summit

we extremely HCM change very was venue we all also much which that quarter, Summit had accommodate in During to the of the attendees. so attended, to well New York, our hosted second

in the sales critical and to proud products and that positive the Ceridian our traction of has past for our that continued achieved are are excited about quarter. also the customer marketplace our the I We believe in engagement am positive momentum. received sustain culture recognition events Dayforce we

equal we and gender of effectiveness practices, First, certified and work, equivalent after pay third-party evaluation, extensive an of were culture. for balance, inclusiveness policies for EDGE

Annual Guide's Awards. In IT Work. products, by And recognized continued to HCM over I'll Products with best by the the winning recently that turn ahead. again by we to about and Network In Most our Great time you highlighted Dayforce most we independent recognized be excited now Gold your the the Places Ceridian extremely of addition, as Year Thank continues summary, analysts the of Innovative as part to on and leading quarter support. for for it solution, World in workplace lies second are was performance tremendous Arthur. opportunity pleased women are as Company our recently for

Arthur Gitajn

minutes This to good our quarterly public first reflecting IPO report our our David, April is end U.S. available highlight and items SEC IPO take XXXX performance Web-site. as and on to morning related a was the our some financial and you, the EDGAR QX a is want in at Thank Form the XX-Q, of few of this I morning filed which everyone. company since

million cash expenses, $XX going forward. we accounting proceeds statements million million X use of $XXX the proceeds. saves Company First, $XX.X the beginning expense IPO to was in detailed Page well. the a of and on after the for Note on use an and to of sheet X financial notes, primary provides IPO interest redeem in additional And senior the IPO balance fees associated ended which The more up as with year the than

Second, XX, debt the refinanced new have term our time facility. as million and in a $XXX now loan on discussed at $XXX Page we beginning same a X million we Note credit and remaining revolving

financial Page beginning X discussed in the Note addition, IPO, on in interest our the with contemporaneous statements, our to to In controlling pre-IPO XX distributed financial LifeWorks the XX-Q, as of stockholders. we

result, Human present one Capital LifeWorks has our Management a segment, our reclassified and discontinued presented and As or HCM operations statements been reportable financial now only as business.

detailing we and adjusted quarter Analysis four other year-to-date compensation XXXX comp the last XX and provided in financial, quarter reconciling excluding comparable provide for in reference, Management more adjustments income our share-based second have the quarterly we our of and have results in reported and your expense the finally, share-based disclosure the other scheduled of the as LifeWorks statements our for in and For periods press XXXX, impact and year And and expense each by first tables on to in year. adjustments, providing Discussion pages and line, this for new on quarters the release. quarterly results XX, interest our for of

which As David XXXX. performance XX, mentioned, $XX.X $XX.X $XXX.X includes from revenue Dayforce our pleased we includes million with revenue increased Dayforce million. million revenue, total Cloud Bureau revenue, solutions in XX%, or increased our very $XXX.X $XX which ended quarter million by and $XXX.X are or both Cloud And or million. to and Powerpay, both to by XX%, the million. June by XX%, to increased second

provided I'm results last by exceeded to that actual our Cloud $X.X for second range pleased During report the quarter the call, for high the we and million. revenue our end of guidance

results second actual driven adjusted recurring in Of and total million Our in other range was Cloud Dayforce. end services revenue high $X.X the by attributable Cloud by million. and by results of exceeded a revenue. to high $XX.X the XX% exceeded customers professional was a services Bureau Cloud of revenue quarter for for Cloud in the $X.X EBITDA end million, the actual our range the growth revenue the XX% to or $X.X increase increase million revenue, in migrating and increase XX%

solution, X.X%, to the Powerpay $XXX.X from revenue which declined Breaking total this quarter year XX% Cloud to by compared in of million. in revenue line expectations. $XX.X by increased impact revenue increased second second with the the million million migrations to revenue XX% the quarter year. Bureau revenue Cloud Dayforce down quarter, last and was XX% XX% Excluding second revenue accounted $X.X or in our during Dayforce, our solutions of our for to

customer foreign the was Dayforce average increased during float Powerpay to last $X.XX in And approximately of balance by XX%. to quarter an last and year. increase was in billion, increased compared yield X.XX% points impact revenue basis $X.XX second by second average revenue XX increased the quarter the funds the revenue for compared during quarter, of Excluding second the fluctuations, trust yield second Cloud approximately year. our the quarter X%, The billion the currency XX%, average

a quarter second million million in funds As quarter was year. from in trust invested result, $XX.X last the second customer to compared income the $XX.X

and our grew scale recurring the in increased recurring second revenue cost million of we last as gross to Cloud increased margin continue or recurring $X.X to services Cloud to XX%, services this XX% our year from support the on business. growth quarter While XX% services by Cloud XX%,

improved or to revenue to $XX.X in expenses the and other and due increased to services in refinancing. last of development processes. continued While our to Continuing use professional million profit increased general of increase increase one-time million, due $XX.X from costs, million capitalized professional XX%, implementation expenses, million of increase million. and in research administrative $XX.X to customers, new IPO administrative services professional new primarily management related margin year cost we X%, software XX%, the XX% XX%, revenue a last $XX.X experience reflecting to in revenues, general $XX.X an negative implementing services on quarter, total $XX.X other a and Selling, was or attributable revenue automation increased selling, gross development quarter flat in the implementation professional by and with million of in were million and and the expense Overall, negative to expenses Product by cost productivity other trend improvements $XX.X primarily year-over-year. by million $X.X and million reduced productivity increased XXX% total reflecting development increased and consultants go-live grew relatively negative Of and revenue in $X.X $X.X debt million and from in the customers. improvements to million. and post generated $XX.X the costs was our or services increase implementing profitable second our

compared incurred being benefit quarter Excluding second expenses, primarily public increased the costs $XX.X administrative selling, last We by of loss operating general $X.X costs, to associated IPO sales expenses due commission million operating an in million in company. quarter and a expense, second $X.X profit to with increased million, the of related related employee year. incremental and

$XX.X by $XX Excluding million to the $XX.X million debt $XX.X loss million refinancing reflecting the impact million million, $XX.X increased year. net term to $XX.X Interest quarter quarter last profit senior related attributable redemption last $X.X from IPO increased increased $XX.X the Income of in year. expense loss would compared EBITDA Ceridian the of by in the year. to expenses, second to have an million realized second of operating million And we million, loss was interest $X.X of of net and loan last million, quarter the million Adjusted of notes an expense million. second our to reduced a profit debt. $XX.X of in by in in to tax refinancing a compared net and expense operating $XX.X

impact Excluding and net expense, debt expenses $XX.X tax $XX.X second $XX loss in of a have million the IPO the been change quarter refinancing million compared and to in loss no assuming year. in net million last would of

in our we on have XX-Q. with the Form new standard already have plan quarter the discussed facilitate beginning – impact XX-Q revenue estimated XXXX, in these have results ASC our companies Form filing, in the our financial To recognition that standard, may As that will of and to new first we adopted, the XXX. adopt have the of disclosed comparisons standard new

will and to result of our changes new recognition. We in timing standard expect revenue adoption classification that the of

we other recognition recurring will new revenue revenue services a U.S. in in as U.S. as an to services the current timing that Specifically, increase current to changes reduction of and to our GAAP. compared expect expect in classified revenue GAAP. standard professional under as classified the new result standard Further, and we revenue compared revenue

the revenue changes $X.X be have over been have and expenses the general commissions of capitalizing and total sales force. increased the selling period bonuses to incremental selling, We recurring would services standard require by XXXX, benefit. sales will as and and will of as These the certain expenses would such by professional also increased QX revenue standard, new Under expenses, certain $X.X by so would timing expect to million, amortized the million, reduced services paid have customers' million. amortizing administrative $X.X revenue other in new

margin expenses In negative negative of in Cloud to other from operating by sales been on The reduced services and in recurring would on would the services improved $X.X an would XX% million. XX% increase reduced from professional addition, have profit margin $X.X XX%, been and have million, have gross to XX%. resulting

cash total Moving June of of June to had and increase cash as $XXX.X of December And XX, to as balance the XXXX. debt sheet, we million $XX.X XXXX, was million equivalents million, an compared XX, of XX, $XXX.X the term debt. to of compared are and December and XXXX. refinancing a XXXX, at cash million balance $XXX.X in in debt reduction primarily $XX.X of attributable reduction million $XXX.X the The the increase to XX, IPO million our our

the to year. $XX.X for through million of in equipment. XXXX for $XX.X compared expenditures first the months and in through capital million million six Our technology were capital months million software expenditures six million and first Included $XX.X $X.X last were and the property $XX.X

Turning the and revenue third to quarter, $XXX of to to of million. be $XX million million, of the now $XXX $XXX expect $XX range million for we outlook in revenue in the $XXX in total our range adjusted the to Cloud EBITDA million to range million,

million weighted the approximately XXX $XX quarter approximately for and outlook shares expense Our average assumptions; the includes interest of third million also following outstanding.

for of full-year initiatives be we that us outlook year range performance David our we range the the half $XXX million profitability in still adjusted $XXX confidence be targets, our the of our fiscal XXXX, and of for EBITDA outlook in million Total in revenue Cloud we million. fiscal given reaffirming million. our our investments full-year discussed, now the $XXX to follows. to And our can to believe over-performance million second expected of some provides as to outlook and quarter, in through to XXXX the the are be $XXX $XXX meet the $XXX of now accelerate growth our first as to raise revenue to million. expected in is Turning with range is to the

up XXXX full-year the operator note the QX interest guidance approximately changes shares to million At you. outlook and also the for may foreign outstanding. also ask average expense Thank this the open I of any Our weighted million approximately significant have. exchange includes $XX assumes full-year no questions assumptions; the following fiscal that that and both in for for would rates. XXX our would I lines you time,

Operator

the first Jesse with of question from line Our comes Please question. Hulsing with Goldman [Operator Sachs. your proceed Instructions]

Jesse Hulsing

David, expectations, years? launch contribute and starting end couple the the over geography July. launched go revenue of about to guess How at the that your of the I how do you U.K. did next to think versus

David Ossip

was The launch fantastic.

delighted are We with initial of first the the go-live few customers.

In the fact, U.K. the for in celebrations. customers' be I in September go-live will early one of

have Labor Day. I very that as we've accelerated increase we of to say U.K. as I happy they after also So, right HCM and are some our mentioned, mentioned started in And our having And should cross-sales summits. that one I We're marketing. the well.

Specifically, people we're to do who U.K. up opportunities, hiring ramping and the the alongside in and sellers that currently executives, that team in are outbound development these U.K., identify actively business the calling the we're

terms the In be will can cycle, minimal, how impact and we have will accounts. implementations the activate then sales XXXX it the do it and get of as in through imagine to revenue, you early XXXX

I impact the latter and to half next year expect into So, would XXXX. see towards some of

Jesse Hulsing

Great. little Can was drove revenue bit quarter-over-quarter. walk down through recurring Cloud that? a And Arthur, you what

Arthur Gitajn

So, or by million recurring revenue all, year-over-year increased first of about Cloud XX%. $XX.X

our in that earned to strongest are seasonality was it because is it forms as quarters flat and if an million, PS TX forms would QX PS million range. subtract noted, but there the increase and growth from that typically other Canada. end QX tax would last the relatively out other I from tax it's the attribute U.S. our with $X.X then of QX was Professional we by W-X in quarter, benefits about been as well, million. Cloud guidance you revenue also guidance roughly association in the our of in and range our of still point have to primarily some sequentially exceeded Even filing other hit revenue. revenue end million, XX%. all $XX.X our revenue you and tax rate high and flat would year over-performance was and QX have As the half, quarter relatively $X.X of and high services $XX

to that's improved two and have support the which buy So customers, PS see our and is initial trend numbers, believe you base would in see to this revenue per also less, our customer on and to of from with XX attract full-year negative see that's gross proportion not live customer. but the quarter's matures base. was – than was of Page in you XX% only per overall in sell functionality that other gone customer can we go-live the margins The additional customer I to the customers customer $XX,XXX. to the we'd the reflected that customer professional all improvement we're opportunity revenue quarter margin also than ago will Dayforce you sell what into XX% to recurring Dayforce XX% are additional line XX.X%. in last out recurring post and $XX,XXX, the and in this our when contributes average as year, We go can customer that And incremental also per Cloud continue And improvement this that for we more functionality, than revenue and our for we revenue results, revenue services matures, the this in base to the costs been services, two customer can which point much on to years expect seeing expectations. as have reflected customers and second in as the additional modules base QX services is larger customer the the has XX-Q, more QX from – base and negative the which infer, as in year to compared XX.X% our to per on from in the into and years added hosting more back implementation services, contributed in post about XXX% XX%. average to was profitable increase go-live increased QX continue customer Cloud

Jesse Hulsing

Thank color. you. great That's

Operator

question Morgan. with of with your from next comes proceed Our Murphy Mark the line J.P. Please question.

Mark Murphy

in can Congrats customers compare on number number I that just that compares new that the Dayforce quarter was number of of if QX. volume booked I which how how I'm curious would believe of wondering the the the health to were the QX went you also last who of Dayforce live, during and to ballpark results. XXX year? customers was

David Ossip

We is that of number taken out sold or can I quarters. under future we given we've do robust the What see quarter consideration market. in very for a say a don't report accounts

Mark Murphy

how aspirations? Okay, expect new very cadence you payroll offer great. countries And what aggressive the do can are run? instance, payroll global as a think you follow-up, many For rollout long how in in David, native you plan countries to your to and

David Ossip

There we've that such obviously announced are which will markets Zealand ready in be of we U.K., New which to XXXX. Mark, in are Australia, adjunct would Australia, as make accelerating sense. lot and Ireland, a early both the

that we're quite as And share get we'll we operationalize. more begin also strategy further to bit global a information. We elaborate now beginning along, have to

Mark Murphy

question, of calculation selected instance Okay. architecture engine the for way single the you any the cetera? One competition wins of single you versus database, continuous et the any at during David, over what just is primarily a because payroll overarching Dayforce last application, there with the mix approximate QX, attributes, customers Dayforce other can if look

David Ossip

Mark, about beforehand. we've this spoken

company user based single experience, selecting are one one and allows true mortgage for We their that do of would differentiated roll us other us meaning calculations, reasons we engine, quarter. have researched as in one one customer players from database, That probably select is out the are does have the it continuous reason the probably you in that a the differentiate inside Generally for to of And market. we and other us. it the which would clients us. that holds I wins the top been that application, Chicago, X,XXX-employee had imagine that

Operator

of Please line Jaffray. question. Alex Zukin the with proceed from with comes Piper your question next Our

Alex Zukin

of bookings first seeing you the to investments compares David, perspective kind maybe marketing, from as half talk first the maybe I year? confidence incremental and making are first think and on one make about guess to you can increased you maybe sales that in these what a that the ARR either giving So, that's for last half about investments new how you you're

David Ossip

we're mentioned, robust I seeing hire As that have a conversations in Market and market, not I Head a would we of Demand. about prior spoken

indicative that the us a see you sound So fact we probably is marketing see sales that can and for in demand our do services. investing very strong market and of types

Alex Zukin

Got it, for Powerpay? then sequential helpful. basis. year maybe one both down And it and Arthur, can can this year talk on Sequentially, a about that's you last be

should what curious, how drives of just any the we Powerpay? about then usually seasonality Dayforce either in back or I'm half that on think the year So and

Arthur Gitajn

big QX in basis. foreign C$X.XX US$X to The compared dollar X% the growth basis strengthened a exclusively and XX.X% rate, is year. on on year impacted The a constant Canadian GAAP from a the Powerpay by C$X.XX impact grew since to dollar stronger Powerpay currency about revenue QX in positively exchange. on last Canadian product X.X% Canadian this is to Powerpay Powerpay

Alex Zukin

that Got during and to on the during quantity success if you the year, can what maybe could remainder sneak you look more Bureau and like that one just on to year? expect to quarter Dayforce, the kind And in it, Dayforce do last the of perfect. relative of comment trend how customers of did volume converting and I and

Arthur Gitajn

we to of growth, approximately which customers about the to of and the grew revenue basis saw Dayforce Dayforce was to to solid XX% Again, as on XX% even migration Cloud guiding constant Cloud Bureau continued – XX%. we've contribution that approximately in about even declined, been migrations currency of impact contributed XX% note Important increase revenue. Dayforce and the We've a to seen growth we see a and XX%. historically XX%,

Operator

Deutsche Our Please of next from the Keirstead question proceed question. comes with your Bank. line with Karl

Karl Keirstead

we Arthur, Just to perhaps the it, around a of XXXX you I'm expect or take the investment investment curious margins? expectations decision whether this and the that sales as growth increase half, for view perhaps of to such EBITDA one-time a our sort David step-up into follow-up relatively just continue or in wants level to you and buildout would second the the whoever temper capacity spending on should adjusted

David Ossip

question. Nice

The As revenue for Arthur guidance guidance EBITDA came of year. of would fact that used the can be kind we've the guidance EBITDA growth held in that had mentioned, be we have in the steady increased terms our year. in above for the remainder initiatives our of the what we remainder the to QX investment with infer of

of will the Going year, next I continue that we to imagine in into invest business. growth the

Karl Keirstead

notable And follow-up thanks, the Okay, any you. shifts for obviously there then Thank in maybe worth you've a just of mix count flagging and midmarket, the customer given whether Dayforce David, were I'm wondering from terms me, growth, us? sequential enterprise, smaller customers,

David Ossip

prior all segments. are across [ph] seeing of with] the it's we different would I success quarters, say, [constant

Karl Keirstead

Got it.

and congrats. Okay, thanks

Operator

of comes with Panigrahi line question the proceed with next Our your Wells Siti question. from Fargo. Please

Siti Panigrahi

Dayforce be quota-carrying more whether the achieve? on able just market, what's there sales to side the maybe the or on you your like sales more and share a I of your international [indiscernible] terms the or in investment, on Powerpay want marketing. plan investment you rep bit to dig it's little increase Would for to versus aspiration what

David Ossip

in Cloud The side, just are relationships, more investments making largely of broker our making is that we revenue on well leads, given the But the on Powerpay Dayforce. mostly slightly Dayforce and Remember that the to are the telesales as headcount a to than these increase that types more inbound a seller sellers. outbound in more get different marketing agreement. around are Powerpay investments predominantly The the majority of investments Powerpay seller that developing is are we're side. Dayforce quite

of in are there Dayforce, number. terms making the we're In investments a that

and we expect implementation The was the the a location us doing HCM Ceridian, to Chicago benefits in their I prospective from to we we next The we've selected the we output year, spoke working events as growing the like, I we typically they experience are the have they particular number the of we been received bring about what have would speak has had go successful. increased earlier the into and first the have summits These we're why where existing about have with was that what number feature that customers of inside system, and what day this year. is customers company year. and that Summit continue X.X mortgage Denver quite and the been that

payroll, BDEs. callers HCM who of time are the types also in These into for attendance, various modules. identify active investments to We opportunities making are call HR, outbound organizations and or

number quota-carrying not reps, we are to the disclose programs as increasing have. to obviously pipeline. of of marketing well are the market increase we reps in investing number although We alliance And also that and the do we the

Siti Panigrahi

Thanks that big you how of to planning to U.S. that is target at kind are guess or [indiscernible] I to bring just And at Canada. focused opportunity what's market? Powerpay, this your below point? ever and a [indiscernible] And for follow-up that's and Dayforce only least on Powerpay, and XXX also, color.

David Ossip

does second So, regards to of question, the up of both the in and I market. your question, hear the but scale part technology part first didn't your Dayforce down

below see in XXX. with Canada, fact, market do customers some we wins small In

the part we the and question? looking that But time. the market are that your at any on the you U.S. methodology make at repeat in very for in attractive We implementation, made first Could of this well. smaller new could as point Dayforce tooling, implementation haven't decisions

Siti Panigrahi

to in remain what's how penetration Canada point big and for at the Powerpay? I is was your opportunities this asking,

David Ossip

was earlier up marketing have and for Dayforce building it software. competitor In store Powerpay is number a limited and in year. Powerpay talked this targeted were in amount at tremendous little – expense opportunity They a one last boxed a for really the taken had about the effectively years, Canada. I biggest Our bit the time, of business. at as our we sales we of

Now balance we that sales sheet, in accelerate a at slightly have to we Powerpay for are opportunities different looking Canada.

Operator

Marcon line Baird. proceed from comes question with next with Our question. your Please of the Mark

Mark Marcon

on, and to the was either little wondering terms if you the results. the clearly with I'm that of ended wondering number bringing about if larger the I dimensionalize but And that of a you of QX in retention? spend, turnover brought of obviously is staying size on a that client on in commentary regards terms competitor you Congratulations just clients what in any could strong of were to or not on modules period, size you in bit just of incremental Dayforce, also up seeing Dayforce, sort takeaway? they are are clients revenue talk big and could terms

David Ossip

A lot Mark. Sure, inside questions of there.

really the that haven't of I consistent the onboarded broken segment customers quarter. we've out somewhat we've seen would We are within they what with that previously. last the expect

having we're before, mentioned I rates, across segments. success of success terms In

very Our wins. Chicago competitiveness the very, a have still by many I product it's was primary did in about competitive allowed in resonating single replace calc and The the differentiated the a continuous very has one account competitors. us to where process of competitive is app, spoke sales that market, well inside that of we our

Arthur Gitajn

planning year We to rates, went into those numbers. only those at point respect our the that anything us annually, year would rethink and see we're and we with cause XX%, last providing retention to was this rate Mark, don't retention between XX% and XX%. Cloud

Mark Marcon

there implications wondering I wondering, margin beyond for expansion year should with the margin you it relates – wasn't as was just if year, I to outlined? expansion continue the that EBITDA about for expect previously question earlier to pace I this to then the could clear of and an we investments was answer, next year step-up entirely this and just And Great. was in was and regards terms the just

Arthur Gitajn

for stages planning very in year beyond. of still next We're early and

margin when has we balance want there David additional the existing positive our that, to But again investments. additional and about, of a functionality you terms incremental is between and of As sale in in want the also very revenue, but see of expansion, we we and to base. to realize the balance investment lag the base talked and customer time trends modules maturity

a two be of to come going it's to combination more of sort but those So, factors, quarterly.

in more our next for we'll share As we quarters. and subsequent continue to plans year beyond, develop

Mark Marcon

to next Great. Look week. seeing you forward

Operator

of Our Citi. with Pritchard question. next question with comes your from Please line the Walter proceed

Walter Pritchard

year-over-year? the on of year, David, count, and that should customer that I off that sales end of Dayforce growth that's investments the of decelerating marketing, bit accelerates look we wondering Wondering, making here, for you're given towards the been go-live we we in the terms QX as live count customer in expect the guess I'm saw levels a

David Ossip

things over So, of been couple have we there, up-market. going a

healthy you such, would slight year-over-year, a I accounts lot to in number expect are obviously see of in lots a customers is a biggest going live is of there if of our So, there go go-live of going and to QX live. comparisons and that difference as opposed live QX. accounts smaller terms going

Walter Pritchard

for on business we've then seems the And just, of versus of that Arthur, may maybe how of the here much in serv upside activity pro systematic the couple is in that's terms of like bit in just services side, to it. it any few a next post-implementation on had indicator implementation quarters, that go-lives leading last of result going Got over type the quarters? that

Arthur Gitajn

larger of in what's margins. go-live overall post increase That's primarily the professional services. a proportion It's primarily driving the the

David Ossip

and actually you If as increased QX-to-QX, service total XX% look professional of a revenue driving of particular services and post-live the in obviously margin increase at to percentage other from the that's group. numbers, revenue XX% that the the

Walter Pritchard

incremental Great. help understand just about I And on but could? quite given of additional us split investments, versus talked here, the lastly if a international just bit domestic that investment so you then think

David Ossip

it of still majority The America. in North is

now U.K. marketing However, Australia. sales we the are in in beginning to both up ramp and and BDE

Walter Pritchard

great. me. for Thanks. That's it Okay,

Operator

DiFucci of line with the question. your John from comes Please question Jefferies. next Our with proceed

John DiFucci

of remain going with he's first And also to the COO on? take going regarding executive guess XXXX May going and just David to strategy CSO curious I to I changes, Erik you team serve that what be is clear, for to have for Paul Arthur. new just the until Zimmer, of the a May a of is over focused Company the for to while Leagh Turner follow-up question XXXX? President. role after be said areas as then is as David, going Paul as to Company

David Ossip

questions. two great are Those

Canada least types similar to Erik activity, make recently thing while. for Company. to that of services Lee he helping H. biz the we more at prior We've looking IPO experience and a experiences robust side, up with organization, us and from on strategies operational T. first as to dev of seven what the around both she is times to in more closely higher that. of for and Lee. the accelerate I'm very the taken ways obviously as at served the for Strategic what has where of as years. quote global Thomas She levels delighted say advantage from SAP implementation. us Canada cycle comprehensive in on was EMEA as organizations of various an I so focus Erik MD alliances, the dev business, as as both sales that generally is, in organization, well to Global will growth COO looking was the for of group for and So and for across Acting the Powerpay that operational in well SAP. successful together large joins like business, significant worked organization. at I Leagh their well so can global level in was and of President strategic ways most for lot now the terms very Leagh he hours on exceptionally of she responsibilities as effort Accounts, Activate terms from Erik would running be the Erik are growth reducing COO and Erik's successful was Leagh of a worked areas I of technology strong on the terms that of excellence. marketing, the doing joins side. was organizations and She sales, with have looking joining

been very role years. be we transitioning the that be all role of year. executive a fantastic filed it's for May around of gradual to person will Paul on work active consulting has X-Ks with last number the another of so of a of transfer. XXXX, And will a over are The changes night. the in Paul, Paul he last In type of that into details terms post

John DiFucci

a revenue, Great, but been seasonal has And thing. has question a things lot the a get just asked in about Powerpay the but correct? Arthur, actually grew, said last the which for but the very sure first decline declines in sequential year almost one-time revenue year I there quarter biggest the that that due to pretty primarily recurring clarification David. of think I here. you Powerpay main usually Cloud it effect every much thank times second think you recurring I for Isn't I and guess Powerpay, that, the that's I'm the few just that's the quarter part You to of think in

Arthur Gitajn

little of the well, is thing. Dayforce but as main revenue There's you're That a bit additional right.

John DiFucci

much. Thank great. Okay, you very

Operator

with comes of your question Furby next with the Our Justin line Citi. question. from proceed Please

Justin Furby

what side maybe give Congrats. ago? before does what for deals for a you David, compares a Dayforce can just to to that like? start, And today sold customer if a how discounting, on like the sense everything you and year PEPM that looks new look opportunity

David Ossip

PEPM haven't of going up terms the Obviously average we or clients. that increase number we the is what target as answer available the because modules PEPM to I is So, are in what number disclosed is. can broad the the

are and getting is around when also typically few obviously between average we the which is a more employees in We for in and XXX that in more success PEPM full up particular employees. the sell thousand that And the we're us suite midmarket, service. as going range,

to of investments, will In is management we'll year, succession accelerating showing be well conference, terms R&D our we add which the platform. as of client mentioned product of pay, INSIGHTS which are in that some this as side. is which on-demand I the both At October,

Justin Furby

result And you is in given of the play quarter, the percentage any in do and think considered it. side if the go you growth you could Dayforce higher, think on in, you where think investments but over in, and market, but being those like do on Dayforce those then enterprise time? that deals XXX what being in of then how midmarket opportunities are considered many about pretty a in your Okay, side, hypothetical hopefully just the question, got there's which payroll if sales

David Ossip

do that that. for are answer an have there do I believe don't see. not I deals we

more increasing obviously, will [indiscernible]. and so allow sales play expenses across the to And us at marketing board

that that should we quite are know we our confident those we investments making are As healthy, quite [indiscernible] see growth. by

Justin Furby

the Arthur, services, into housekeeping you would under that just consists a that so can item, us of that what give And it. sense $X of is? reclassified from revenue million a got or Okay, of sort what revenue then recurring XXX get or

Arthur Gitajn

for we so the we're what it and the services price sales PEPM other. under deemed entire you doing the it, wherever here revenue to and standalone have Basically you the the elements and in fee sell services, we're services as professional of PEPM on not. then Professional on elements, are take between the is XXX the arrangement allocate primarily recurring

sales from And so, really it's estimated from you are PEPM, revenue allocating recurring on standalone the price. services based to

Justin Furby

you very Thank much. Okay.

Operator

turn Thank you. final questions at the Mr. for you there Ossip, floor further are I'll any to time. this back comments. no

David Ossip

to which continued Thank us performance positive revenue in our to has our third strong the in you very quarter much. In closing, momentum we pleased and are work-life second delivering and and to interest better that I'd for thank everyone for customers investments We our quarter, our outlook and with to and increase year the their the allowed technology today. accelerate to joining the employees. growth Ceridian building remain us in you. your again dedicated innovative to for make Thank initiatives. like call helps for

Operator

you. This concludes today's teleconference. Thank

time. you disconnect Thank for this your participation. may lines You at your