Ceridian HCM Holding Inc. (NYSE:CDAY) Q3 2019 Earnings Conference Call Transcript

Nov 07, 2019 • 05:00 pm ET

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Ceridian HCM Holding Inc. (NYSE:CDAY) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Jeremy Johnson

Thank you and good evening. On the call today we have President and CEO, David Ossip; and CFO Arthur Gitajn.

Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call including the Q&A portion may include forward-looking statements about our current and future outlook, guidance, plans, expectations and intentions, results, levels of activities, performance, goals or achievements or any other future events or developments. These statements are based on management's reasonable assumptions and beliefs in light of information currently available to us.

Listeners are cautioned not to place undue reliance on such statements. Each forward-looking statement is subject to risks and uncertainties that could cause our actual results to differ materially from those set forth in such statements. We refer you to our previous filings with the SEC for information regarding the significant assumptions underlying forward-looking statements and certain risks and other factors that could affect our future performance and ability to deliver on these statements.

We undertake no obligation to update or to revise any forward-looking statements made on this call except as may be required by law. The third quarter earnings release and quarterly report on Form 10-Q, the related financial statements and the MD&A have been furnished or filed with the SEC and will be available on the SEC's EDGAR database in the U.S. and the SEDAR database in Canada as well as on the Ceridian Investor Relations website at investors.Ceridian.com. As a reminder, all figures discussed on this conference call are in U.S. dollars, unless otherwise noted.

And with that, I will turn the call over to David.

Executive
David Ossip

Thanks, Jeremy. Good evening, everyone, and thank you for joining our earnings call. We are very pleased with the results from the third quarter of 2019. Dayforce momentum remained strong, with Dayforce recurring revenue growing by 33% both on a GAAP basis and on a constant currency basis. Total Dayforce revenue including professional services and other increased by 30% year-over-year on a GAAP basis and 31% on a constant currency basis. As we had expected, the revenue growth for both Dayforce recurring and Dayforce total revenue reaccelerated. Dayforce total revenue growth exceeded 30% for the first time, since the third quarter of 2018. Including Powerpay, Cloud revenue grew by 26% both on a GAAP basis and on a constant currency basis.

Moving on to Customer Count. We ended the quarter with 4,159 customers live on the Dayforce platform, a net increase of 163 customers from the second quarter of 2019 and a net increase of 704 customers since September 30, 2018. From a profitability standpoint, we were pleased that Cloud recurring services gross margin expanded 440 basis points year-over-year to 70.2%, and professional services and other gross margin improved from negative 13.6% to negative 7.7%. Adjusted EBITDA was $46.4 million, an increase of 27.5% compared to last year and adjusted EBITDA margin was 22.9%, an increase of 250 basis points compared to last year.

Moving onto our focused areas of investment, product development and sales