Ceridian HCM Holding Inc. (CDAY) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

August 2, 2023 5:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Matthew Wells

[Call Starts Abruptly] …CEOs, David Ossip and Leagh Turner and our CFO, Noemie Heuland. [Operator Instructions]

Now before I hand the call over to David, I want to remind everyone that our commentary may include forward-looking statements. These statements are subject to risks and uncertainties that could cause Ceridian's results to differ materially from historical experience or present expectations. A description of some of these risks and uncertainties can be found in the reports we file with the Securities and Exchange Commission, such as the cautionary statements in our filings.

Additionally, over the course of this call, we will reference non-GAAP measures to describe our performance. Please review our earnings press release and filings with the SEC for our rationale behind the use of non-GAAP measures and for a full reconciliation of these GAAP to non-GAAP metrics. These documents, in addition to a replay of this call will be available on the Ceridian Investor Relations website.

And with that, I'd like to turn the call over to David.

David Ossip

Thank you, Matt, and thank you all for joining us today on our second quarter earnings call. Today, I'll discuss our strong second quarter results continued commitment to innovation in the HCM space and provide an update on our raised full year outlook. Leagh will provide more information on sales wins, successful customer implementations and continued scale across our organization. and Noemie will add detail to our quarterly performance and updated full year outlook.

Before I dig into our financials, I'd like to congratulate the team. Our global workforce, our customer base and our partner network. There is momentum across the organization and our HCM ecosystem. And these results are evidence of that.

Now turning to our financial results. I'm pleased to report that we exceeded guidance across all revenue and profitability metrics in the second quarter. And we are pushing the full beat across all revenue and profitability metrics into our full year guidance raise. On a constant currency basis, Dayforce recurring revenue grew 39%. And Dayforce recurring revenue ex float grew 28% year-over-year at constant currency.

Turning to the bottom-line metrics and cash flow. Adjusted cloud recurring gross margins of 78.1% continued to expand by 177 basis points year-over-year. Adjusted EBITDA was $98.4 million or 27% of revenue and expanded meaningfully year-over-year by 640 basis points. This is a result of the revenue upside in the quarter and our continued focus on operational efficiencies. Adjusted operating income was $83 million or 23% of revenue and also benefited from these same trends.