Online payroll and human resource software provider Dayforce (NYSE:DAY) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 16.4% year on year to $431.5 million. The company expects next quarter's revenue to be around $416.5 million, in line with analysts' estimates. It made a non-GAAP profit of $0.43 per share, improving from its profit of $0.31 per share in the same quarter last year.

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“I am pleased to report another strong quarter for Dayforce. We grew both revenue and operating profit, and we exceeded guidance across all key revenue and profitability metrics,” said David Ossip, Chair and CEO of Dayforce.

Founded in 1992 as Ceridian, an outsourced payroll processor and transformed after the 2012 acquisition of Dayforce, Dayforce (NYSE:DAY) is a provider of cloud based payroll and HR software targeted at mid-sized businesses.

HR Software

Modern HR software has two powerful benefits: cost savings and ease of use. For cost savings, businesses large and small much prefer the flexibility of cloud-based, web-browser-delivered software paid for on a subscription basis rather than the hassle and complexity of purchasing and managing on-premise enterprise software. On the usability side, the consumerization of business software creates seamless experiences whereby multiple standalone processes like payroll processing and compliance are aggregated into a single, easy-to-use platform.

Sales Growth

As you can see below, Dayforce's revenue growth has been strong over the last three years, growing from $234.5 million in Q1 2021 to $431.5 million this quarter.

This quarter, Dayforce's quarterly revenue was once again up 16.4% year on year. We can see that Dayforce's revenue increased by $31.8 million quarter on quarter, which is a solid improvement from the $22.2 million increase in Q4 CY2023. Shareholders should applaud the re-acceleration of growth.

Next quarter's guidance suggests that Dayforce is expecting revenue to grow 13.8% year on year to $416.5 million, slowing down from the 21.5% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 13% over the next 12 months before the earnings results announcement.

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Customer Growth

Dayforce reported 6,575 customers at the end of the quarter, an increase of 182 from the previous quarter. That's a little better customer growth than last quarter and quite a bit above the typical growth we've seen in past quarters, demonstrating that the business has strong sales momentum. We've no doubt shareholders will take this as an indication that Dayforce's go-to-market strategy is working very well.

Key Takeaways from Dayforce's Q1 Results

We were impressed by Dayforce's strong growth in customers this quarter, enabling it to narrowly top Wall Street's revenue estimates. On the other hand, its revenue and EBITDA guidance for next quarter underwhelmed, although its full-year outlook remained intact. Overall, this quarter's results seemed fine. The stock is flat after reporting and currently trades at $61.61 per share.

Dayforce may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.