What Happened:

Shares of online payroll and human resource software provider Dayforce (NYSE:DAY) fell 10.3% in the morning session after the company reported first-quarter results and provided underwhelming revenue and EBITDA guidance for the next quarter, although its full-year outlook remained intact. Similarly, revenue and EPS came in narrowly ahead of expectations during the quarter. Notably, the forward growth forecast implied a deceleration (FY'24 revenue growth in the mid-teens vs. 22% growth in the previous year). Overall, it was a weaker quarter for the company.

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What is the market telling us:

Dayforce's shares are quite volatile and over the last year have had 6 moves greater than 5%. But moves this big are very rare even for Dayforce and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 8.8% on the news that the company reported fourth-quarter earnings with billings falling below Wall Street's expectations, though revenue beat by a narrow margin. The total customer count also missed estimates. Looking ahead, full-year revenue guidance fell below expectations, implying 14% growth (vs 21.6% in FY2023). Overall, it was a weak quarter for the company.

Dayforce is down 13.4% since the beginning of the year, and at $57.15 per share it is trading 23.9% below its 52-week high of $75.11 from October 2023. Investors who bought $1,000 worth of Dayforce's shares 5 years ago would now be looking at an investment worth $1,105.

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