UPDATE – Ceridian Reports Third Quarter 2020 Results

MINNEAPOLIS and TORONTO, Nov. 06, 2020 (GLOBE NEWSWIRE) — Please replace the release to the following corrected version due to multiple revisions.  The corrected release follows:Dayforce recurring services revenue of $122.7 million, up 12.2% year-over-year, both on a GAAP and a constant currency basis.
Excluding float revenue, Dayforce recurring services revenue of $115.1 million, up 17.9% year-over-year, both on a GAAP and a constant currency basis.Dayforce revenue of $157.8 million, up 9.8% year-over-year, both on a GAAP and a constant currency basis.Excluding float revenue, Dayforce revenue of $150.2 million, up 13.9% year-over-year, both on a GAAP and a constant currency basis.  Cloud recurring services gross margin of 70.4%, an increase of 20 basis points year-over-year, and excluding float revenue, Cloud recurring service gross margin of 68.3%, an increase of 190 basis points year-over-year.Net loss of $0.8 million, down $63.5 million, primarily due to a one-time tax benefit of $65.8 million related to the release of our valuation allowance in the third quarter of 2019.Adjusted EBITDA of $33.2 million as compared to $46.4 million in the third quarter of 2019, and excluding float revenue, Adjusted EBITDA was $22.6 million as compared to $28.1 million in the third quarter of 2019.Ceridian HCM Holding Inc. (“Ceridian” or the “Company”) (NYSE:CDAY) (TSX:CDAY), a global human capital management (“HCM”) software company, announced today its financial results for the third quarter ended September 30, 2020. All financial results are reported in U.S. dollars unless otherwise stated. A reconciliation of U.S. generally accepted accounting principles (“GAAP”) to non-GAAP financial measures has been provided in this press release, including the accompanying tables. An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.”
“I am pleased to report that we delivered strong results in the third quarter across key measures of the business, exceeding our guidance for Dayforce recurring revenue, total revenue, and Adjusted EBITDA,” said David Ossip, Chairman and Chief Executive Officer of Ceridian. “We remain focused on our growth agenda, and we believe we are well positioned to take advantage of changing market dynamics to capture market share and to grow profitability.”The average U.S. dollar to Canadian dollar foreign exchange rate was $1.33, with a daily range of $1.30 to $1.36, for the three months ended September 30, 2020, compared to $1.32, with a daily range of $1.30 to $1.33, for the three months ended September 30, 2019. As of September 30, 2020, the U.S. dollar to Canadian dollar foreign exchange rate was $1.33. To present the performance of the business excluding the effect of foreign currency rate fluctuations, the Company presents revenue on a constant currency basis, which we believe is useful to management and investors. We have calculated revenue on a constant currency basis by applying the average foreign exchange rate in effect during the comparable prior period.Financial Highlights for the Third Quarter 2020The financial highlights below are on a year-over-year basis, unless otherwise stated.Dayforce RevenueDayforce recurring services revenue was $122.7 million for the third quarter of 2020, an increase of 12.2%, both on a GAAP and a constant currency basis.Excluding float revenue, Dayforce recurring services revenue was $115.1 million for the third quarter of 2020, an increase of 17.9%, both on a GAAP and a constant currency basis.Dayforce revenue was $157.8 million for the third quarter of 2020, an increase of 9.8%, both on a GAAP and a constant currency basis.Excluding float revenue, Dayforce revenue was $150.2 million for the third quarter of 2020, an increase of 13.9%, both on a GAAP and a constant currency basis.RevenueCloud revenue, which includes both Dayforce and Powerpay, was $176.7 million for the third quarter of 2020, an increase of 6.8%, both on a GAAP and a constant currency basis.Excluding float revenue, Cloud revenue was $167.2 million for the third quarter of 2020, an increase of 10.9%, or 11.0% on a constant currency basis.Total revenue, which includes revenue from both our Cloud and Bureau solutions, was $204.4 million for the third quarter of 2020, an increase of 1.0%, or 1.1% on a constant currency basis.Excluding float revenue, total revenue was $193.8 million for the third quarter of 2020, an increase of 5.3%, or 5.4% on a constant currency basis.Gross MarginTotal gross margin of 37.5% for the third quarter of 2020, compared to 43.9%.Cloud recurring services gross margin improved to 70.4% for the third quarter of 2020, compared to 70.2%, and excluding float revenue, Cloud recurring service gross margin improved to 68.3% for the third quarter of 2020, compared to 66.4%.Professional services and other gross margin declined to (10.7)% for the third quarter of 2020, compared to (7.7)%.Net (Loss) Income and Net (Loss) Income Per ShareNet loss was $0.8 million for the third quarter of 2020, compared to net income of $62.7 million. Net income for the third quarter of 2019 included a one-time tax benefit of $65.8 million related to the release of our valuation allowance. Adjusted net income was $17.7 million for the third quarter of 2020, compared to $17.0 million.Diluted net loss per share was $(0.01) for the third quarter of 2020, compared to diluted net income per share of $0.42. Adjusted diluted net income per share was $0.12 for the third quarter of 2020, compared to $0.11. Diluted weighted average common shares outstanding were 147.1 million and 149.2 million for the third quarter of 2020 and 2019, respectively.Adjusted EBITDAAdjusted EBITDA declined 28.4% to $33.2 million for the third quarter of 2020, compared to $46.4 million.Excluding float revenue, Adjusted EBITDA declined 19.6%.Balance SheetCash and equivalents were $554.6 million as of September 30, 2020, compared to $281.3 million as of December 31, 2019.Total debt was $964.9 million as of September 30, 2020, an increase of $287.8 million, compared to $677.1 million as of December 31, 2019. On April 2, 2020, in light of the uncertainty and volatility in the global financial markets resulting from the COVID-19 pandemic, we elected to borrow $295.0 million under our revolving credit facility as a precautionary measure to increase our cash position and to preserve financial flexibility.Dayforce Live Customer Count4,704 Dayforce customers were live on the Dayforce platform as of September 30, 2020, a net increase of 535 customers, compared to 4,169 Dayforce customers as of September 30, 2019, and a net increase of 101 customers, compared to 4,603 as of June 30, 2020.Excluding float revenue, the impact of lower employment levels due to the COVID-19 pandemic, and on a constant currency basis, Dayforce revenue per customer was $129,719 for the trailing twelve months ended September 30, 2020, an increase of 13.1% from $114,704 for the trailing twelve months ended September 30, 2019.Business OutlookBased on information available to us as of November 5, 2020, we are issuing the following guidance for the fourth quarter of 2020:Dayforce recurring services revenue of $128 million to $129 million, or an increase of approximately 12% to 13% on both a GAAP and constant currency basis. Excluding float revenue, Dayforce recurring services revenue is expected to grow approximately 18% to 19% on both a GAAP and constant currency basis.Dayforce revenue of $167 million to $169 million, or an increase of approximately 5% to 6% on both a GAAP and constant currency basis. Excluding float revenue, Dayforce revenue is expected to grow approximately 9% to 10% on both a GAAP and constant currency basis.Cloud revenue of $189 million to $192 million, or an increase of approximately 3% to 4% on both a GAAP and constant currency basis. Excluding float revenue, Cloud revenue is expected to grow approximately 6% to 8% on both a GAAP and constant currency basis.Total revenue of $215 million to $219 million, or a decline of approximately 3% to 1% on both a GAAP and constant currency basis. Excluding float revenue, total revenue is expected to grow approximately 1% to 3% on both a GAAP and constant currency basis.Float revenue of approximately $6 million within Dayforce revenue, $8 million within Cloud revenue, and $9 million within total revenue.Adjusted EBITDA of $30 million to $34 million.We expect Dayforce recurring services revenue growth, excluding float revenue and on a constant currency basis, to be above 19% in the first quarter of 2021 compared to the first quarter of 2020, including an anticipated $1 million to $2 million of improvement from increased customer employment levels.Our fourth quarter 2020 guidance assumes an average U.S. dollar to Canadian dollar foreign exchange rate of $1.32, compared to an average rate of $1.32 in the fourth quarter of 2019. We have not reconciled the Adjusted EBITDA range for the fourth quarter of 2020 to the directly comparable GAAP financial measure because applicable information for the future period, on which this reconciliation would be based, is not readily available due to uncertainty regarding, and the potential variability of, depreciation and amortization, share-based compensation expense and related employer taxes, changes in foreign currency exchange rates, and other items.Conference Call DetailsCeridian will release third quarter 2020 earnings after the close of regular market trading on Thursday, November 5, 2020.A live Zoom Video Webinar of the event can be accessed at 5:00 p.m. Eastern Time that same day through a direct registration link at https://ceridian.zoom.us/webinar/register/WN_ZdpRsaJSRoCfhHkkF3zlcQ. Alternatively, the event can be accessed from the Events & Presentations page on Ceridian’s Investor Relations website at https://investors.ceridian.com. A replay and transcript will be available after the conclusion of the live event on Ceridian’s Investor Relations website.