Q4 2020 Ceridian HCM Holding Inc Earnings Call

And you're in a P. J one of the fastest grade and regions and provides a significant and cross sell opportunity for day falls.

We expect the acquisition to close and the second quarter and will provide greater clarity for the announcement implications of the acquisition at that time.

I would like to now hand, it back to Jeremy to open the call up for questions. Thank you.

Thanks, David.

As we go through the Q&A portion of this call I'll announce your name and at that point, we ask that you. Please on mute your line and ask your question and then re mute. Your line May also ask that you. Please limit your time to one question and one follow up.

First question comes from the line of Mark Murphy from J P. Morgan Mark. Please go ahead.

Alright.

Mark doesn't see Mark of young.

We'll move onto the next question, we're going to go through is Mark Mark on of Baird Mark Sue. Please go ahead.

Hi, everybody.

I'm wondering if you can talk a little bit more about the impact with regards to the sales and.

And this quarter and what stalled over into January and should we anticipate that the.

The first quarter sales numbers are going to end up being elevated because of what was you know what was what fell into the into this quarter, how should we think about that.

The market was a handful of very large accounts.

Net sales in early January as opposed to late December.

And what I'll say is that of the customers were less reluctant to call executives back to just do the teeth and see the in all cases, where and the final stages of contract.

Normally black line and just waiting for final signatures and they felt spilled over into January.

In terms of revenue impact obviously is minimal because as you know we typically recognize revenue on the whole when the customers go live.

In terms of January and we're optimistic about the actual quarter.

We had a strong January obviously, given the of spillover.

From December and the pipeline still remains very strong.

Great and can you talk a little bit about just the pipeline of we're hearing some you know and some chatter from some systems integrators, saying that theres a greater number of really large enterprises that are looking of digitizing their HCM processes toward an even greater extent and they were previously are you seeing that.

And how do you think that unfolds over the course of the year. So it and it's an interesting question to ask for member of that we've been moving up into the large enterprise space over the last 18 months of its hard to.

And to differentiate.

If there are more opportunities out there for all of US just asked the more relevant in the large enterprise.

For the space.

Yeah.

That being said David can you just say, how many more opportunities you're seeing relative to what you would've expected of war.

Anything along those lines.

Market for charity again differentiate obviously, we are seeing more opportunities are there any of it is as you said more large enterprises looking at digitizing their HR processes for its just that we are of proper contender and you know there are a lot of data points in there. Obviously, we had many more large deals last year.

We were included in the block and the Gartner needed leadership quadrant.

It makes us much more relevant for that particular enterprise space as well our global operating has strengthened as well year over year and most of those large opportunities do you have a global of component. So we are seeing more large enterprise deals.

But I can't tell you if it is from more opportunities and market or just us being included and more opportunities.

Sure. Thank you.

The next question comes from city of Pentagon at Mizuho of Citi. Please go ahead yeah.

Yeah. Thanks, Thanks for taking my question Justin.

And just in terms of the our guidance with the Idaho.

You didn't give the full guidance for the day for recurring revenue.

22% Q2, and the second half of 25 per cent for David What's your assumption in terms of unemployment.

Eric.

And our and 2000 and talk to you on and and.

And that guidance how much of this kind of the Everglades going back and do new sales as I said on the.

Employment levels within your installed base.

Well about 25% of our sales is add ons to the base and those add on sales two forms other additional populations mainly from the global employees.

All from buying of new modules. So the majority of our growth obviously comes from the acquisition of new customers.

And in market.

In terms of the growth rates tremendous vary from system, what we said last quarter.

We said that we would expect to see the recovery and the second half of 'twenty and 'twenty one given that we saw sales recovery starting in about Q3 of last year.

Mhm Okay.

And then one of the follow up on the international opportunity.

Last year, and you talked about 'twenty expanding into 'twenty country, then and now you mentioned of about 50 concrete.

That seems like pretty aggressive international expansion and so what sort of regulate countries and now you're you have and the how should we think of broadband internet for.

The revenue contribution and going forward.

And our city as we move upmarket and enterprise space, We obviously see many more global opportunities the acquisition that we do the often called harvest of extended T.

Last year had a very positive impact.

And helping.

Peanuts for the global opportunities.

So we did see a lift if you like in win rates and especially with our organs.

Organizationally that had populations and a P J.

Our upcoming acquisition of ascend the obviously will strengthen us in Africa as well.

But we also have continued building out major of capabilities into Germany.

The U K I region has done tremendously well over the last year. So we remain very optimistic on the global side.

Thanks for all of it.

The next question comes from some of Simona of Jefferies small. Please go ahead.

Hi, good evening and thanks for taking my question so.

David as always we appreciate all of the thoughtful of remarks, and the and a shareholder letter Thats always very helpful, especially when there's this much uncertainty you said, thank you for that but yeah, maybe and in the remarks, you talked about returning to pre COVID-19 growth levels and so I just wanted to triangulate, maybe a little bit further on that at the.

Is that mean that you do you think that the growth for day force recurring ex float will get back to that 30% plus type of level that we saw and 2019 and and <unk> of 'twenty before Covid hit and I'm not trying to pin you down on the on the timing of when that happens I don't think of any of us know, but is that you're saying the 30% is achievable as of <unk>.

Return level.

And they want it but.

A number out of out of guidance for what I will say is that we have given a guidance number that we feel quite comfortable with.

There's still a bit of uncertainty around the impacts of Covid and.

For example, if I look at Q4.

And that we just passed we had expected to see about a 2 million dollar recovery in terms of employment levels. So the impact from high unemployment and.

Increasing our revenue by about $2 million in reality, we only saw about a <unk> 5 million of <unk> 5 million recovery.

And so it all depends really on what goes on and the employment levels as we move into the second half of 2021.

If we see the and recovery.

Kind of a solid five and I think we can be a little bit more aggressive and looking at the growth rates and the second half of the year.

Great and then as my follow up I'd like to maybe the kind of add.

And I add on to the city's question around the international side and clearly with the the three acquisitions over the last couple of years I'm curious if you could give us any data or at least anecdotal data points on how the uplift has looked for customers that were using and accelerating that of added on day force products or.

Or are right tack and just so we can start to think about what that the long term opportunity it looks like sort of if they were spending.

X dollars before what's that revenue uplift or our sales uplifts booked bike when you've sold and your day of force products into their base thereof, and then with display of the uplift number on the on the Upsells to write checks and <unk>.

But we obviously do the extent expect a significant cross sell opportunity. So if I look at the ascend the opportunity and I'll break it down 1200 additional customers most of them actually are quite nice and enterprise side.

And that provides a significant opportunity for us to obviously migrate to day falls and a center effectively does payroll.

So we should be able to add on work force management and all of the various talent components as well. So we're quite excited about the opportunity of that.

And one other point of the Auto Center is when you combine of center with Excel of T. We're at about 1500 customers about $2 5 million employees paid and we believe that positions us as the dominant leader in the E. P. J region, which is the fastest growing region for human capital management.

Again, a very good data point and another reason for optimism.

Great really appreciate you taking my questions and I'll turn it over to the Nexsan and Ross. Thank you again.

Thanks, Our next question was and it come from the line of Mike Water and Michael. Please go ahead.

Hey, there thanks, everyone and good afternoon, and good to see everyone.

Going back for just the question on the shape of day for US I think we're all just recalibrating and can appreciate the moving pieces. There last quarter you were guiding for what looked like a slight acceleration in the Q1. It looks like Q4 actually came in a touch of ahead of maybe where we were modeling, but the Q1 outlook now implies maybe a slight step down before you move.

Back up towards that 25% target and the second half so.

I know David mentioned some of the enterprise impacts and there are some good details and the letter but can you just help with level of setting if there's anything else driving the change in trajectory and maybe just touch on also how much visibility you have into that second half target level.

We obviously get into the year with very good visibility.

And in terms of Q1 Youre right.

And we outperformed in Q4, and if employment levels have improved for the level that we had expected.

And you would've seen another about $1 million to $2 million of revenue on the.

On the day of fore sight.

However, the COVID-19 the employment levels haven't recovered to levels that we had expected when we get to the Q3 call and so we're taking that into account and we look at the Q1 guidance.

I know in the in Germany, and anything else that you would add to that.

And I think that's the good summary, I think the other thing I would point out of the on the professional services side of the presentation. We've seen a pretty steady pace of go lives and Q4 and I think that that may have shifted some of the revenue expected from the Q4, but really beyond that I think David covered it all.

That's helpful color, if I can squeeze in just a quick follow up on wallet.

And the numbers keep moving up it's now 100 customers using of 375 signed up that's a pretty big sequential step up from the 200 last quarter are the some of the stats that you laid out are those that are helping with adoption and traction of it it would seem that some of those metrics around things like retention and turnover in this environment could could certainly help with adoption and something like.

Wallet share.

A few things and wallets the.

The actual numbers are at or slightly higher.

I think it's actually about 122 customers that are live and wallets and 399 customers have signed up.

Obviously, the still seen rapid and if you like adoption of the.

The actual wallet.

Obviously, yes.

And we see the economy moving to recovery, probably starting in the second half of the year. We expect that focus will be on talent acquisition and the fact that wallet significantly improves the time that it takes to find people the time that it takes to actually.

And the probability of closing.

Helps a lot of and also the fact that it reduces voluntary turnover across molecule. This.

Is all the theory.

A big selling point and not only for Wallach actually for day for us as well.

Thank you.

The next question comes from the line of Dan Jester and please go ahead.

Great. Thanks, and good afternoon, everyone, so sticking with wallet.

A couple of stories about state and local authorities looking to potentially put some additional regulations around earned wage access and and limit. Some of the keys is that something that you're hearing and does that have any impact on how you think about rolling out from here for.

Dan and I appreciate the question, but that's actually how we differentiate and markets. We don't charge the employees and E C safety and compare our wallets to some of the third party volume and market.

The charge a certain amount of per month per active wallet holder of cardholder, we don't do that.

We don't charge any direct feeds for usage of the wallet. So there's no fees to load money and there's no teach the effectively spend on the actual warrants of either.

And so we had expected fashion and our belief is that in the longer term the construct of the PE heritage, which as you noted the weekly biweekly and some cases, even monthly makes the no longer makes any sense people should have access to their earned wages as the earn outs.

Great. Thank you and then.

Just maybe turning to margins and sort of the comments around 2021 can you help us think about the sort of the puts and takes between sort of the step up investments and the fact that float revenue is going to be lower which would margin excluding float could they go higher in 2021 or two.

The investments offset that from a margin perspective, the metric we look at is our gross profit on recurring revenue.

On cloud and.

As you know that went up by 200 and basis points or 380 basis points ex float and Q4, we would expect to see that metric continues to grow.

And into 'twenty 'twenty, one in terms of EBITDA margin. It's another year that we do have headwinds.

If we do look at it if I look at just Q4 of learned relative to the prior Q4 and the impact of employees and employment levels, while its about $9 $5 million as compared to Q4 of 2019.

And we had a float headwind of about $7 million.

And compared to 2019.

When we look at Q1, we go in again with headwinds.

From the employment side I believe that Jeremy correct me on EM and correct me, if I'm wrong of about six point a $5 million.

And from a flow perspective, I think we actually go in at least from a Q1 perspective of about $9 million total a flow of headwind.

And if you divide it up between day falls and power pay it's about six and three respectively.

Now obviously as we start to get into Q2 Q3 Q4.

On a normalized basis, it becomes a little bit more even because we are operating and shoot Covid day, yes.

Yeah, and maybe if I can add to the color on margins and some of the investments we're making I think we're looking beyond 2021, and as David mentioned earlier Theres, a lot of opportunities with customers globally.

Well as customers and the markets and we're definitely investing and our product capabilities to support those customers and we're also investing in sales and marketing to go after that and that's it's time that we havent yet tackled. So I think that's really important we're making conscious decisions to invest to few of the growth of day for current and future because that's really where we're betting.

But I think where we're also managing on the G&A side very cautiously to get scale. So I think the combination of both you'll you'll see some improvement towards the back of the 'twenty 'twenty, one and more in 2022 of them, but that's.

Horton to really focus on addressing the growth that we have and.

And then looking at the global opportunities and the expansion of the product capabilities that I think that's critical for us.

Everyone can understand great.

Great I appreciate all of the color best of luck everyone.

Thank you Dan.

Next question is going to come from Brian in Bergen, and Cowen and Brian. Please go ahead.

Alright, Thanks, guys. Good evening I wanted to start with the sender David can you talk about the strategy with this one as far as whether it was really targeted for the and country expertise and to migrate the clients over to day for us versus most of the attractive technology that youll layer and too and also it seems like it's a larger deal than you.

The other recent transactions and I'm curious if this is the one off or if this is a signal of youre going to be at the market for bigger transactions and.

Let me start with the Y Y and center and so.

And if I look at the ascend the 1200 customer base and the employee base. The majority actually is in Australia.

And the Australia, there actually have two products one of their product is an education and in government, which are new verticals for us and market.

They have and exceptionally strong team when it comes to domain knowledge.

Round payroll, which will help us significantly in the ANZ space and because.

As you noted one of our constraints of ways for growth is just having great people around who can help implement and support kind of products.

The plan for a center is no different than what we've spoken about historically.

And that the technology stack is largely day to it as compared to day falls and so over a period of time and provides a movement of opportunity towards staples and as we do that we would expect also that you have the ability to up sell them on time and attendance workforce management.

Talent acquisition performance comp the engagements and the like so a tremendous cross sell ability.

The other point about ascend is when we combine and as I mentioned, we can sell a cheap we do become the dominant player in the a P. J region and if I look at the a P. J region is probably about 25 per cent of the global town.

When you look at and the human capital management systems, and it's probably the fastest growing regions as well so it gives us a significant.

And if you like the presence inside the actual region and already we see and impact of the <unk> acquisition in helping us win not only accounts and a P. J, but other global accounts with those companies had significant head count and the P J region.

So it fits very very nicely in terms of the future. We will continue to look for opportunities in country, where we can find great people.

Customers that provide the opportunity to move today force and to upsell and to get the local knowledge. If you like with the inside the actual marketplace. So its a what I would say about the center.

It's very much in line with what we communicated to the market.

For a year ago.

Okay.

And then a follow up here around the Bureau and <unk>.

Comment on what the Bureau of migration benefit the day of course was and fiscal 'twenty and what what's left and the Bureau of that you expect to be potentially convertible here and the future of at what point of the base out of the.

And the numbers for.

'twenty and 'twenty were 585851 and for one sorry for for.

Across the a year.

As we go into next year, obviously, if you're going to start to see lower numbers.

We're coming to the actual and by the end of 'twenty and 'twenty one.

And they effectively should be almost no bureau of revenue as it relates to payroll.

No EMEA, Jeremy and anything that Youre at the color about.

And what remains at the end of the year.

I'm not on that David and I think you've covered it all of that honest Thunder at the <unk>.

Other point I would make on the acquisition and why it is very relevant for us is on the.

Global operating model that we are trying to to be on I mean, we've been so far and North American Canadian company centered around serving customers globally and now if you ask Scott and the Kirby right. They can know offender, we're really building a region and a P. J to serve our customers locally with the robust our partners.

Ecosystem and we have a strong leadership, that's going to come on board as well the deep knowledge of the customer. So I think that's also very critical for us and that regardless of who are building avail of global.

Company and so I just wanted to highlight that for you as well, but all of your I think he covered and don't need it.

Yeah.

Thank you.

Thanks, Brian next question comes from the line of Mark Murphy, Mark J P. M and please go ahead. Thank you Jeremy Thank you for bearing with me and nice to see you are David the.

And going back for the comment about the impact from the.

Second we Havent Covid certainly understandable can you help us understand and maybe how many transactions and total you were looking out of the or the dollar value of bookings debt closed in January and and I and I think more importantly is your suspicion or are you trying to convey that.

You are past.

The period, where there would be those kinds of disruptions and it sounds that way based on your commentary.

But just with vaccines rolling out and kind of the infections trending a little lower do you think that that might of been a bit of a one off.

Yes.

And the Mark I would say at the end of last year, we started to see fatigue, if you like in the customer teams and whatnot.

Meanwhile, the keys that we didn't have the same urgency that we typically have at end of year, where it's all hands on deck from the customer to get the contract signed so even though we were at black lines with the actual customers and getting that final signatures.

It's a little bit more effort and we've seen beforehand. So shortly after the new year's and those transactions close we're talking about a handful of customers three of four large transactions and moved over into the January.

In terms of Covid.

And we didn't see the.

Recovery that we had expected in Q4 and as I mentioned, we had thought that the headwinds in terms of employment numbers would improve between $1 million to $2 million in Q4 in reality, we only for about half of million.

A recovery and so we are still seeing.

Impact of Covid, if you like in Q1 in terms of employment accounts.

And we do believe there by the second half of the year.

And should be through that.

And the U S already I would say it looks like and we've seen the numbers being published that.

And that the employment numbers and the U S seem to be going up and.

And as the little bit behind because I think you know the vaccine rollout and calendar hasnt been and <unk>.

Successful and as it is and the U S.

Okay, and if I can sneak in a quick follow up.

I think the this the gross and the day for us revenue per customer that you've listed here.

8.5% during 2020, it's quite impressive that has to be well above.

And your peer group is it is it possible to just unpack that in terms of how much is our larger customers. You brought on that are lifting that average up and <unk>.

Versus how much of that is the existing base of.

It was up kind of absorbing more of your technologies.

It's.

Okay. If I look at the ratios at the end of the year.

It still was about 53% and kind of the mid major markets and about 35% and the enterprise side.

What we are seeing the is tremendous up sell.

Across our customer base now and if I go back a year ago. When we spoke about add ons. We typically we're speaking about additional modules or adding to the customer now.

<unk> also seen the impact of global so last year, the add ons, where about 20 per cent. If I look at Q4, we were at 25% and I would say that's probably is the impact of the global employee populations that we're actually adding on to day falls. The other pointed out and mentioned that if I look at the actual growth.

In terms of employment counts and.

And we obviously are up about 9% I believe in terms of the average size in Q4, but remember that is after taking into account the employment headwinds.

That we typically wouldn't have had and the third headwind. So if you actually of corrected from net I think it actually would have been even more significant other metrics of I really do think for impressive that even in a COVID-19 yeah. Our retention rate remained around 96 per cent.

On cloud.

And if I look at our net retention rate, we remained at about 106%.

And I think there's a very very strong numbers.

Excellent. Thank you very much.

Next question comes from the line of urban and 19 from Piper Sandler. Please go ahead.

Hi.

Thanks for taking my question I wanted to really kind of go back. The addition of water.

And some good color on that and also you know urban and research has suggested that kind of assumption par.

For the on demand pay continues to grow and you don't really have a competing solution.

And then can you talk of Martin.

If the customer concentrations and comes out of customers kind of looking at.

And basically what it is the reason for it to a Saturday and versus the competitor and how much of the helping on the win rates and and even if.

The metrics are not.

High income and the actually the U S H interest.

Is this kind of like the secular driver, where we had for the early stages and the next two three years of become the company mainstream for.

And it definitely is having an impact on our win rate on day falls as I mentioned, we've seen and burned 80% of attachment rates of wallet to new customers.

And the metrics that we now also have if I look at the number when we build a module. We've used the same methodology from the very onset, which is one of the kpis, we can impact that the customer through use of the actual for the.

The true through the use of the actual and <unk>.

And how does an improvement and net kpis and translate into dollar or money benefit for the customer.

And so when I look at the actual wallet metrics that we're now able to look at and we get that by looking at wallet users versus the general population of our customers and we obviously have almost 5000 customers now so we have a big group that we do the testing.

And we're seeing the benefit on the talent acquisition side and on retention side and just the retention side alone. Many of you actually run through the numbers.

You get a 42% reduction.

And voluntary turnover and maybe just make the math easy you say, okay. The person makes the $50000. We're looking at typically of 10% voluntary.

Attrition rates.

And at a company if the have a thousand employees that means that they typically would lose about 100 people per year, if we can impact that by reducing debt by 40% that means that we can save them 14th of April the cost of replacing each of those people is probably 25 per cent of the salary.

So the $12 5000.

<unk> thousand dollars per person times 40 people.

Right and and that's that's obviously a big number that's about a 100 K just from the use of the wallet in that particular customer.

And so you're beginning to see the ROI and again it ties back to that whole premise, we have to create quantifiable value for our customers now with wallet, we extend debt onto the employee side as well because when an employee of actually begins to use the water. They get access to the funds continually so and if you have of credit card Bill.

Debt comes due in the middle of the month between pay periods and this allows you to pay of your credit card as opposed to doing the minimum payment and the interest of 22% and the full balance.

And also if you are someone who is really a non bank employee of your paycheck to paycheck. It allows you to avoid those very extensive seeds of going to pay day learn what she actually other types of expensive types of borrowings.

And when we look at the way that we've built the wallet. It leverages the continuous pay engine that we have with inside day force member as we compared to any other competitor and market.

With us we have one system with one rule engine. So that's continually throughout the pay for it we calculate your net earnings the wallet allows the employee to see how much they've made net of voltage options and taxes added to the day of force wallet. So often spend it we don't charge the customer and.

And anything for the use of the wallet, we don't have them change the way the PE fund their payroll and they still fund at the end of the actual payroll cycle, we don't charge of employee any direct fees for the usage of the actual wallet chill out of the money onto the actual wallets.

And what you actually do the spend so again and creating tremendous value for the employees of our customers as well as for the our customer base and that is the big differentiation relative to anyone else and market.

Yeah, Yeah absolutely.

That's an incredible success and I appreciate the providing the detail the metric.

You don't.

And given that the heart of the high Rois philosophy, whether the wallet and always be essentially of free product or at some point and the burden of usage and maybe some of them for years or you just kind of look at my children.

Thank you.

And fundamentally what we were kind of just stay kind of reservoir and ESG.

The challenge of a key charging employees for the usage of the wallet and I think that would go counter to what we're trying to do right.

And remember our brand promises to make work life better and are the only thing charge and those employees, especially those employees of comp reported PE.

And I usage of the wallet and I think the fees actually ethically wrong.

And so they intend to the here is to make sure that we designed the wallet in the way that we can benefit from the interchange in East and North America that funds, the wallets and allows us to make a nice profit that's true the use of the of the wall of it.

Great.

Yeah, I really appreciate and thank you.

Thanks for our next question comes from Josh Reilly, who is in for Scott Berg of Needham.

Thank you. So I was curious what are you guys seen with the use of usage trends on the platform. During the pandemic now that you have several quarters of data points here are there any modules that might be searching of inactivity or up selling better than the pre pandemic period, and then are you using any of that data and the sales.

The cross sell complementary modules.

And we've obviously seen of lift in terms of add ons as I've mentioned.

In 2020.

In 2019, and we averaged about 20% of.

Of our monthly sales were add ons to the base that figure of 225% in 'twenty and 'twenty.

Part of that was the global and for the employee base and so we obviously did see as well additional module add ons and the type of add onto the typically saw where to the key things around learning management.

<unk> management the compensation the Inc.

Gauged and surveys.

And if I look into 'twenty and 'twenty, one and very optimistic about what we can see in terms of the hub and the hub plus the rock coming out of.

I believe we will continue to see benefits from the benefit of intelligence and after the release at the end of last year, which again focus of Mac quantifiable values and very very strong ROI for the customers and so.

Hey, Josh and Yeah, we did see obviously more usage across the module and fuels the general trend for more digitization.

Our customer base.

Okay, Great and then just one follow up of international outside of Canada, Obviously has been growing as an opportunity here given the M&A activity and investments and native payroll how should we think about what regions you are going to be targeting for sales and marketing investments here in 'twenty and 'twenty one.

Obviously, we focused on a P. J, but is there anything else that we should be aware of where there's a pretty meaningful opportunity here. Thanks for.

And obviously you were building out major of pay for Germany at the moment and we've been quite successful and market with our work force management product inside that particular region and so you'll see us do a lot more investments in Germany and the surrounding countries.

The next question comes from the line of Dow True of Credit Suisse. Please go ahead.

Other thanks for taking my question.

David I have one philosophical one for you on M&A I can't imagine you're the only one hunting for these assets out there.

Can you help us explain how sort of doing this different shaded or advantages of the buyer versus the other sponsors of the local acquirers and we'd be looking at the same assets that you are.

I think of lot of it comes down to what we can actually of the employees of those particular customers and I think if you look at us compared to where they typically where the land ups. The companies. We're a lot more attractive option remember if you look at the history of Ceridian and today. It really started with the acquisition of the Aprils and if you look.

And how we leverage the people from the Air Force myself and it would be and example of that.

And I encourage you and release, it and see significant career opportunities with inside the organization and asthma and Amy mentioned.

A large part of Dania sender acquisition. Once if we are now beginning to transition from net North American company operating globally surety of more of a regional model and authentic gives us really critical mass with inside the a P. J region, which again further differentiates us from the other players inside the actual market.

On the global side I do believe we have a significant opportunity to be differentiated the trends of our technology platform.

And how we can actually if you like leverage the people that we see inside the country to win more and more customers.

Thank you that's great and if I may just have one quick follow up on the pricing environment can.

Can you speak at the high level of just how pricing is kind of more broadly and the competitive dynamic.

<unk> rationalized from the marketplace do you expect pricing to recover from what you might call depressed second half COVID-19 levels, how you just.

Conceptually of coach pricing and competition here.

And I think that pricing and really changed in 2020 as compared to 2019.

And what I would say if it came down to multi contract towns.

And as us and others provide a more flexible terms to our customers stocking in Q2 of last year, just given the inherent risk of Covid.

Thank you that's very helpful.

Thanks, Joe next question comes from Kevin Kumar is in for Chris Merwin of Goldman Goldman Sachs.

Hi, Thanks for taking my question a question on Powerplay, how should we think about COVID-19 and and <unk>.

For him and impact to that business and the trajectory of growth.

Should we think of it similar to the day for us.

And kind of a rebound in the back half of 'twenty one.

I think that Bob and it's going to be under more pressure than vehicles, because it largely is what Ernie is a small business in Canada and.

And if we look at Canada, the largest market that we have which would be Toronto and Montreal are both under lockdown and.

So we are seeing more revenue pressure on power of paid and we are seeing on the walls.

Coupon of AR.

Quantify it and when.

When we actually look towards Q1.

The headwind I believe for.

For Tal.

Hey, Jeremy it's going to be one of about three.

$3 million or so.

Yeah, that's correct moving into Q1, whereas if we looked at day falls, which is of much more significant revenue.

Our revenue stream in aggregate, it's about $6 5 million. So it's obviously a.

Our power pay it's still a feeling for it and much more now and we are seeing with.

With day falls and now I think the recovery is largely determined on.

The Canadian it's really getting the act together in terms of vaccine distribution.

And the currently it looks like the expectation is that they'll be able to provide vaccines to everyone who wants it by the end of Q3, which is somewhat in line with the U S. Although it's been installed probably a quarter lesion.

Great. Thanks, a lot of David.

Thanks, Kevin next question comes from Brad Clark of BMO.

Alright. Thank you for taking my question and just wanted to revisit a cloud.

The revenue.

Churn rate ticked down a little debt compared to 2020, just want to understand how much was employment and popkin GAAP metric versus other factors and the market share. So the employing the production the impact really the.

The net retention rates, which effectively remained constant at around one of the six about the time you added the add ons.

Yes, the Inc.

Climate and numbers you basically net debt to the same amount.

In terms of of the actual retention rates of King came in at kind of 95, eight relative to $96 three of the year before or 96, the year before that the largely around 96 percentage over the last three years. It was impacted by some of the small business losses that we saw on day for that were linked.

She's very small pilot pay of customers that went out of the business.

Thank you.

Next question comes from Matt Pfau of William Blair Ma'am. Please go ahead.

Hey, guys. Thanks for taking my question just wanted to ask on the international expansion strategy. So you kind of seem to be taken two different approaches with Europe, a bit more organic in terms of the build out and Asia Pac a bit more driven by acquisition. So maybe just the rationale behind the different strategies, there and then.

And also in terms of the partner program any difference in terms of how you think about that between the two different regions, yes, Sir.

And I think in reality and not that different.

And I say, if I look at U K I.

We built out native payroll for for the U K and and we extended into Ireland and we've been very successful day, but we started with the little bit more momentum given the history that we've had inside the inside the country beforehand.

In Australia, we started off liability nature of time and payroll for.

All of the ANZ market.

We then get and acquisition of write checks, which largely was to get people who understood. The work force management side to allow us to continue doing the implementation inside the region.

Excel of key and our centre of slightly different because we were expanding our scope of outside of ANZ into the board of a P. J, a typo of region, and particularly with us and we're picking up of wonderful team.

<unk> really experienced people in the and the A&D market place that we do believe will further differentiate us and also allows for each of growing slide deck region.

When we look more broadly on the global market, you'll continue to see the rebuilding of major.

The pay for Germany that doesn't mean that we won't look for similar types of assets around that particular type of region.

We still have to start looking towards Latin America, and other parts of Europe and other.

The World will take place in the lots and lots of opportunities out there and I do believe that the day of force global strategy from a technology platform perspective is very differentiated.

With the other players and market.

Yeah.

Got it and and then in terms of the partner strategy any any difference between the the different.

Different regions, Alright, and that's a great question and I'm, sorry, and I know Andy mentioned that beforehand, another very attractive piece of both the center and <unk>.

We're both the and software partners and the Si partnerships like we picked up with that and just on the <unk> side. We've made tremendous for aircrafts in terms of building out a network of system integrators many of them.

And being the large global sites.

If we look at it I would say, it's not pretty differentiated by by a region, but largely by size of customer that as we begin to pay more and more and that large enterprise space.

You'll see us do and much more work with the large and our system integrations and the shareholder letter we called out One example, a.

Which was the government of opportunity that we actually pop net with a system integrator and in fact, they are leading and.

And they let contracts for that particular accounts.

Great. Thank you.

Thanks, Matt. Our next question comes from the line of Chris So that's true.

For Baritones, Chris. Please go ahead and I have are the good.

Good afternoon. Thanks, a lot for taking the question just another one on wallet if you don't mind.

Of course like the digital wallet space is very active right now.

And ceridian and seems to be and a very privileged position with what seems like a captive audience. So.

Just wondering whether you see an opportunity to add some more of the typical wallet functionality, that's proven really popular over the past year and helped some of these other wallets kind of achieved virality and and really explosive growth like peer to peer transfers and I know this is more of a stretch for digital currencies and whatnot.

So that's kind of part one and and I know you need critical mass, which leads me to my second question why not.

A lot of wallet I mean, what well.

Sorry, Chris you you seem.

Seem to you you seem to of friends or not from the second part of your question, but in terms of your first the question. Yes. They are adding the typical one features that you would see things like bill pay.

Peer to peer transfers OTT transpose.

The another area that we do ever launch differentiation is really around direct deposits.

And so as we're adding more and more pay card capability to the actual water technology should allow us to actually capture even more if.

If you like usage of the actual wallets are what I will say about wallet share as we brought from a very seasoned individual and.

And the AR in Q4, and he joined Us from Green Dot.

And obviously, you're wonderful instrument tremendous experience of.

And the consumer side as it pertains to the water technology.

Chris I see you still there.

Looks like you are having network issues, but you want to try and maybe ask your second part of your question again.

Yeah, Yeah, sorry about that so the the second question is I guess I know you need some of like critical mass for some of the peer to peer stuff and I'm just wondering why not accelerate the rollout of wallet I mean, what prevents you from reaching out to all of the customers and just turning it on right away for anyone who wants to use it is it just.

What's the limiting factor there well remember we only launched the wallets in may of last year, and so for us, it's making sure that we do it properly we create value for our customers and for the employees that we make sure that the experience is tremendous and remember him from our perspective, when we look at building the product and we talk about user experience.

We don't just think hey, we have to have a really easy to use mobile app, which we do we think Rudy how do we.

The benefit the employee by giving them continual access to their earned wages with our charge of any types of fees and focus on the use cases of which all of the most attractive to them.

But if I go off of a year from now I think you'll see the features in our wallet the very much on par with some of the on the other wallets and as you'll see and market of importance for the end of Q1, and we are launching now in Canada.

And at the end of Q1, we'll launch the walls and Canada as well.

Got it thank you.

Yeah.

Excuse me and our last question comes from the line of Stephanie price at CIBC. Stephanie. Please go ahead.

Hi, Thanks for taking my question.

Just curious if you're seeing any change and the pace of implementations.

So all three of the larger deals just given the secondly, the cope with that we're going through GAAP.

And Stephanie I think knowing the actually you mentioned that earlier as well, we actually saw an acceleration of implementations in Q4.

What I will say is I think again, we're differentiated in market and that we have a robust technology.

And almost 5000 customers using gay for today.

When a customer signs up we have of very high confidence that we can take the customer live on time and on budget and.

And with a very good customer experience and if I look at our net promoter scores on the implementation.

For over a year they were up significantly.

So even during this COVID-19 period, and not have we been able to only accelerate implementation, but we're also the haven't seen much.

Much better implementation of experiences as measured by NPS.

Right and and maybe just one for a lot of just curious of what the composition of bookings in Q4 versus Q3, and any sense of where you're thinking of the strongest demand across the client side.

It's a hard question, we continue to do very well and major markets, but obviously, we're seeing a lot of success and the enterprise space as well.

So I would say, it's very much in line with what we saw in Q3 and from the earlier in the air as well.

And thank you very much very welcome.

That concludes the earnings call for today and when the thank you for joining and for the excellent questions and.

And wish everyone have a happy and I have a good evening. Thank you very much. Thank you everyone and have a great.

Yeah.

Yeah.