Q4 2023 Ceridian HCM Holding Inc Earnings Call

Matthew Wells: Good morning, and thank you for joining us. Welcome to the Dayforce 4th Quarter 2023 Earnings Conference Call. I'm Matt Wells, Head of Investor Relief. On the call today, we have our CEO, David Ossip, and our CFO, Jeremy Johnson. We're also joined by our Chief Product and Technology Officer, Joe Korengabel, and our President, Steve Holdren. As a reminder, all participants are in a listen-only mode, and a question-and-answer session will follow our opening remarks.

Good morning, and thank you for joining welcome the day for fourth quarter 2023 earnings Conference call I'm, Matt <unk> head of.

After releasing.

Speaker Change: On the call today, we have our CEO, David <unk> and our CFO Jeremy Johnson. We're also joined by our Chief product and Technology Officer, Joe <unk>, and our President Steve Holdings.

Speaker Change: As a reminder, all participants are in a listen only mode and a question and answer session will follow our opening remarks.

Matthew Wells: 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 DAFORCE'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 filed with the Securities and Exchange Commission, such as the cautionary statements in our filing.

Speaker Change: Before I hand, the call over to David.

Speaker Change: I want to remind everyone that our commentary may include forward looking statements.

Speaker Change: These statements are subject to risks and uncertainties that could cause <unk> results to differ materially from historical experience or present expectations.

Speaker Change: A description of some of these risks and uncertainties can be found in the reports we filed with the Securities and Exchange Commission such as the cautionary statements in our filings.

Matthew Wells: Additionally, over the course of this call, we'll 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 DateForce Investor Relations website. And with that, I'd like to turn the call over to David.

Speaker Change: Additionally over the course of this call we will reference non-GAAP measures to describe our performance.

Speaker Change: 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.

Speaker Change: These documents in addition to a replay of this call will be available on the <unk> Investor Relations website, and with that I'd like to turn the call over to David.

David D. Ossip: Thanks, Matt, and thank you all for joining us. Next to me is Steve, who will review key customer go-lives and sales wins during the quarter. Joe, who will highlight platform innovation and discuss our acquisition of Illumi. And I'm delighted to welcome Jeremy back as our CFO. Jeremy will provide details on our quarterly performance and initial 2024 outlook. Last fall, we shared our intention to transition from Ceridian to Davos with a goal to simplify and strengthen our brand. And I'm excited to announce that our brand evolution is now a reality.

David: Thanks, Matt and thank you all for joining us.

David: Next to me I have Steve who will review key customer go lives and sales wins in the quarter.

David: Sarah who will highlight platform innovation and discussed our acquisition on the Lumi and I'm delighted to welcome Jeremy back as our CFO, Jeremy will provide details of our quarterly performance and initial 2020 full outlook.

David: Last fall, we said our intention to transition from Ceridian today April with a goal to simplify and strengthen our brands and I'm excited to announce that our brand evolution is now a reality as 1900 brands April we firmly believe that we can amplify our promise to make.

David D. Ossip: As one united brand, Davos, we firmly believe that we can amplify our promise to make work life better. Today's new workforce is boundless, blurred, always on, and borderless. Our changing world of work makes running an organization more complex than ever, and we're committed to helping organizations conquer that complexity.

David: Work life better.

David: Today's new workforce is boundless always.

David: Always on and borders are changing well above where it makes running an organization more complex than ever and we're committed to helping organization conquered that complexity.

David D. Ossip: That's why we chose this moment to evolve and simplify our brand from two in the market to one. We selected Dayforce because, over the years, Dayforce has grown into a trusted global platform, setting a new standard for the human capital management industry. Our customers know the J-Force name to represent innovation, collaboration, and transformation. The brand represents our future, and we design everything for that ever-changing future, together with our customers, helping them transform their organizations and set the pace for their industries.

David: That's why we chose this moment Super Bowl and simplify our brand from two in the market to one we selected day for us because over the year Staples has grown into a trusted global platform setting a new standard for the human capital management industry.

David: Our customers know that.

David: Both named to represent innovation collaboration and transformation.

David: The brand represents our future and we design everything that ever changing future together with our customers, helping them transform their organization and set the base for their industry.

David D. Ossip: I'm incredibly excited and proud of the path I see for us ahead, united with one powerful brand that represents our products company community at its best. Turning to our fiscal results, total revenue was 1.51 billion and grew 23% year-over-year in constant currency.

David: I'm incredibly.

Speaker Change: <unk> and proud of the top IC for ASUR, Ed United with one powerful brand that represents our products company community at their best.

Speaker Change: Turning to our fiscal results.

Speaker Change: Total revenue was $1 five 1 billion and grew 23% year over year in constant currency.

David D. Ossip: This was underpinned by the strong growth in day vault recurring revenue of 77% in constant currency. Day 4's recurring revenue exfloat grew 29% exfloat in constant currency and reflects the strong second half go-live, particularly of large enterprise customers, coupled with industry-leading retention rates and sustained employment volume. Adjusted cloud recurring gross margins of 78.3% continue to expand, showcasing the scale and efficiency of our platform. Adjusted EBITDA margins of 27.1%, or $410 million, reflect the flywheel of our cloud revenue and gross margin expansion, coupled with efficient op-eds. And we had record operating cash flows of $219.5 million, a conversion of 54% from adjusted EBITDA that reflects our focus on driving our profit into cash. Our customer base remains healthy and resilient. We ended the year with over 6.84 million employees live on the J-Force platform, an increase of approximately 900,000 employees added year over year.

Speaker Change: This was underpinned by the strong growth in <unk> recurring revenue of 77% in constant currency.

Speaker Change: <unk> also carrying revenue ex slowed grew 29% ex float in constant currency and reflects the strong second half go lives, particularly of large enterprise customers, coupled with industry, leading retention rates and sustained employment body.

Speaker Change: Adjusted cloud recurring gross margins of 78, 3% continued to expand showcasing the scale and efficiency of our platform.

Speaker Change: Adjusted EBITDA margins of 27, 1%.

Speaker Change: Or for $10 million reflects the flywheel about solid revenue and gross margin expansion coupled with efficient opex.

Speaker Change: And we had record operating cash flows of $219 5 million a conversion of 54% from adjusted EBITDA that reflects our focus on driving our profit into cash.

Speaker Change: Our customer base remains healthy and resilient.

Speaker Change: We ended the year with over 684 million employees live on the <unk> platform, an increase of approximately 900000 employees added year over year.

David D. Ossip: Net-go lives of large enterprise customers, or those with over 6,000 employees, increased 64% year-over-year, demonstrating our ability to shift up markets. Day 4 recurring revenue per customer of $147,000 was also up 21% year-over-year, and throughout the year, we also maintained our industry-leading retention rates of 97.1%. This is a metric I'm particularly proud of, as it showcases our ability to continually deliver value to our customers while helping them make work life better for their employees. Turning to guidance, our initial fiscal 24 guidance contemplates default recurring revenue x load growth of 20% to 21% and assumes a normalized employee cadence coupled with continued go-live activity across our larger customers. Adjusted EBITDA margin at the midpoint of 28.3% assumes our continued expansion of gross margin in addition to one-time costs associated with our rebrand and the eLUMI integration. And conversion of adjusted EBITDA to operating cash flow is expected above the mid-50% range.

Speaker Change: Net go lives of large enterprise customers or those with over 6000 employees increased 64% year over year, demonstrating our ability to shift up market.

Speaker Change: Both recurring revenue per customer of 147000 was also up 21% year over year.

Speaker Change: And throughout the year, we also maintained our industry, leading retention rates of 97, 1%.

Speaker Change: This is a metric I'm, particularly proud of as it showcases our ability to continually deliver value to our customers, while helping them make work life better for their employees.

Speaker Change: Turning to guidance, our initial fiscal 'twenty full guidance contemplates staples recurring revenue ex slowed growth of 20% to 21% and assumes a normalized employee cadence coupled with continued go live activity across our larger customers.

Speaker Change: Adjusted EBITDA margin at midpoint of 28, 3% assumed the continued expansion of gross margin. In addition to onetime costs associated with our rebrand and the Illumina integration.

Speaker Change: And conversion of adjusted EBITDA to operating cash flow is expected about the mid 50% range. In summary, we had a very strong 2023 and I'm excited for the year ahead I'd like to thank our strong team managing our customers partners and our employees our databases.

David D. Ossip: In summary, we had a very strong 2023, and I'm excited for the year ahead. I'd like to thank our strong community, our customers, partners, and our employees, our day mates. Steve, over to you.

Steve Holdings: Steve over to you.

Steve Holdren: Thanks, David. I am also truly excited for what lies ahead for Dayforce, our customers, our partners, and our day workers across the globe. Two weeks ago, we held our largest ever sales kickoff in Orlando with 800 plus attendees, 100 partner attendees, which was double last year, 10,000 hours of sales training, all focused on accelerating sales coverage and effectiveness in 2024. Throughout the year, we continue to attach the full suite to nearly 50 percent of new sales, and today, 40 percent of Dayforce customers have adopted the full suite. Add-on sales back to the base continue to trend in line around 30 percent of sales bookings, consistent with prior orders.

Steve Holdings: Thanks, David I Am also truly excited for what lies ahead for de force our customers our partners and our day makers across the globe too.

Steve Holdings: Two weeks ago, we held our largest ever sales kickoff in Orlando 800, plus attendees 100 partner attendees, which was double last year 10000 hours of sales training all focus on accelerating sales coverage and effectiveness in 2024.

Steve Holdings: Throughout the year, we continue to attach the full suite to nearly 50% of new sales and to date, 40% of <unk> customers have adopted the full suite add on sales back to the base continues to trend in line around 30% of sales bookings consistent with prior quarters.

Steve Holdren: Day Force Wallet also saw healthy traction with 1,150 customers live and 1,860 new customers added. Average wallet registrations continue to tick up, now above 60%, along with healthy wallet usage of about 25 times per month. We surpassed $3 billion in total day-four wallet loads earlier this year compared to $1 billion at the start of 2023. Last year, we brought in Sam Akherat as Chief Revenue Officer to take our sales function to the next level, and we are already seeing significant benefits from his leadership, including strong talent infusion, enhanced pipeline size and quality, improved conversion rates, deal execution rigor, and stronger go-to-market alignment. However, we did also see longer sales cycles and more decision gates in Q4, impacting our sales performance relative to our aggressive goals. That said, in 2023, we saw 50% year-over-year growth in pipeline generation.

Steve Holdings: <unk> wallet also saw healthy traction with 1100 50 customers live and 1800 60, new customers added average wallet registrations continue to tick up now above 60% along with healthy wallet usage of about 25 times per month.

Steve Holdings: We surpassed $3 billion in total day parts wallet loads earlier this year compared to $1 billion at the start of 2023.

Steve Holdings: Last year, we brought in Sam apparatus, Chief revenue officer to take our sales function to the next level and we are already seeing significant benefits from his leadership, including strong talent infusion enhanced pipeline size and quality improve conversion rates deal execution rigor and stronger go to market alignment. However.

Steve Holdings: We did also see longer sales cycles and more decision gates in Q4 impacting our sales performance relative to our aggressive goals that said in 2023 weeks up 50% year over year growth in pipeline generation. We entered 2024 with a record pipeline coverage ratio and started the year strongly with.

Steve Holdren: We entered 2024 with a record pipeline coverage ratio and started the year strongly with January sales ahead of our target. Before I move to key sales and go live, I'd also like to share the recent announcement from the Government of Canada that their extensive testing of the DayForce platform has led them to conclude that DayForce is a technically viable option for the next modern HR and pay system. This is another testament to the ability of DayForce to handle complexity at scale in our multi-year partnership with the government of Canada. Now, turning key sales wins from across the globe into a few. LAR, one of the world's leading catering services companies with 90,000 employees globally, has chosen Dayforce to support its U.S. and U.K.-based employees.

Steve Holdings: January sales ahead of our target.

Before I moved to key sales and go lives I would like to also share. The recent announcement from the government of Canada.

Steve Holdings: Their extensive testing of the <unk> platform has led them to conclude the day for US is a technically viable option for the next modern HR and pay system.

Steve Holdings: This is another testament of the ability of data for us to handle complexity at scale and our multiyear partnership with the government of Canada.

Steve Holdings: Now turning to key sales wins from across the globe in Q4 early or one of the world's leading catering services companies with 90000 employees globally has chosen <unk> to support its U S and U K based employees.

Steve Holdren: Viva Energy, a leading convenience retailer, commercial services, and energy infrastructure business growing to more than 13,000 employees, selected Dayforce for a full suite of HCM technology to support its growth in retail. A global designer and manufacturer of innovative furnishings and workspace solutions, partnered with Daybores to transform payroll operations for more than 11,000 employees across 30 countries. A global sports fashion retailer with 75,000 employees expanded its use of Dayforce to include 21,000 employees in the U.S. An innovative and fast-growing electric vehicle manufacturer selected the full Dayforth platform to support 7,000 employees in the U.S. Now turning to our record Q4 go live, one of the world's largest global shipping and logistics organization with over a half million employees completed its phase one development to over 33,000 employees along with tax services for its entire U.S. employee population.

Viva energy, a leading convenience retailer commercial services and energy infrastructure business growing to more than 13000 employees selected <unk> full suite of HCM technology to support its growth and retail.

Steve Holdings: Global designer and manufacturer of innovative furnishings, and workspace solutions partnered with day parts to transform payroll operations for more than 11000 employees across 30 countries.

Steve Holdings: Global sports fashion retailer with 75000 employees expanded its use of <unk> to include 21000 employees in the U S and innovative in fast growing electric vehicle manufacturers selected the full <unk> platform to support 7000 employees in the U S.

Steve Holdings: Now turning to our record Q4 go lives one of the world's largest global shipping and logistics organization with over $1 billion employees completed its phase one development to over 33000 employees along with tax services for its entire U S employee population.

Steve Holdren: A multinational manufacturer of consumer and industrial brands with over 50,000 employees successfully continued its Dayforce implementation and is now live in 22 countries with 27,000 employees. A leading consumer goods company with 28,000 employees in 40 countries completed phase one of its global Dayforce implementation with the deployment of workforce management and payroll in Hong Kong and Thailand. A global European bank with 70,000 employees in 50 countries continued its Dayforce deployment to employees in the U.S. and Canada.

Steve Holdings: A multinational manufacturer of consumer and industrial brands with over 50000 employees successfully continued at the date or implementation and is now live in 22 countries with 27000 employees.

Steve Holdings: A leading consumer goods company with 28000 employees in 40 countries completed phase one of its global data implementation with the deployment of workforce management, and payroll and Hong Kong and Thailand.

Steve Holdings: A global European Bank with 70000 employees in 50 countries continued at the date for its deployment to employees in the U S and Canada Sabre held a senior care service provider with 14000 employees across the U S went live with the full day for Sweet and one of the worlds, leading mining and infrastructure companies with 13000 employees.

Steve Holdren: Saber Health, a senior care service provider with 14,000 employees across the U.S., went live with the full Dayforce suite. And one of the world's leading mining and infrastructure companies with 13,000 employees being paid across the globe continued its multi-phase global Dayforce implementation. I'm now pleased to hand off to my colleague, my innovation partner, Joe Korngabel, our Chief Product and Technology Officer. Joe, over to you.

Steve Holdings: Floyd being paid across the globe continued its multi phased global day parts implementation.

Joe: Now pleased to hand off to my colleague My innovation partner, Joe corn gable, our chief product and Technology officer, Joe over to you.

Joe Korengabel: Thank you, Steve. On the product front, we continue to invest in innovation that drives value through efficiency and productivity for our customers and their employees. By leveraging the advancements around data and AI, as well as delivering simplicity at scale, we released some key innovations in Q4 that provide quantifiable value for our customers. First and foremost, Dave Forrest's co-pilot, our generative AI assistant. It was delivered to our early adopter customers in Q4, providing dramatic improvements in the productivity of employees in answering common HR-related policy and compliance questions. And, in turn, saving valuable time for HR administrators. Dayforce Copilot will be sold as a new product, in our suite as an add-on to our core products of HR, pay, time, benefits, and talent.

Joe: Thank you Steve on the product front, we continue to invest in innovation that drives value through efficiency and productivity for our customers and their people by.

Joe Corngable: By leveraging the advancements around data and AI as well as delivering simplicity at scale. We released some key innovations in Q4 that provide quantifiable value for our customers first and foremost Dave horse co pilot, our generative AI assistant it was delivered to our early adopter customers in Q4, providing dramatic.

<unk> in the productivity of employees and answering common HR related policy compliance questions and in turn saving valuable time for HR administrators <unk> co pilot will be sold as a new product.

Joe Corngable: In our suite as an add on to our core products.

Joe Corngable: <unk> pay time benefits and talent.

Joe Korengabel: Next, HR Service Delivery. It's a new product that we released in Q4 that is now in the hands of our customers, driving efficiencies with an AI-first approach to answering open tickets for employees. Our early HR service delivery customers are eliminating the cost of bolt-on expensive point solutions and driving more value with Dayforce as a single robust HCM platform. Now, on to Dayforce Talent Market, which was extended in Q4 for both internal and external talent efficiencies, allowing greater flexibility to meet labor needs. For employees, we enhanced our shift bidding and shift trading capabilities, boosting employee control over their work hours and allowing employers the ability to close scheduling gaps more quickly and efficiently for the boundless workforce outside of your direct employees.

Joe Corngable: Next HR service delivery, it's a new product that we released in Q4 is now in the hands of our customers driving efficiencies with an AI first approach to answering open tickets for employees.

Joe Corngable: Our early HR service delivery customers are eliminating the cost of bolt on expensive point solutions and driving more value with date for us as a single robust HCM platform.

Joe Corngable: Now onto D Force talent marketplace, which was extended in Q4 for both internal and external talent efficiencies, allowing greater flexibility to meet labor needs.

Joe Corngable: For employees, we enhanced our shift bidding and ship trading capabilities boosting.

Joe Corngable: Boosting employee control over their work hours, and allowing employers the ability to close scheduling gaps more quickly and efficiency.

Joe Corngable: Efficient.

Joe Corngable: With a balanced workforce outside of your direct employees, we officially launched our new ideal talent marketplace in Q4, which provides an on demand pre qualified hourly workforce, enabling flexibility across a network of skilled employees when needed.

Joe Korengabel: We officially launched our new Ideal Talent Marketplace in Q4, which provides an on-demand, pre-qualified, hourly workforce, enabling flexibility across a network of skilled employees. On the scale of our industry-leading global payroll product, we have delivered our new horizontally scaled payroll as a service architecture. This empowers both our large customers with dramatic performance gains as well as our small business power pay customers with a modernized payroll platform. Onto mobile and empowering the frontline workforce, which continues to be a powerful capability of our HCM, driving engagement and connectivity for employees. We have now reached over 1 million daily active users on Dayforce.

Joe Corngable: On scale of our industry, leading global payroll product, we have delivered our new horizontally scaled payroll as a service architecture.

Joe Corngable: This empowers both our large customers with dramatic performance gains as well as our small business power pay customers with a modernized payroll platform.

Joe Corngable: On the mobile and empowering the frontline workforce, which continues to be a powerful capability of our HCM suite driving engagement and connectivity for employees. We have now reached over 1 million daily active users on deep horsepower.

Joe Corngable: And our compliance leadership continues to grow as we closed out 2023 with an additional 36 countries and territories, where our customers completely pay their workforce accurately with the horse.

Joe Korengabel: And our compliance leadership continues to grow as we close out 2023 with an additional 36 countries and territories where our customers compliantly pay their workforce accurately. Finally, I wanted to further highlight our acquisition of Illumi, which closed on February 1st. This acquisition brings together an innovative team and product that is incredibly well aligned with our culture and our shared ambition to make work life better for our customers. This partnership supercharges our Dayforce learning and talent products, extending our leadership in compliance with industry-leading learning management capabilities, combined with an engaged learning experience platform to ensure employees stay current and compliant. Also, in frontline workforce enablement with mobile microlearning for training and people development, and in AI innovation with generative AI learning content offerings and personalized learning.

Joe Corngable: Finally, I wanted to further highlight our acquisition of <unk>, which closed on February one.

Joe Corngable: This acquisition brings together an innovative team and product that is incredibly well aligned with our culture and our shared ambition to make work life better for our customers.

Joe Corngable: This partnership Supercharging, our D force learning and talent products, extending our leadership in compliance with industry, leading learning management capabilities combined with an engaged learning experience platform to ensure employee stay current and compliant.

Joe Corngable: In frontline workforce enablement with mobile micro learning for training and people development.

Joe Corngable: And in AI innovation with generative AI learning content offering and personalized learning path.

Joe Corngable: In addition, we will also be adding several new products to day for us with the assimilation of the alumina Lumi technology and that includes D Force learning content, which offers pre packaged curated learning cockpits that target's compliance industry and geographic needs with one affordable subscription.

Joe Korengabel: In addition, we will also be adding several new products to Dayforce with the assimilation of the Illumi technology, including Dayforce Learning Content, which offers prepackaged, curated learning content that targets compliance, industry, and geographic needs with one affordable subscription. And also, a brand new product, Dayforce Employee Communications, delivering a mobile-first experience with real-time chat, collaborative communities, and up-to-the-minute news feed for employees That's a quick look at some of the innovations in Q4 and our recent investments in innovation. Now, I'll hand it over to Jeremy to talk through the financials. Jeremy

Joe Corngable: And also a brand new product D Force employee communications, delivering a mobile first experience with real time chat collaborative communities and up to the minute news feed.

Joe Corngable: Or date for us.

Joe Corngable: That's a quick look at some of the innovations in Q4 and our recent investments in innovation now over to Jeremy to talk through the financials Jeremy.

Jeremy Johnson: Thanks, Joe. It feels good to be back. I'm proud of the way our team closed out the year. In Q4, we delivered Dayforce recurring revenue Xflow growth of 29% on a constant currency basis, underpinned by strong Q4 enterprise go-lives and healthy underlying customer trends. Tax modernization contributed about 440 basis points of growth as we completed the transition at the end of the year. Adjusted cloud recurring gross margins of 78.1% expanded 190 basis points year over year as the DateForce platform continues to scale. Adjusted EBITDA of $99 million, or a 24.8% margin, expanded by 470 basis points year-over-year, reflecting the timing of OPEX investments in addition to incremental grants. Operating cash flows of $90 million in Q4 benefited from strong operating income and working capital trends. For the full year, we delivered 54% conversion from adjusted EBITDA, or $219.5 million.

Jeremy Johnson: Thanks, Joe feels good to be back.

Jeremy Johnson: I am proud of the way our team closed out the year in Q4, we delivered day force recurring revenue ex float growth of 29% on a constant currency basis underpinned by strong Q4 enterprise go lives and healthy underlying customer trends.

Jeremy Johnson: Tax modernization contributed about 440 basis points of growth as we completed the transition at the end of the year.

Jeremy Johnson: Adjusted cloud recurring gross margin of 78, 1% expanded 190 basis points year over year as the date force platform continues to scale.

Jeremy Johnson: Adjusted EBITDA of $99 million or a 24, 8% margin expanded by 470 basis points year over year, reflecting the timing of Opex investment in addition to incremental brand spend.

Jeremy Johnson: Operating cash flows of $90 million in Q4 benefited from strong operating income and working capital trends on the full year, we delivered 54% conversion from adjusted EBITDA or $219 5 million.

Jeremy Johnson: All in, this was a successful quarter and year. We brought live some of our largest customers to date while delivering healthy top line growth and record operating cash flow. Our cloud revenue growth, expanding gross margins, and consistently high retention rates showcase the strength of our financial model. Turning to guidance.

Jeremy Johnson: All in this was a successful quarter and year.

Jeremy Johnson: We brought live some of our largest customers to date, while delivering healthy topline growth and record operating cash flows.

Jeremy Johnson: Our cloud revenue growth.

Jeremy Johnson: <unk> gross margins and consistently high retention rates showcase the strength of our financial model.

Jeremy Johnson: Turning to guidance.

Jeremy Johnson: In the first quarter, we expect Day Force recurring revenue X flow growth in the range of 20 to 21 percent, both as reported and at constant currency. Total revenue is expected to grow 14 to 15 percent, both as reported and at constant currency, and adjusted EBITDA is expected to be in the range of $123 million to $126 million, or a 29.3 percent margin at mid-term. For the full year 2024, as David previously mentioned, we expect Dayforce recurring revenue ex-flow growth in the range of 20 to 21 percent, both as exported and at a constant currency. This reflects sustained employment volumes in the first half of the year, balanced by a more conservative second half. We have reflected at LUMIE in this guidance, assuming approximately 150 basis points contribution to day force recurring revenue explode growth in 2024 and 100 basis point contribution in Q1, reflecting only two months of ownership. Float revenue guidance of $174 million for the full year reflects a moderating rate environment throughout the year. Total revenue guidance for the full year is 14% growth as reported or 13% to 14% growth at constant growth. Adjusted EBITDA for the full year is in the range of $480 million to $495 million, or a 27.9% to 28.6% margin.

Jeremy Johnson: In the first quarter, we expect a force recurring revenue ex float growth in the range of 20% to 21% both as reported and at constant currency.

Jeremy Johnson: Total revenue is expected to grow in 2014% to 15%.

Jeremy Johnson: Both as reported and at constant currency and adjusted EBITDA is expected to be in the range of $123 million to $126 million or 29, 3% margin at the midpoint.

Jeremy Johnson: For the full year 2020 for David David Previously mentioned, we expect a force recurring revenue ex flow growth in the range of 20% to 21% both as reported and at constant currency. This.

Jeremy Johnson: This reflects sustained employment volumes for the first half of the year balanced by a more conservative second half of the year.

Jeremy Johnson: We have reflected illumina and this guidance, assuming approximately 150 basis point contribution to de force recurring revenue ex flow growth in 2024, and 100 basis point contribution in Q1, reflecting only two months of ownership.

Jeremy Johnson: Float revenue guidance of $174 million for the full year reflect the moderating rate environment throughout the year.

Jeremy Johnson: Total revenue guidance for the full year is 14% growth as reported or 13% to 14% growth at constant currency.

Jeremy Johnson: Adjusted EBITDA for the full year in the range of $480 million to $495 million or 27, 9% to 28, 6% margin. This range includes incremental headwinds from Illumina and the de force rebrand totaling approximately $15 million.

Jeremy Johnson: This range includes incremental headwinds from Illumi and the Day Force Rebrand, totaling approximately $15 million. Additionally, we expect operating cash conversion from adjusted EBITDA to be in the mid to high 50% range for the full year. Before we break into Q&A, I'd like to provide an update on two items. First, in conjunction with our rebrand to Dayforce, we made the decision to terminate our frozen defined benefit pension plan. If you recall, this was a legacy pension plan that Day Force inherited from Ceridian and its predecessors. We expect this termination process to take 15 to 18 months.

Jeremy Johnson: Additionally, we expect operating cash conversion from adjusted EBITDA.

Jeremy Johnson: In the mid to high 50% range for the full year.

Speaker Change: Before we break into Q&A I'd like to provide an update on <unk>.

Speaker Change: First in conjunction with our rebrand to date for US we made the decision to terminate our frozen defined benefit pension plan.

Speaker Change: You'll recall this was a legacy pension plan that Dave <unk> inherited from Ceridian and its predecessors.

Speaker Change: We expect this termination process to take 15 to 18 months.

Jeremy Johnson: And conclude in 2025. As a result of this termination, we expect to see some financial impacts on our 2025 numbers, specifically a cash charge in the range of 15 to 25 million to fully fund the plan and cover termination expenses. And in 2025, we'll also incur a non-cash charge to reflect the termination of the pension plan. We do not expect an impact to adjust the EBITDA margins either in 2024 or 2025.

Speaker Change: And concluded in 2025.

Speaker Change: As a result of this termination we expect to see some financial impact to our 2025 numbers, specifically a cash charge in the range of 15% to $25 million to fully fund the plan and cover termination expenses and in 2025, we will also incur a noncash charge to reflect the termination of the pension plan.

Speaker Change: We do not expect an impact to adjusted EBITDA margins, either in 2024 or 2025.

Jeremy Johnson: And second, the modernization of PowerPay is well underway, and we now have our first PowerPay customers using Dayforce Embedded Payroll Engine as their calculation engine. This enhancement will provide PowerPay customers with access to new features and functionality on a more robust platform, and while we're very excited about this transition, we do not plan to reclassify PowerPay revenue to Dayforce, simply given the different customer profiles between Dayforce and PowerPay. As such, we will continue to disclose power pay revenue separately for financial reporting. And with that, I'll hand the call back over to Matt to begin the Q&A portion. Thanks, Jeremy. I'd like to remind everyone, please, of one question and one follow-up. We have a pretty healthy audience tonight. Our first question comes from Kevin McVeigh with UBS. Kevin, if you want to unmute,

Speaker Change: And second the modernization of power PE is well underway and we now have our first power pay customers using data for its embedded payroll engine is our calculation engine.

Speaker Change: This enhancement will provide power paid customers with access to new features and functionality with a more robust platform and while we're very excited about this transition we do not plan to reclassify power pay revenue to date for us simply given the different customer profiles between day force and power right.

Speaker Change: As such we will continue to disclose power pay revenue separately for financial reporting purposes.

And with that I'll hand, the call back over to Matt to begin the Q&A portion.

Matt: Thanks, Jeremy I'd like to remind everyone. One question and one follow up please we have a pretty healthy audience today.

Matt: Our first question comes from Kevin Mcveigh with UBS.

Matt: Mhm.

Matt: Mhm.

Matt: <unk>.

Kevin Kumar: Kevin If you went on mute.

Scott Berg: Thank you. We'll circle back. Scott Berg with Needham.

Kevin Kumar: Yes.

Kevin Kumar: We'll circle back.

Scott Berg: Scott Berg with Needham.

Steve Holdren: Hi, good morning, everyone. Thanks for taking my questions and congrats on a good quarter. I wanted to start on a question regarding the longer sales cycles comments. Can you help break that down a little bit in terms of what you saw?

Scott Berg: Hi, Good morning, everyone. Thanks for taking my questions and congrats on the good quarter.

Scott Berg: I wanted to start on a question regarding the longer sales cycles comments I guess can you help break that down a little bit in terms of what you saw was just a couple of deals that pushed from Q2 Q1 was a significant amount of deals you obviously called it out so it was a little bit of material, but just wanted to try to think about the impact on both the year and then was there.

Steve Holdren: Was this just a couple of deals that pushed maybe from Q 20 to Q 1? Was it a significant number of deals? You obviously called it out.

David D. Ossip: So it was a little bit material, but I just want to try to think about the impact on both the year and then was that the primary benefit for the January outperformance versus your plan? Thanks, Scott, and nice to speak with you. First of all, it has no impact on our fiscal 24 guide. What we did see was a slightly higher decision-gate in Q4, coupled with probably fewer days inside the actual month. Christmas vacation, as you know, started a bit early this year relative to the past.

Scott Berg: The primary benefit for the January outperformance versus your plan.

Speaker Change: Thanks, Scott or speak with you.

Scott Berg: First of all it has no impact on our fiscal 'twenty full guide.

Speaker Change: What we did see was a slightly more decision gate in Q4, coupled with property.

Days with inside the actual month Chris.

Speaker Change: Christmas vacation as you know started early.

Speaker Change: Yeah relative to the past.

David D. Ossip: When we look at the start of the year, as you pointed out, we had a good January. It came in above our internal expectations for that particular month. And we also entered the year with almost twice the coverage that we had at the beginning of last year. I don't believe that there is any change in the macro.

Speaker Change: When we look at the start of the year as you pointed out we had a good January it came in above our internal expectations for that particular month, and we also intend to yet.

Speaker Change: With.

Speaker Change: Two times the coverage that we had at the beginning of last year.

Speaker Change: I do believe that there is any.

Speaker Change: Any change in the macro.

David D. Ossip: And, you know, quarter over quarter, and we are obviously going into this year quite optimistic about the forecast for sales. Thank you, Helpful. My follow-up question is actually for Jeremy. Welcome back.

Speaker Change: Quarter over quarter.

Speaker Change: And we are obviously going into this year quite optimistic about the bolthouse wholesale.

Speaker Change: Thank you helpful. My follow up is actually for Jeremy and welcome back looking forward to working with you more here.

Jeremy Johnson: I'm looking forward to working with you more here. You come into the CFO role with a unique perspective, obviously. I've been with the company for an extensive period before.

Jeremy Johnson: You come into the CFO role with a unique to you obviously have been with the company for an extensive period before.

Jeremy Johnson: But how do you think about driving additional efficiencies and maybe leveraging the model versus your prior experience with the company? Is there anything that you think about doing maybe differently in the current position as CFO than you did before that might be interesting for investors to think about here going forward? Yeah, thanks, guys. Good to talk to you again.

But how do you think about driving additional efficiencies and maybe leverage in the model versus your.

Jeremy Johnson: Your prior experience with the company is there anything that you think about doing maybe differently.

Jeremy Johnson: On the crude position as CFO than maybe two before that might be interesting for <unk>.

Speaker Change: So think about your going forward. Thanks.

Speaker Change: Yeah. Thanks, Scott good to talk to you again as I said, it's good to be back it does kind of feel like coming home here, especially with an executive team that largely familiar with our finance team that I know the key players very well our board and investors that I also know really well.

Jeremy Johnson: And as I said, it does kind of feel like coming home here, especially with an executive team that I'm largely familiar with, a finance team where I know the key players very well, a board, and investors that I also know really well. So look, I think there's a number of levers that we have to continue to grow this business. I think since I've been gone, I've been very impressed with some of the big rocks that the company has moved. We've dramatically moved up into the enterprise space, and we called out some of the metrics there where we've increased our go lives and enterprise customers 64 percent year over year. We talked about partnerships and some of the progress we've made with global SIs there. And I'm also thinking about global expansion, and we've done some amazing things in the APJ and EMEA regions. Thank you.

Speaker Change: So.

Speaker Change: Look I think there's a number of levers that we have to continue to grow this business I think since I've been gone I've been very impressed with some of the big rocks debt that the company has moved.

Speaker Change: We've dramatically moved up into the enterprise space and we called out some of the metrics there where we've increased our go lives in <unk>.

Speaker Change: Enterprise customers, 64% year over year, we've talked about partnerships and some of the progress we've made with global size there.

Speaker Change: And I'm also thinking about global expansion.

Speaker Change: And we've done some amazing things in the P. J in EMEA region.

Speaker Change: I think we've got a lot of room to continue to expand profitability at this company.

Jeremy Johnson: I think we've got a lot of room to continue to expand profitability at this point, and that's really where I'm going to spend my time focusing on maintaining growth, making sure we invest the right amount to maintain that growth, but also making sure that we continue to improve the cash flow position of this company. And you saw us make some really great moves there this year.

Speaker Change: And conversion into cash flow.

Speaker Change: And that's really where I'm going to spend my time, focusing on is maintaining growth.

Speaker Change: Making sure we invest the right amount to maintain that growth, but also.

Speaker Change: Making sure that we continue to improve.

Speaker Change: Is the the cash flow position of this company and you saw us make some really great moves there this year.

Siti Panigrahi: Excellent. Thanks for taking my questions. Our next question comes from Siti Panigrahi with Mizzou Health. Okay. Thanks for taking my question, and Jeremy, welcome back. So it's good to see this 20% plus kind of growth guidance for your organic data security. That's probably because you're growing faster than other payroll peers. So my question is, you have been adding so many modules since IPO, and even Joel's team relentlessly kept on adding more features there. So how big is this growth opportunity to now cross sell these modules to your base to deliver sustainable growth? And what's your go-to-market strategy to go after the base? Because most of them are a displacement opportunity.

Speaker Change: Excellent thanks for taking my questions.

Speaker Change: Our next question comes from city Panic Rohit with Mizuho.

Rohit: Great. Thanks for taking my question and Jeremy will come back.

Rohit: So it's good to see this 20% plus kind of growth guidance for your organic therefore, some coding.

Panic Rohit: That's broadly youre growing faster than other payroll peers.

Panic Rohit: So my question is like you have been adding so many more deals since IPO and.

Panic Rohit: George team relentlessly kept on adding more features there so how how big is this growth opportunity to cross sell these modules to your base.

Panic Rohit: To deliver sustainable growth and what's your go to market strategy to go after the base because most of them are displacement opportunities. So we'd have to disburse some existing vendor.

David D. Ossip: So you have to display some existing vendors. Thanks for being great to speak with you. It's a very valid question. So when I look at the overall company, what I can say is that our client retention rate is probably several percentage points higher than anyone else in the industry, including the ERP. It's 97.1%.

Speaker Change: Thanks again, great to speak with you.

Speaker Change: It's a very valid question so when I look at the overall company.

Speaker Change: I can say is that.

Speaker Change: Client retention rate is probably several percentage points higher than anyone else and industry, including the ERP.

Speaker Change: It's 90 is 97, 1%.

David D. Ossip: When we look at our sales back to the base as a percentage, we are quite low relative to the industry. So this year, we brought in a very senior leader to head up the customer-based sales team. And we're expecting to take sales back to the base, up by about 5% relative to last year. So it's definitely a focus that we have at the moment. One other clarification that you might have. When you look at the dayfuls recurring revenue growth year over year, you must remember that last year we had a tailwind of about 500 basis points from the movement of the tax business. This year,

Speaker Change: When we look at our sales back to the base as a percentage were quite low relative to industry.

Speaker Change: So this year.

Speaker Change: We brought on a very senior.

Speaker Change: Leader to head up the customer base sales team.

Speaker Change: And we're expecting to take the sales back to the bed up by about 5% relative to last year. So it's definitely a focus that we have at the moment.

Speaker Change: One other clarification that you might have.

Speaker Change: When you look at the.

Speaker Change: The <unk> recurring revenue growth year over year, you must remember that last year, we had a tailwind of about 500 basis points from the movement of the tax business.

Speaker Change: This year.

David D. Ossip: You have an effect on the denominator, in the reverse. So if we actually, if we had not migrated the tax, which we did, obviously, for accounting reasons. You would effectively be a few percentage points higher, probably around 23% on an organic basis. Thanks for that clarification. Just to follow up, if I look at Q4 results, that's come kind of this organic day for security revenue growth coming in line with expectation. Is there anything you want to point to? Is that the employment level or any go-live date? Also, if you could touch upon your so many large deals, those scheduled to go live, any update on that? Look, as you know, we guide very narrowly.

Speaker Change: Effectively in the denominator and the reverse.

Speaker Change: Actually if we had not migrated the tax which we did over the full.

Speaker Change: The accounting reason.

Speaker Change: We're effectively would be a few percentage points higher probably around 23% on an organic basis.

Speaker Change: Thanks for that clarification, and just to follow up if I look at Q4, <unk>, that's kind of just organic.

Speaker Change: For security revenue growth came in line with expectation is there anything you want to point to is that the employment level or any go lives also if you could touch upon.

Speaker Change: So many large deals.

Speaker Change: The go lives any update on that.

Speaker Change: As you know we guide very narrowly.

David D. Ossip: As we get to the end of the year, the number should come within guide, which it did, which I think is a reflection of a well managed and very predictable type of business. As Steve called out, we were very happy with the go lives that we saw in the quarter. In fact, they came in ahead of what we had internally budgeted. It's also impressive given the fact that we now have at least half of the deals that we're implementing run by the system integrators, but they're priming the actual implementation. And that, I think, is a reflection of the robustness of the software, that it's not only us that can implement it, but we're finding that our system integrator partners are able to implement it and implement it predictably on time, which I think is a very good testament. Jeremy, anything else that you'd call out?

Speaker Change: I can say.

Speaker Change: As we get to the end of the year.

Speaker Change: <unk> Com was aimed guy, which did which I think he is reflection of a well managed it very predictable but.

A type of business.

Speaker Change: As Steve called out.

Speaker Change: We were very happy with the go lives that we saw in the quarter. In fact, they came in ahead of what we had internally budgeted.

Speaker Change: It also impressive given the fact that we.

Speaker Change: We now have.

Speaker Change: At the top of the deals that were implemented and run by the system integrators, but their primary in the actual implementation and that I think is a reflection on the robustness of the software.

Speaker Change: Not only that can implement that we're finding that our system integrator partners are able to implement and to implement predictably on time.

Speaker Change: Which I think is a very good Testament, Jeremy anything else that you would call out.

David D. Ossip: I think you said it nicely; the only thing I'd add is, you know, we increased guidance throughout the year in Q2, Q3, so I think, you know, we feel really good about the quarter that we had and coming in line with guidance, I think, on a tight metric like that speaks to the visibility that we have into the business and the accuracy of the model. Great, thank you. Our next question comes from Dan Jester with BMO. Great, thanks for taking my question. Maybe a couple for Steve and me.

Jeremy Johnson: I think you said it nicely.

Jeremy Johnson: The only thing I'll add is you saw us increase guidance.

Speaker Change: Throughout the year.

Speaker Change: In Q2 Q3.

Speaker Change: I think we feel really good about the quarter that we had.

Speaker Change: And coming in line with guidance I think.

Speaker Change: On a tight metric like that speaks to the visibility that we have into the business and the accuracy of the model.

Speaker Change: Great. Thank you.

Speaker Change: Our next question comes from Dan Jester with BMO.

Daniel Jester: Great. Thanks for taking my question, maybe a couple for Steve.

Daniel Jester: First can you maybe double click on any of the go to market or partner changes.

Steve Holdren: First, can you maybe double-click on any of the go-to-market or partner changes that you're really excited about for 2024? And then secondly, I appreciate the update on the Government of Canada process. Can you give us an update in terms of the roadmap for next steps as they assess Dayforce more broadly? Thank you. Yeah, happy to answer both of those. Let me start with your second one first.

Daniel Jester: That you're really excited about for 2024, and then secondly, I appreciate the update on the government of Canada process can you give us an update in terms of the road map for next steps as they assess day for us more broadly thank you.

Speaker Change: Yeah, Hey, happy to answer both of those let me start with your second one first.

Steve Holdren: So Government of Canada, it's a significant step. They put it out in a press release. They have determined that our solution is technically viable, which is a result of many multiple years of piloting it at all sorts of complexity. The next step is a continued process on that. I don't want to get too far ahead of where they're at, but we're continuing to work with them to define what the next steps are and rolling that out over the next couple of years here. In terms of the go-to-market, so nothing dramatically changes in tune with it. You heard David talk really about three things.

Speaker Change: So government of Canada is a significant step they put it out on our press release, they have determined that our solution is technically viable which as a result of many multiple years of a pilot proving that at all sorts of complexity.

Speaker Change: The next step is a continued process on that I don't want to get too far ahead of where they are at but we're continuing to work with them to define what are the next steps in rolling that out over the next couple of years here.

Speaker Change: In terms of the go to market, so nothing dramatically changes and tune a bit you heard David talk about really three things one continued focus on our customer base and how we service the customer how we take advantage in terms of our high retention rate the focus on the customer base team and the amount of investment we're making in innovation in the product we built.

Steve Holdren: One, continued focus on our customer base and how we service the customer, how we take advantage in terms of our high retention rate, the focus on the customer base team, and the amount of investment we're making in innovation and the product. We believe that's an incredible growth source for us. Secondly, we continue to increase sales capacity and knowledge, and we continue to refine our go-to-market in terms of understanding the places where we have the best right to win and making sure we're adjusting and focusing sales resources where we tend to win. We tend to find we're winning more upmarket, we're winning globally, and we're winning in terms of compliance, in terms of product satisfaction, and in terms of pulse. Thank you, and then maybe a quick one for Jeremy on your commentary about a little bit more conservatism in the back half of the 24 guidance. Can you just elaborate on that a little bit? What's driving that conservatism?

Speaker Change: That's an incredible growth source for US secondly, we've continued to increase sales capacity and knowledge and we've continued to refine around our go to market in terms of understanding the places where we have the best right to win and making sure. We're adjusting and surging sales resources, where we tend to win we tend to find we're winning more upmarket.

Speaker Change: We're winning global and we're winning in terms of compliance in terms of product satisfaction in the terms of the full suite.

Speaker Change: Thank you and then maybe a quick one for Jeremy on your commentary about a little bit more conservatism in the back half of the 24 guidance can you just elaborate on that a little bit what's driving that conservatism and if there's anything you'd call out from a seasonality perspective, as we think about the quarters for 2000.

Jeremy Johnson: And if there's anything you'd call out from a seasonality perspective as we think about the quarters for 24. Thank you. Yeah, it's good to speak with you again, Dan.

Speaker Change: Thank you.

Speaker Change: Yes, it's good to speak with you again then.

Jeremy Johnson: The comment in my scripted remarks was specifically around employment levels and employment levels moderating in the back half of the year. Visibility there is probably where we have, you know, obviously the least, and so we're being a little bit more conservative on expecting any upside there. You know, as you know, I talked about this before, but we have a lot of visibility into our numbers as we head into a year, and we feel confident in our guess. Thank you very much.

Jeremy Johnson: The comment in my scripted remarks was specifically around employment levels and employment levels moderating in the back half of the year.

Jeremy Johnson: Visibility there is probably where we have obviously the lease and so we're being a little bit more conservative on it.

Jeremy Johnson: Expecting any upside there.

Jeremy Johnson: As you know I talked about this before but we have a lot of visibility into our numbers as we head into a year.

Jeremy Johnson: And we feel confident in our guidance.

Thank you very much.

Jeremy Johnson: Our next question comes from Mark Marcon with Barron. Hey, good morning, and thanks for taking my question. And Jeremy, great to work with you again. Looking forward to that.

Jeremy Johnson: Our next question comes from Mark Mark Hahn with Baird.

Mark R. Murphy: Hey, good morning, and thanks for taking my question and Jeremy Great to work with you.

Mark R. Murphy: Looking forward to that.

Mark S. Marcon: I'm wondering if you can talk a little bit more about one of the newer modules, the HR service delivery. Sounds like it could be really promising. Can you elaborate a little bit there in terms of which point solutions you could be going after, and how big you think that TAM is?

Mark R. Murphy: I'm wondering if you can talk a little bit more about.

Mark R. Murphy: One of the one of the newer modules the HR service delivery.

Mark R. Murphy: It sounds like it could be really promising can you elaborate a little bit there in terms of.

Which point solutions, you could be going after how big you think about the Tam is and.

Joe Korengabel: And what characteristics does the Day Force HR delivery model have that is superior to some of the incumbents that are out there that have been doing relatively well? Mark, good to talk to you again. And thank you for the question. HR service delivery has grown in importance to the overall HCM suite to deflect questions and provide a knowledge base so that customers can get their questions answered when they have questions around their employment, when they have HR policy questions, or compliance-related questions. And so it has grown. There are a handful of point solutions that have grown over the last decade in the HR space. And traditionally, it was a bulldog.

Mark R. Murphy: What.

Mark R. Murphy: What characteristics because the day force HR delivery model.

Mark R. Murphy: That is superior to some of the incumbents that are out there that have been doing relatively well.

Speaker Change: Market to talk to you again and thank you for the question.

Speaker Change: Our service delivery has grown as importance to the overall HCM suite to deflect questions and provide a knowledge based services that customers can get their questions answered when they have questions around their employment when they have HR policy questions or compliance related questions.

Speaker Change: And so it has grown there are handful of point solutions that have grown over the last decade, and HR space and traditionally and it was a bolt on the hard thing about that was it.

Joe Korengabel: The hard thing about that was employees didn't know where to go to get their questions answered. There were different technology solutions, and they wouldn't have a streamlined user experience. And so the delivery of that product, especially now for us, with the advances in AI and being able to surface answers quickly and effectively to employees, is proving to be a really important differentiator for us. A lot of companies who did it in the past leveraged a traditional just search model, and search can only be so accurate. And so technology has really provided us a boost in terms of what we can do to see that. And our early adoption customers that took the product in Q4 highlighted that for us.

Speaker Change: Employees didn't know where to go to get their questions answered there was different technology solutions and they wouldn't have a stream streamlined user experience and so the delivery of that product, especially now for us with the adventures advancements in AI and being able to surface answers quickly and effectively to employees.

Speaker Change: Proving to be a really important differentiator for us a lot of companies who did it in the past leveraged.

Speaker Change: Traditional just search model in search can only be so accurate and so technology has really provided us.

Speaker Change: A boost in terms of what we can do to see that in our early adoption customers that took the product in Q4 highlighted that for us. So we see it as a key add on almost every one of our customers will want it drives efficiency in a world of efficiency right now for our customers. It makes their employees, especially the HR administrators.

Joe Korengabel: So we see it as a key add-on that almost every one of our customers will want. It drives efficiency in a world of efficiency right now for our customers. It makes their employees, especially the HR administrators that are highly paid and need to really manage their time effectively in this world of change, efficient and productive at that level of their workforce.

Speaker Change: That are highly paydowns need to really manage their time effectively in this world of change it drives efficiency and productivity into that level of their workforce and so we're really bullish about what it's going to provide as far as an add on module. We're seeing the uptake in Q4 as an example of where we're going is to be quite high and it eliminates like I said that need for the.

Joe Korengabel: And so we're really bullish about what it's going to provide as far as an add-on module. We're seeing the uptake in Q4, as an example of where we're going, to be quite high. And it eliminates, like I said, the need for complex integration and the expense of these point solutions that were widespread, and they were really bringing down a lot of the efficiency of the workforce. You know, hey, Marco, one thing in terms of advantage relative to the others, the central part of our experience for employees and managers is the day before the hub experience. Which in itself is a content management system, which means that as organizations build their hub experiences by loading up documents, say, for example, a paternity policy, onto the actual platform, we can index it immediately and make it available to what we call intelligent search. And through the intelligent search, if someone were to say, hey, can I take all this amount of time? If the search doesn't respond with the sufficient amount of information, we can create that service ticket for the individual.

Speaker Change: A complex integration the expense of these point solutions that were widespread and they were really.

Speaker Change: <unk> down a lot of the efficiency of the workforce.

Speaker Change: One thing in terms of advantage relative.

Speaker Change: Relative to the others.

Speaker Change: Cost of our Erin to employees and managers is the <unk> hub experience.

Speaker Change: Which in itself is a content management system, which means that as organizations build a hub experiences by loading up document say for example, our <unk> policy to the actual platform.

Can indexes immediately and makes it available through what we call intelligent search.

Speaker Change: And through the intelligent search.

Speaker Change: If someone were to say hey can I tackle this amount of time.

Speaker Change: Such doesn't respond with the sufficient amount of information we can create that service tickets for the individual and so I do think from an integration perspective will experience perspective.

David D. Ossip: And so I do think from an integration perspective or an experience perspective, the fact that we are one with the employee model, one with the actual experience, gives us a leg up relative to the competitors. The single experience is really powerful to highlight And when you add on what we're doing with Copilot, you can actually refine your question, and you're seeing that over and over again from our customers wanting to leverage technology to drive efficiencies and productivity in their workforce. That's terrific.

Speaker Change: That we are working with the employee model one with the various gives us a leg up relative to the competitors.

Speaker Change: The single experience is really powerful to highlight data point to and then when you.

Speaker Change: You add on to what we're doing with co pilot you can actually refine your question down and Youre seeing that over and over again from our customers wanting to leverage technology to drive efficiencies and productivity of the workforce.

Speaker Change: That's terrific.

Steve Holdren: And then with regard to a couple of things that you mentioned earlier, with regard to the government of Canada, I think at one point you mentioned rollout over the next two years. So are we to take that comment as essentially not only are you technically viable, but there is, in fact, a plan to roll you out over the next two years, and will you get the entire government? And then is there anything that you can tell us about the big logistics company that you've signed up and that you've started up in the U.S.? Any big learnings there that will position you to continue to win some of those really large enterprises? So a couple of things on the government of Canada.

Speaker Change: With regards to.

Speaker Change: A couple of things that you mentioned earlier.

Speaker Change: With regards to the government of Canada, I think at one point you mentioned rollout over the next two years. So are we to take are we going to take that comment that.

Speaker Change: Essentially not only are you technically viable but there is in fact, a plan to roll out over the next two years would you get the entire government.

Speaker Change: Then is there anything that you can tell us about the big logistics company.

Speaker Change: That you've signed up with something that you've started up in the U S any big learnings there.

Speaker Change: Okay.

Speaker Change: Well positioned to continue to gain some of those really large enterprises.

Speaker Change: So a couple of things on government of Canada, I want to be careful we don't get ahead of where we are it was a two to three year process to go through and then tensor valuation for us to be determined technically viable which is significant we are in the process of defining the next steps and rollout over the entire government that'll be more than a two year process on that and the timeline.

Steve Holdren: I want to be careful we don't get ahead of where we are. It was a two to three year process to go through an intense evaluation for us to be determined technically viable, which is significant. We are in the process of defining the next steps and rolling them out over the entire government. It will be more than a two-year process for that. And the timeline for that is still under discussion, and there's obviously funding and other political things that need to happen for that, but we're very positive. We're aware of that.

Speaker Change: That is still under discussion and Theres, obviously funding another political things that need to happen for that.

Speaker Change: But we're very positive were worth adding significant next step.

Steve Holdren: And it's a significant next step. Secondly, you know, I guess learnings in terms of the logistics company. We talked about them and others' key wins before, but we are understanding and improving the ability of the product to scale. Right.

Speaker Change: Secondly.

Speaker Change: I guess learnings in terms of the logistics company, we talked about them in others key wins before us.

Speaker Change: We are understanding and improving the ability of the product to scale right and while this first phase was a chunk of it we're well in terms of the second phase, which is going to be significant were looking at accelerating that and thanks to Joe and what his team has done we've really demonstrating that our ability to scale the things that Joe talked about our reality and our.

Steve Holdren: And while this first phase was a chunk of it, we're well into the second phase, which is going to be significant. We're looking at accelerating that. And thanks to Joe and what his team has done.

Steve Holdren: We're really demonstrating that our ability to scale on the things that Joe talked about is a reality and are creating a level of confidence in a customer like this who, you know, will exercise and test us at the highest level. Terrific. Thank you. Our next question comes from Raimo Lenschow with Barclays. Hey, thank you. I have two quick questions, and congratulations for me as well.

Speaker Change: Creating a level of confidence and a customer like this who you know will exercise and test us at the highest levels.

Speaker Change: Terrific. Thank you.

Speaker Change: Our next question comes from Raimo <unk> with Barclays.

Raimo: Okay. Thank you.

Raimo: I have two quick questions.

Raimo: And congrats from me as well.

Raimo Lenschow: First one is on customer addition this quarter. Obviously, you're moving up market a little bit. So there's going to be like a focal point, you know, there's going to be fewer customers that you're kind of dealing with compared to the past. But then you also talked a little bit about like a longer deal cycle. Can you just put it in context in terms of how much of that number was kind of driven by a change in strategy versus the market? And then I will have one follow up, please.

Raimo: First one is on the the customer addition, this quarter, obviously, you're moving up market a little bit so there's going to be like a <unk>.

Raimo: B fewer customers that you're kind of dealing with comp compared to the past, but then you also talked a little bit about <unk>.

Raimo: Longer deal cycles can you just put it frame it in terms of how much of that number was kind of driven by a change in strategy versus like the market and then I had one follow up please.

David D. Ossip: So remember, it's a net ad. As you know, we are focusing on the largest. And included in the base of customers going back to about 2018 and before, we had a large number of power pay payroll customers using day force or workforce management. And these are very small cuts.

Raimo: Rob I remember, it's a net add.

Rob: As you know we are focusing on the largest customers.

Rob: And included in the base of customers dating back to about 2018 and before we have a large number of a.

Rob: Payroll customers using day falls or workforce management.

Rob: And these are very small customers and so we are seeing in China.

David D. Ossip: And so we are seeing churn at the small end of the customers, partially by design, as we continue to focus up market. In terms of the quarter and the elongated sales cycles... I'm not ready to say if it is a macro-allocated cycle or just how the days of the week fell into some in December coupled with an earlier Christmas break, where we had several days fewer than we normally have to go through the end of the year.

Rob: And of the customers partially by design.

Rob: We continue to focus.

Rob: Market.

Rob: In terms of the.

Rob: The quarter and elevated sales cycles.

Speaker Change: I'm not ready to say it is.

Speaker Change: Macro allocated cycle or just how the days of the week fell into some in.

Speaker Change: In December coupled with an earlier Christmas break.

Speaker Change: Where we had.

Speaker Change: Several days than we normally have you guys through the end of the year.

David D. Ossip: And as I mentioned, we got off to a very strong start in Q1, and when I look at the pipeline development that we did for 2023, which was a key priority for us, we see that reflected in the almost four to five times coverage relative to our sales targets this year. Historically, we would have gone in probably around two to three times.

Speaker Change: And as I mentioned, we got off to a very strong start in Q1, when I look at the pipeline development that we did over 2023, which was a key priority for us.

Speaker Change: We see that reflected.

Speaker Change: Almost four to five times coverage <unk> sales target of this year historic kidney would've gone and probably around two to three times.

David D. Ossip: So I think the macro is still there. I think customers are still buying, etc. Yeah, okay, perfect. That's really helpful. That's really good to hear. And then one follow-up question for me is, if you think about, are there any differences that you see at the moment, as your sales leaders are discussing the year with you in terms of the US, Canada, versus kind of Europe, Asia, in terms of like, what demand signals you're seeing there, just to get a better idea of how the global economies are playing out for you. And then, lastly, Jeremy, welcome back.

Speaker Change: I think the macro is still there I think customers are also buying.

Speaker Change: Et cetera.

Speaker Change: Yes, Okay perfect. That's really helpful. That's really good to hear and then one follow up for me. If you think about all that.

Speaker Change: Any differences that you see at the moment.

Speaker Change: As you'll see as needed.

Speaker Change: In discussing the year with you in terms of.

Speaker Change: U S, Canada versus kind of Europe Asia in terms of like what demand signals you're seeing there.

Speaker Change: Just to get any better idea in terms of how this global economies will play out for you and then lastly, Jeremy will come back and looking forward to working with you.

David D. Ossip: I'm looking forward to working with you. Look, I think we have a very strong opportunity in APJ in Asia-Pacific and Japan. I actually was there last week.

Speaker Change: Look I think we have a very strong opportunity.

Hey.

Asia Pacific and Japan actually all of them.

Speaker Change: Last week and when I look at our footprint and market is quite remarkable.

David D. Ossip: And when I look at our footprint in the market, it is quite remarkable. In total, we have about 1,500 customers in the region, to which we pay almost 2 million people in terms of regular paychecks. By the way, those 1,500 would not be included in the day-four count that we have.

Speaker Change: In total we have about.

Speaker Change: 500 customers in region of which.

Speaker Change: We pay almost 2 million people.

Speaker Change: In terms of regular pace by the way that is the 800 would not be included in the day port counts that we have and the customers that we have there.

David D. Ossip: And the customers that we have there are the best of the best. The breakfasts and the lunches and the customer meetings I had really spoke about the potential that I do think we have inside that region. That said, when we look towards our 2024 plan, I think it's largely in line in terms of the global distribution with previous years. We do have a lot of global capability.

Speaker Change: Best of the best.

Speaker Change: And the launches and the customer meetings I had really speak about the potential that I do think we have inside that region.

Speaker Change: That said when we look towards our 2024 that I think it's largely in line in terms of our global distribution with prior years, but we do have a lot of global capability and when I speak to customers. All the large Si partners. One thing that is called out consistently is that we are able to deliver.

David D. Ossip: And when I do speak to customers or to the large SI partners, one thing that is called out consistently is that we're able to deliver strong local payroll in a lot of different countries, and, as well, we're able to offer very strong global payroll across all the countries that customers have. And that does differentiate us quite significantly from any other player, whether it be HCM, payroll, or ERP. Yeah, I would just add one thing to that.

Speaker Change: Strong local payroll.

Speaker Change: And a lot of different countries and as well, we're able to offer a very strong global payroll across all the countries that customers.

Speaker Change: And that does differentiate us quite significantly from any other player whether it be HCM payroll ERP.

Speaker Change: Yes, I'd just add one thing to that is.

Steve Holdren: Our growth levers remain the same, and we have the advantage of a balanced portfolio approach to how we drive our sales, right? A significant push in growth in terms of global. We are number one in terms of that, and customers recognize it. You've seen the growth in enterprise, but we still have a very healthy mid-market business, and that differentiates it around a full sweep across that. We still, you talked about the fact of the customer-based motion. You heard the stats on Wallet and other things around adjacent innovation. So, as we take a look at the year, each one of those levers has a growth target assigned to it, and we see a pretty even distribution of the portfolio. And one of the advantages of our go-to-market strategy is that, as things change in different geographic or macro conditions, we can adjust those levers and continue to drive them. Okay, perfect. Thank you.

Speaker Change: Our growth levers remain the same and we have the advantage of a balanced portfolio approach to how we drive our sales right significant pushing growth in terms of global we are number one in terms of that and customers recognize that you've seen the growth in enterprise, but we still have a very healthy mid market business and the differentiation around full suite across debt we still.

Speaker Change: You talked about the back to the customer base motion you heard the stats and wallet and other things around the adjacent innovation. So as we take a look at the year. Each one of those levers has a growth target assigned to it and we see a pretty even distribution of the portfolio and one of the advantages in our go to market as things change in different geographic or macro conditions, we can.

Speaker Change: Just those levers that continue to drive that number.

Speaker Change: Okay perfect. Thank you.

Brad Reback: Our next question comes from Brad Reback with Spiegel. Great. Thanks very much.

Speaker Change: Our next question comes from Brad Reback with Stifel.

Speaker Change: Okay.

Brad Reback: Great. Thanks very much.

Jeremy Johnson: Jeremy, as you think about your guidance philosophy going forward, could you give us a sense of how that may have differed, if at all, from previous CFOs? Thanks. Hey, Brad, good to speak with you again. The answer to the question is really no, no changes. The guidance philosophy I have is generally going to be consistent with the way we've guided in the past under previous CFOs. Great. Thanks very much.

Brad Reback: Jeremy as you think about your guidance philosophy going forward.

Brad Reback: Can you give us a sense of how that may have deferred if at all from previous CFO. Thanks.

Brad Reback: Hey, Brad good to speak with you again.

Jeremy Johnson: The answer to the question is really no no changes.

Jeremy Johnson: The guidance philosophy I have is.

Speaker Change: Generally going to be consistent with the way we have.

Speaker Change: Guided in the past.

Under previous CFO.

Speaker Change: Great. Thanks very much.

Jared Levine: Our next question comes from Jared Levine with Cowan. Thanks. In terms of the demand environment in 4Q and so far into 1Q, have you seen any differences based on employer size, geography, vertical, or even payroll versus workforce management? Um, not really. I don't think so.

Speaker Change: Our next question comes from Jared Levine with Cowen.

Jared Levine: In terms of the demand environment, <unk> and so far into what could have you seen any differences based on employer size geography vertical or even payroll versus workforce management.

Jared Levine: No Randy.

Jared Levine: Thanks.

Randy: Look a lot of it depends on how we basically set our priority in terms of theme says pattern across the different segments, we play in and the geography.

David D. Ossip: Look, a lot of it depends on how we basically set our priorities in terms of, as Steve says, balance across the different segments we play in and geography. We know that we still have a tremendous amount of white space just in the US and Canada. And so we are still quite focused on what I call the domestic market, you know, given the amount of growth potential we still have over here. But I can't say that I'm seeing... Any global market kind of stand out either positively or negatively? No, we didn't.

Randy: We noted that we still have a tremendous amount of white space just in the U S and Canada.

Randy: So we are quite focused on what I'll call the domestic market just amount.

Randy: Given the amount of growth potential we still are.

Randy: Sure.

Randy: But I cant say that im seeing.

Randy: Any global market economy stand out either positively or negatively.

Randy: No.

Steve Holdren: We've received. Yeah, we see growth across all of them. David talked about APJ. I'm with our team in Europe in a week.

Randy: Sure.

Randy: Yes, we see growth across all of them, David talked about APG and with our team in Europe, and we have a number of significant brands over the past couple of years that we sold that are helping us there, but no I think gets go back we have the advantage of a balanced portfolio and the ability to grow for multiple levers and two anytime adjust up or down on those levers.

Steve Holdren: We have a number of significant brands over the past couple of years that we sold that are helping us there. But no, I think just to go back, we have the advantage of a balanced portfolio and the ability to grow from multiple levers and at any time to adjust up or down on those levers based on what's happening in a particular economy. Great.

Randy: Based on what's happened in the particular economy.

Jared Levine: And then in terms of upsells and targeting and the increasing mix of bookings related to upsells, do you anticipate that to be pretty broad-based across payroll versus your other modules, you know, as you roll out more native payroll functionality, do you anticipate the mix of upsells related to payroll to change over the medium term here? I think there are really three key focus areas for upsell with our existing base. One, customers that we have a footprint in a particular region are moving them to global. We're finding even small mid-market companies are pulling up shared services centers. Number two, customers that have time and pay with us to pull suite with all the investments we've made in terms of talent, and HR service delivery; there's a significant push on that. And then, secondly, different divisions and distributions where we have one division in a company and cross only to another division as part of a larger global and multinational.

Randy: And then in terms of Upsells and targeting an increasing mix of bookings relate to Upsells do you anticipate that would be pretty broad based across payroll versus your other modules as you rollout more native payroll functionality do you anticipate the mix of upsells related to payroll to change over the medium term here.

Randy: Okay.

Speaker Change: There's really three key focus areas for up sell with our existing base one customers that we have a footprint in a particular region and moving them to global we're finding even small and mid market companies are pulling up shared services centers.

Speaker Change: Number two customers that have time and pay with us default suite with all the investments we've done in terms of talent HR service delivery. There is a significant portion of that and then secondly different divisions and distributions, where we have one division in the company and cross selling to another division as part of a larger global multinational.

Speaker Change: <unk>.

Steve Holdren: I just complement that with our approach from the product standpoint. We have an industry-leading payroll product. It's a global payroll product that's differentiated. You heard from David, you heard me.

Speaker Change: I just complement that with our approach on a product standpoint, we have an industry, leading payroll product. It's a global payroll product. That's differentiated you heard from David you heard Steve.

Joe Korengabel: Steve, in terms of whether it's APJ or across the globe, handling it both locally and then being able to handle a global footprint. We often lead with that, and you can land and expand with Dayforce. We started Dayforce with an industry-leading WFM product. It's a product that is differentiated by the ability to extend into different industries and do that hyper-effectively. We often lead with that product as a best-of-breed WFM solution, and we land and expand and can grow our footprint. And now, with the Illumi acquisition, you can see what we're doing in talent, a really powerful frontline workforce with an AI capability that really provides industry-leading talent capabilities. We can lead now with talent, and you can land and expand with the compliance solutions that we have that are leaders around WFM and payroll.

Speaker Change: Steve in terms of whether it's APG or across the globe are handling of both locally and then being able to handle a global footprint, we oftentimes lead with that and you can land and expand with D. Force. We started de force was an industry, leading WSI product. It's a product that is differentiated ability to extend the different industries and to do that hyper effectively.

Speaker Change: We oftentimes lead with that product as a best of breed Wm solution in the land and expand it to grow our footprint and now with the Illumina acquisition you can see what we're doing in talent.

Speaker Change: A really powerful frontline workforce with an AI capability that really provides industry leading talent capabilities. We can lead now with talent and you can land and expand with the compliance solutions that we have that are leading around ws LS cable and so we're really coming at it not just as a full suite, which we of course now have a very robust.

Joe Korengabel: And so we're really coming at it not just as a full suite, which we now have a very robust full suite. We can give you best-of-breed capabilities in those three areas and then land and expand with our customers. So in a world of efficiency and productivity needs, it's starting to be a good strategy. Great, thank you. Our next question comes from Steve Enders with Citi. Okay, great.

Speaker Change: We can give you best in breed capabilities in those three areas and then land and expand with our customers and in a world of efficiency and productivity needs.

Speaker Change: Turning to be a good strategy.

Speaker Change: Great. Thank you.

Steve Vendors: Our next question comes from Steve vendors with Citi.

Steve Vendors: Okay, great. Thanks for thanks for taking the questions here.

Steve Enders: Thanks for taking the questions here. Maybe just to start, it seems like, you know, as we think about the model moving forward and the pace of net new go lives that. Maybe we should expect that level to be a little bit lower, given some of the dynamics. I guess I just want to clarify that or what you're thinking about what the pipeline looks like for go-lives going through calendar 24. So, you know, that that's metric is a. It's not a simple metric.

Steve: Just to start it seems like.

Steve: As we think about the model moving forward and the pace of net new go lives that maybe.

Steve: Maybe we should expect that level to be a little bit lower.

Steve Vendors: Some of the dynamics I guess I, just want to clarify that or how you are thinking about what the pipeline looks like for go lives going through there.

Steve Vendors: During the calendar 'twenty four.

Steve Vendors: So.

Steve Vendors: That metric is a.

Steve Vendors: It's not.

David D. Ossip: The better number to look at would be the number of employees that were onboarding onto the actual platform. If you look at 23 to 22, we added about 900,000 people onto the actual platform. In this, the net number of customers that are live, there are a lot of customers that are not included in that number because we've tried to keep the number consistent in the way we did it at the time of the IPO.

Steve Vendors: One of our critical metric.

Steve Vendors: The better number to look at would be the number of employees that were onboarding onto the actual platform.

Steve Vendors: If you look at 'twenty three 'twenty.

Steve Vendors: Two we added about 900000 people onto the actual platform.

Steve Vendors: The net number of customers or a lie there are a lot of customers that are not included in that number.

Steve Vendors: I think what we try to keep the number of <unk> systems.

Steve Vendors: The way, we get hit at time of IPO.

David D. Ossip: So I think Jeremy will have to determine what we actually disclose on a go-forward basis when it comes to that metric for employee volume. In terms of our go-to-market strategy, we remain committed to focusing on the market where we believe we have differentiation. When I look at the actual product, what we do exceptionally well is we deliver simplicity at scale, where we're able to solve very complex problems for our customers, especially around the peril, workforce management, scheduling, and benefit side, but while at the same time trying to expand our markets, simplifying the number of different vendors that they're dealing with to get a complete and powerful total human capital management experience.

Steve Vendors: So I think Jeremy will have to determine what we actually disclose on a go forward basis. When it comes to that metric will invoice volume.

Steve Vendors: In terms of our go to market strategy, we remain committed to focusing on the market.

Steve Vendors: Differentiation.

Steve Vendors: When I look at the actual product, what we do exceptionally well and the deliberate simplicity at scale, where we're able to still very complex problems for our customers.

Steve Vendors: Especially around the payroll workforce management scheduling benefit side, while at the same time.

Steve Vendors: <unk> number of different vendors that they're dealing with you get a complete and powerful total human capital management experience.

David D. Ossip: That means that, largely, you'll see us continue to go up market and play very successfully in what we describe as the enterprise phase, that 3,000 to 12,000 employee market. And as well in the major space, which goes from about 1000 employees up to about 3000. When we go into the very large enterprise, we are now seeing full HTM suites, particularly where there are high percentages of front-line workers, so think retail, for example.

Steve Vendors: That means that largely youll see us continue to go up market. He played very successfully in what we describe as the enterprise space that 3000 to 12000 employee Mark.

Steve Vendors: And as well in the major space.

Steve Vendors: <unk> from about 1000 employees up to about $3.

Steve Vendors: When we get into the very large enterprise, we are now seeing full HCM suite.

Steve Vendors: Particularly where they are high percentages.

Steve Vendors: <unk> workers.

Steve Vendors: I think retail for example.

David D. Ossip: In other industries, we typically focus on our compliance model, our global payroll, and our global workforce management capabilities, which, as you know, are quite uniquely marked. And if I could just add three things that I think are really strong metrics for us that we've talked about already, but I'll highlight them again. We had record go-lives this past year in Q4.

Steve Vendors: In other industry, we typically focus on our compliance modules, our global payroll global workforce management.

Steve Vendors: Capability, which as you know are quite unique in market.

Speaker Change: And if I can just add three things that I think are really strong metrics for us.

Speaker Change: That we've talked about already but I'll highlight them again.

We had record go lives.

Speaker Change: Past year and in Q4.

Jeremy Johnson: That's on a dollar basis metric. We have maintained our world-class retention rates of 97.1 percent, and we had net ads for our enterprise customers up 64 percent year-over-year. So larger customers, record go-lives, and strong dollar-based retention are the three metrics that I want to highlight. Okay, perfect. That's helpful, helpful context there, and it may be just on partner feedback and, you know, potential customer feedback you've heard so far on the name change to Dayforce. And I guess, yeah, what has been the comment that you've heard so far? One, I'm very proud of the work that our brand new team did.

Speaker Change: That's on a dollar basis this metric.

Speaker Change: We have maintained our world class retention rates of 97, 1% and we had net adds for our enterprise customers up 64% year over year.

Speaker Change: Larger customers record go lives and strong dollar based retention I think of the three metrics that I wanted to highlight there.

Speaker Change: Okay.

Speaker Change: That's helpful helpful context there.

Speaker Change: And then maybe just on the.

Speaker Change: The partner feedback.

Speaker Change: The potential customer feedback you've heard so far on the name change to day for us.

Speaker Change: What has been the common tragedy occurred so far.

One I am very proud of the work that our brand new team.

Speaker Change: As shown in the box.

David D. Ossip: I'm seeing tremendous excitement both internally and externally from the simplification of the actual name change. So I'd say it's been very, very positive. Okay, perfect. Thanks for taking the questions. I'm going to open the door. Arvind, I think you're going to have to mute.

Speaker Change: Im seeing tremendous excitement both internally and with the pressure from the simplification of the actual maintaining you're interested in stock that has been very very positive.

Speaker Change: Okay.

Speaker Change: Okay perfect. Thanks for taking the questions.

Speaker Change: No.

Speaker Change: Arvind I think youre going to have to mute.

Arvind Ramani: But if you'd like to ask a question, this is Arvind Ramani with Piper Sandler. Thank you. Next question: Mark Murphy with J.P. Morgan.

Speaker Change: But if you'd like to ask a question.

Speaker Change: This is this is arvind rahmani with Piper Sandler.

Speaker Change: Okay.

Speaker Change: Next question.

Mark Murphy with JP Morgan.

Mark R. Murphy: Yes, thank you very much. I'm wondering if you can drill down a bit into what you're expecting for migration tailwinds in 2024. David, I think you mentioned the tax modernization side, but I'm interested also in the international payroll migrations. Should we think that the tax migrations fade off somewhat while the international payroll piece perhaps starts to pick up and make up some of that difference? And then I have a quick follow-up.

Mark R. Murphy: Yes. Thank you very much I'm wondering if you can drill down a bit into what you're expecting for <unk>.

Mark R. Murphy: Migration tailwind in 2020 for David I think you mentioned the tax.

Mark R. Murphy: Modernization side, but I'm interested also in the international.

Mark R. Murphy: Payroll migrations should we think that the tax migrations paid off somewhat while the international payroll piece, perhaps starts to pick up and make up some of that difference and then I have a quick follow up.

Mark R. Murphy: So the the tax migration as you know that was a platform change onto the day fulton's, there largely driven by accounting reasons.

David D. Ossip: So the tax migration, as you know, that was a platform change onto the default and so largely driven by accounting reasons. In terms of the APJ migration, we are now beginning to target what is a product and market called Proceda, particularly in the Australian marketplace. And we are actively speaking with the Proceda customer base about their journey towards Dayforce. I had lunch with many of them just last week.

Mark R. Murphy: In terms of the P. J migration, we are now beginning to target.

Mark R. Murphy: This product in the market Court proceed up particularly in the Australia marketplace.

Mark R. Murphy: And we are actively speaking with the procedure customer base about their journey towards Staples had a lunch with many of them. Just last week. We have several that are completed the journey on a highly referenced apple so I'm optimistic that that Jennie O go very well.

David D. Ossip: We have several that have completed the journey and are highly regarded. So I'm optimistic that that journey will go very well. Likewise, we're actually focusing on simplification across the other countries within the APJs. The launch of Dayforce Unified, which gives customers a consistent experience when we incorporate what I'll call the headless payroll engine that we have across multiple APJ countries, that's also been launched and is also going quite nicely. And then, over time, you'll see the expansion of Dayforce native as we go to 2025 and 2027. OK, I understand. And then, perhaps for Jeremy, it is great to have you back, of course. In mathematics, is it correct that the float income guidance steps up slightly for 2024? And if so, mechanically, can you just remind us how that works? And are you factoring in an expectation of some rate cuts? In the spring or summer,

Mark R. Murphy: Likewise, we are actually focusing on simplification across the other countries within <unk> the launch of <unk> unified which gave the customers.

Mark R. Murphy: Consistent experience when we incorporate what are called the Atlas payroll engine that we have across multiple will come to a P. J country that also Golden San Jose again quite nicely and then over time, you'll see the expansion update both nature that'd be going into 2025 and 2026.

Speaker Change: Okay understood and then.

Speaker Change: As a follow up perhaps for Jeremy.

Speaker Change: It is great to have you back of course.

Jeremy Johnson: [noise] arithmetic Lee isn't it correct that the float income guide steps up slightly for 2024, and if so mechanically could you just remind us.

Jeremy Johnson: How that works and are you factoring in an expectation for some rate cuts.

Jeremy Johnson: In the spring or summer.

Jeremy Johnson: Hey, Mark, good to speak with you again, and thanks for the question. Yeah, so, float steps up slightly in our guidance compared to where we ended the year. We ended the year at around $169 million, and our guidance was $174 million.

Speaker Change: Hey, Mark good to good to speak with you again.

Lee: And thanks for the question, yes, so float.

Lee: Up slightly from <unk>.

Lee: In guidance compared to where we ended the year and we ended the year at around $169 million in our guidance was $1 74.

Jeremy Johnson: Essentially, what you can assume there is balanced growth offset by essentially flat rates. Now, keep in mind, we have baked in rate cuts throughout the year into this number, but the way we ladder our portfolios, the rate cuts won't really hit this year. They'll start to hit next year or towards the end of this year and not impact that average rate that we're seeing. Okay, so something like a six to nine month lag because of the laddering. So maybe a little bit longer than that, but something like that.

Lee: Essentially what you can assume there is balanced growth offset by essentially flat.

Rates now keep in mind, we have baked in.

Lee: Rate cuts throughout the year.

Lee: Into this number but the way we ladder our portfolios the rate cuts wont really hit this year. They will start to hit next year towards the end of this year and not impact that average rate.

Lee: Okay, so something like a six to nine month lag because of the ladder.

Lee: So maybe a little bit longer than that but but something like that if the market. If you look at it last year, our yield was effectively 374%.

Jeremy Johnson: Yeah, so Mark, if you look at it, last year our yield was effectively 3.74%, and this year we're assuming about 3.75. So it takes a bit of time for the rate increases to go through the system. We're still climbing the yield curve when it comes to the core portfolio. That's the part of the portfolio that we will ladder out. In Q1, the proportion between the short term and the core portfolio shifts more towards the short term. So we should see some benefit from a higher rate environment in Q1. Relative to last year,

Lee: And this year, we're assuming about $3 75.

Lee: So it takes a bit of time to have the rate increases through the system, we're still climbing the.

Lee: The yield curve when it comes to the core portfolio. That's a part of the portfolio that we lever out in Q1.

Lee: The proportion between the.

Lee: The short term and the core portfolio shifts more towards the short term.

Lee: We should see some benefit from a higher rate environment in Q1.

Speaker Change: Relative to last year understood. Thank you very much I appreciate it.

David D. Ossip: understood. Thank you very much. I appreciate it.

Mark R. Murphy: Our next question comes from Kevin Kumar with Goldman Sachs. Our next question comes from Bhavin Shah with Deutsche Bank. Great, thanks for taking my question.

Speaker Change: Our next question comes from Kevin Kumar with Goldman Sachs.

Kevin Kumar: Our next question comes from Bob <unk> Shah with Deutsche Bank.

Kevin Kumar: Great. Thanks for taking my question just first on first co pilot I think you've talked about in your prepared remarks about the strong productivity improvements from some of the early adopters can you just talk about how youre thinking about monetization of the skew how much is based on productivity and kind of how that pipeline is staring for the offering.

Joe Korengabel: Just first on Dayforce Copilot, I think you talked about in your prepared remarks about the strong productivity improvements from some of the early adopters. Can you just talk about how you're thinking about monetization of this SKU, how much is based on productivity, and kind of how that pipeline is faring for this offering? Bhavin, good to talk to you, and thank you for the question.

Bob I'm going to talk to you and thank you for the question, Yes, we see it as an add on to our our suite and so when you look at our overall suite, whether its core HR.

Joe Korengabel: Yeah, we see it as an add-on to our suite. And so when you look at our overall suite, whether it's Core HR, our compliance modules of payroll, workforce management, or what we're doing in talent analytics, we feel like Copilot is, as we refer to it, an AI teammate for your global workforce. It can help you in terms of efficiency, quickly and easily get the questions you have answered. It's also moving into action, where it can automatically generate reports instead of having to work with IT to create reports or get the data you need out of the system. It can do it more instantly, and it's a nice add-on.

Bhavin Shah: Our compliance modules of payroll workforce management or what we're doing in talent analytics.

Bhavin Shah: We feel like copilot as we refer to it as an AI teammate for Ya global workforce.

Bhavin Shah: It can help you in terms of efficiency quickly easily get.

Bhavin Shah: The questions you have answered it is also moving into action, where it can automatically generate reports instead of having to.

Bhavin Shah: Work with it to create reports you'll get the data you need out of the system that can do it more instantly and it's a nice add on so we treated as any module. We have you can add on co pilots for an additional charge.

Joe Korengabel: So we treat it like any module we have; you can add on Copilot for an additional charge and then drive those efficiencies. With our early adopters now, we're monitoring that efficiency and really driving that so that we can then, in our go-to-market later this year, really drive that into the metrics that we provide for customers to upsell and see what labor increases they can see and what productivity increases they can see from their workforce as a result of using Copilot. So it is an add-on module that you add on to a subscription; whether you just buy payroll or you buy our full suite, it can be added on as an additional cost. Super helpful.

Bhavin Shah: And and drive those efficiencies with our early adopters now we're monitoring that efficiency and really driving that so that we can then in our go to market. Later this year will really drive that into the.

Bhavin Shah: The metrics that we provide for customers to up sell and see what.

Bhavin Shah: Labor increases they can see and what productivity increases they can see from the workforce as a result of using co pilot. So it is an add on module that you add on to a subscription whether you just buy payroll you buy our full suite. It can be added on as an additional cost saver for your business.

Speaker Change: Super helpful. Just one quick follow up based on I guess more for Jeremy just based on kind of you noted in your guidance. It assumes a more moderating rate environment. Obviously, its the latter so the impacts can be more I guess 25, but how are you as a management team thinking about just the rate and pace of investments to the extent we are in a lower pace environment does that kind of <unk>.

Bhavin Shah: Just one quick follow-up, based on, I guess, more for Jeremy, just based on kind of, you noted in the guidance, it assumes a more moderating rate environment; obviously, it's lighter, so the impact can be more, I guess, 25. But how are you as a management team thinking about just the rate and pace of investments, to the extent we are in a lower-paced environment? Does that kind of impact how you're thinking about investing into going to market, etc.?

Speaker Change: How youre thinking about investing in the go to market et cetera.

Jeremy Johnson: We always look at the float as a really nice piece of our business, and we'll take it when it's here, but as it goes away, it's something that, you know, we will continue to invest in the business. We'll also focus on expanding our adjusted EBITDA margins and the conversion of that into cash flow. I think maybe what I'll highlight there is that we saw a significant improvement in our operating cash flow and conversion from adjusted EBITDA into operating cash flow. So we ended the year at $219.5 million in operating cash flow, which is a 54% conversion from our adjusted EBITDA. So we're really pleased with that. And you'll continue to see us focus on profitability, regardless of the rate environment. The other thing that I'll mention is if I look at EBITDA, which came in at, you know, 27.1% for the full year, X float, that was up by 340 basis points year over year.

Speaker Change: We always look at the float is a really nice piece of our business and we will take it when its here.

Speaker Change: But.

Speaker Change: But as it goes away it is something that.

Jeremy Johnson: We will continue to invest in the business. We will also focus on expanding our adjusted EBITDA margins and the conversion of that into cash flow I think maybe what I'll highlight there.

Jeremy Johnson: We saw significant.

Jeremy Johnson: Improvement in our operating cash flow.

Jeremy Johnson: Conversion from adjusted EBITDA into operating cash flow, we ended the year at 219.

$5 million in operating cash flow.

Jeremy Johnson: Which is a 54% conversion from our adjusted EBITDA. So we're really pleased with that Youll continue to see us focus on profitability.

Jeremy Johnson: Regardless of the rate environment. The other thing that I'll mention is if I look at the EBITDA, which came in at 27, 1% for the Oems.

Jeremy Johnson: Ex float that was up by 340 basis points year over year, So while we did get benefit from it.

Jeremy Johnson: So while we did get benefits from the float, we did continue our focus on, as Jeremy pointed out, more efficient operations across the company, and as well, the cash conversion. We were very happy that we came in at 54% conversion of operating cash flow, EBITDA operating cash flow. And when we look at our guide for 2024, we're looking at increasing that by possibly another 10% up to the high 50% range of cash conversion.

Jeremy Johnson: Continue our focus on that Jeremy pointed out more efficient opex across the company and as well the cash conversion.

Jeremy Johnson: We're very happy that we came in at 54% conversion of operating cash flow EBITDA to operating cash flow and when we look at all.

Jeremy Johnson: For 2020 full we're looking at increasing that pipeline, possibly at number 10% up to the high 50% range.

Bhavin Shah: I appreciate the answers. Thanks for taking my questions. Thanks everyone for dialing in today. This concludes our call. Goodbye.

Jeremy Johnson: <unk>.

Speaker Change: I appreciate the answers thanks for taking my questions.

Speaker Change: Thanks, everyone for dialing in today this concludes our call.

Speaker Change: Okay.

Speaker Change: Goodbye.