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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly reporting period ended June 30, 2024

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 001-38467

 

Dayforce, Inc.

(Exact name of registrant as specified in its charter)

Delaware	46-3231686
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

3311 East Old Shakopee Road

Minneapolis, Minnesota 55425

(952) 853-8100

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	DAY	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 24, 2024, there were 158.1 million shares of common stock, par value of $0.01 per share, outstanding.

Dayforce, Inc.

Table of Contents

		Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		3
PART I. FINANCIAL INFORMATION		5
Item 1.	Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	44
PART II. OTHER INFORMATION		46
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47

2 | Q2 2024 Form 10-Q

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ("Form 10-Q") contains, or incorporates by reference, not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and that are subject to the safe harbor created by those sections. Forward-looking statements include, without limitation, statements concerning the conditions of the human capital management solutions industry and our operations, performance, and financial condition, and include, in particular, statements relating to our business, growth strategies, product development efforts, and future expenses. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “seek,” “believe,” “estimate,” “expect,” “assume,” “project,” “could,” “continue,” “likely,” “may,” “will,” “should,” and similar references to future periods, or by the inclusion of forecasts or projections.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Consequently, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national, or global political, economic, business, competitive, market, and regulatory conditions. In particular:

•our inability to maintain our high Cloud solutions growth rate, manage our domestic and international growth effectively, or execute on our growth strategy;

•the impact of disruptions to the movement of funds to initiate payroll-related transactions on behalf of customers;

•our failure to manage our aging technical infrastructure;

•system breaches, interruptions or failures, including cyber-security breaches, identity theft, or other disruptions that could compromise customer information or sensitive company information, including our ongoing consent order with the Federal Trade Commission regarding data protection;

•our failure to comply with applicable privacy, data protection, information security, and financial services laws, regulations and standards;

•our inability to successfully compete in the markets in which we operate and expand our current offerings into new markets or further penetrate existing markets due to competition;

•our failure to properly update our solutions to enable our customers to comply with applicable laws;

•our failure to provide new or enhanced functionality and features, including those that may involve artificial intelligence or machine learning;

•our inability to maintain necessary third-party relationships, and third-party software licenses, and identify errors in the software we license;

•our inability to offer and deliver high-quality technical support, implementation, and professional services;

•our inability to attract and retain senior management employees and highly skilled employees;

•the impact of our outstanding debt obligations on our financial condition, results of operations, and value of our common stock;

•our ability to maintain effective internal control over financial reporting, and the effect of the existing material weakness in our internal control over financial reporting on our business, financial condition, and results of operations; or

•the impact of adverse economic and market conditions on its business, operating results, or financial condition.

Please refer to Part II, Item IA. “Risk Factors” of this Form 10-Q and Part I, Item IA, “Risk Factors” of our most recently filed Annual Report on Form 10-K, for the year ended December 31, 2023 (“2023 Form 10-K”), for a further description of these and other factors. Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. If any of these risks materialize, or if any of the above assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. For the reasons described above, we caution against relying on any forward-looking statements. Any forward-looking statement made by us in this Form 10-Q speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should be viewed as historical data.

3 | Q2 2024 Form 10-Q

Investors and others should note that we have in the past announced, and expect in the future to continue to announce, material business and financial information to our investors using our investor relations website (www.investors.dayforce.com), our filings and furnishings with the Securities and Exchange Commission (“SEC”), webcasts, press releases, conference calls, and other channels of distribution that are compliant with SEC regulations.

In the future, we may also announce material business and financial information to our investors using our corporate X (formerly known as Twitter) account (@Dayforce), our blog (www.dayforce.com/blog), and our corporate LinkedIn account (www.linkedin.com/company/dayforce). We use these mediums, including our website, to communicate with investors and the general public about us, our products, and other issues. It is possible that the information that we make available on these mediums may be deemed to be material information. We therefore encourage investors and others interested in us to review the information that we make available through these channels.

4 | Q2 2024 Form 10-Q

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Dayforce, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	June 30,			December 31,
	2024			2023
(In millions, except per share data)
Assets
Current assets:
Cash and equivalents	$	465.4		$	570.3
Restricted cash		0.8			0.8
Trade and other receivables, net		260.8			228.8
Prepaid expenses and other current assets		140.1			126.7
Total current assets before customer funds		867.1			926.6
Customer funds		4,969.5			5,028.6
Total current assets		5,836.6			5,955.2
Right of use lease assets, net		14.8			19.1
Property, plant, and equipment, net		220.0			210.1
Goodwill		2,383.4			2,293.9
Other intangible assets, net		256.2			230.2
Deferred sales commissions		205.6			192.1
Other assets		129.5			110.3
Total assets	$	9,046.1		$	9,010.9
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt	$	7.3		$	7.6
Current portion of long-term lease liabilities		5.9			7.0
Accounts payable		66.3			66.7
Deferred revenue		46.5			40.2
Employee compensation and benefits		80.2			92.9
Other accrued expenses		41.8			30.4
Total current liabilities before customer funds obligations		248.0			244.8
Customer funds obligations		5,032.3			5,090.1
Total current liabilities		5,280.3			5,334.9
Long-term debt, less current portion		1,210.7			1,210.1
Employee benefit plans		25.9			27.7
Long-term lease liabilities, less current portion		14.5			18.9
Other liabilities		38.9			21.1
Total liabilities		6,570.3			6,612.7
Commitments and contingencies (Note 15)
Stockholders’ equity:
Common stock, $0.01 par, 500.0 shares authorized, 159.8 and 156.3 shares issued and outstanding, respectively		1.6			1.6
Additional paid in capital		3,246.7			3,151.1
Accumulated deficit		(312.5	)		(317.8	)
Accumulated other comprehensive loss		(460.0	)		(436.7	)
Total stockholders’ equity		2,475.8			2,398.2
Total liabilities and stockholders' equity	$	9,046.1		$	9,010.9

See accompanying notes to condensed consolidated financial statements.

5 | Q2 2024 Form 10-Q

Dayforce, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2024			2023		2024		2023
(In millions, except per share data)
Revenue:
Recurring	$	365.0		$	314.9	$	747.7	$	632.8
Professional services and other		58.3			51.0		107.1		103.7
Total revenue		423.3			365.9		854.8		736.5
Cost of revenue:
Recurring		89.3			78.8		177.7		158.9
Professional services and other		69.6			67.0		135.7		130.9
Product development and management		58.3			49.2		111.4		100.2
Depreciation and amortization		19.3			15.0		37.8		30.3
Total cost of revenue		236.5			210.0		462.6		420.3
Gross profit		186.8			155.9		392.2		316.2
Selling and marketing		83.1			61.5		162.1		115.7
General and administrative		89.6			65.0		175.3		132.7
Operating profit		14.1			29.4		54.8		67.8
Interest expense, net		11.1			9.1		24.4		18.3
Other expense, net		3.0			0.7		12.0		1.5
Income before income taxes		—			19.6		18.4		48.0
Income tax expense		1.8			16.5		13.1		35.0
Net (loss) income	$	(1.8	)	$	3.1	$	5.3	$	13.0
Net (loss) income per share:
Basic	$	(0.01	)	$	0.02	$	0.03	$	0.08
Diluted	$	(0.01	)	$	0.02	$	0.03	$	0.08
Weighted average shares outstanding:
Basic		157.9			155.1		157.4		154.7
Diluted		157.9			157.6		159.8		157.8

See accompanying notes to condensed consolidated financial statements.

6 | Q2 2024 Form 10-Q

Dayforce, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
(In millions)
Net (loss) income	$	(1.8	)	$	3.1		$	5.3		$	13.0
Items of other comprehensive income (loss) before income taxes:
Change in foreign currency translation adjustment		(4.8	)		5.5			(27.5	)		6.7
Change in unrealized loss from invested customer funds		7.1			(18.6	)		(0.3	)		5.3
Change in pension liability adjustment		2.8			1.5			6.0			3.0
Other comprehensive income (loss) before income taxes		5.1			(11.6	)		(21.8	)		15.0
Income tax expense (benefit), net		2.6			(4.5	)		1.5			2.2
Other comprehensive income (loss) after income taxes		2.5			(7.1	)		(23.3	)		12.8
Comprehensive income (loss)	$	0.7		$	(4.0	)	$	(18.0	)	$	25.8

See accompanying notes to condensed consolidated financial statements.

7 | Q2 2024 Form 10-Q

Dayforce, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Common Stock				Additional Paid In		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		$		Capital		Deficit			Loss			Equity
(In millions)
Balance as of December 31, 2023		156.3	$	1.6	$	3,151.1	$	(317.8	)	$	(436.7	)	$	2,398.2
Net income		—		—		—		7.1			—			7.1
Issuance of common stock under share-based compensation plans		1.6		—		15.3		—			—			15.3
Share-based compensation		—		—		38.0		—			—			38.0
Foreign currency translation		—		—		—		—			(22.7	)		(22.7	)
Change in unrealized loss, net of tax of ($1.9)		—		—		—		—			(5.5	)		(5.5	)
Change in pension liability adjustment, net of tax of $0.8		—		—		—		—			2.4			2.4
Balance as of March 31, 2024		157.9	$	1.6	$	3,204.4	$	(310.7	)	$	(462.5	)	$	2,432.8
Net loss		—		—		—		(1.8	)		—			(1.8	)
Issuance of common stock under share-based compensation plans		1.9		—		1.5		—			—			1.5
Share-based compensation		—		—		40.8		—			—			40.8
Foreign currency translation		—		—		—		—			(4.8	)		(4.8	)
Change in unrealized loss, net of tax of $1.9		—		—		—		—			5.2			5.2
Change in pension liability adjustment, net of tax of $0.7		—		—		—		—			2.1			2.1
Balance as of June 30, 2024		159.8	$	1.6	$	3,246.7	$	(312.5	)	$	(460.0	)	$	2,475.8

	Common Stock				Additional Paid In		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		$		Capital		Deficit			Loss			Equity
(In millions)
Balance as of December 31, 2022		153.9	$	1.5	$	2,965.5	$	(372.6	)	$	(485.0	)	$	2,109.4
Net income		—		—		—		9.9			—			9.9
Issuance of common stock under share-based compensation plans		1.1		0.1		14.7		—			—			14.8
Share-based compensation		—		—		40.2		—			—			40.2
Foreign currency translation		—		—		—		—			1.2			1.2
Change in unrealized loss, net of tax of ($6.3)		—		—		—		—			17.6			17.6
Change in pension liability adjustment, net of tax of ($0.4)		—		—		—		—			1.1			1.1
Balance as of March 31, 2023		155.0	$	1.6	$	3,020.4	$	(362.7	)	$	(465.1	)	$	2,194.2
Net income		—		—		—		3.1			—			3.1
Issuance of common stock under share-based compensation plans		0.5		—		8.5		—			—			8.5
Share-based compensation		—		—		41.5		—			—			41.5
Foreign currency translation		—		—		—		—			5.5			5.5
Change in unrealized loss, net of tax of $4.9		—		—		—		—			(13.7	)		(13.7	)
Change in pension liability adjustment, net of tax of ($0.4)		—		—		—		—			1.1			1.1
Balance as of June 30, 2023		155.5	$	1.6	$	3,070.4	$	(359.6	)	$	(472.2	)	$	2,240.2

See accompanying notes to condensed consolidated financial statements.

8 | Q2 2024 Form 10-Q

Dayforce, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
	2024			2023
(In millions)
Cash flows from operating activities
Net income	$	5.3		$	13.0
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax (benefit) expense		(17.4	)		5.5
Depreciation and amortization		99.4			45.4
Amortization of debt issuance costs and debt discount		2.1			2.2
Loss on debt extinguishment		4.3			—
Provision for doubtful accounts		3.8			2.5
Net periodic pension and postretirement cost		5.1			0.7
Share-based compensation expense		78.8			81.7
Change in fair value of contingent consideration		—			7.2
Other		—			0.2
Changes in operating assets and liabilities, excluding effects of acquisitions:
Trade and other receivables		(34.5	)		(27.6	)
Prepaid expenses and other current assets		(2.6	)		(13.5	)
Deferred sales commissions		(14.8	)		(12.9	)
Accounts payable and other accrued expenses		(7.6	)		5.2
Deferred revenue		(1.6	)		2.5
Employee compensation and benefits		(12.3	)		(28.1	)
Accrued taxes		7.3			13.1
Other assets and liabilities		(7.0	)		(4.1	)
Net cash provided by operating activities		108.3			93.0
Cash flows from investing activities
Purchases of customer funds marketable securities		(322.9	)		(101.6	)
Proceeds from sale and maturity of customer funds marketable securities		167.9			174.0
Purchases of marketable securities		(4.0	)		—
Proceeds from sale and maturity of marketable securities		3.0			—
Expenditures for property, plant, and equipment		(6.7	)		(10.1	)
Expenditures for software and technology		(47.7	)		(46.4	)
Acquisition costs, net of cash acquired		(173.1	)		—
Other		—			(1.0	)
Net cash (used in) provided by investing activities		(383.5	)		14.9
Cash flows from financing activities
(Decrease) increase in customer funds obligations, net		(3.0	)		100.4
Proceeds from issuance of common stock under share-based compensation plans		16.8			23.2
Proceeds from debt issuance		650.0			—
Repayment of long-term debt obligations		(644.7	)		(4.1	)
Payment of debt refinancing costs		(11.4	)		—
Net cash provided by financing activities		7.7			119.5
Effect of exchange rate changes on cash, restricted cash, and equivalents		(21.7	)		63.1
Net (decrease) increase in cash, restricted cash, and equivalents		(289.2	)		290.5
Cash, restricted cash, and equivalents at beginning of period		3,421.4			3,151.2
Cash, restricted cash, and equivalents at end of period	$	3,132.2		$	3,441.7
Reconciliation of cash, restricted cash, and equivalents to the condensed    consolidated balance sheets
Cash and equivalents	$	465.4		$	486.6
Restricted cash		0.8			0.8
Restricted cash and equivalents included in customer funds		2,666.0			2,954.3
Total cash, restricted cash, and equivalents	$	3,132.2		$	3,441.7

See accompanying notes to condensed consolidated financial statements.

9 | Q2 2024 Form 10-Q

Dayforce, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Organization

Dayforce, Inc. and its direct and indirect subsidiaries (also referred to in this report as “we,” “our,” “us,” or the “Company”) offer a broad range of services and software designed to help employers more effectively manage employment processes, such as payroll, payroll-related tax filing, human resource information systems, employee self-service, time and labor management, employee assistance programs, and recruitment and applicant screening. Our technology-based services are typically provided through long-term customer relationships that result in a high level of recurring revenue. While we operate in 19 countries globally, our operations are primarily located in the United States and Canada.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accounting policies we follow are set forth in Part II, Item 8, Note 2, “Summary of Significant Accounting Policies,” to our audited consolidated financial statements in our 2023 Form 10-K. The following notes should be read in conjunction with these policies and other disclosures in our 2023 Form 10-K.

In the opinion of management, the unaudited condensed consolidated financial statements contained herein reflect all adjustments (consisting only of normal recurring adjustments, except as set forth in these notes to the condensed consolidated financial statements) necessary to present fairly in all material respects the financial position, results of operations, comprehensive income (loss), and cash flows from all periods presented. Interim results are not necessarily indicative of results for a full year.

Recently Issued and Adopted Accounting Pronouncements from the Financial Accounting Standards Board

There were no recently adopted accounting standards that had a material effect on our condensed consolidated financial statements and accompanying disclosures, and no recently issued accounting standards that are expected to have a material impact on our condensed consolidated financial statements and accompanying disclosures.

3. Business Combinations

On February 1, 2024, we completed the purchase of 100% of the outstanding shares of eloomi A/S ("eloomi"), a learning experience platform software provider based in Copenhagen, Denmark, and Orlando, Florida.

The purchase accounting has not been finalized as of June 30, 2024, with provisional amounts related to intangible assets, including goodwill, and tax positions. Intangible assets recorded for this acquisition consist of $85.2 million of developed technology and $1.8 million of customer relationships. The goodwill arising from the eloomi acquisition is primarily attributable to the potential to achieve synergies and other cost savings through integration with our existing operations. None of the goodwill associated with this acquisition is deductible for income tax purposes.

The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows:

	(In millions)
Cash and equivalents	$	6.5
Trade receivables, prepaid expenses, and other current assets		4.6
Goodwill		112.5
Other intangible assets		87.0
Other assets		0.6
Accounts payable and accrued liabilities		(3.9	)
Deferred revenue		(8.6	)
Deferred tax liability		(19.1	)
Total purchase price	$	179.6

10 | Q2 2024 Form 10-Q

4. Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Our financial assets and liabilities measured at fair value on a recurring basis were categorized as follows:

	June 30, 2024
	Level 1		Level 2			Level 3			Total
	(In millions)
Assets
Available for sale customer funds assets	$	—	$	2,303.5	(a)	$	—		$	2,303.5
Total assets measured at fair value	$	—	$	2,303.5		$	—		$	2,303.5
Liabilities
DataFuzion contingent consideration	$	—	$	—		$	14.9	(b)	$	14.9
Total liabilities measured at fair value	$	—	$	—		$	14.9		$	14.9

	December 31, 2023
	Level 1		Level 2			Level 3		Total
	(In millions)
Assets
Available for sale customer funds assets	$	—	$	2,178.3	(a)	$	—	$	2,178.3
Total assets measured at fair value	$	—	$	2,178.3