Human capital management software company Dayforce (NYSE: DAY) met Wall Streets revenue expectations in Q3 CY2025, with sales up 9.5% year on year to $481.6 million. Its non-GAAP profit of $0.37 per share was 33.2% below analysts’ consensus estimates.
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Dayforce (DAY) Q3 CY2025 Highlights:
- In light of the pending Thoma Bravo Transaction, Dayforce will not be providing forward-looking guidance or updates to previously issued guidance and will not host an earnings conference call or webcast for its third quarter fiscal 2025 results and does not expect to do so for any future quarters.
- Revenue: $481.6 million vs analyst estimates of $481.4 million (9.5% year-on-year growth, in line)
- Adjusted EPS: $0.37 vs analyst expectations of $0.55 (33.2% miss)
- Adjusted EBITDA: $147.3 million vs analyst estimates of $145.3 million (30.6% margin, 1.4% beat)
- Operating Margin: 6.3%, up from 4.7% in the same quarter last year
- Free Cash Flow Margin: 1%, down from 18.7% in the previous quarter
- Billings: $473.9 million at quarter end, up 8.6% year on year
- Market Capitalization: $10.81 billion
Company Overview
Rebranded from Ceridian in January 2024 to highlight its flagship product, Dayforce (NYSE: DAY) provides cloud-based software that helps organizations manage their entire employee lifecycle, including HR, payroll, workforce management, benefits, and talent development.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Dayforce’s sales grew at a decent 17.6% compounded annual growth rate over the last five years. Its growth was slightly above the average software company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Dayforce’s recent performance shows its demand has slowed as its annualized revenue growth of 14.3% over the last two years was below its five-year trend. 
This quarter, Dayforce grew its revenue by 9.5% year on year, and its $481.6 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 11.8% over the next 12 months, a slight deceleration versus the last two years. This projection is underwhelming and indicates its products and services will see some demand headwinds.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Dayforce’s billings came in at $473.9 million in Q3, and over the last four quarters, its growth was underwhelming as it averaged 12% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in acquiring/retaining customers. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Dayforce is extremely efficient at acquiring new customers, and its CAC payback period checked in at 11.9 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from Dayforce’s Q3 Results
Billings and EPS both missed. Overall, this was a softer quarter. The stock remained flat at $68.36 immediately after reporting.
Dayforce’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
