Ceridian (NYSE:CDAY), a cloud-based payroll and HR software provider has reported impressive financial results for Q3 FY2023, exceeding Wall Street predictions. The company's revenue surged by 19.6% year-on-year (YoY) to reach $377.5 million, outperforming analyst estimates by a margin of 2.19%. This robust performance is attributed to the growth in recurring revenue from Dayforce, the HR software acquired in 2012, which saw a substantial increase of 34.6%.
The company's non-GAAP EPS also improved significantly, turning into a profit of $0.37 per share from a loss of $0.14 per share YoY. However, Ceridian's free cash flow experienced a substantial quarter-on-quarter (QoQ) decline of 93.9%, settling at $4.8 million.
In terms of customers, Ceridian saw a modest increase from 6,272,000 to 6,346,000 despite a slight dip in GAAP gross margin from 43% to 42.5%. Chair and Co-CEO David Ossip attributed the company's solid performance to the success of Dayforce. The web-browser-delivered software offers cost savings and seamless experiences through its subscription-based service, ease of use, and compliance aggregation.
Looking ahead, Ceridian provided optimistic revenue guidance for the next quarter, projecting $399.5 million at the midpoint. This forecast surpasses analyst projections by 1.67%, indicating potential continued growth for the company in the coming quarter.
InvestingPro Insights
Taking into account real-time data from InvestingPro, Ceridian (CDAY) presents an intriguing financial landscape. The company's market cap is currently standing at $9510M USD. Despite not being profitable over the last twelve months, the company's revenue growth has been accelerating, showing a 22.44% increase in the last twelve months as of Q2 2023. This aligns with the company's recent impressive Q3 FY2023 financial results.
InvestingPro Tips suggest that Ceridian is expected to grow its net income this year, with 8 analysts having revised their earnings upwards for the upcoming period. This is a positive sign for potential investors, as it indicates a favourable outlook for the company's financial performance.
In terms of valuation, Ceridian is trading at a high Price / Book multiple of 4.74 as of Q2 2023. This suggests that the market has high expectations for the company's future earnings growth.
For more in-depth analysis and additional investing tips, consider exploring InvestingPro's extensive resources. With over 10 more tips available for Ceridian, it is a valuable tool for any investor looking to make informed decisions.
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