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Ceridian (NYSE:CDAY) Q4: Beats On Revenue, Growth To Accelerate Next Year


Kayode Omotosho /
2022/02/09 4:33 pm EST
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Online payroll and human resource software provider Ceridian (NYSE:CDAY) reported Q4 FY2021 results topping analyst expectations, with revenue up 26.6% year on year to $282.1 million. Guidance for next quarter's revenue was $289 million at the midpoint, which is 1.4% above the analyst consensus. Ceridian made a GAAP loss of $9.5 million, improving on its loss of $17.3 million, in the same quarter last year.

Is now the time to buy Ceridian ? Access our full analysis of the earnings results here, it's free.

Ceridian (CDAY) Q4 FY2021 Highlights:

  • Revenue: $282.1 million vs analyst estimates of $275 million (2.56% beat)
  • EPS (non-GAAP): $0.06 vs analyst estimates of $0.03 ($0.03 beat)
  • Revenue guidance for Q1 2022 is $289 million at the midpoint, above analyst estimates of $284.9 million
  • Management's revenue guidance for upcoming financial year 2022 is $1.2 billion at the midpoint, beating analyst estimates by 1.03% and predicting 17.6% growth (vs 12% in FY2021)
  • Free cash flow was negative $18.1 million, down from positive free cash flow of $11.4 million in previous quarter
  • Customers: 5,434, up from 5,227 in previous quarter
  • Gross Margin (GAAP): 36.8%, down from 43.3% same quarter last year

"I am very pleased to report that we closed fiscal year 2021 with strong momentum and performance with Dayforce recurring revenue, excluding float revenue, growing by 32% in the fourth quarter," said David Ossip, Chair and Co-Chief Executive Officer of Ceridian.

Founded in 1992 as an outsourced payroll processor and transformed after the 2012 acquisition of Dayforce, Ceridian (NYSE:CDAY) is a provider of cloud based payroll and HR software targeted at mid-sized businesses.

HR software benefits from dual trends around costs savings and ease of use. First is the SaaS-ification of businesses, large and small, who much prefer the flexibility of cloud-based, web-browser delivered software paid for on a subscription basis than the hassle and expense of purchasing and managing on-premise enterprise software. Second is the consumerization of business software, whereby multiple standalone processes like payroll processing and compliance are aggregated into a single, easy to use platforms.

Sales Growth

As you can see below, Ceridian 's revenue growth has been decent over the last year, growing from quarterly revenue of $222.8 million, to $282.1 million.

Ceridian Total Revenue

This quarter, Ceridian 's quarterly revenue was up a very solid 26.6% year on year, which is above average for the company. On top of that, revenue increased $24.9 million quarter on quarter, a very strong improvement on the $6.8 million increase in Q3 2021, which shows acceleration of growth, and is great to see.

Guidance for the next quarter indicates Ceridian is expecting revenue to grow 23.2% year on year to $289 million, improving on the 5.29% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $1.2 billion at the midpoint, growing 17.6% compared to 12% increase in FY2021.

There are others doing even better than Ceridian . Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.

Customer Growth

You can see below that Ceridian reported 5,434 customers at the end of the quarter, an increase of 207 on last quarter. That is a little better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

Ceridian Customers

Key Takeaways from Ceridian 's Q4 Results

With a market capitalization of $11.6 billion, more than $367.5 million in cash and the fact it is operating close to free cash flow break-even the company is in a strong financial position to invest in growth.

We were very impressed by Ceridian ’s very strong acceleration in customer growth this quarter. And we were also glad that the revenue guidance for the next year looks positive. Overall, we think this was a really good quarter, that should leave shareholders feeling very positive. The company is flat on the results and currently trades at $81.01 per share.

Ceridian may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.