Dayforce (DAY -1.20%), a global provider of human capital management (HCM) software, released its second-quarter 2025 earnings on August 6, 2025. The company reported notable earnings and revenue beats, with adjusted (non-GAAP) earnings per share coming in at $0.61 versus an expected $0.52. Revenue (GAAP) reached $464.7 million compared to analyst expectations of $457.92 million. The quarter delivered double-digit gains in recurring revenue per customer (up 10.4% year-over-year, excluding float, Ascender, ADAM HCM, and eloomi revenue, and on a constant currency basis) and stronger operating profitability. Overall, the period showed solid operational progress and product innovation, offsetting moderation in new customer additions and some legacy revenue stream declines.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $0.61 | $0.52 | $0.48 | 27.1% |
| Revenue (GAAP) | $464.7 million | $457.92 million | $423.3 million | 9.8% |
| Operating Profit (Adjusted, Non-GAAP) | $124.9 million | $94.9 million | 31.6% | |
| Adjusted EBITDA | $147.2 million | $116.3 million | 26.6% | |
| Free Cash Flow (Non-GAAP) | $87.1 million | $72.7 million | 19.8% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Dayforce’s Business and Focus Areas
Dayforce builds cloud-based software for organizations to manage the entire employee lifecycle, from recruitment to payroll, time management, and talent development. Its flagship Dayforce platform is known for integrating core HCM functions into a single, data-rich system. The company serves both large multinational clients and smaller businesses, offering payroll solutions in over 200 countries through its global reach.
Recent focus areas for the business include rapid product innovation, especially in artificial intelligence and analytics, and expansion into new global markets. Key success factors for Dayforce revolve around growing recurring subscription revenue, driving product adoption with new features, and deepening relationships with existing customers through upselling and cross-selling advanced modules. Continued investment in AI capabilities and a predictable, recurring revenue model are also central to Dayforce’s competitive position and financial stability.
Quarterly Highlights: Revenue, Product Progress, and Operational Trends
The company’s second quarter featured growth across most key metrics. Recurring revenue, which includes predictable subscription fees, continued to be a core driver. Revenue excluding float—income generated from holding client funds prior to payroll processing—rose 11.5% year over year on a GAAP and constant currency basis. Dayforce’s main subscription product, the Dayforce Recurring segment, accounted for $315.5 million in revenue, up 13.6% year-over-year. The Canadian-focused Powerpay offering for small businesses was essentially flat, while the “Other Recurring” segment declined 44.3% on a GAAP basis. Professional Services, which includes implementation and consulting for large-scale HCM projects, increased 22.8% (GAAP), reflecting strong contract wins and a growing backlog, notably including public sector projects like the Government of Canada contract.
Operating profitability improved sharply. Adjusted operating profit rose to $124.9 million from $94.9 million, up 31.6%. Adjusted EBITDA was $147.2 million, up 26.6% year-over-year, translating to an adjusted EBITDA margin of 31.7%, up from 27.5% for Q2 2024. Net income under generally accepted accounting principles (GAAP) turned positive at $21.3 million after a loss last year. Free cash flow (non-GAAP) reached $87.1 million. The six-month free cash flow margin for the period ended June 30, 2025, improved to 11.3% from 6.3% for the six months ended June 30, 2024, aided by certain legislative tax changes.
Customer growth by count moderated, with Dayforce live customer count increasing 4.9% year-over-year to 6,984 as of June 30, 2025, compared to 5.4% growth to 6,929 as of March 31, 2025, with 6,984 customers on the Dayforce platform as of June 30, 2025, a 4.9% rise year-over-year. However, Dayforce recurring revenue per customer, excluding float revenue, Ascender, ADAM HCM, and eloomi revenue, and on a constant currency basis, jumped 10.4% for the trailing twelve months ended June 30, 2025. The average Dayforce recurring revenue per customer, excluding float revenue, Ascender, ADAM HCM, and eloomi revenue, and on a constant currency basis, was $171,075 for the trailing twelve months ended June 30, 2025. Year-to-date bookings—a measure of new deals signed—rose over 40% year-over-year for the first half of 2025, signaling a strong pipeline to support future growth.
Cash and equivalents stood at $625.2 million as of June 30, 2025, compared to $579.7 million as of December 31, 2024. Debt climbed, with the current portion reaching $582.3 million as of June 30, 2025, partly due to refinancing activity. Management emphasized its focus on cost discipline and efficiency, noting that the ongoing transition away from legacy products could continue to weigh on some revenue lines in the near term.
Innovation, Product Roadmap, and AI Push
The Dayforce platform emphasizes rapid innovation, with a string of enhancements rolled out during the quarter. Recent improvements include new AI-powered features for learning, shift visibility, compensation management, and pay transparency. The company’s Co-Pilot AI assistant is gaining traction, and a suite of new AI “agents” is planned for release throughout the year. About half of new customer deals included adoption of the AI assistant in the first quarter of 2025, indicating early success in integrating artificial intelligence features into core product offerings. Management claims its single-database architecture gives clients an edge by enabling quicker adoption and deeper integration of AI across Human Capital Management modules.
Expanding internationally is another cornerstone of Dayforce’s growth strategy. The company secured or expanded several large contracts in the quarter, underscoring its ability to serve major government and multinational customers. Notable examples include an expanded engagement with the Government of Canada for HR system modernization, and a global apparel company adopting the entire Dayforce suite to serve over 37,000 employees as of June 30, 2025. These wins add to a strong pipeline in public sector and enterprise markets, although management noted the potential complexity and risk in delivering large-scale projects across diverse regions and regulations.
Dayforce aims to increase both customer count and average revenue per customer. While the absolute number of new customers grew at a slower rate, expansion within existing accounts pushed recurring revenue per customer upward for the trailing twelve months ended June 30, 2025, excluding float revenue, Ascender, ADAM HCM, and eloomi revenue, and on a constant currency basis, showing effective upselling and broadened suite penetration. Bookings growth of over 40% year-to-date as of June 30, 2025, signals continued momentum.
The company’s recurring revenue business model continues to underpin growth. This model generates income through customer contracts, often billed per employee per month. “Float” revenue, tied to interest earned from holding client funds, fell 3.1% year-over-year on a GAAP basis, reflecting a modestly lower yield of 3.7%. Free cash flow margin guidance for FY2025 is ahead of previous guidance, raised to 13.5%–14.0% from 12.0%, boosted by operational efficiency improvements and a recent legislative bill improving tax cash flows. The company raised its full-year 2025 free cash flow margin guidance, now expecting 13.5% to 14.0%, up from the earlier projection of 12%.
Looking Ahead: Guidance and Investor Considerations
Management issued stronger third-quarter and full-year guidance. For the third quarter of 2025, Dayforce expects total revenue (GAAP) in the range of $476 million to $486 million. Guidance for Dayforce recurring revenue, excluding float, is $329 million to $339 million for the third quarter, up 12.7% to 16.1% on a GAAP basis. For FY2025, the company projects total revenue between $1.935 billion and $1.955 billion on a GAAP basis, while Dayforce recurring revenue (excluding float) should rise approximately 15.1% on a constant currency basis. Adjusted EBITDA margin guidance is 32% for FY2025. Free cash flow margin is forecast at 13.5% to 14.0% for FY2025, up from a prior 12% outlook. These targets reflect confidence in sustained operating leverage and ongoing demand for advanced, AI-powered HR solutions.
Investors will want to monitor several factors in future quarters. These include the pace of net new customer additions, execution on legacy product migration, and the demonstrated financial impact of new AI-led capabilities. Float revenue remains exposed to fluctuations in interest rates and client payroll balances. Dayforce’s continued investments in AI, customer success, and global expansion will be key to supporting its above-market growth aspirations while navigating industry competition and potential regulatory changes. DAY does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
