Dayforce Inc (DAY) Stock Forecast & Price Target

Dayforce reported a substantial year-over-year revenue increase of 9.5%, with recurring revenue growth ex-float showing a significant rise of 14%. The company has demonstrated strong customer acquisition success, particularly through global expansion and increased penetration in the enterprise segment, which positions it for continued low 20% core revenue growth over the coming years. With a large market opportunity and improving profitability and cash flow, Dayforce's financial outlook remains robust compared to its peers.

Dayforce reported a decline in gross margin by 80 basis points year-over-year to 48.1% and a non-GAAP operating margin of 24.7%, which fell short of estimates by 220 basis points and decreased by 120 basis points year-over-year. The company also experienced a significant drop in operating cash flow, decreasing by $60.6 million year-over-year to $31.2 million, alongside a free cash flow reduction of $58.4 million year-over-year to $5.0 million, contributing to a $0.24 earnings per share miss. These financial challenges, combined with potential pressures on customer retention and increased competition, raise concerns about Dayforce's profitability and its ability to maintain its competitive position in the market.