Dayforce (DAY) Q1 2025: Bookings Surge 40% as Full Suite Adoption Accelerates
Dayforce entered 2025 with record sales momentum and a sharply expanding pipeline, signaling robust demand for its unified HCM platform across all segments and geographies. Full suite adoption and partner-led deals are now driving both new customer wins and deeper penetration of the existing base, while operational leverage and a disciplined efficiency plan are supporting margin expansion and cash flow gains. With bookings up 40% year-over-year in the first half and a growing backlog of large enterprise and government contracts, Dayforce is positioning itself for sustained growth and market share gains through 2026.
Summary
- Full Suite Penetration Climbs: Nearly half of new deals are now full suite, with enterprise adoption at 100%.
- Sales Pipeline Momentum: Bookings growth and project kickoffs offer multi-year revenue visibility.
- Operational Leverage Grows: Efficiency plan and product-led expansion are fueling margin and cash flow gains.
Performance Analysis
Dayforce delivered a strong start to 2025, with total revenue up double digits and adjusted EBITDA margin expanding by 240 basis points year-over-year. The company’s core Dayforce recurring revenue remains the primary engine, supported by a 16% constant currency growth rate and broad-based customer expansion. Professional services and other revenue rose nearly 50% as new wins and large-scale government projects ramped, while legacy and other recurring lines continued to wind down as planned.
Operational discipline was evident through a 5% workforce reduction and an efficiency plan targeting $65 million in annualized cost savings for 2025. This contributed to a sharp improvement in free cash flow, which turned positive and is on track with the company’s 12% margin goal. Share repurchases continued, aimed at offsetting dilution from equity compensation. The company’s updated reporting structure now highlights the dominance of its Dayforce and Powerpay recurring lines, which together account for 96% of recurring revenue excluding float.
- Sales-Driven Uplift: Add-on sales to existing customers rose 30%, reflecting both cross-sell and upsell strength.
- Bookings Outpace Revenue: First half bookings are expected to be up 40% year-over-year, well ahead of reported revenue growth.
- Professional Services Surge: Government and enterprise contracts drove a 46% YoY increase in services revenue, supporting near-term topline acceleration.
While seasonality and project timing will influence quarterly revenue cadence, the underlying demand signals and margin improvements point to a business scaling efficiently, with significant embedded growth from recent wins yet to be realized in reported results.
Executive Commentary
"Bookings in Q1 were very strong. They were in line with what we saw in Q4 of last year, and if you recall, bookings in Q4 were very strong as well. When we look at the month of April, bookings continued to be very strong, and in terms of numbers, we would expect the first half bookings to be up approximately 40% year over year. As you know, it takes a bit of time for that to translate into revenue, but that obviously gives us tremendous confidence as we go into 2026 and beyond as well."
David Osip, Chief Executive Officer
"During the quarter, we announced an efficiency plan and the reduction of our global workforce by approximately 5%. We expect our original estimates of pre-tax cost savings to remain accurate. That is $65 million in savings in 2025 and $80 million of savings annualized. In connection with this plan, we incurred a non-recurring restructuring charge in the first quarter of $29.2 million, including severance, employee benefits and related costs, and non-cash stock compensation. These savings were reflected in our initial 2025 guidance and, of course, remain reflected in our reiterated 2025 guidance."
Jeremy Johnson, Chief Financial Officer
Strategic Positioning
1. Unified Platform and Full Suite Penetration
Dayforce’s core differentiation lies in its single application, single codebase model, allowing customers to consolidate up to 12 disparate HCM applications into one unified platform. This simplification resonates strongly in the market, particularly in major market and enterprise segments—where nearly 100% of new deals are now full suite. This drives higher recurring revenue per customer and strengthens long-term retention and upsell opportunities.
2. Partner Ecosystem and SI Channel Expansion
System integrator (SI) partners are playing a growing role in pipeline generation, deal velocity, and large-scale implementation capacity. SI prime deals doubled and now account for 50% of new deals, particularly in strategic and government accounts. The new Microsoft Azure marketplace partnership further lowers adoption barriers for enterprise buyers and enables customers to use Azure credits, aligning Dayforce more tightly with broader cloud transformation budgets.
3. AI-Led Product Innovation
AI adoption is accelerating, with the co-pilot (now branded as AI Assistant) attached to 50% of new deals and a roadmap of domain-specific AI agents set to roll out across HR, payroll, time, and talent modules. The company’s single database architecture enables faster and deeper AI integration than multi-product competitors, creating both a product and data moat. There remains significant whitespace for AI-driven upsell across the nearly 7,000-customer installed base.
4. Managed Services and Wallet Monetization
Managed payroll and benefits offerings are up 70% year-over-year, though still under 10% of total sales, leaving ample room for expansion. The Dayforce Wallet, an on-demand pay solution, continues to see high utilization among unbanked employees and is now expanding with direct-to-bank and instant transfer features, broadening the addressable market and increasing transaction revenue.
5. Government and Large Enterprise Contracts
Dayforce secured its largest-ever contract in Q1—a government agency deal with a $72 million US extension for the Government of Canada project. These large, multi-phase projects deliver both near-term professional services revenue and long-term recurring streams, while also serving as high-visibility reference wins for future enterprise pursuits.
Key Considerations
The quarter’s results reflect a business at a strategic inflection, with strong demand signals, operational discipline, and product differentiation converging to drive both growth and profitability.
Key Considerations:
- Win Rate Acceleration: Management reports win rates have nearly doubled year-over-year, highlighting competitive strength and product-market fit.
- Pipeline Depth and Visibility: 40% bookings growth in H1 and robust project kickoffs underpin multi-quarter revenue visibility and backlog conversion.
- Efficiency Plan Execution: A 5% workforce reduction is expected to deliver $65 million in 2025 savings, with the majority of benefits accruing to G&A and margin structure.
- Legacy to Dayforce Migration: Aggressive migration off legacy platforms is accelerating, with a typical 50% uplift per customer and improved profitability.
- AI and Product-Led Expansion: High attach rates of AI modules and wallet features offer incremental ARPU and stickiness across the base.
Risks
Employment levels at customer organizations remain a key macro sensitivity, as Dayforce invoices per employee per month and has embedded minimums at about 80% of contracted headcount. While no impact has been seen yet, a labor market downturn could pressure recurring revenue growth. Additionally, large government projects carry inherent delivery and timing risks, and continued margin expansion depends on successful execution of the efficiency plan and legacy migration strategy. Competitive intensity from major HCM and ERP vendors remains a constant backdrop, though Dayforce’s win rates and suite adoption suggest current positioning is strong.
Forward Outlook
For Q2 2025, Dayforce guided to:
- Total revenue of $454 million to $460 million
- Total revenue excluding float of $408 million to $414 million, up 10% to 11% constant currency
- Float revenue of $46 million
- Adjusted EBITDA margin of 30.5% to 31.5%
For full-year 2025, management reiterated constant currency guidance:
- Total revenue of $1.929 billion to $1.944 billion (12% to 13% growth)
- Dayforce recurring revenue excluding float up 15% to 17% constant currency
- Free cash flow margin target of 12%
Management highlighted several factors that will influence results:
- Timing of go-lives from recent bookings, especially large deals, will shape quarterly revenue cadence
- Macro variables such as employment levels and interest rates (impacting float revenue) are being closely monitored, but no changes to outlook are warranted at this time
Takeaways
Dayforce’s Q1 2025 results reinforce the company’s trajectory as a consolidator and share gainer in the HCM software space, with strong sales execution, expanding suite adoption, and disciplined cost management driving both growth and profitability.
- Bookings Outpace Revenue: 40% bookings growth in H1 sets up a robust multi-year revenue pipeline, with delayed revenue recognition as large deals ramp.
- Margin and Cash Flow Expansion: Efficiency plan and mix shift to higher-value recurring and services revenue are delivering improved profitability and cash generation, supporting continued investment and buybacks.
- AI and Suite Expansion as Catalysts: High attach rates and product innovation create multiple levers for ARPU expansion and customer stickiness, with significant whitespace remaining for cross-sell and upsell.
Conclusion
Dayforce’s Q1 2025 performance demonstrates a company executing well across sales, product, and operational fronts, with a growing backlog and expanding margin profile. The combination of strong suite adoption, partner acceleration, and disciplined cost management positions Dayforce to capitalize on sustained HCM modernization trends.
Industry Read-Through
Dayforce’s results highlight a broader HCM industry shift toward unified platforms and full-suite adoption, especially among enterprise and government customers seeking to consolidate legacy stacks. The rising influence of SI partners and cloud marketplace integrations (such as Azure) signals a maturing ecosystem where ease of deployment and integration are key differentiators. AI-driven product enhancements and managed services are becoming table stakes for providers aiming to drive ARPU and retention. Legacy vendors and point solutions face increasing displacement risk as customers prioritize simplification, compliance, and data-driven insights. Investors should watch for similar suite penetration and partner-led go-to-market dynamics across the HCM and broader enterprise software landscape.