Analyst with J.P. Morgan. Great to see everyone in the room, and it is a great pleasure for us to be able to host David Ossip, who is the CEO and Chairman of Dayforce. So first off, David, I just want to thank you for taking the time to be here, and welcome you to the conference. Thanks. Thanks, Mark. Thanks, everyone, for being here. And I'm always impressed when I see you walk in with your placemat-sized sheet of paper that I think has I think is every metric humanly imaginable about the business. And then I usually tend to notice that you don't need it anyway, because every number is right there in your mind. So why don't we begin, David, just for the benefit of the audience. Maybe you could give kind of the one-minute brief introduction of yourself and particularly the company, for the benefit of anyone who might not be familiar. Great. So, Dayforce plays in the human capital management space. The way we typically compete in two different areas where we have the right to win. The first area is in what we call the majors to enterprise space, which is about 300 employees to 12,000. When we go into organizations like that, what we do is we map out the existing HR systems that the client uses. We typically find that they have about 12 different systems, and for each of those systems, there's a subscription fee that they pay. There are FTEs assigned to managing each of those 12 different systems. There's typically people dedicated to integration and an integration platform that they pay for. There's typically a data aggregation reporting platform and people that manage that. We show to the prospect how we can simplify that to one Dayforce system, and with that, there's a subscription saving, and there's a significant FTE saving as we drive efficiencies through the business. We can also give the customer a much better user experience and much better decision-making capability through the actual platform. We also play upmarket in what we term the large enterprise, so organizations that have more than 12,000 employees. In those organizations, there's typically a system of record in place, and so we focus on our payroll, time, workforce management, global payroll, and tax capability, all where we're quite differentiated. Our differentiation over there is that we built pay, ben, and time as one, which means we have a continuous calculation engine that's able to calculate payroll across the globe, and we're able to handle the money movement and the tax remittances for the customers. That's a very strong differentiation. In the first area where we have the right to win, that 300-12,000 space, we typically compete with some of the ERPs and possibly UKG. In the upper end of the market, it's really global payroll, so it would be more towards ADP, possibly UKG if it's a domestic type of system. That, that's a wonderful overview. So David, you've been involved in the HCM market now for over 30 years, and you've been, clearly, you've been a technology visionary. You know, you've been. You played an important role in transforming the whole HCM market. We always notice that you seem to be willing to take on these heavy-lifting types of innovations that it feels like in a lot of cases, your competitors don't really want to pursue or do that type of work. A lot of that was embodied in Dayforce, right? 15 years ago, you founded Dayforce. Can you maybe walk us through what you think is important about some of the innovations and the, and the way the product has been the product and even the go-to-market, you know, how this has been evolving for you? So at the very heart of what we do is simplicity at scale. The 12-to-1 journey for a customer where we can drive the efficiencies and a better experience. And that we noticed at the very onset when we did the market research back in around 2010. It was quite evident that the incumbents in place typically had separation of data, different databases and different user experiences, and that meant that most of the people processes for organizations were largely batch-based in nature. And there was no technical reason for that other than that these incumbent systems had been cobbled together over decades. So we took a clean sheet approach to the design of how the people experience should be for global organizations. And as you know, to do that, we had to get the tax capability- Mm-hmm ... because that is really part of payroll. You do payroll to do tax. Mm-hmm. At the same time, we started Dayforce when cloud was already well adopted, and that's given us a significant advantage because the other incumbents built before that. And so with us, we were able to leverage technologies from the inherent cloud vendors that you would be out there, in our case, Microsoft, which allowed us to do things a lot easier, a lot cleverer, and in a way that people would expect. So you see things like the Copilot technology- Mm-hmm. or how we use AI for sentiment analysis. That's actually native within the platform, and for us, very easy to do from that clean data model that we have in place. So, that's a super helpful recap of that timeframe. Part of what happened along the way, of course, was the focus that you had on the core payroll capabilities. And, the term is continuous real-time calculation engine, at least that's the one that sticks in my mind. That's a pretty differentiated architecture, and in our view, is a real game changer at the foundational level of the problem that a- Mm-hmm ... payroll manager is going to deal with. Can you help us to understand why is that architecture kind of remaining a differentiator? And what is it about that for... I assume no one in the audience has ever been a payroll manager. What, how is that kind of yielding this high customer satisfaction score that you tend to receive? Sure. So when I looked at the industry, and I was trying to decide where to begin, I looked at it from a perspective of: where do you get long life of customer? And what I found was that payroll had the longest life. Now, when I looked at how payroll was done at the time, the challenge that you had with the payroll teams was that because of the separation of data between time and attendance, which is where you clock in, clock out, and payroll, where you work out the deductions and the taxes, it meant that the payroll team couldn't start their busy work until the pay period had ended, plus one day. And that meant that the payroll team didn't have enough time to do the quality checks that they needed to do. In fact, when I asked payroll people when they would fund payroll, the answer I got wasn't, "When I'm ready," but rather, "When I run out of time." So when we launched the product, the first part we did is we brought pay, ben, and time together, so that any time you had a data change, you would calculate the net earnings immediately and allow the payroll team to get access to the data right away. That led to an 80%-90% efficiency gain in the payroll department, and it also allowed people to get a higher quality of pay. We then evolved that into the Dayforce Wallet, which was, if we're calculating continuously, why don't we allow people to get paid at the end of the actual shift, and not do an approximation, but do it based on what their net earnings are after any types of taxes, deductions, limits, garnishments, and the such? And that's now become very part and parcel of a modern payroll system, that people should be able to get paid when they want to, as opposed to bridging their financing between pay periods. That probably took us, I would say, until about 2018, 2019. At that point in time, when I looked at the product, I felt we could lift up on user experience, on talent modules, and on data. And that was an inflection point for us, and we brought in a guy named Joe Korngiebel. He joined us from Workday, and Joe's mandate was that: build our comprehensive talent, lift up the user experience, and build the data capability. If you look at the work that he's done, we've moved into the Gartner Leadership Quadrant as an HCM vendor, not a payroll vendor. Right. When we go to market today, it's really about that 12-to-one journey for the customer, 12 systems to one, and the savings that the customers get when they go live with the actual application, the efficiencies, because you don't need the people, again, maintaining all those different systems, and access to the data that you get from a single database. That's partially the reason we did the name change and the brand change to Dayforce, because it reflects who we are today, which is an HCM vendor with that simplicity at scale at the very core. So part of, part of what you mentioned, I just, I just want to, make sure I understood the point correctly. You're kind of suggesting that this, the continuous calculation engine in the Wallet, it kind of, is kind of a symbiotic relationship or even a requirement to, to, to have the first one, to have, to have the second one. Is that a fair way of looking at it? If we look at market, and you'll find our competitors followed us with what we would call bolt-on systems for early wage access. Right. Their way of doing it is that they would do an approximation as to what the person will earn in the given pay period, and they would offer the person an advance without calculating how much they've made. That's effectively a payday loan. Right. When you do that, you're not necessarily compliant because the states would argue that when you're actually paying people, it's a payroll, which means that you have to do the remittances within 24 hours. Our way requires that you calculate continuously so that you can pay the person, not on what you think they're going to make, but what they've actually made, and you do the remittances compliantly at the federal, state, and municipal level within that 24-hour period. So yes, you need the continuous engine if you are going to pay people continually. Okay. Now, you mentioned a moment ago, David, as well, the appearance in the Gartner Magic Quadrant. That was for enterprise cloud HCM, and as you said, not and not being limited to the payroll arena, right? You have an end-to-end full HCM platform, and the stat that was very impressive recently was 50% of new sales bookings are selecting the full suite, right? So not just core payroll. It could have workforce management, it could have talent management, it could have many other applications. Do you feel that we have reached a point where the war has been won? You know, where with the core payroll engine, and when you think about future innovation from here, maybe it doesn't need to go into that core payroll engine. Maybe it'll be more centered on the strategic side of HR, right? Where you're basically helping companies now to win not the payroll war, but the talent war in gaining the strategic talent. So, when I look at what's driving growth today, is, I would argue during the COVID years, HR organizations had to acquire technology very quickly to adapt to people working remotely and working anywhere. And that meant that the systems in place today weren't designed properly, but really cobbled together. And because of that, organizations are paying much more than they should, because you've got so many systems in place, and again, each of those systems requires someone to maintain them. You have to pay for the database, you have to pay for the cloud environment, so there's subscription fees for each of those components. And, it was best described by one of our prospects recently. CHRO said, "We're looking for more automation, less integration, less manual workarounds, less errors, less FTEs, more efficiencies." And that allows an organization to move to a system like ours, where you have one database, one experience, there's no integration, you're able to do a lot more decision-making, you can leverage newer technologies like Copilots, better for everyone, and at the same time, you're saving true dollars because you have less subscription fees you're paying for the actual platform, and you have much fewer people required to actually run the system, maintain the system, and you don't need another system to do integration and aggregation. And that's what's driving a lot of the growth and the interest we're seeing. Now, you're true. The other benefit we have is that the center point of our application is what we call the Hub Experience, which is a content management system. And we've done it in a way that the CHRO, who doesn't have to be technical, and they don't have to have a design background, and they can easily create this beautiful experience for their people that renders on the web and on mobile and meets the person where they're at. And what I mean by that is, we typically focus on frontline worker organizations, and they're in our system all the time. They're clocking in, clocking out, looking at their schedules, requesting time away from work, looking at their earning statements, requesting to get paid through the Dayforce Wallet. So they're in the system several times a day. And that allows the CHRO to move their agenda. Say, if they have a flexible wage benefit, or they have an engagement survey, or they have open enrollment, they can push that message to the person when they're interacting with the system. That's a much stronger platform... Mm-hmm ... from an HR talent component perspective. The other area we have is, if you look at what we can do from talent acquisition to onboarding, learning management, performance management, open enrollment with benefit decision support, you're able to really have a much better experience and higher value to the actual person, the employee themselves. Would you agree, if I go back to my core premise, so why is it, why is Dayforce doing this, getting there architecturally, and competitors are not? Is it... My view is it's a heavy architectural lift to do what you've done from the continuous real-time payroll engine, and then, taking rather than bolting on wallet, building it natively, rather than bolting on and acquiring workforce management in all these other areas, it's kind of pre-integrated. So you start with architectural cohesion, and then all the collaboration kind of flows off of that. Yeah, look, we had two advantages. One, we started about 10 years after anyone, right? And so the technology set available to us was cloud. The second was, I'd been in industry for about 15 years, and I'm a research-bound person, which meant I did a lot of research before we started building. And that allowed us to have a modern architecture that cut across the HCM domain. Others in market didn't start like that. They typically started from point solutions, and then they acquired different types of technologies and kept the data separate. It's a very hard lift to bring it together. You know, little things like effective dating of the records. It's important to handle some of the complexity around movement of employees across different legal entities, across jurisdictions, where you have to work out the taxability on the day or by the hour... and if you don't have that in your architecture, if you talk about global, in order to go global, you have to have the mindset of how do contracts work when someone moves cross-country? How do you technically handle things like localization, cultures, currency, constant currency? And those are pieces that you really can't retrofit onto an existing platform. So technology-wise, we have a significant advantage to the others in the market. I see. Okay. Now, David, when we bridge over and just look at what's been happening recently, let's say in the last 12 months, it's clearly been a very rough stretch for your competitors that are downmarket. We've had... In some cases, there's a deceleration of 20%, and several of them are, you know, they're gonna barely grow 10%-15% this year. When we look at Dayforce recurring revenue, that could exceed, I believe, 20%, this year. And I think there's a tendency for... We'll have this discussion with investors, and they will say, "Well, it's just different exposure. It's the small business that's weaker. It's the enterprise that's healthier," right? Dayforce is, you know, stronger upmarket, has more exposure upmarket. But then I listened to what you said in the earnings call, and you mentioned acceleration of competitive wins in your mid-market segment during Q1. So I'm curious, I think, just through that lens of trying to understand then what exactly is happening, what do you think has been, maybe a little tougher in the environment on your, on your competitors in the last year? So, we don't compete against the PEOs. It's very unusual for us to go against them. If we're both there, probably one of us shouldn't be inside the room. With the PEOs, from what I understand, and I can really only speak about our company, is I understand that they get paid based on the number of active employees who are working. We don't. We get paid for FTEs as well. So if you look at our growth, even during the COVID years, we continued to grow, where they had to step down because they had less people being paid each pay period. We weren't impacted that way. At the end of COVID, you had that step back in, where people came back into the workforce, and they got paid, and that, I think, was a significant percentage of the growth of the actual pays. And that's obviously come to an end because you're back to steady state employment again. Second piece is with us, when we say major markets, that's really enterprise to the pays, right? Our enterprise starts above 3,000 and goes well into the hundreds of thousands of people. Major markets for us is actually above them, and in that, we play the 12-to-one, right? 12 systems to one system, which is really driving the rationalization around the purchasing decision for our type of system. And you'll see that in our numbers. About 40% or 50% of our sales were full suite in Q1. 40% of sales were back to the base, selling them more capability and more modules, which is in line with that full HCM suite simplification, 12-to-one, less subscription fees for the customer, less FTEs, more efficiencies, better access to data, that we're driving through the platform. Is it sustainable, David, or is there potential where Dayforce would have higher recurring revenue growth than the rest of the field? Or can you know for some kind of sustained period of time, what do you think would have to come together to enable it? So we do believe that our growth rate is sustainable. You know, we're quite factual on how we look at the industry. We believe we have about a 2.9% market share. When we look at our growth aspirations, which is growing to about $5 billion, that would take us to an 8% market share, and we believe that is doable in a relatively short period of time. As we do that as well, another fact that happens is, first, the percentage of recurring revenue of the business will continue to grow. Currently, we're in the high 80s%. We would expect to get into the high 90s%, like other vendors who've been around longer than us. Mm-hmm. And that drives significant cash flow to the bottom line, and the other objective is to increase our sales back to the base. Currently, I think we have the highest retention rate in industry. Our gross retention is 97.1%. Our net retention rate at the moment is 105.7%. If we can move that to 108%-110%, which is doable with back-to-the-base sales, that flows directly to the bottom line because our cost bases is the same if we have one product or if we have multiple products at the customer. It's the same hosting environment- Mm ... same customer support costs, and so it flows down to free cash flow. The goal for us, alongside the $5 billion revenue target, would be to move to a 20% free cash flow conversion. And again, we do think if you guys can do the math, if you take the constant growth rates we have, move it out, you get there in the near term. Yeah, I can't do 20% of five. It's really difficult. But thank you for offering that up and clarifying. You know, David, you've been calling out, I think, for quite a while, that for Dayforce has been a relatively stable type of a macro backdrop. And you know, we try to listen to the bookings commentary. It seems like it remains fairly good. You had a blip in December, probably related to the holidays, and then on the earnings call, I think you stated January was very strong and April was ahead of plan. Could you double-click on that? I think in retrospect, I went back, and I was trying to understand what made you emphasize those two months, maybe more so than February and March? Oh, I think it's quite simple because I was doing the call in February and May, and I was speaking to the most recent month. So for February, I could speak about January, which was the delta between the previous quarter and where we were, and when it came to the Q1 earnings call, we had that, I believe, in May, which I could speak about, "Hey, this is the traction we've had quarter to date." So the only reason is that- Oh, you were trying to frame it up as quarter to date. Okay. I Yeah ... understand. understand. Okay. It's just how, you know, last quarter plus the one month that's passed since. So that, that's why. It wasn't an emphasis, it was more, "This is what we've seen in the current quarter. Okay. Well, what do you think you're going to see in the back half of the year? Because there is a debate around there. We don't hear too many companies at this conference, David, that are calling for some kind of a big V-shaped recovery. Many of them are saying that, you know, downmarket below your focus area is a little tough right now. Do you think the reality of kind of a higher for longer rate environment trickles into the purchasing decisions, or does it feel more to you like we're going to have business confidence improving? Look, we can talk about the macro from what we see in employment levels. They're, as we expected, maybe slightly more positive than we had forecasted at the beginning of the year, so we're optimistic on that. We think there's growth in our industry, largely because companies are more focused on profitability. The reality, again, is that the HR systems in place today are 12 different systems, where there should be one, and there's a significant savings if you move to a Dayforce. When we look at the size of our pipeline, we're operating to date about a 5x, so five times our sales target over the next four quarters, which is probably the most that we can afford as a cost to maintain and to build pipeline, and I think that's kind of evidence of a healthy environment. You mentioned rates. Rates will continue to be a tailwind for us, at least until 2027. So another difference that you typically see us versus some of the smaller players, is that we take our overall float balances, and we put 50% into overnight funds and 50% into a longer-term horizon, into what we call the core portfolio. In the core portfolio, we ladder out with an average maturity of two and a half years. We're actually still climbing up the yield curve for that. So for this year, we'll do slightly above 4% with our yield. Next year, I would expect it to increase again by maybe 10-20 basis points, and again into 2026, and possibly even into 2027. So it still gives us a bit of tailwind and also helps us a little bit on the cash flow side during that period of time. You had mentioned as well earlier the ability, you know, you're closing deals. You said it go 3,000, and then well in excess of 100,000 employees or seats out there. Mm-hmm. What do you see in that funnel and in that pipeline? Because there was. That can be very lumpy, right? You can have a period of a quarter or two where those just happen to be dropping timing-wise. You can have other quarters where those don't happen to close. But the technology can scale. The technology can handle it. You've got SIs pulling you up there. So do you feel good about that part of the pipeline? So the large enterprise deals give us visibility in the longer term. When we sign those deals in quarter, there's rarely any impact to short-term revenue, so it gives us kind of the visibility. When we look at the size of the large enterprise deals that we are now playing in, they're definitely bigger than we have played in the past. You've seen some, you know, news, I guess, or press release around organizations like the Government of Canada, which are obviously very, very large deals, but are very long-term deals. And the balance between the 300-12,000 employee size organization, plus the 12,000 and beyond, markets allow us to get kind of this durable growth platform, which allows us really to look at visibility. If you look at the guidance we give the street, it's very narrow, right? Which talks about- Yeah ... the controllability- Yeah ... of the organization. So let's go... We have about five minutes left, and I think that we should jump ahead and talk about the Copilot a bit. You had- Yeah ... you had mentioned this earlier, David. You know, we've been very impressed by the vision that you've had there as well and the actual technology that you've developed. Dayforce Copilot, I think you had announced it last October, and there have been further innovations, further traction, many more customers experimenting with it. Can you try to make it tangible for someone in the audience here? What is this, what is this product going to- Yeah ... do for them? And just remind us how the customer feedback has been. So, with Dayforce, we always focus on what we call quantifiable value, which means we have to be able to show a hard cost savings to the customer through the use of our technology. Where we started with Gen AI is we started internally. We built out a product called Cerebro, where we effectively trained the model using our implementation guide and our knowledge bases. And then we allowed the services organization access to the tool, and we found that the tool could answer 80% of the knowledge-based inquiries coming through the support desk, and that's about 70% of the volume. That led to a 15% efficiency improvement in the customer support organization. That's tangible. We're bringing the same innovation to our clients now. The Hub Experience is a content management system, which means that you can upload documents, things like a job share program, a maternity or paternity type of policy. And then for the people who are in the audience for those documents, they can use the Copilot to ask questions. So, "I'm having a baby. When can I take off? How am I gonna get paid? How does a job share program work?" All the way down to more mundane tasks like, "Hey, can I take Friday off? Create the transactional request for me." The goal for us is to generate the same efficiency benefits for the people, groups inside our customers. So driving that 15% efficiency, which makes it easier for people to ask questions, get answers, without having to actually speak to a person, and obviously drive the efficiency that way. So we get questions from time to time on the... Well, at a very high level, on the applicability of generative AI and what the human adoption is gonna look like for these technologies, especially at the application software layer. There are a lot of questions on the both, not only the usage, but also the monetization, because it's been going slowly. What is giving you confidence that it's something that's going to resonate in the domain of HR, and where... Something where you say, "This is a pro- this product is a must-have, and the value proposition is gonna sing"? So I look at it at the evolution of the user experience, and I, I think that's what we really are talking about. If I go through my kind of tenure in this industry, I started off with AS/400s and DOS, and then client server, and then web application, cloud applications, HTML5. Large language models and Gen AI are effectively a continual evolution of how we interact with systems, and we've all seen this at home. If you think about your experience with Alexa or Siri over the last number of years, it's become very natural and expected. That's how you do interactions with technology. We're seeing the same in our industry as well, that I, as an employee, don't want to have to hunt and peck through a system to find what I'm looking for. So if I'm a manager or executive, I should be able to say, "Show me, in a bar chart format, locations sorted by overtime or regrettable turnover," and the system should just generate the chart for me immediately without me having to learn, how do I create a dashboard? How do I work with the actual data? How do I navigate the table of contents? I think that era of trying to use systems in that way is gone, and I think we'll all be very surprised at how quickly systems will move to generative AI copilots, types of interactions with the system. And already we've done that. We've done that at the employee level. I can pick up my phone, leverage Teams, use the copilot, and I can do typical tasks. You know, "Can I take Friday off using my vacation balance? Please create the request for me." HR service desk delivery. "Can I take off, you know, three months before I have my baby? Create an HR service desk ticket for me that will go to the HR business partner. Mm. Help the HR business partner pen the response of that." Communicate via voice. Now, imagine if we go out a year or two, it might even be a visual kind of animation of a person that you're actually interacting with. But it's just part of the evolution, and it's happening very quickly. And if you're on a modern platform like us, in other words, you know, we're built effectively on the Microsoft stack. Mm-hmm. So it's not that we're creating large language models, that we have no business in doing that. We're leveraging the platform, which allows us to move very, very quickly. And the other part is, in order to do Gen AI, where I think some of the competitors are gonna struggle, is you have to have a very well-formed database, one. If you don't have that data properly defined, you actually can't do it. Mm-hmm. If you do it, you probably are gonna trip over privacy and confidentiality, and the like. And again, if with us, we have that as a strong advantage. So I love finishing on that note because it comes back to the architectural cohesion that you have in the Dayforce platform, and it is very refreshing and uplifting to hear you say that you think that the adoption of these technologies is actually gonna go faster than people think. If you think about when iPhones came out, how quickly people moved to that platform, which was just, again, a change of user experience, typically, these technology or adoption curves happen very quickly, as soon as it's publicly available. And you know, Gen AI doesn't move in a linear fashion. It kind of goes in a step fashion, and you typically find the height of each next step is much larger than it was previously. And I think you're gonna see a continual acceleration as to what is possible. And organizations like us that leverage modern technologies benefit from that very, very quickly, and we can also pass that benefit to our users, so they can get kind of the benefit, and that gives us a strong differentiation. It's no different, like things like Dayforce Wallet that we did. You know, I can't say it's a miraculous invention, right? It's the way that people should be paid, and within a few months, we saw that in every single RFP. "Hey, can we pay our people immediately?" You're gonna see the same with Gen AI, that as the RFIs, RFPs come out, people are gonna have sections about, how do I interact using that technology with the underlying data? Great note to end on. David, I can't thank you enough for taking the time to be here with us today. I really appreciate it. Thank you.