Alright, why don't we get started here? Welcome everybody who's joining us for day one of KeyBanc's Technology Leadership Conference. We are very pleased to have Dayforce 's CFO, Jeremy Johnson, joining us today for a 25-minute fireside chat. My name is Devan Howe. I am part of the software research team here, and I'm sitting in for Jason Salino, who is super bummed he couldn't make it today because, you know, he's having a second kid on his way, so I'm sure his wife would appreciate him being home. With that, let's move on to some hot questions since this is a fireside chat after all. Jeremy, maybe if we could just dive right in. Can we start with what Dayforce is seeing from kind of a go-live and forward-looking perspective? Because kind of from our seat, you know, Dayforce is seeing kind of a dichotomy between current reported revenue performance and forward-looking bookings commentary. If you can kind of explain the air pocket of demand from last year that has kind of led to a decel in top line growth a little bit. Maybe if we could just start there, that would be good. Yep, yeah, definitely. It's good to see everybody, and thanks for coming to the presentation today. Look, Dayforce is, I don't know how else to describe it, but on fire from a demand perspective. We are having about three straight quarters of 40%+ bookings growth. That started in Q4 last year and has continued in through the last second quarter here. All indications are that Q3 is shaping up to be a nice quarter as well, as we had a nice strong July. The 40%+ bookings growth that we're seeing is in contrast, as you said, to the Dayforce recurring revenue growth that was growing at about 14% constant currency this last quarter. You can't really say that 40% bookings is ever going to get you to 40% revenue growth unless you grow consistently for about eight years, I think, at 40%, just because of the difference of bookings and our $2 billion kind of revenue base. Over time, as we continue to have success, you should see those two lines converge. That's really what you're seeing in our forecast and in our guidance. Our guidance, I think Q2 was the low point, and you kind of call it an air pocket. I think we're feeling the slower demand from last year, early part of last year, and even the year before in 2023. For us, go-lives take about 12 months to get to, sales take about 12 months to get to revenue. On average, you'd say that we are essentially taking things live that we sold last year at this time. That takes a little bit of time for the revenue to get through the pipe. That's what we're feeling in our forecast right now, is that in Q3, our forecast is expected Dayforce recurring 13%- 16%, Q4 at 16%- 19%. We've signaled that we expect to maintain that strength as we go out through 2026 and beyond. We are seeing a ton of demand. We're executing on that well. I think our message is resonating really, really nicely with prospective customers. On a couple of fronts, you'll see that our add-on sales are surging. 40% of our total sales this year-to-date period so far have been add-on sales back to the base. Managed services sales, which we can touch on that strength, 17% of our total sales were managed services sales, and managed services is where we actually act as essentially the payroll department for the companies. For us, it can double our per employee per month revenue that we get for every customer. I think across the board, we're just really, you know, messages continue to resonate on this 12 to 1 consolidation play. What we go out to a new prospect with is you probably have a separate provider for payroll, a separate provider for time and attendance, a separate provider for recruiting and performance management and compensation. We're able to take all of those and put it into one single application. That's Dayforce. That's kind of the 12 to 1 we're selling on an ROI basis. You can not only save a bunch of different vendor costs and software subscriptions, but also, you can save internal labor costs for maintaining all those subscriptions and the APIs and the tech behind that with one single Dayforce. The message just seems to be resonating. That's what's driving the demand. Ultimately, we feel confident that the strong demand can continue in the future and then also drive strong revenue in the future. Okay. It sounds like a lot of goodness happening within the business. Maybe just kind of go back to the customer go-lives. I think quarter over quarter, the past two quarters has been around like in the 50 range, right? I think historically, the go-lives have kind of averaged closer to like 70 or maybe even 100 plus, depending on the quarter. You mentioned a lot of things are happening. The messaging is resonating. Could we see that go-lives quarter over quarter number get back to those historical levels? Could you just kind of speak to that? Yeah, the go-live number that we're referring to is essentially the change in our live Dayforce customers. That means it's a net number to start with, right? It's the increase net of any customer churn that we have. What I don't love about that number is it doesn't actually depict what we're taking live. We have a lot of smaller customers on the workforce management only side that tend to churn a little bit faster than our normal 98% gross retention that we have of our customers. If you go to an enterprise customer that we have here, our retention rate is well above that 98%. These companies don't churn much. We do have some smaller customers that churn probably in line with a smaller business provider, that 90% range, and you get some elevated churn that doesn't really have much revenue impact at all. That said, the live customers and the growth in the live customers, plus we also disclose a figure called the Dayforce recurring revenue per customer. The combination of the growth of those two, it was 5% last quarter on the customer side of things, and it was 11% on the revenue per customer side of things, generally adds up to the total Dayforce recurring growth or pretty close to it. If I look out in the future and say, do I think the number of live customers is going to grow or the revenue per customer is going to grow faster? I'd probably say the revenue per customer grows faster than the live customers. That's okay to have that dynamic in my side of things. That means, number one, we're selling a larger customer size. Average is $170,000 per customer right now. I'll tell you that most of our new business customers coming on are much, much larger than that. We know that that average can continue to go up. The second thing is, as we go back and sell additional functionality to our customers, so that 40% of our total bookings, you're not going to increase the number of customers alongside of that. The managed side of things, as we mentioned, it can continue to raise the size of the customer and the revenue per customer. I do expect those two, obviously, you're going to see those continue to go in line. If you go out to our guidance of, you know, in Q4, for example, of 16%- 19%, the two that need to add up, the number of customers plus the revenue per customer, I'd probably say it probably goes up for both of them, but a little bit higher on the revenue per customer, if I had to say. Okay, that's helpful. I just want to go back to bookings again. Maybe just one last question here. I know you kind of mentioned, aside from net new sales, the back-to-base motion, selling the add-ons has been going well too. Is there any way for us to conceptualize or even parse out how much strength of the back-to-base motion from the 40%+ bookings growth we've talked about? Any way for us to think about just how strong the back-to-base motion is? Yeah, it's growing faster than new business bookings. If I go back to that 40% that we sold, that is add-on, you know, sales back to the base of our total, last year that was probably in the low 30% range. We're increasing the total. I think where we're having most success on bookings is customer-based sales, and that team is just firing on all cylinders. We really built that team out starting really early 2024, and we've grown that team from basically nothing into a team that's performing just exceptionally well. Where they're selling is really three key areas. The first is product back to the base. If you go back to kind of 2013 all the way to about 2019, just past our IPO, we were really selling a compliance base of software. That's for compliance for us as payroll, time and attendance, some benefits administration type things. We call that our compliance suite. That's the core kind of pay, time, and benefits. We brought in a guy named Joe Korngiebel to really elevate our product team. He's our EVP of Product and Technology. His goal was straightforward. It was build out the entire HCM suite beyond the compliance things. Add in performance, add in talent, add in recruiting, and really get that up to par with the other players in the space. We've done that really nicely. He's done that really nicely. We now can go back to the customers that we sold from 2013 to 2019 and actually sell them more product. The second thing that we're seeing really strong sales in is, I mentioned, managed. Our customer-based sales team is actually going back to our existing customers and saying, "Hey, we can take this administrative burden of you guys being your own payroll department off of you, and we can do that." We maintain all the compliance behind the scenes and, you know, partner with our customers to then commit payroll and do all the audits and all the checks. It's a really nice service that we offer. If we had to guess, I would say that if we fast forward a few years, the majority of our customers will be buying managed from us. The third thing is global that our customer-based sales team sells. Global for us is where we go and we're doing the software payroll, workforce management, time, and attendance for North America, for example. You have U.S. and Canada, and we'll go and add other countries that this company has. We have a network of in-country providers. We have owned technology in the APJ region that we utilize, and we have our own native solutions across Australia, New Zealand, Singapore, U.K., Ireland, Germany, Mauritius, and Mexico, and obviously U.S. and Canada. We've got a really full global suite that our customer-based sales team can go back and sell to. Those are the three things that are really driving our customer-based sales. Okay, maybe just want to dive deeper into the second point, which is product. I know a lot has, you know, come out. I remember at the conference, the Joe Show, a lot of products were being introduced, a lot of exciting products. I think the one thing I want to maybe dive deeper is AI, just because, you know, that's kind of a hot topic. If you don't mind, can I just ask, do you have like an overview of kind of the AI products you guys have today? And kind of what's your monetization strategy there? Yeah, so it's obviously been a key focus for us the last probably two years here is building AI capabilities ahead of what our peers are doing. Dayforce, before I start with kind of what we're offering today, has a foundational advantage that we have a single application with a single database. That is something that no other vendor has. The single database allows you to actually build AI on top of that database so that you can actually do some pretty unique things. Whereas our competitors alternatively have a separate time and attendance solution, a separate pay solution, a separate recruiting solution. It's really difficult to do AI across all of those when you have different systems that need to speak to each other. We have one single database with a single application on top of it. With that competitive advantage, I think we're the first to launch what we called initially a co-pilot. We're calling it an AI assistant right now. The AI assistant sits on top of the experience hub. The hub is the landing page when you log into Dayforce. It's a really nice landing page that HR departments can manage, include things that they want employees to know about. It's benefits, enrollment time, get your W2 here, here's some company announcements here. You can index all of your company documents, load it into the experience hub and index all of those documents so that you can train the AI assistant on your own company documents. Employees of our customers can go in and ask specific questions about their payroll, about their benefits, about their time off policies, anything that they really want to ask about the company and can be answered through the AI assistant. It's a really nice solution. Year to date, we've attached it to about 50% of our sales. It's resonating really nicely. It enhances the user experience. Where we're going next is agents. We're aggressively launching kind of agents to then take the next step to do tasks ultimately for the user. The user in this case can be either the employee or it can be the administrator on the payroll side of things. Audit my pay, do the checks, and tell me if I'm ready to commit pay, and then I can commit. Similarly, on the recruiting side of things, you can think about someone posting a job. I need to post a job. Let me walk you through the steps and just do it for you ultimately. We can write the job description, generate the job description, you can edit it. The use cases go on and on. We're in the plans of launching about 30 AI agents across the stack over the next few years. Got it. Maybe just follow up there. Do you have a question, Matt? Yeah, are you charging for that? Yeah, right now we're charging a per employee per month charge, so a monthly subscription fee. We are likely going to bundle the agents together into, you know, hey, you have access to all the agents or a subset of the agents and create a pricing module around that. We are monitoring the usage to understand if we need to charge on a usage basis and have a kind of an upsell type thing that would happen for enhanced usage. Given that we're in the early stages of it, it's just on the monitoring side of things. We haven't yet seen it on the Dayforce Co-Pilot or on the Dayforce AI Assistant yet. As we go into the agents, we'll continue to monitor. Yeah, thanks for the question. Just a quick follow-up here. I know a lot of your peers in the HCM landscape have also launched their own kind of agent assist chatbot and whatnot. Maybe more of like a conceptual question, you know, as more companies provide these products and agents, do you view these products as like a table stake for the industry in the long term? Kind of how should we think about that? I do think AI is going to be table stakes throughout our industry and throughout all other software. I think it'll clearly define the winners and the losers. It'll certainly change the way a user interacts with the software. I think we're seeing that already. That's exactly the way we look at it. I think our competitive advantage on the data side of things gives us a huge leap ahead from our peers. Okay. I just want to switch gear back to maybe like the customer side of things, but also kind of macro and market. I know you guys have done really well going up market, winning large enterprise customers, Government of Canada. I think there was like an earlier win with the U.S. Fed. Can you just speak to the strength that you're seeing there? You know, what enabled Dayforce to win here? It seems like everyone is kind of maybe struggling and seeing challenges, especially in the U.S. Fed. Can you just speak to why are you guys winning in a dynamic backdrop? Yeah, it's, you know, Dayforce itself, the sweet spot of Dayforce is really, you know, probably a thousand employees up to around 5,000 employees. We've done that really well. We've expanded inside that kind of base of customer of industry really well. We've done well. I think as you look out, there is a path that you have to go down that says you go lower and compete on the small end of the side of the world or you go higher. We chose a number of years ago that we go larger customers. We built out aggressively relationships with the large systems integrators, as well as we attempted to bid for the Government of Canada business for the replacement of their Phoenix product. I think, probably went into that saying, we'll learn a lot, but there's a very small chance that we'll win this thing. We exceeded our own expectations there. The Government of Canada has been a great partner in kind of pushing us on different areas to move up market. Our SI partners have also done that. Our product scales now from, you know, you can go as low as you want all the way up to our largest customers, which are now 500,000 plus employees. We talked about that with not only the Government of Canada, who we're actively kind of taking live right now. We were selected this last quarter as the vendor officially, as the vendor that will replace their old system. We also announced we took live our largest customer ever. It's a large logistics provider that we sold a few years ago. They're now, I think, 300,000 plus planning to scale to 500,000 by the end of the year. As you mentioned, we had success in winning a large U.S. federal agency in the first quarter of this year, which was our largest single sale ever. We'll work on taking that customer live over the next few years. We're having success up market. We're doing a really good, I think, a really good job moving the product up as well. Great. That's certainly great to hear. I'll pause here and see if there's any. On that note, Jeremy, I think for decades most of us have heard everybody's taking share. Paylocity, Paycor, ADP seeding share. ADP seems to be doing well. Where does the share come from? Is it greenfield stuff? Explain that dynamic, I guess, in general. Everybody says they're taking share. How do you hear this? Yeah, look, the market today, I think, is largely defined as Dayforce and Workday. This is the enterprise side of the market, right? Because where we start is about 500 employees, and that's really where the Paycoms, the Paylocities, and the other smaller players stop. It is largely defined as Dayforce and Workday competing for ADP and UKG business. I think we're continuing to do a good job at taking share from ADP and some of the other peers there. ADP is a great business, and the market is also growing nicely. You look at what we're selling today in a full suite sale, and it's not just replacing things that the prior one single vendor would have had. I'm replacing, as I mentioned, 12 different vendors. In some of those vendors, or in some companies, they might not even be vendors. They might be nothing. A lot of companies still use Microsoft Word and email for performance management. They use spreadsheets for compensation management. The market continues to grow. Our competitors continue to do well, and we just think we're doing a little bit better than them. It's a really durable market and one that I think will continue to be a very large one over a long period of time. I think you will see those dynamics of Dayforce continuing to grow and expand and others, depending on the pace, continuing to slow down. That's a good question. Any other in the audience before I move back into some of the more financials questions? Great. Only a few minutes here. I want to close out with a couple more financial questions, if I may, Jeremy. Yeah. Profitability has been a big focus as of late. You guys have raised the free cash flow margin to 13.5% to 14% margin, a four points expansion year-over-year, which is great to see. I think you also talked about some incremental tailwinds from the OBBBA on the call. How should we think about maybe expansion for margins for free cash flow, maybe beyond 2025? Should we still expect the same cadence that you kind of laid out at the analyst day, or should we perhaps see even greater expansion case? This has been my greatest area of focus since I came as CFO back in the beginning of 2024. At the time, I think we had free cash flow margins that were well below, you know, 10%. My goal was to get us in line with our peer group and potentially even above our peer group. We set at Investor Day targets of $1 billion of free cash flow by 2031, or we said 2031 plus. At this earnings call, we really said we can hit that. We feel very confident that we can hit the $1 billion by 2031. What that'll mean is that, you know, we're going from 13.5%- 14.5% up to 20% plus by 2031. In order to do that, we need to continue to expand free cash flow margins by 100 -200 basis points a year. I think we can certainly exceed those targets. We feel confident that, and probably the most confident, I think I'd say, in our ability to control costs, ability to improve the time to cash, and the cash realization that we get. I think the proof is really in our ability to do this over the last few years. As you said, we're going from 9.7% margin up to 13.5% to 14%. There is a slight benefit from the, you know, taxes, tax changes in the tax law, the One Big Beautiful Bill Act. We'll take that. Even outside of that, I mean, we're up about 500 basis points year to date this year without any benefit from the tax. We are getting more efficient, and we're doing things, I think, that really benefit our ability to move up. Awesome. With that, I think we're out of time.