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Ceridian Drops 6.2% on Q4 Revenue and Guidance Miss
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Ceridian Drops 6.2% on Q4 Revenue and Guidance Miss

Shares of Ceridian HCM Holding, Inc. (NYSE: CDAY) were trading 6.2% down in the pre-market session on Thursday after the company’s fourth-quarter revenues fell short of expectations.

Ceridian reported adjusted earnings of $0.06 per share, lower than the year-ago earnings of $0.09 per share but marginally above the Street’s estimate of $0.05 per share.

Total revenue increased 26.6% year-over-year to $282.1 million, significantly missing analysts’ expectations of $347.32 million.

Dayforce recurring revenue grew 30.2% to $170.4 million and Cloud revenue rose 24.5% to $241.4 million.

Adjusted EBITDA stood at $38.7 million, compared to $33.1 million in the previous year.

Commenting on the results, Co-CEO David Ossip, said, “I am especially pleased that our focus on delivering value to our customers has allowed us to deliver strong financial and operating results, while we are simultaneously building for future growth through our investments in people and products.”

2022 Guidance

Along with the results, Ceridian has also provided guidance for the first quarter and full-year 2022.

The company expects total revenue to range from $286 million to $292 million in the first quarter against the consensus estimate of $356.69 million.

It anticipates adjusted EBITDA to lie between $41 million and $47 million.

Full-year 2022 revenue is projected to range from $1.192 billion to $1.217 million. The Street expects Ceridian to report revenue of $1.5 billion.

Adjusted EBITDA is expected to be in the range of $180 million to $195 million in 2022.

Co-CEO Appointment

Meanwhile, the company has promoted President and COO Leagh Turner to Co-CEO. She has also been appointed to Ceridian HCM’s Board. Both the appointments are effective immediately.

In the expanded role, Turner will continue to report to Ossip.

Ossip said, “I believe that this modern structure will make Ceridian even more relevant for our customers. Together, Leagh and I will lead Ceridian into the next wave of growth.”

About Ceridian

Minnesota-based Ceridian offers human capital management (HCM) software. Its flagship cloud HCM platform, Dayforce, provides human resources, payroll, benefits, workforce management, and talent management services.

Wall Street’s Take

Following the release of the results, Barclays (NYSE: BCS) analyst Raimo Lenschow maintained a Sell rating on the stock and lowered the price target to $83 from $92 (2.5% upside potential).

In a research note to investors, Lenschow said, “The company posted another quarter of limited beat levels and limited estimate revisions, indicating that investor optimism is not translating into tangible results.”

Additionally, Scott Berg of Needham has reiterated a Hold rating on Ceridian but did not provide a price target.

Based on 5 Buys, 5 Holds and 1 Sell, the stock has a Moderate Buy consensus rating. The average Ceridian HCM Holding price target of $103.10 implies 31.8% upside potential from current levels. Shares have lost 22.8% year-to-date.

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