Blue Orca Capital says short Dayforce

Blue Orca Capital says it is short Dayforce as it believes Dayforce engages in “highly aggressive” revenue recognition and accounting maneuvers to “inappropriately” pull forward revenues and inflate profits. In a research note, the firm says it believes Dayforce “manipulates” key profitability metrics, “misleading,” investors and “unjustly” enriching management, whose compensation is tied to these profitability metrics or directly benefit from the company’s accounting. “Dayforce is plagued by worst-in-class GAAP gross margins, yet its stock trades at an unjustified 25%+ premium above other human capital management companies, likely because of a latticework of misperceptions created around the Company’s business and true profitability,” Blue Orca says.