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Greetings, and welcome to the Dayforce First Quarter 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to David Niederman, Vice President, Investor Relations. David, please go ahead.

Thank you for joining, and welcome to the Dayforce first quarter 2025 earnings call. I'm David Niederman, Vice President, Investor Relations. [Operator Instructions] Joining me on the call today are CEO, David Ossip; and CFO, Jeremy Johnson. We also have key Strategy, Product and Technology Officer, Joe Korngiebel, and our President and COO, Steve Holdridge available for Q&A. Before I hand the call over to David, I want to remind everyone that our commentary may include forward-looking statements. These statements are subject to risks and uncertainties that could cause Dayforce's results to differ materially from historical experience or present expectations. A description of some of these risks and uncertainties can be found in the reports we file with the Securities and Exchange Commission, such as the cautionary statements in our filings. Additionally, over the course of this call, we'll reference non-GAAP measures to describe our performance. Please review our earnings press release and filings with the SEC for our rationale behind the use of non-GAAP measures and for a full reconciliation of these GAAP to non-GAAP metrics. These documents, in addition to a replay of this call and also transcript will be available on the Dayforce Investor Relations website. And with that, I'd like to turn the call over to David.

Thanks, David, and thank you all for joining us. I'll begin with some high-level commentary on our results and outlook before handing the call over to Jeremy, who will provide more detail on our financials and guidance. Dayforce performed well throughout the first quarter. Our sales momentum continued, building off the strong performance we experienced in the fourth quarter of 2024, and our sales pipeline remains in excellent shape. Project kickoffs are up significantly following two strong sales quarters and go-lives remain on track. These key indicators give us confidence for 2025 and 2026. Specific to the first quarter, total revenue was $482 million, growing 14% on a constant currency basis. Excluding float, total revenue grew 17% on a constant currency basis. Dayforce recurring revenue, excluding float, grew 16% on a constant currency basis. Adjusted EBITDA margin was 32.5%, up 240 basis points year-over-year, and free cash flow of $19.5 million was up significantly versus last year, keeping us on track to achieve our full year target of 12%. Our value proposition of providing companies with the ability to simplify their people operations at scale by streamlining their HCM software stack continues to resonate with current and potential customers. Dayforce allows organizations to reduce the number of applications from an average of 12 down to the single Dayforce application. With Dayforce, customers can operate with confidence, empower their workers and obtain a tangible ROI. Even during periods of economic uncertainty, this value proposition allows our teams to continue building sales pipeline and results. From a sales perspective, Sam and his team are achieving superb results. We had the best first quarter in our history, and we anticipate bookings in the first half of 2025 will continue to be strong and in line with the Q4 of last year. Results were distributed nicely across most of our segments and geographies with healthy growth in each of our key segments. Our back to the base sales strategy is performing well with Q1 sales to existing customers growing 30%. In the first quarter, we secured several key new business wins, selected highlights include: a large entertainment and leisure company that chose the complete Dayforce suite as its unified HCM solution to support 61,500 employees across North America. A leading uniform and workplace solutions provided that selected the full Dayforce suite to support its 22,000 employees across North America, a leading North American utility infrastructure service provider that selected the full Dayforce suite to modernize and unify its systems supporting over 9,000 employees, a global safety solution provider that selects the full Dayforce suite, including managed payroll and managed benefits to support 8,000 employees across 30 countries in North America, EMEA, LATAM and APJ, and a leading North American civil engineering and heavy construction company that selected the full Dayforce suite to support its more than 7,200 employees, consolidating 14 systems into one. Live customers on Dayforce platform grew 5.4% to 6,929, and Dayforce recurring revenue per customer grew 11.5% to $167,600. Turning to our partner efforts. Our system integrated channel is performing well with our top SI partners delivering an outsized impact. SI prime deals won during the first quarter were up significantly versus last year and exceeded our expectations, underscoring strong alignment and demand generation across strategic accounts. We're seeing a growing partner-led pipeline and an increase in co-sell velocity across regions. We also announced a partnership with Microsoft, which puts Dayforce on the Azure marketplace. This launch makes it easier for enterprise customers to adopt the Dayforce platform with the security, scalability and streamline procurement. On the product side, we continue to make excellent progress. In the quarter, we extended our AI copilot to our native iOS and Android apps. Copilot is performing well. In Q1, 50% of new deals had it attached. We also enhanced our talent modules with personalized updates for the Advanced Experience Hub, improve the intuitiveness and workflows of our learning and recruiting modules and launched new direct-to-bank capabilities for Dayforce Wallet that allows employees to route their pay to any personal bank account. And as always, we continue to remain a solid core of compliance, releasing features like the total remuneration package calculation for comprehensive compensation management and compliance enhancements for global statutory requirements in the United Kingdom, Singapore, Australia and New

Thanks, David. We are pleased with our first quarter results. Top line revenue growth remained strong, while we scaled the business and continued to expand cash flow margins. Before I get to the numbers, I want to highlight a refreshed look to the face of our P&L, where we have removed the gross profit break and broken out depreciation and amortization on one line. We also simplified the disaggregation of revenue tables in our press release and MD&A to simply show four revenue lines: Dayforce recurring, Powerpay recurring, other recurring and float recurring, which sum to total recurring revenue as shown in our P&L. With these changes, we will no longer refer to cloud revenue or profitability. As of this quarter, 96% of our recurring revenue, excluding float is from Dayforce or Powerpay, what we've historically referred to as our cloud solutions. Our goal with these changes was to improve comparability between Dayforce and our software peers and make it easier for users to analyze our financial performance as we continue to grow and scale the business. Now turning to our first quarter results. Total revenue was $481.8 million, up 11.7% on a GAAP basis and 13.6% on a constant currency basis. Excluding float, total revenue increased 15% on a GAAP basis and 17.1% on a constant currency basis. Dayforce recurring revenue, excluding float was $323.1 million, up 14.4% on a GAAP basis and 15.9% on a constant currency basis. Professional services and other revenue was $71.3 million, up 46.1% on a GAAP basis and 49.8% on a constant currency basis. Operating profit was $31 million and adjusted EBITDA was $156.7 million, up 20.6% or a 32.5% margin expanding 240 basis points. Operating cash flow was $49.6 million and free cash flow was $19.5 million versus negative $18.8 million last year. Free cash flow as a percent of revenue was 4%, expanding 840 basis points. During the quarter, we announced an efficiency plan and the reduction of our global workforce by approximately 5%. We expect our original estimates of pretax 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 nonrecurring restructuring charge in the first quarter of $29.2 million including severance, employee benefits and related costs and noncash stock compensation. These savings were reflected in our initial 2025 guidance and, of course, remained reflected in our reiterated 2025 guidance. On share repurchases, we repurchased $30.4 million of shares or approximately 519,000 shares during the quarter under our $500 million share repurchase program. Cumulative to date, we have returned more than $66 million of capital to shareholders under this program. We still anticipate continuing to purchase shares in 2025 with the goal of minimizing dilution to our shares outstanding from stock-based compensation. Overall, it was a solid first quarter and a nice start to 2025. A few comments on what I'm seeing in the macro before we move to our guidance. First, we saw a solid demand environment in the first quarter. As David said, our sales momentum continued building off the strong performance we experienced in the fourth quarter of 2024. Our HCM solutions and value propositions continued to resonate with buyers. It's also important to note that we haven't seen a change in customer retention and continue to expect retention rates at our historical ranges. Second, employment levels were largely in line with our expectations during the first quarter. As we invoice on a per employee per month basis, employment levels at our customers do have a direct impact to our revenue. However, we do have minimums built into most contracts at about the 80% level. We'll continue to monitor these employment levels and report to you as we progress throughout the year, but do not see any to adjust our outlook or guidance related to employment levels. Regarding interest rates, which impact Dayforce through our float revenue, we now expect three rate cuts in the U.S. in the back half of the year compared to one rate cut previously assumed in our original guidance. However, with Q1 float revenue coming favorable to our expectations on average -- higher average balances and higher yield, we are comfortable holding our full year float revenue guidance. For full year 2025, we still expect mid- to low single-digit growth in average balances and an effective yield of about 3.6%. And finally, foreign exchange rates. In Q1, FX rates were in line with our expectations. However, since the announcement of tariffs, we have seen the U.S. dollar weakened. This weakening has the impact of increasing the U.S. dollar amount of both revenue and expenses. So we've updated our Q2 guidance to align to the average FX rates we saw in April, but we've left the rest of the year assumption flat with our original guidance. All of the rates that we've used in our guidance for U.S. dollars to Canadian dollars, Australian dollars and British pound can be found in our press release. And just a reminder that we are naturally hedged from FX on an EBITDA perspective. We provide constant currency growth rates in our guidance for this purpose. And to be clear, we are leaving constant currency growth rates unchanged to prior guidance. Now turning to our guidance. As I mentioned, we are reiterating our previously issued full year 2025 guidance on a constant currency basis, but you'll note the dollar amount of guidance to reflect the Q2 FX rates. Specifically, we expect total revenue of $1.929 billion to $1.944 billion. Total revenue, excluding float of $1.749 billion to $1.764 billion, an increase of 12.1% to 13.1% or 14% to 15% on a constant currency basis. Dayforce recurring revenue, excluding float of $1.317 billion to $1.342 billion, an increase of 13.6% to 15.7% or 15% to 17% on a constant currency basis. Float revenue of $180 million, adjusted EBITDA margin of 32% and free cash flow margin of 12%. And for the second quarter, we expect total revenue of $454 million to $460 million, total revenue, excluding float of $408 million to $414 million, an increase of 9% to 11% or 10% to 11% on a constant currency basis, float revenue of $46 million and adjusted EBITDA margin of 30.5% to 31.5% of revenue. With that, we can begin the Q&A portion of our call.

[Operator Instructions] Our first question is coming from Siti Panigrahi from Mizuho Securities. Your line is now live.

Thank you. I want to -- can you hear me?

Yes, we got you, Siti.

All right. So I want to ask about this -- in this macro environment. What are you hearing from your customer mainly for their HR and payroll project. David, you talked about strong sales pipeline and project kickup. Wondering if you're seeing anything different in the U.S. versus international market given what we have seen last month or so?

Siti, thanks for the call. Let me start by saying this. 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. If I actually dissect the sales, add-on sales, as I mentioned on the call, were up 30% year-over-year, and that means that we are seeing more new customers signed with Dayforce. Where I'm very encouraged is when I look at our strategy of building out a single application, and I look at the percentage of full suite deals that we are now doing for new customers. We saw full suite deals be approximately 50% of the total deals we did in the quarter, but we're not actually dissected and I look at the major market space, the enterprise space and emerging space, again, emerging 500 -- up to 500 employees, major markets up to 3,500 enterprise above 3,500 employees but below 12,000. We're seeing almost 100% of those particular segments by full fleet deals. And obviously, that's very encouraging. We're also seeing impact from the SI channels, SI prime deals were 50% overall, and we're gaining traction with our managed offering which is also up quite considerably year-over-year. It's up by about 70% year-over-year, but still less than 10% of sales. So still tons of room to actually grow. So we haven't seen impact at all from the macro in terms of buying decisions. When we look at project kickoffs, obviously, following a very strong Q4 and a very strong Q1 of sales, you would expect that kickoffs would be also up significantly year-over-year. And again, that gives us confidence into 2026 and beyond.

Thank you. Your next question is coming from Scott Berg from Needham & Company. Your line is now live.

Hi everyone. Nice quarter. Thanks for taking my questions here. David, on the fourth quarter call, you had mentioned some increased demand strength on HRMS and payroll deals upmarket and the kind of the larger enterprise segment that you all play in. How has that played out kind of 90 days later? Are you still excited about that segment? I know you're overall sales and pipeline commentary is really good, but those deals tend to have a longer sales cycle. So I guess just trying to understand how that setup looks like maybe in the second half?

It's continued as well, Scott. Thanks for the question. In fact, in the first quarter, we signed our largest deal ever, which is another government agency that will probably have similar characteristics to what we've seen from the government of Canada deal. So in other words, obviously, it starts with scoping, a bunch of service work, and that will lead to quite nice recurring revenue into the actual future. We also are simply being quite successful at selling full suite deals into the large enterprise space as well. The entertainment and leisure company we spoke about would be a perfect example of that. That's about 62,000 employees. So we saw strong sales performance across segments and across geo in the first quarter, and we've seen that continue in the month of April as well.

Thank you. Next question today is coming from Mark Marcon from Baird. Your line is now live.

Good morning. Really nice to see the free cash flow margin improvement. Wondering if you can just talk a little bit about the cadence in terms of total revenue growth? It looks like you're basically projecting for the second quarter on a total revenue perspective, to see a little bit of a deceleration. And then I'll pick up in the second half. Wondering if you can just talk to some of the dynamics that would be driving that.

Yes. Thanks, Mark. It's good to hear from you. Look, maybe I'll start with Q1 total revenue and then we can move into the full year. The primary drivers between that 14% kind of constant currency revenue growth is -- look, we were up about $58 million year-over-year. You can look at that as mostly Dayforce recurring, $45 million up. Professional services had a really strong quarter that was up about $23 million, $24 million. Powerpay was relatively flat, and then we had the headwinds from other recurring, which was down about 6% and float was down about 4%. Now the Dayforce recurring, that drive is driven mostly by go-lives. You can generally think about that as mostly new business and now seeing a greater proportion of add-ons. We also had some migrations from the APJ business, which is driving that $6 million -- part of that $6 million decrease in the other recurring and professional services and other was a huge increase in Q1. As you move into Q2 and beyond, you've got some seasonality in there. Our seasonality primarily around the Dayforce recurring side of things comes from the year-end solutions. If you think about our year-end services in the past, you should think about that pretty consistently year-over-year, which drives that same seasonality between Q1 and Q2, and that's how I would think about it. In Q2 also, I wouldn't expect as much growth in the professional services side. We grew 50% in Q1. I would expect that still above the recurring growth, as I talked about in the first quarter, but not at 50% level. We're seeing strength in that number from obviously, all the demand that we've seen in Q4 and into Q1. On Powerpay side of things expected relatively flat. And then obviously, we -- that other recurring in the bureau side goes down. The last piece of that is the float. And think about float as I think we gave specific guidance on this one, kind of average balances in the $5 billion range. That's -- and an effective yield of about 3.6% for the second quarter.

Thank you. Next question today is coming from Mark Murphy from JPMorgan. Your line is now live.

Thank you so much. I'll add my congrats, Jeremy. I'm curious how you're seeing the trends in some of your industries that are most acutely affected by tariffs, thinking about airlines, retailers, maple syrup, energy providers, all that. Is there anything in the pipeline or employment levels that's reflecting any of the trade tensions yet when you look at the forward indicators? And then just -- on the Azure marketplace set up, can customers burn down their Azure credits to purchase Dayforce?

Mark, I'll start with the easy question. Yes, they can burn down their Azure market credits, which is a big part of the actual partnership as well, it does benefit the SIs from the same perspective. To the first part of your question, we haven't seen impact from the tariffs.

Thank you. Next question today is coming from Kevin McVeigh from UBS. Your line is now live.

Great. Thanks so much. David, you talked about that Canadian contract a little bit. I just want to make sure I understood, do they extend that contract? Was the dollar amount increased? I just -- could we start there real quick?

Sure. On the Canadian, so there are two points over there. The first was, Kevin, we actually signed another federal agency contract with another government in Q1, similar types of dynamics to what you have with the Government of Canada deal. In regards to the Government of Canada deal, yes, they did sign an extension. It was a dollar amount of CAD 105 million, USD 72 million, that will -- is mostly for services or additional services over the next, I think, 15 months. So obviously, that bears quite well for that project. But the comment that I made earlier was another government contract that we started in Q1.

Thank you. Your next question is coming from Samad Samana from Jefferies. Your line is now live.

Hi, good morning and thanks for taking my question. Maybe just if I think about the guidance, it's a strong start to 2025. If you think about that range that you're reiterating, maybe help us understand what would allow you to get to the high end? Would that be bookings that have already been captured going live earlier than expected? Or would that be more of a function of out executing on bookings in the first half? Just -- as I think about that 15% to 17% constant currency, you guys split the middle in 1Q. How should we think about where you think you can land in the range? And as of today, are you thinking closer to the middle where you started or towards the higher or lower end?

So Samad, nice to speak with you. I'll start and I'll hand it over to Jeremy. As you know, we have a very predictable business. We model out the revenue based on individualized projects tied to each of the different customers that we currently have in process and that shapes the revenue curve, if you like, for the various types of quarters. In terms of what could impact the second half of the year. One, obviously, we are benefiting from the strong Q4 and the strong Q1 sales. A portion of those will go-live in October. And then the remainder most likely would go-live at the end of December for the fiscal year '26. There are some assumptions that we do have regarding the macro in terms of employment levels and obviously, yields for the remainder of the year that kind of Jeremy went through in a bit of detail. Jeremy, what else would you add to that?

I think that's right. Employment levels are the key things to watch for us that's really kind of out of our control from a macro side of things. And to be clear, we haven't seen an impact to our expectations from employment levels yet. So if we kind of look at things right now, it's steady as she goes. I think otherwise, no difference from prior years. It's add-on sales. As David mentioned, its go-lives. We've got our wallet business, which continues to go strong and in line with our expectations and retention, which also, as I mentioned, is very strong as well.

Thank you. Next question today is coming from Raimo Lenschow from Barclays. Your line is now live.

Okay, thank you. You said everything is on plan. The one question I have that is related to that. It's like on the go-lives in Q1, is that just like the shape of where things were playing out with Q4 being very strong, et cetera? And in Q1, with bigger projects, do you get more pushes in the later part of the year? Or is there anything else going on there?

Raimo, that's exactly right. If you look at Q4 of last year, it was up quite significantly relative to the year before. 146 versus 147. When you look at it, remember, you have to look at really where the days of week aligned relative to the start of the payroll period for the customers. So in some years, the go-lives are skewed towards Q4 and other years are skewed towards Q1, and you see that part as the year progresses between the differences between the actual quarters.

Thank you. Next question today is coming from Jared Levine from TD Cowen. Your line is now live.

Yes. Thank you. With your recently announced efficiency plan, can you discuss the primary expense items in the income statement, expecting to see the benefit from the efficiency plans as well as the associated charges and how you're thinking about how much of those savings will be reinvested back into the business?

Yes. Jared, it's good to hear from you. Thanks for the question. Yes, I talked about this a little bit on the scripted remarks. But -- and we talked about this since -- it's -- we reviewed the entire company from a functional and geographic perspective. And the cuts really span broadly across both of those two vectors. I think going forward, you should expect to see more leverage from G&A, and we'll continue to drive slight scale in product and sales and marketing costs. And then our plan has always been to continue to improve recurring gross margins and our professional services gross margins when we get towards that breakeven line. The impacts and the savings are around $65 million in year and $80 million annualized. That's offset by, call it, about $10 million of investment that we put back into the business on some specific projects. As far as the onetime charges in connection with the plan, we incurred a nonrecurring restructuring charge in the first quarter of about $29 million. That includes severance costs, that includes employee benefits and related costs, it also includes noncash stock compensation. And those savings, as we've talked about, were reflected our initial 2025 guidance and of course, remain reflected in our reiterated guidance. In Q1, it was about $11 million, and you'll see this in the notes to our 10-Q, $11 million of restructuring charges that were paid. And that means we have a liability of about $18.6 million the combination of those two gets you to the $29 million.

Thank you. Next question today is coming from Steven Enders from Citigroup. Your line is now live.

Okay. Great. Thanks for taking the question this morning. I wanted to ask just on the, I guess, the bookings and pipeline opportunity that you're seeing. I think last quarter, you talked about new sales coming in above total revenue growth. And it seems like it's looking that way for 1Q based on what you're seeing. But do you feel the same way as you look out in the pipeline for the back half of the year? Or kind of what are you seeing in the pipeline dynamics right now?

Thanks for the question. As I mentioned on the call, the pipeline remains healthy. Q1 bookings were very strong. We expect that to continue through Q2 as well. Again, from a number perspective, we would expect year-over-year sales to come in about 40% greater than we saw in the prior year and in line with what we saw in Q4. So we're quite optimistic and confident on the sales front.

Thank you. Next question is coming from Alex

Hi, guys. This is Ryan Krieger on for Alex. Thanks for taking the question. I just wanted to circle back on some of the AI commentary, David, that you provided. It sounds like attach is really strong there, particularly around Copilot. So just kind of curious what type of maybe PEPM uplift you're seeing in those AI deals versus the non-AI deals and how that compares to initial expectations? And then just beyond Copilot, kind of what other AI features are you seeing good traction?

Sure. So on the AI assistant, which is the new name, if you like, for Copilot, we saw a 50% attachment rate of that particular skew to new deals. That's obviously very encouraging. We are launching a series of AI agents this year across all the various domains that we play in, so HR, payroll, time and talent. You'll see those coming out through the year, and that obviously gives us another ability to see a revenue uplift or skew uplift. We still have tremendous white space across our almost 7,000 customers where we can go back and upsell them the advanced experience hub with the AI assistant. What you'll see actually, if you look at the application today and the features that we're releasing is that AI is everywhere. We have a distinct advantage over the others in that we have a single database, a single native code base, and that allows us to really leverage that single database to drive AI in every touch point from the employee frontline manager all the way to the executive. In terms of the agents, we have two different types of agents. We have agents that are designed for their employee, and we have agents that are designed for the administrator. And I think the customers will benefit greatly from the innovation that we're doing around AI.

Thank you. Next question today is coming from Brad Reback from Stifel. Your line is now live.

Great. Thanks very much. David, on what appears to be a meaningful acceleration in sales force productivity, is that coming from a meaningful uptick in win rates out in the field, growing pipeline top of the funnel, DSI? Maybe you can talk to that a little bit.

Yes. Thanks for the question. So let me break it down. Yes, we've seen our win rates go up significantly year-over-year. If I were to estimate, I would say they've almost doubled in terms of our win rates. I don't know how much further we could take the actual run rates. What is resonating very well is our technology leadership that we have that single code base, a single database. We do the 12:1 simplification is resonating with the actual market. We're seeing that reflected in the percentage of full suite deals that we're now doing. If I would look at Joe's strategy, when he joined the organization about three, four years ago, which was to build a full suite, so from pre hire to retire code base, that is gaining traction. Again, when we look at kind of the major market space, which is that 500 to 3,500 employee or we look at the enterprise space, we've seen full suite deals in major markets of about 90% and full suite deals in enterprise of 100%. So that's one of the reasons that you're seeing our win rates go up. You've seen the acceleration of the actual sales. I do believe we are quite differentiated in the segments that we play on. Our global payroll story as well is very, very strong, and we're still seeing traction on that. Our advantage in managed services, which have to do with the payroll and on the benefit side is a very, very strong differentiator that's up 70% year-over-year. And I would say that the execution of the sales organization led by Sam is working very, very well that they're able to articulate the value proposition clearly. Customers understand how that results in very strong ROI to their organization, much better experience. We're obviously writing the AI kind of wave just given our advantage of having that single code base and that very well structured data set that allows us to leverage kind of large language models and other ML types of technology very, very effectively to the benefit of our customer bases. But as you can tell, we're very optimistic on the sales side.

Thank you. Our next question is coming from Daniel Jester from BMO Capital Markets. Your line is now live.

Great. Thanks for taking my question. Maybe two real quick ones for Jeremy. First, on free cash flow. First quarter was very strong. I think historically, your first quarter cash generation is a little bit lighter. So can you help us think about the seasonality for the rest of the year? And then secondly, on the Government of Canada contract, the new USD 72 million that David mentioned. Is that net new? Or was some of that already contemplated in your guidance for the year?

Thanks, Dan. It's good to hear from you. The seasonality in free cash flow will continue. Q1 is the lower sales quarter you've got -- or excuse me, the lower free cash flow quarter, you've got things like bonus runs for our employees, you've got annual subscription to go out the door and those things impact our cash flow. You'll see a very similar trend. Obviously, it was the tide raise with our increased cash flow, but a very similar trend to past years on a quarterly basis, and as we progress towards that 12% free cash flow margin in our guidance. As you think about the Government of Canada, it's -- the work is continuing, I think, really, really nicely that substantive contract that we signed continues the professional services work, and that will continue to help drive that growth, professional services revenue growth above the recurring growth for the near-term here as we continue to work through that project. David, anything to add on the Government of Canada?

No, just I do think it is a sign of confidence on the actual project is consistent with what the government has said in prior years. Obviously, there was some risk going into the quarter with the elections that were going on, but I think we came in of that rather well. I think you'll see that reflected as well in the professional services and other line, which if you look at kind of the professional services and other adjusted margin, it's really improved very, very nicely. In terms of the guidance comment, yes, we had made assumptions that the project would continue and this obviously derisks that item, gives us certainty about the revenue stream.

Thank you. Next question today is coming from Jason Celino from KeyBanc Capital Markets. Your line is now live.

Great. Thank you. This is

That's an interesting question. With the actual wallet product, we have on-demand pay, where the employees are able to move their earned wages onto their Mastercards and they can go off and obviously spend. For that particular product, it's largely for, I would say, the unbanked employees in the United States, which allows them to avoid check cash-in fees. It allows them to not have to do payday loans to bridge their finances. For those employees, we're seeing a very, very high utilization rate. Typically, they use the product about 25x per month with an average spend of about $25. It's been largely consistent, that type of utilization since we launched. We also have direct deposit capability, which is at the end of the pay period instead of having the money deposited to a direct deposit account or a paper check. We allow employees to get paid through direct deposit directly to the wallet. The benefit for the employee is that the money transfer happens immediately, whereas when we do direct deposit to other bank accounts, we go through the ACH system, which takes between 24 and 48 hours. Again, with the unbanked employees, this gives them a effectively a bank account, which allows them to get the money very, very quickly. We also have capability if employees have other cash apps or if they want to do instant transfer, we call that AFT and IFT, where people can do the transfers immediately or pull the money from the other wallets. We launched that last year, and that immediately got a lot of traction, and we'll continue to see that traction grow. Earlier this year, we launched direct to bank capability. We started first with the ability of when someone does an on-demand pay transaction, instead of going to the Mastercard that we provide, they have the ability to use any debit card. And there is a fee for that. We launched that. That's going very, very nicely. We're seeing effectively the revenue from that go up by a few thousand dollars each day of week relative to the same day of week last year. So we're very confident that will generate several million dollars of revenue over there. And more recently, we just launched the ability for someone to do an on-demand transaction to any direct deposit account that they actually have as well. The last two items that I spoke about are largely focused around not the unbanked employees but rather the bank employees. So we would expect to see a benefit to wallet this year from those capabilities much like we saw from AFT and IFT last year.

Thank you. Next question is coming from Bhavin Shah from Deutsche Bank. Your line is now live.

Great. Thanks for taking my question. I think earlier you spoke about migrating customers from the APJ legacy business over to the Dayforce, how is that going relative to your expectations? And kind of what kind of uplift are you seeing as you migrate them from the legacy platform to the more modern Dayforce solution?

Thanks for the question, Bhavin. And yes, you can see in our other -- this is most clearly in our other recurring line where that was down about 29%, 30% year-over-year. And in the future, in Q2 and Q3, I actually think that percentage could even accelerate above that into the 40% ranges. We made some decision to really aggressively kind of move customers and target customers either over to Dayforce or off so that we can drive the efficiency and the profitability of the company a little bit faster. As the customers move over and migrate over, we do get an uplift. That uplift varies contract to contract. But it's a pretty decent uplift probably on average, 50% or so. And we continue to see that as we move customers over.

Thank you. Next question is coming from Michael Turrin from Wells Fargo. Your line is now live.

I appreciate you taking the question. David, some notable commentary on bookings throughout the call would be useful to hear your perspective on the competitive landscape, how that's evolving? And if you can compare and contrast what you're seeing between mid-market and enterprise as well as speak to some of the consolidation opportunities you're highlighting in the press release. That's all helpful.

So regarding the competitors, as I mentioned, we've seen our win rate go up by almost double, if you like, year-over-year. And so that gives evidence that I think our product is performing very well, and we are gaining market share. Our overall market share still is relatively low, probably under 4%. So it gives us a lot of optimism that we should be able to be a market taker for quite some time going forward. What's driving this is that we are quite unique with our single database model, a native code for all aspects from pre hire to retire. It does allow an organization to do that 12:1 simplification. And as they do that, they typically pay less subscription. They save a tremendous amount of labor costs and that they don't have to support 12 different systems when they move to a single Dayforce application and equally important they have the ability to do much better decision-making because the data is all accessible and it's all in the same data store, and they can leverage newer technology like language models, machine learning and other AI type of tech, which obviously benefits everyone from their frontline worker to the executives. The value proposition, I think, is being understood by the market. And I think if people do field research, they'll find that the product truly is differentiated. In terms of the competitive market, we haven't really seen much of a change. Our competitive market set has been largely the same, which is one other HCM provider that obviously has a few headwinds and then the typical ERP players as we go more and more upmarket. We've seen, again, tremendous success with full suite sales all the way from emerging to the enterprise space. So up to that 12,000 employee space. And we are beginning to see success with full suite sales in the large enterprise market. Again, like I mentioned, the entertainment and leisure company of about 62,000 employees behind the full suite. Our focus, again, remains on organizations that have frontline workers, which is the majority of the actual workforce. As you know, we have always focused that we have the continuous calculation. We've been the leader in compliance for quite some time. We continue to invest in compliance. Last year, we did over 900 compliance features. I called out some of the compliance features we did on a global basis in the first quarter of this year. And I think that continues to be a very, very strong differentiator, and now when you couple that with our really competitive talent offerings and data offerings and managed services offerings, we're a difficult organization to compete with.

Thank you. Your next question today is coming from Allan Verkhovski from Scotiabank. Your line is now live.

Hi guys, thank you for taking the question and great to hear about all the booking strength in the quarter. I want to follow up on SIs priming implementation. Could you just go deeper on what business trends you've seen there over the past three months, maybe compared to the year ago period, that would be great.

So let me start by saying that building a powerful SI ecosystem is very important to our organization. Sam, our CRO and his organization has specific targets that we measure in terms of SI involvement in each of our sales, and as well, we measure the percentage of kickoffs and projects that are primed by the SIs. We have different layers or different levels of SI partnerships. We started with the Tier 1s. For example, if we look at the Government of Canada, you'll find E&Y would be the prime on that particular deal. We also deal with CGI on that particular. But we have very strong Tier 1 SI partners that we use typically in the large enterprise space. When we go into the enterprise, major markets and emerging spaces, we typically bring on a different set of SIs along the lines of groups like BDO and such, which are very well geared for delivering quantifiable value to that particular market set. The use of the SIs really allows us to scale the organization without building out a tremendously large services organization. It also helps us in terms of building out the pipeline, influence of the actual pipeline as well. And so we're encouraged with what we're actually seeing on the SI side.

Thank you. We've reached end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Just want to say thank you very much for attending the call today. We look forward to hosting you on the Q2 call. And also just want to send a special thank you to all the Dayforce employees that are out there supporting this company as we continue to do really, really good work for our customers, existing customers and attracting new customers as well. Thank you very much.