Investors Turn Attention to Ceridian HCM as Stock Grows

Ceridian HCM’s IPO debuted at a mere $22 per share. The stock is currently priced at $37, and changed about eight months after hitting the market.

Though Ceridian is new to the public investing marketplace, its history goes all the way back to the 50s when the company operated under the name of Control Data Corp. The company pivoted to information services and acquired Dayforce, a human resources software-as-a-service provider. HCM is an acronym that stands for human capital management. The company is best known for its Dayforce platform and penchant for spearheading new industry trends.

Ceridian is well above its initial offering price. Though the software management firm is clearly a stock market winner in the little bit of time it has been publicly traded, some investors are adamant that there is still room for growth. The company is prudently positioning itself at the forefront of a shifting workforce in which employees work on a contract and remote basis.

Ceridian’s most fervent backers insist the company has the potential to reshape its portion of the job market. If Ceridian’s Dayforce cloud platform proves successful by enabling employees to request payouts at any point in time, the company might eventually become a household name. This on-demand service has universal appeal as work is performed in every corner of the globe. Employers who provide access to immediate payment for work performed will be perfectly positioned to attract the best personnel.

The example detailed above is just one of many ways in which Ceridian is poised to change the industry of work. It is best to think of Ceridian as a worldwide capital management software enterprise. The company is proud to claim it “makes work life better.” Ceridian’s much-touted flagship offering, Dayforce, provides everything from payroll to human resources functionality, workforce management and more. Clients use the Dayforce platform to optimize the management of the full employee lifecycle from generating interest to engaging prospects, providing payment, developing talent and deploying personnel into action. Ceridian smartly caters to businesses of all sizes.

Ceridian’s numbers are impressive. The company has an operating profit in excess of $15 million, representing a year-over-year increase of more than 200 percent. Ceridian’s cloud revenue is $133 million, a nearly 30 percent increase on a year-over-year basis. All in all, Ceridian’s aggregate revenue is slightly less than $180 million, representing a nearly 10 percent gain since this point last year. When the impact of foreign currency fluctuations is removed from the picture, the company’s cloud revenue spiked more than 30 percent. Ceridian’s total revenue soared more than 11 percent on a year-over-year basis.

Company executives anticipate cloud revenue to end up between $530-$534 million this year. If it meets this estimated figure, fourth quarter cloud revenue will have to hit at least $146 million. EBITDA is anticipated to be between $150 and $153 million. Ceridian’s total revenue will likely be around $742 million, meaning the fourth quarter revenue will likely fall in the range of $195-$197 million.

Ceridian HCM’s Dayforce cloud platform is clearly its shining star. Revenue stemming from this platform increased 36 percent to reach $111.7 million. The company has nearly 3,500 customers live on the uber-popular platform. There is undoubtedly robust demand for this product as well as the company’s other offerings such as Powerpay. The question is whether you are looking to add a capital management software business to your portfolio and whether Ceridian is the right one.

So, what does this mean for investors?

It appears as though Ceridian HCM is a pioneer in its own right. The company’s Dayforce service recently debuted an on-demand payment function so employees who need a quick influx of cash can access their upcoming paycheck for hours already worked rather than wait all the way until the next check arrives. This is just one example of the type of technology Ceridian is working on.

The point is Ceridian is a trailblazer in a somewhat stagnant industry. Continue to monitor the company’s progression. If Ceridian engineers continue to churn out new and interesting services, the company might be considered a potential takeover target. At the very least, its stock will perform well.


Ethan Warrick
Wealth Authority

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