Dayforce Inc. (CDAY) DCF Valuation & Fundamental Primer
Dayforce Inc. (CDAY) currently trades at $69.52 with an enterprise value of $10.49B. Our proprietary institutional model rates Dayforce Inc. at 88/100 (Grade: A+ · Elite SaaS Compounder). The current market price prices in an implied 5-year revenue CAGR of 21.9% vs. historical growth of 22.3% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of Dayforce Inc. (CDAY) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Dayforce Inc. (CDAY) 3-Scenario DCF Valuation Range
Stress-test CDAY's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $69.52).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $78.37 +13% | $83.20 +20% | $88.83 +28% | $95.49 +37% | $103.48 +49% |
| 9.3% | $70.53 +1% | $74.34 +7% | $78.71 +13% | $83.77 +21% | $89.72 +29% |
| 10.0% | $64.09 -8% | $67.15 -3% | $70.62 +2% | $74.58 +7% | $79.15 +14% |
| 10.8% | $58.71 -16% | $61.21 -12% | $64.02 -8% | $67.18 -3% | $70.79 +2% |
| 11.5% | $54.15 -22% | $56.22 -19% | $58.53 -16% | $61.10 -12% | $64.00 -8% |
Institutional Software Quality Scorecard (88/100 · Grade A+)
Exceptional unit economics, disciplined equity dilution, and fortress balance sheet.
Elite deferred revenue float; FCF exceeds operating income by >20%
Standard software SBC dilution; modest equity transfer to employees
Elite Tier-1 SaaS compounder with high gross margin and superior Rule of 40
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 170% of EBIT driven by upfront annual collections
- Top-quartile software unit economics: 81.7% gross margin and 50.8% Rule of 40 score
- Net cash positive: $540.3M balance sheet buffer
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into CDAY?
Market implies 21.9% annual revenue growth over next 5 years (31.0% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (12.2% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 31.0% 5-year revenue CAGR to justify $69.52/sh on a true per-share economic cash flow basis.
Dayforce Inc. (CDAY) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $1.22B | $1.22B | $1.49B | $1.82B | $2.23B | $2.73B | $3.34B |
| Gross Profit | $996.4M | $996.4M | $1.22B | $1.49B | $1.82B | $2.23B | $2.73B |
| Operating Income (EBIT) | $204.9M | $204.9M | $250.6M | $306.5M | $374.8M | $458.4M | $560.6M |
| Stock-Based Compensation (SBC) | $148.8M | $148.8M | $182.0M | $222.5M | $272.2M | $332.9M | $407.1M |
| Unlevered Free Cash Flow (FCF) | $347.6M | $347.6M | $425.1M | $519.9M | $635.8M | $777.6M | $951.0M |
| SBC-Adjusted True Cash Flow | $198.8M | $198.8M | $243.1M | $297.3M | $363.6M | $444.7M | $543.9M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -31.0 + 0.83 × (Rule of 40) · R² = 77%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Dayforce Inc. | CDAY | $10.85B | $1.22B | 81.7% | 28.5% | 50.8% | 12.2% | 8.5× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 8.5× | $10.31B | $10.85B | $69.52 | 0.0% |
| -20% Multiple Compression | 6.8× | $8.25B | $8.79B | $56.31 | -20.0% |
| -35% Multiple Compression | 5.5× | $6.70B | $7.24B | $46.40 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $6.10B | $6.64B | $42.52 | -40.9% |
Frequently Asked Questions: Dayforce Inc. (CDAY) Valuation
What is Dayforce Inc. (CDAY)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Dayforce Inc. (CDAY) has a Base Case implied value of $70.62 per share (with a Bear Case of $31.29 and a Bull Case of $126.82), compared to its current price of $69.52. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Dayforce Inc. (CDAY)'s Rule of 40 score and Free Cash Flow margin?
Dayforce Inc. achieves a Rule of 40 score of 50.8%, combining a 22.3% revenue growth run-rate with a 28.5% TTM free cash flow margin on $1.22B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into CDAY stock according to Reverse-DCF analysis?
At $69.52 per share (Enterprise Value of $10.31B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 21.9%, compared to Dayforce Inc.'s historical CAGR of 22.3%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does Dayforce Inc. compare to Software & Cloud Services software peers?
Dayforce Inc. (CDAY) earns an institutional Software Quality Score of 88/100 (Grade A+ — Elite SaaS Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Dayforce Inc. (CDAY)'s valuation?
Dayforce Inc. recorded $148.8M in TTM stock-based compensation (12.2% of revenue). When treating SBC as a cash-equivalent compensation expense, Dayforce Inc.'s SBC-adjusted free cash flow yield is 1.8%, scoring 16/25 on our Shareholder Dilution Friction pillar.