Dayforce Inc (DAY) DCF Valuation & Fundamental Primer
Dayforce Inc (DAY) currently trades at $69.34 with an enterprise value of $4.78B. Our proprietary institutional model rates Dayforce Inc at 66/100 (Grade: B+ · Quality Software Operator). The current market price prices in an implied 5-year revenue CAGR of 45.7% vs. historical growth of 20.2% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of Dayforce Inc (DAY) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Dayforce Inc (DAY) 3-Scenario DCF Valuation Range
Stress-test DAY'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: $69.34).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $30.21 -56% | $32.41 -53% | $34.97 -50% | $38.00 -45% | $41.63 -40% |
| 9.3% | $26.64 -62% | $28.37 -59% | $30.36 -56% | $32.66 -53% | $35.37 -49% |
| 10.0% | $23.71 -66% | $25.10 -64% | $26.68 -62% | $28.48 -59% | $30.56 -56% |
| 10.8% | $21.26 -69% | $22.39 -68% | $23.67 -66% | $25.11 -64% | $26.75 -61% |
| 11.5% | $19.18 -72% | $20.12 -71% | $21.17 -69% | $22.34 -68% | $23.66 -66% |
Institutional Software Quality Scorecard (66/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Elite deferred revenue float; FCF exceeds operating income by >20%
Disciplined equity compensation well below software industry average
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 165% of EBIT driven by upfront annual collections
Key Operational & Dilution Risks
- Lower software gross margins (46.1%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into DAY?
The current share price demands 45.7% 5-year CAGR (63.0% net of SBC & dilution)—a +25.5% acceleration over historical run-rate (20.2%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (8.8% of revenue) and annual share dilution (1.1%/yr). Accounting for both requires 63.0% 5-year revenue CAGR to justify $69.34/sh on a true per-share economic cash flow basis.
Dayforce Inc (DAY) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $1.76B | $1.76B | $2.12B | $2.54B | $3.06B | $3.68B | $4.42B |
| Gross Profit | $812.1M | $812.1M | $976.3M | $1.17B | $1.41B | $1.70B | $2.04B |
| Operating Income (EBIT) | $104.1M | $104.0M | $125.0M | $150.3M | $180.7M | $217.3M | $261.2M |
| Stock-Based Compensation (SBC) | $155.5M | $155.6M | $187.0M | $224.9M | $270.3M | $325.0M | $390.7M |
| Unlevered Free Cash Flow (FCF) | $171.5M | $171.4M | $206.1M | $247.8M | $297.9M | $358.1M | $430.5M |
| SBC-Adjusted True Cash Flow | $16.0M | $15.8M | $19.0M | $22.9M | $27.5M | $33.1M | $39.8M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -10.5 + 0.45 × (Rule of 40) · R² = 59%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 | DAY | $11.05B | $1.76B | 46.1% | 9.7% | 30.0% | 8.8% | 6.7× |
| 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 | 6.6× | $11.70B | $11.05B | $69.34 | 0.0% |
| -20% Multiple Compression | 5.3× | $9.36B | $8.71B | $54.65 | -20.0% |
| -35% Multiple Compression | 4.3× | $7.61B | $6.95B | $43.64 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $8.80B | $8.15B | $51.12 | -24.8% |
Frequently Asked Questions: Dayforce Inc (DAY) Valuation
What is Dayforce Inc (DAY)'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 (DAY) has a Base Case implied value of $25.90 per share (with a Bear Case of $8.81 and a Bull Case of $49.67), compared to its current price of $69.34. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Dayforce Inc (DAY)'s Rule of 40 score and Free Cash Flow margin?
Dayforce Inc achieves a Rule of 40 score of 30.0%, combining a 20.2% revenue growth run-rate with a 9.7% TTM free cash flow margin on $1.76B 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 DAY stock according to Reverse-DCF analysis?
At $69.34 per share (Enterprise Value of $11.70B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 45.7%, compared to Dayforce Inc's historical CAGR of 20.2%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does Dayforce Inc compare to Software & Cloud Services software peers?
Dayforce Inc (DAY) earns an institutional Software Quality Score of 66/100 (Grade B+ — Quality Software Operator). 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 (DAY)'s valuation?
Dayforce Inc recorded $155.5M in TTM stock-based compensation (8.8% of revenue). When treating SBC as a cash-equivalent compensation expense, Dayforce Inc's SBC-adjusted free cash flow yield is 0.1%, scoring 21/25 on our Shareholder Dilution Friction pillar.