Dayforce beats quarterly revenue estimates on steady software demand

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(Reuters) -Dayforce on Wednesday beat Wall Street expectations for second-quarter revenue and raised its annual revenue forecast, benefiting from resilient spending on its cloud-based human capital management (HCM) software.

Demand for the company’s software services has been stable as more enterprises increased their use of artificial intelligence and cloud-based platforms to run day-to-day operations.

However, some analysts have warned that moderating employment trends and rising concerns about a deteriorating labor market could hit the HCM industry, as companies pull back spending due to the aggressive U.S. tariffs.

Dayforce’s shares have fallen more than 26% this year, underperforming larger peers such as Paycom and Automatic Data Processing.

U.S. employment growth was weaker than expected in July, while the nonfarm payrolls count for the prior two months was revised down by a massive 258,000 jobs, suggesting a sharp decline in labor market conditions.

Dayforce’s second-quarter revenue of $464.7 million surpassed analysts’ average estimate of $457.8 million, according to data compiled by LSEG.

The company raised its annual revenue forecast to a range of $1.94 billion to $1.96 billion, from its prior expectation of $1.93 billion to $1.94 billion.

It expects third-quarter revenue of $476 million to $486 million, compared with estimates of $483.2 million.

The company reported net income of 13 cents per share for the second quarter, compared with a loss of 1 cent per share a year ago.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shreya Biswas)