Dayforce, Inc. (DAY) Earnings Call Transcript & Summary

All right. Well, good afternoon, everyone. Thanks for joining BMO Software event today. Really appreciate all of your time. Next up, we have human capital management and payroll software provider, Dayforce. And I'm very excited to have Jeremy Johnson, who's the CFO, with us today. Jeremy, thanks for joining.

Thanks for having me, Dan. Good to see you.

Great. Thank you so much. So in terms of logistics, this will be the same as all the other sessions. If you have a question that you'd like me to ask Jeremy, shoot me an e-mail, and I will do my best to get that answered for you.

But with that, why don't we just jump right in? So it's been interesting, Jeremy. We've gone through both March quarter end reporters, and now we've had April quarter end reporters in software. And it feels like everybody is feeling and seeing something a little bit different. So I think maybe to start the conversation, I would love to kind of hear what Dayforce is seeing in the current market environment. How are your customers reacting? How are you reacting? Kind of give us the lay of the land as you see it today.

Yes. Thanks, Dan. Well, we had a good first quarter. You can see, obviously, the results were strong, and we're really pleased with what we saw. I think I look at the whole macro as a few pieces, and we can get into each of them. But the first one is probably just around employment levels at our customers. Employment levels of our customers have kind of remained in line with our expectations and that is lower than where they've -- lower growth than where it's been in the past. So if you go back a couple of years ago, we may have gotten a few percentage points from employment levels from our customers of growth. Last year, it was lower. And even this year, it's below 1%. And that's really what we expected, but it's what we've seen. So I don't know that, that's -- it's not a huge driver of our growth. As I mentioned, each -- it's a percentage or so of growth year-over-year. But it's kind of where we expected it to be based on where the economy was looking coming out of last year. I think the second thing from us is you get an impact from interest rates and what happens at either the Bank of Canada or the U.S. Fed. That flows through us from the -- through our float balances. Yield for us is coming down year-over-year. Float revenues last year were about $200 million. We're expecting it to be about $180 million. And that will change, I'm sure, tomorrow and the next day, and it will fluctuate continuously. But I'm glad I don't have to forecast that on a daily basis, I guess, is what I would say. FX is an impact for us. We have something like 20-some-odd percent of our business in Canada, another 4% or 5% in Australia and a little bit less than that in the U.K. So FX rates impact us, and we give constant currency guidance. That's really it from a macro side of things like the impacts to our business. I think the biggest thing that I'll talk about when I say -- when I think about the macro is the demand environment. And the demand environment for us, it's probably the best indicator of what -- how things are going in the macro. And it's been really, really solid. And we've had a strong Q4 growth rate in bookings where we had 40% growth. And we expect the first half of this year to also grow at about 40% as well. And -- so continued Q4 into Q1 and into Q2, and we're feeling really strong about how our message is resonating with investors and that has to be the biggest impact for macro from our side of things.

Okay. That's great. And I definitely want to dig into the bookings environment and what you're seeing there and how that flows through. But one of the questions I get from people who are newer to the Dayforce story is they just try to understand the sequentials of the business. And so if I look last year, Dayforce recurring ex float constant currency was growing something like 20%, 21%. And in the first quarter, you grew about 16% and so a step down. And you don't guide for the second quarter. But if I look at consensus numbers, it looks like another kind of lower pace of growth than last year. So maybe just help me like why was the business growing 20% last year? And why is it growing 16% today? What are the variables to consider for that deceleration?

Yes. So Dayforce, you're exactly right. Dayforce recurring grew at around 20% last year, excluding [ float ], constant currency. The one thing that is inside of those numbers is we did an acquisition of a company called eloomi. I'm sure we'll probably get into that later, but it's a learning acquisition platform -- a learning management platform and that was folded in. It added about 150 basis points of growth to last year. So if you kind of take that out, we were growing in the upper teens. That comes down to about 16% in Q1. We guided to the full year at around 15% to 17%. And Look, I think part of this is some of the employment levels that we've been seeing. There is some macro. You've seen inflation in the past. We get a price increase adjustment every year. It's CPI-based. We saw some really nice price increases over the last few years. There's a slight headwind from that. But the biggest piece of this is that we are seeing just -- we're kind of in a little bit of a pocket from a growth perspective from a new business side of things. And I think we talked about this demand that we saw in Q4 and into Q1, and we're seeing into Q2 and the first half of this year. Our business is -- we recognize revenue once we take that customer live. So that bookings goes through over the next kind of on average, major markets for us is around 6 to 9 months. Major markets is about 500 employees to 3,500 employees. Enterprise goes from 3,500 to 12,000. It's around a 12-month cycle time on average. And then large enterprise can be 12-plus as you get into those larger global rollouts or phased rollouts across different departments. So you kind of reverse that and go back and say what we are experiencing now is what we sold in 2023 and kind of early 2024, where it just wasn't as strong. We couldn't actually come out and say, I've been seeing 40% growth rates. And so we are in a little bit of a pocket right now on top of some of those macro headwinds that you see in the numbers. But I think what I look at it is I say there's confidence in, obviously, the back half but into 2026 as well. So we feel really good about our path to achieving guidance this year and then continuing to grow in the right direction here in 2026 and beyond.

Okay. Okay. So I think since we brought it up the bookings environment a couple of times, you probably just hit it now. And so what in your mind was the catalyst that took us from the bookings environment in the first half of '24, which you just mentioned was kind of okay to the fourth quarter of '24 and the first quarter of this year, which were much stronger. So from your perspective, what drove that step up?

I think there's a few things. You go back a few years ago, and we were largely selling pay and time. We built Dayforce as this pay and time continuous calculation, single application and that's what we were selling up until about 2020, 2021 time frame. We brought in -- and that's a great value proposition. It was a great differentiation, and we have done and still have that differentiation in market. We are the only ones that have a single application for pay and time. For most part, at about 1,000 employees, we get about $10 to $12 per employee per month for that pay and time kind of bundle and most of our customers buy that bundle. But we didn't have the full suite HCM at that time. And we brought in a guy named Joe Korngiebel, who's our Chief Product and Technology Officer. He came in from Workday, a competitor. And his remit was very simple. It was go and build out full suite. Don't lose anything on the compliance side, which is that pay and time core, but go and build out full suite and make us competitive as much as possible. And our idea is that by adding the full suite across the talent portfolio. So this would include recruiting, performance management, compensation management, learning management and everything else across the suite, we could actually go in and take that $10 to $12 per employee per month that we get at 1,000 employees and double it and get another $10 to $12. And Joe has done a fantastic job at that. We are now a top right quadrant in Gartner for enterprise full suites and that's a couple of years in a row. This last quarter, on new business sales, we attached a full suite deal to 86% of our major market customers and 100% of our enterprise customers, so that 3,500 to 12,000 bought a full suite. And even some of the larger customers are buying a full suite as well. So we've, I think, reached parity in terms of talent, which is helping us. That helps us get a larger deal, it helps us with win rates, and that's a benefit. The other thing that we've started to lean into is managed services. And managed services for us is, again, adds another $10 to $12 per employee per month at about 1,000 employees. As you move upmarket, all those numbers come down with volume discounting. But managed services for us is when we actually go in and we're the payroll department. We act as -- we do a managed service to be the payroll department for our customers. So it's not a PEO. We're not outsourcing HR. We're not the employer of record or anything like that. We are truly just acting as the payroll department for our customers, and we extend it into benefits sometimes as well. And we started doing this about 3 years ago with some larger customers that asked us to do it. And we to win the deal would say, yes, let's -- we can do it. And we have these a few customers where we saw this. And we saw higher revenue per customer. We saw higher NPS scores, higher retention and an overall better customer experience. One thing we didn't have at the time, though, was the margins of managed services were lower than the software margins we're getting. We charge it as a recurring fee just like a PEPM, the margins were lower. And so over the last few years, we really focused on driving those margins up. And now we're at parity with the software margins and the managed margins such that we actually feel comfortable leaning into managed a little bit more. And so we've done that really nicely. In Q1, 70% of our growth came from managed -- or 70% of growth in managed services sales year-over-year. And it's still a relatively low attach rate across our base and across the new customers, but it's growing really fast. And that's helping us resonate not only on new business side, but on the add-on side. And then there's back to the base sales. And as I mentioned, add-on sales, back to the base motion is going really well. So we're -- our add-on sales grew 30% in Q1 year-over-year. Last year, we talked about 40-some-odd percent or just under 40% of our sales -- total sales were add-on sales and the other -- the rest of it was new business. In Q1, it was a little bit lower because we had such a high new business quarter, but we still grew at 30% on add-on sales. So we're loving the traction that we're getting on that side of things. And I think if I was to strip it all out -- if you go through all of that and you strip it out and say, what do we think is driving this? I think our messaging is really resonating with customers. And I think our sales team is executing really well. And all of that is driving win rates to almost double year-over-year. And those 2 things, I mean, are certainly behind a lot of the bookings.

It's very comprehensive. So thank you to go through all of the pieces there. I guess one thing that you didn't mention that comes up from time to time is total cost of ownership, right? Like when you do the simplification that David Ossip, your boss, has been talking about, right, the 12:1 simplification that ostensibly reduces the cost of ownership, which makes you maybe more compelling compared to an ERP-centric provider. So if you had to think about sort of the things you just talked about versus your ability to deliver at maybe a more reasonable price, where does that fall in the continuum of buying decision for customers these days?

I think it's huge. It actually plays into that messaging story really well, right? Like I think if you go back, again, a few years ago, we were -- had this very simple message. It was that single application, pay and time, continuous calculation, here's our differentiation. And then we got into COVID and our messaging kind of shifted with what we thought was the market. And that market was there's a boundless workforce. There's a complexity crisis, and we're going to help you tackle that. And what we found is that, that was a very hard message to deliver for our salespeople and also hard to quantify and understand for our customers. And so this past year, we actually pivoted that message back to -- or to -- now we have the ability to do this 12:1 kind of consolidation play, you could think of it as. And that messaging is really nice because what it allows us to do is not only -- most of the RFPs come in from the HR side of things. And what happens now is that there's a gate at either technology or CFO or even CEO with getting these deals across the lines. And with this 12:1 consolidation play where we can basically come in and say, you've got about 12 on average systems that are doing all of the things for you on HR, and that's payroll, that's tax, that's benefits, that's your learning. You probably have 2 or 3 vendors for learning. You've got a vendor for recruiting. You've got a different vendor for performance management. You got a different vendor for compensation and raises and things like that. Across the board, you've got a ton of different vendors. And that just means you've got a bunch of subscriptions. You've got a bunch of people managing those technologies. You've got a bunch of people that are managing the integrations with those technologies into your ERP or into your HR stack. And what we come in is one Dayforce . we say we've got one Dayforce that is a single subscription. It's a single integration and tech team that can run it. And there's truly a hard dollar ROI there. And that message resonates really nicely with the CFOs and the CEOs of the world, which is now a gate through this. And it also resonates really nicely with the CTOs of the world because they're all about simplification. And so I think it's going really nicely. And I think it's a message that's differentiated from any of the other players out there right now.

Okay. On the managed services bit, I think you talked a little bit about this at Investor Day. Obviously, we talked a little bit more about it today. It seems like a really interesting opportunity. How have you been able to drive this business that has the same gross margin profile as software? You think it'd be a people-centric processes. And so what have been the steps to get that business now to parity? And can it be above parity in the future? Or is this now kind of where we should be thinking about it?

I think this is where we should be thinking about it, I think at parity. You would -- that's how we started was a very people-centric approach to it. We obviously added a bunch of automation across the board. We were able to scale this pretty nicely such that a single person or a group of people can manage multiple customers pretty efficiently. We are also able to utilize lower cost jurisdictions. So we utilized the Philippines quite a bit and some of our other lower-cost geos where it helps us reduce the cost. And then on top of that, it's -- we found that customers are willing to pay for it. So just for this one thing, we're able to get kind of $10 to $12 per employee per month at that 1,000 employee level. So we had some -- it's easier to make the margins work when the revenue is there, I guess, is what I would say.

Okay. And so maybe we can just pivot a little bit to margins because that's been something that you've really worked hard on improving since you've come back into the CFO role. If I look in the first quarter, I think underlying EBITDA margins like ex float were up 5 percentage points year-over-year, like a big significant improvement. How much of what you've been able to accomplish on the margin side is just scale? How much of it has been some of the restructuring and optimization that you've done? Sort of help us sort of unpack sort of why we've been able to see so much improvement on the margin front over the past year.

Yes. It starts with the recurring nature of our business. And our Dayforce recurring revenue is obviously the most profitable. And as we continue to grow that piece of the business compared to some of the other pieces, it helps us out quite a bit. We've gotten Dayforce recurring revenue margins above that 80%. Obviously, Powerpay is really nice from a margin perspective and that other kind of Bureau business is shrinking and shrinking. So it does start there, and we'll continue to drive efficiency through that. The other piece of it is the professional services and other gross margin is going to continue to improve. So we've been able to drive some process improvement through that business, some automation, some use of low-cost geographies. And we think we can get that into a breakeven state on an adjusted basis this year. And I don't think it will stop there. I think we can continue to improve those margins. Also the mix of kind of high-value, high-margin post go-live professional services, we call them [ VaaS ] services helps us out quite a bit there. So those things help. Last year, in 2024, it was an investment year for sales and marketing. We knew that. This year, it's the reaping of the productivity, and we're doing that really nicely. I think, obviously, when you improve your win rates pretty substantially that helps quite a bit, too, from a productivity side. Scale and G&A is something that you'll continually see. And our product development and management costs, as I mentioned, we had built out a lot -- done a ton of work to build out the platform, and we had invested there. So I think you should start to see us go into a period of slight scale. We still got work to do on the product and that will never end. But I do think like the big builds have kind of ended. Now we focus on kind of making the platform more AI ready. And so in general, our ability to generate adjusted EBITDA and convert that into free cash flow is going really, really nicely. So you talked about the adjusted EBITDA side. We're focusing more on the free cash flow margin side of things right now, where we've grown that from -- I think it was below 7% a few years ago to now this year, we're targeting 12%. And even in that 12%, I've got about $25 million or so of my onetime costs for the separation of -- and the reduction in force that I did in March. But I've also got $25 million of pension termination costs in the back half of the year. And those things go away next year and provide an incremental benefit to next year. So we have really good line of sight to, I think, exceed our expectations that we set at Investor Day where we said we'd expand free cash flow margins at 100 to 200 basis points a year. I mean this year, our guidance would imply we're doing 230. Next year, I think we can certainly do that or more. So we're feeling really good about our path here on profitability.

That's great. I was going to ask about free cash flow next, so you beat me to the punch. So -- and just to be clear, that free cash flow is kind of independent of the interest rate environment because clearly, there's some moving pieces there. Float is very helpful. So even as float is going down, you're still able to drive those free cash flow outcomes.

That's exactly it. Yes, that's the other headwind I didn't even mention because it's just part of our business and it's part of our planning. So float is -- was $200 million last year. It will be -- I think our guidance says $180 million this year. So that's a $20 million headwind that we're eating inside of that number.

Okay. That's great. So I want to zoom back to Joe and sort of the HCM development and some of the AI developments that have been introduced at least over the past couple of quarters. Maybe to get some perspective from you about sort of where on the customer side, are you seeing the most pull for AI? And how do you see Workday's AI position relative to your competitors? Anything you would call out that you think is differentiated in terms of how you're approaching the market versus what you're seeing from your peers?

Yes. We're -- first of all, we're set up really nicely from an AI perspective. We are, I think, the only vendor that has a single application for the entire people platform in one application. That means we have really a single database that we can actually utilize to drive some of our AI agenda. So I think we are positioned really nicely. I talked about the $10 to $12 per employee per month for pay and time, another $10 to $12 for the full suite and another $10 to $12 for managed. I think there's another opportunity out here for what we call kind of data and intelligence for another $10 to $12 over time. And again, that's at 1,000 employees and scales downward as we move up. And it will take us a little bit of time to get to that full amount. But you start to think about data and intelligence as kind of dashboards and analytics, which we've had for a little bit of time. You've got the Integration Studio, which we launched last year, which really connects your system with the others and allows customers to manage those integrations nicely. we've got the hub experience, which is the basis for a lot of things. The hub experience for us is the landing page where customers and employees land when they open Dayforce. And it's a really kind of like Wix-type tool where customers can and HR teams can really manage that landing page easily and nicely. But what it actually is the content management system. And that content management system customers can load all of their documentation, whether that's handbooks or manuals or benefits packages or expense policies or anything they want into that content management system, and we can apply our Copilot, which is our first stage of kind of this rollout of AI to that and train it against their own documents. Such that an employee can go in and start interacting with the Copilot or the AI assistant that we have there and really improve their user experience, but also stop calling HR for a lot of things that they would be doing. And that's the level 1 there. Level 2 gets into a more agentic approach. And I think Level 3 just becomes a full AI-enabled platform. And the agentic approach that we're going to start rolling out a couple of agents here towards the end of this year will cut across the HR, the talent, the time, the pay, the analytics side of things. And eventually, we'll have agents that kind of dig down into each -- a number of different workflows there that help with -- I'd probably call it workforce assistance, right? And then you get into more of the workforce augmentation, which is really real-time insights and recommendations in the flow of work to really drive some better decision-making. And ultimately, I think where this can go is autonomous people operations. And that's kind of the end state. We're a little bit ways out from that, but that's kind of how we think about AI in our platform. And I think there's dollars to be had from a sales side of things there. We're starting to see it with the Copilot right now, where we had 50% of our Q1's new business sales attach Copilot to it. And we're starting to get some nice use cases of how customers are using those.

Okay. And will each one of these AI use cases come with their own like $1 of PEPM here, $1 PEPM there and build up? Or are you going to be packaging these together into more comprehensive sets of solutions?

I think as you go longer term on new business sales, you start to just say, here's everything we've got and this is the price for it. But as we kind of build it out, you're going to have to take that kind of iterative approach. So here's what's available today, we upsell in future. But in the future, we should be able to sell a data package that includes all of this to new customers as we build -- as it's built.

Okay. And so maybe we talk a little bit more on the technology side. You bought eloomi last year to bulk up on the learning side. Joe has released a bunch of innovation on sort of the HCM, the talent side. Is there any part of the portfolio here where you envision that there could be technology tuck-ins or bolt-ons to sort of further accelerate the trajectory and the road map where you want to go? Or just maybe more generally, how should we think about inorganic as a contribution to the growth of the story?

Yes. It's -- what we've done in the past is probably what we do in the future, which ends up being smaller tuck-in acquisitions more than anything bigger. I think eloomi was one of our larger acquisitions that we had done. And even that was pretty small. I think what's great about eloomi, and this is kind of how we think about it is that we actually replatformed eloomi on to Dayforce within 6 months of acquisition. So now we're selling a Dayforce Learning that is Dayforce native, single application allows us to continue that message of kind of one system, one data source, one experience type thing. So there are certainly areas that we could go in and shore up and add, but that's how you'll think about it, how we'll think about it is I think there's a ton of value to having that kind of differentiation of one system and that generally leads to smaller kind of tuck-in acquisitions that we can replatform. Not to say that we won't ever do anything bigger. It's just right now, that's really our focus. If I think about areas, we talked about expense management could be an interesting one for us. just trying to find the right asset. I think there are some things in recruiting that we can add. And obviously, we'll look at the AI front as well.

Okay. Maybe we can go and do an update on what you're doing in terms of pricing and packaging. So I think a few years ago, there were some comments that as you use more system integrators, more partners, there's the opportunity to do more pay on provisioning. And as we think about sort of AI tools, maybe you want to be a different pricing model than a PEPA model. So maybe just give us sort of the lay of the land where you see pricing packaging today, where we stand today and maybe how it could evolve going forward?

Yes. It's -- today, just where we're at is we price on a per employee per month basis, and we generally charge at go-live. There are customers where -- and there's a lot of times when we'll be able to get some pre-go-live kind of revenue ahead of time. But most of it is still a go-live-driven business. And that's -- it's fine. It's an okay business model. I think customers can tend to resonate with that. They associate value with kind of that go-live because they can start paying. But I would say that the market today is really largely defined as us and a Workday competing for a couple of the legacy vendor businesses. And when we're up against Workday, they are charging on a subscription kind of basis as a true software company would. And I think there's a path for us to move forward toward a model like that. And you'll see us start to test that out here in the back half of the year and see if we can move into that full time. But definitely moving to a simplistic packaging pricing model that is a subscription-based model that has a defined term and ability to raise kind of price and talk to the customer at renewal time and upsell additional functionality and a true software model that I think -- personally, I think I know our customers would really appreciate than getting a monthly invoice every single month with here's how much -- how many people you paid and here's your price for each of those and doing a bunch of reconciliation there. I think it's a lot easier to administer. And I think there's a lot more value that can be gotten out of that model, too.

Okay. And on the AI side, would you price things differently, do you think? Or would that still be a PEPM model from your perspective today?

I think it will still be kind of a PEPM subscription type model. But we're going to -- we'll watch out for it. I think everyone seems to be worried about costs and the cost of that, which is a great concern. I think the way we've done things with our LLMs that we're training things on to date has been pretty unique in that we're -- it's not -- it's kind of an individualized LLM for each customer. And that way costs don't get too far out of control. And I think we're feeling okay about where we're at right there. As we roll out the agents, we'll see how this evolves. But right now, we're pretty confident it can be a per employee per month kind of subscription model.

Okay. So in terms of maybe going back to the strength of back to the base, how much has this been sort of right salespeople right aligned right moment? So you've done some more on the processes to go and focus more heavily on that? Or maybe is there sort of the product has gotten to the point where you can sell more talent now in many different ways than maybe 3 years ago, you couldn't do. What are some of the drivers that have helped you been able to do this back to the base strength?

Yes. As with everything, it's not just one thing that it's a couple of things. And I do think we are at a perfect point here in our product life cycle that we can actually start going back to the base. When we started with nailing pay and time, and we say pay, but the pay is deep, right? And time is deep as well. And you start with nailing that. And now that we've got the full talent and HR suite and we've got analytics on top of that, you do have the ability to now go back to the base and that base of customers that we've grown from 0 to near 7,000 already and selling them what they didn't have, what they don't have from what we've already developed and now developed. So there is a product life cycle side of this. The other side, though, is having the right people and putting the right processes in place. And we brought in a seller, a leader for the back to the base team and built out that team. In the past, we had our new business sellers kind of having a quota that they could either fulfill through new business or add-on sales. And of course, when you do it that way, they're going to go after the big dollar deal, right, which is the new business deal. And they're going to -- second fiddle will always be the add-on sales. So when we pulled it out and we created our own team that was a back to customer base team, back to the base team, we were -- and brought the right leader in and then had the product. It's just -- that along with the messaging, it's working really, really nicely. And we think that over time, I think last year, it was just under 40% of our total base -- total sales were back to the base sales or add-on sales. We think that can get to 50% or so over time, which has a nice ability to go into a net retention play. Our gross retention is 98% last year. Our net retention should be 110% plus. And we think there's a path to get there. We're not there right now, but we're having a lot of success this year, and we think that will continue into the future here.

Okay. Maybe a couple of quick hitters on the go-to-market in other ways, partner investments. So you made a lot here over the past few years from having not sort of that well-defined strategy in sort of the pandemic time frame to now, I think, a very clear one. Where do you stand in terms of the need to further invest and grow maybe from an outsized perspective, the partner ecosystem? Or are we now on sort of the right slope to be able to meet the needs of the business as you foresee it over the next few years?

Yes. I think partners for us is really 2 things. One is the SI side of the partnership and then the other one is really software partnerships. And on the SI side of things, we spent a lot of time and effort building those relationships up. And I think it's going really nicely. We've figured out that in different geographies and in different kind of segments, certain partners are emerging as the premier partner. It's some of the likely ones that you'd expect some of the larger consulting firms, and we're building great relationships with those. Where you see the partners mostly on the SI side of things is in the large enterprise and enterprise side. We still have partners that do some of the things in the major market space. But what we found is that a lot of the partners are too expensive for some of the budget envelopes of the major market customers. And so we will continue to have a really nice efficient team that does the implementations in that major market space, and we'll utilize partners not only do some of the implementations on their paper and make it kind of a real nice software -- clean software play but also to bring us pipeline. And that can happen across the board, and we're starting to see that happen as these relationships with the SIs get stronger and stronger and they build practices around Dayforce. So that's a good thing. On the software side of things from a partnership side, you need to have an open platform. And there's always going to be things that we say we're not going to do it or somebody else can do it better. And we are, I think, really good at that. I think it's something we can drive further and actually create a revenue opportunity on and that's something that is probably in the next few years, we should build out and we will build out is more of a partnership business. It's there, but it's not as big as it could be today.

Okay. And on these sort of auxiliary revenue streams, maybe touch on the Wallet and Flex. What are you seeing in those businesses today? I know Flex is very, very small, but maybe just where the momentum has been in the business since you've launched that more fulsomely last year?

Yes. I mean I'll start with the Wallet, and then we can go into Flex, which, as you mentioned, is pretty small and still early days on that. But on the Wallet side of things, it's going really nicely. We've grown that revenue from -- I think in 2023, it was around $12 million. In 2024, it was $30 million or so. And this year, it's going to continue that trajectory of growth and be one of our fastest-growing products that we have out here. So I really like that the traction that we're hitting with Wallet this year. Last year, we talked about that it was mostly not only just new customers but we also launched a couple of different ways to move money in and out of the Wallet. This year, it's actually innovating outside of the Wallet. And what we've done is we've launched a functionality called Direct to Bank where you actually don't need to go in and register for the Wallet. You can, inside of the mobile application or inside your web application, actually just see your earned wages, any employee can, whether they're registered or not and choose to move that money into their direct deposit account or into a debit card that they had. And because they're not doing that through the Wallet, we don't have the ability to not charge a fee because of the interchange. So we're actually charging a fee for that like some of the other earned wage access players are. Still -- employees can access their money completely free if they want to by registering for the Wallet. But if you don't want another piece of plastic in your wallet or another app on your phone, this is a unique way to do it. And I think that's seeing some really nice traction year-over-year and can drive some incremental revenue growth here this year and continue the traction there. Actually, what it does is it opens up that market to -- right now, it's kind of with the wallets limited to the unbanked for the most part. And there's kind of a ceiling on growth, I think. And what we're doing here is moving outside of that and hopefully opening up even more growth for the future there. The Flex Work business continues to go pretty well, I think. It's early days. Like we said, we've got a dozen or so customer -- I don't call them charter customers, customers using it, posting shifts, filling shifts, working. It's -- this is the year where we're going to decide if this is a business model we want to continue with and if it makes sense inside of the Dayforce asset or if it evolves into something different. And I think we just got to see where the results are, and we'll see -- we'll keep you updated as we come through next year.

That sounds fantastic. All right. Well, we are out of time. So Jeremy, it's a pleasure to talk to you as always. Thank you so much for spending time with us this afternoon. Appreciate it.

Thanks for having me.