TLDR
- Dayforce (DAY) stock surged 25.98% on Monday following reports of advanced acquisition talks with private equity firm Thoma Bravo
- Company beat Q2 earnings expectations with 61 cents EPS versus 53 cents expected, plus revenue of $464.7M exceeding forecasts
- Dayforce raised fiscal 2025 revenue guidance to $1.935B-$1.955B, above market predictions of $1.94B
- Analysts updated price targets with TD Cowen raising target to $67 and Barclays adjusting to $61
- No deal price disclosed yet, with talks potentially concluding in coming weeks though acquisition could still fall through
Dayforce stock rocketed higher Monday morning, climbing 25.98% after Bloomberg reported that private equity giant Thoma Bravo was in advanced talks to acquire the human resources software company.
The stock opened at $65.11, representing a dramatic reversal for shares that had been down 27% year-to-date heading into the session. Dayforce had a market value of $8.4 billion as of Friday’s close.
Bloomberg’s report indicated that an announcement could come within weeks, though the negotiations could still collapse or another buyer might emerge. The report did not specify a potential purchase price for the deal.
The acquisition speculation comes on the heels of strong second-quarter results that exceeded Wall Street expectations across key metrics. Dayforce reported adjusted earnings per share of 61 cents, beating consensus estimates of 53 cents.
Revenue for the quarter reached $464.7 million, surpassing analyst predictions. The company’s recurring revenue showed particular strength, supporting management’s optimistic outlook for the remainder of the year.
Strong Financial Performance Drives Interest
Dayforce raised its fiscal 2025 revenue guidance to a range of $1.935 billion to $1.955 billion, above the previous market consensus of $1.94 billion. The company also projected a healthy EBITDA margin of 32% for the full year.
Third-quarter revenue projections align closely with analyst expectations. Management forecasts recurring revenue between $476 million and $486 million for the upcoming quarter.
The company’s gross margins stand at 47.6%, while free cash flow continues to trend upward. These metrics have caught the attention of Wall Street analysts who have been adjusting their price targets following the earnings report.
Analyst Updates Reflect Confidence
Barclays recently moved its price target from $60 to $61 while maintaining an Equal Weight rating. The modest increase reflects steady confidence in the company’s execution capabilities.
TD Cowen took a more bullish approach, raising its target to $67. The higher target reflects optimism about Dayforce’s growth trajectory and market position in the competitive HR software space.
The analyst updates came before news of the potential Thoma Bravo acquisition broke, suggesting that the fundamental business performance was already generating positive sentiment.
Private equity firms have shown increased appetite for software companies with predictable recurring revenue streams. Dayforce fits this profile with its cloud-based HR and payroll solutions serving enterprise clients.
Dayforce isn’t the only company attracting private equity interest Monday. Soho House also announced it was going private in a deal led by MCR Hotels, with backing from Apollo Global Management and actor Ashton Kutcher. That deal values Soho House at $2.7 billion with shares priced at $9 each.
The potential acquisition talks remain fluid, with no guarantee that a deal will be completed. However, the combination of strong financial results and buyout speculation has created a perfect storm for Dayforce shares.
The stock’s price-to-earnings ratio had suggested some investors viewed shares as potentially overvalued before Monday’s surge. The acquisition interest validates the market’s assessment of the company’s earnings potential.
Thoma Bravo has a track record of acquiring software companies and taking them private to focus on operational improvements and growth initiatives. The firm’s interest in Dayforce signals confidence in the HR software market’s long-term prospects.
Trading volume surged alongside the price increase, with investors rushing to position themselves ahead of any formal acquisition announcement. The 26% gain represents one of the largest single-day moves for Dayforce stock in recent memory.
