Possible private equity deal has Dayforce stock up more than 25%

Dayforce Inc., a human resources software firm that succeeded in one of the largest Minnesota public offerings, could be going private again.

A Bloomberg News report, citing sources close to the negotiations, says the private equity firm Thoma Bravo is in discussions to buy the Bloomington-based company.

News of the discussions sent the stock of Dayforce soaring Monday, with its largest one-day gain since the company went public. Shares closed at $66.62 a share, up 26%. Even with the bump, though, they are still down 8% year-to-date.

Dayforce, then known as Ceridian HCM, launched an initial public offering in April 2018 that raised over $630 million and was the largest IPO by a Minnesota-based company at that time. In 2021, Bright Health, now NeueHealth, eclipsed that with a $924 million IPO.

Dayforce grew out of the pioneering computer company Control Data Corp.

The company, which also has executive offices in Toronto, increased annual revenue by more than $1 billion since 2018 as companies have modernized human resource software systems. Earnings have been more inconsistent, with the company losing money in three of the last five years.

Last year, Dayforce earned $18.1 million, or 11 cents a share, down 67% from the prior year. Revenue grew 16% to $1.8 billion.

Dayforce competes with companies like Automatic Data Processing, Workday, Oracle and SAP as well as Paycom Software and Paylocity Holding, whose annual revenue are similar to Dayforce but have higher market capitalizations.

Jared Levine, an analyst with TD Cowen who covers Dayforce, wrote in a research note Monday he thought a purchase price of $69 a share would be reasonable given Dayforce’s improving financials and comparable valuations of Paycom Software and Paylocity.

“We believe it would be logical for Dayforce to go private here,” wrote Levine.

Thoma Bravo is a Chicago-based private equity firm that specializes in investments in middle-market software and technology firms. It has more than 75 companies in its portfolio and about $184 billion in assets under management as of March 31.