Dayforce surges as private equity firm ponders acquisition

[Payroll business finance management, Automatic salary payment system concept, Businesswomen use technology for payment salary, Financial, Accounting. A person holding payroll of the company]
Luis Alvarez/DigitalVision via Getty Images

Dayforce (NYSE:DAY [https://seekingalpha.com/symbol/DAY]) shares surged 25% during early trading Monday as the private equity firm Thoma Bravo [https://seekingalpha.com/news/4486348-thoma-bravo-in-talks-to-buy-hr-software-firm-dayforce-bloomberg] is reportedly in talks to acquire the human resources management software company.

If it holds, the single-day surge could basically eliminate the 27% decline the Minneapolis-based company has experienced year to date.

"Though details around price have not been disclosed, this comes as the fund completed a ~$34.4bn raise in June (primarily for its newest XVI buyout fund)," said Wells Fargo analysts, led by Michael Turrin, in an investor note. "As a reminder, Thoma Bravo owns other back office assets, most notably including companies like Anaplan (~$10bn, 2022) & Coupa (~$8bn, 2023)."

Wells Fargo believes the acquisition could be good for Dayforce as standalone human capital management, or HCM, platforms face challenges due to the rise of generative artificial intelligence.

"Partly driven by the rise in Al driven seat-based concerns across software, HCM cos. inc. Workday (NASDAQ:WDAY [https://seekingalpha.com/symbol/WDAY]) and DAY have traded off - 10%/-26% YTD respectively (vs. NASDAQ +12%)," Turrin added. "We see DAY specifically facing inc. competitive intensity as up-mkt vendors, inc. SAP (NYSE:SAP [https://seekingalpha.com/symbol/SAP]) + WDAY, move down-mkt & down-mkt vendors set sights on mid-mkt opps. As such, we expect increasing competitive intensity to remain the status quo for DAY's core HCM software market for foreseeable future."

Jefferies concurred.

"In short, we would not be surprised if DAY chose to sell given the lack of appreciation for the stock in the public markets," said Jefferies analyst Samad Samana. "It has been tough sledding for DAY the last few years post-COVID highs, not unlike the rest of the HR/payroll coverage universe."

However, Deutsche Bank said the potential acquisition highlights the durability of payroll software companies such as Dayforce.

"We believe the news highlights the strategic value of Dayforce's platform, especially its leading product portfolio," said Deutsche Bank analysts, led by Bhavin Shah, in an investor note. "Additionally, we see this also underscoring (1) the opportunity within Payroll/HCM could be more durable than some of the more bearish views given the slowdown in growth rates across the group; and (2) the value and durability of software assets at a time where skepticism remains on the impact of Generative Al to overall employment trends and software business models."

MORE ON DAYFORCE

* Dayforce Inc. (DAY) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4809518-dayforce-inc-day-q2-2025-earnings-call-transcript]
* Dayforce: Don't Force Yourself Into It If There Are Better Choices [https://seekingalpha.com/article/4796854-dayforce-dont-force-yourself-into-it-if-there-are-better-choices]
* Biggest stock movers Monday: NVO, DAY, and more [https://seekingalpha.com/news/4486376-biggest-stock-movers-monday-nvo-day-and-more]
* Thoma Bravo in talks to buy HR software firm Dayforce - Bloomberg [https://seekingalpha.com/news/4486348-thoma-bravo-in-talks-to-buy-hr-software-firm-dayforce-bloomberg]
* Seeking Alpha’s Quant Rating on Dayforce [https://seekingalpha.com/symbol/DAY/ratings/quant-ratings]