This Fintech Stock Is Overshadowed by Competitors
The fintech industry has become increasingly crowded and notably hard in which to compete and cut through the noise. In this clip from "The Rank" on Motley Fool Live, recorded on Feb. 7, Motley Fool contributors Matt Frankel and Jason Hall discuss Ceridian's (NYSE: CDAY) financials and analyze whether it's worth investing in given the fiercely competitive fintech industry.
Matt Frankel: No. 8 is a stock called Ceridian. They are a fintech company, ticker symbol is C-D-A-Y. They produce payroll software for larger enterprises. They don't make public their customer list, but they have over 5,000 of them. A lot of big enterprises don't want their names just thrown around. They offer next-generation payroll software that solves a few problems that are typical of payroll systems. For example, there's always a big problem and I can tell you this from being in management before working for The Fool, that there's a big cut off when it comes to when your pay period ends and what data you can access before and after that, is a better way to describe it. The system generally locks the data in until the pay period is over. It limits your ability to fix errors, audit data, make sure you're paying people right, make sure there's no glitches in payroll, until the cycle is complete. Ceridian provides a more seamless approach to it so employers can access all of the data they can audit at-will. They can control the process a lot more. It's caught on really well. In the third quarter, their margins improved, their revenue grew, 33% growth in recurring revenue. The recurring revenue, the gross margin is almost 73%, which is a pretty strong margin. Just to give you an idea of the size of enterprises they deal with, their average recurring revenue per customer is over $107,000. This is not [Intuit Inc. (NASDAQ: INTU)] QuickBooks. This is actually big enterprise scale payroll systems. They are profitable. They have a little over 15% adjusted EBITDA margin. Their numbers are trending in the right direction. But if we're looking at software-as-a-service businesses, 33% recurring revenue growth, there are better opportunities than that for the money in my book. The customer count grew 11% year-over-year. A lot of my favorite software-as-a-service companies are growing a little bit faster. That's why I ranked it toward the bottom of the pack. Guys, any thoughts on Ceridian before we move on?
Source Fool.com
