Joe Korngiebel: Thank you very much, Steve. Yes, on our product and innovation front, we recently shared some key announcements around our industry-leading Dayforce HCM Suite at our annual customer conference INSIGHTS. These announcements focused on four areas of planned innovation, greater intelligence, stronger compliance, better experiences and a more open and connected Dayforce platform. We have been delivering on these themes and announce the following. First, Dayforce Co-Pilot. Yes, a Generative AI assistant that transforms work by automating repetitive tasks and dramatically enhancing Dayforce by helping employees get work done faster and also enabling them to drive better decisions into their business with real-time data informed INSIGHTS.
You see through our partnership with Microsoft and their connection to open AI, we’re able to deliver this to our customers in early access today. That’s right. We’re delivering on the promise of AI with our customers and what it can do to drive efficiency and productivity today, and we will release more-and-more capabilities over the coming year. Next, we announced Dayforce Autonomous Payroll. This is in a major enhancement to our already industry-leading global payroll product. It removes the need for a lot of manual identification of data airs and anomalies that payroll administrators suffer with. It offers these administrators the ability to run payroll completely instantaneously. You see it leverages our continuous calculation engine.
This allows autonomous payroll to run simulations on payroll constantly during the pay cycle. This gives advanced notice to those payroll administrators on potential issues that may arise and really leverages that power of data anomaly connection and AI to cut through the complexities that face their business. This is enabling our customers to be efficient and more productive in entirely new ways. We’re excited to introduce this to our customers with availability in the first half of 2024. Finally, I want to talk about Dayforce Exchange. This is a key area of innovation across our entire ecosystem. It ties together our customers, our users, our partners together with all of our Dayforce experts. You see this exchange is a one-stop shop for organizations to access a rich library of content solutions and integrations.
This leverages our entire ecosystem to help make Dayforce better for our customers. We will again be delivering this in the first half of 2024. All of this momentum, including our placement as a leader in the Gartner Magic Quadrant that David just spoke about reflects our ability to go where customers need us in this time of efficiency and productivity. It allows to Dayforce to be the engine behind their change. It also highlights our ability to be nimble and agile in the face of what’s going on with technology and workforce changes. Our announcements of Dayforce Co-Pilot and the ability to interact with our customers and innovate together, highlights this, agility and nimbleness. Dayforce is continually becoming a trusted partner for our customer that can help in this world of change.
And for us, staying focused on delivering quantifiable value for our customers by providing simplicity for their people operations at scale is what is differentiating us and driving us in the market. With that, let me hand over to Noemie to close this out.
Noemie Heuland: Thank you, Joe. I’m happy to report that all key Q3 metrics exceeded guidance and we are raising Dayforce recurring revenue ex float, total revenue, float revenue and adjusted EBITDA to reflect the full beat and an incremental rate. When we issued our fiscal year ‘25 financial targets, we said our margin profile would expand as a byproduct of the revenue mix shift towards recurring, especially cloud recurring and the scale of cloud gross margin through delivery of efficiencies and product automation. I am happy to report we continue to deliver on that promise with the share of cloud recurring on our total revenue being 80% in Q3 up from 73% last year. In addition to adjusted cloud recurring gross margin expansion of 350 basis points over the same period.
The scale of our cloud business coupled with disciplined and spend across the organization drove significant profitability expansion in the third quarter as evidenced by the adjusted EBITDA beat. Year-to-date operating cash flows of $130 million are up 43% year-on-year. And this increase in cash flow is primarily driven by continued scale in the business. While there was exacerbated seasonality impacting Q3 cash flow, we continue to expect approximately 50% conversion of adjusted EBITDA into operating cash flow in fiscal year ‘23. Turning to Q4 and fiscal year ‘23 guidance. We’re adjusting our Canadian dollar outlook in Q4, resulting in a $1 million to $2 million incremental headwind across Dayforce recurring and total revenue. Of note, after accounting for this incremental FX headwind, we’re still raising our fiscal year outlook for Dayforce recurring revenue ex float above our third quarter beat.
In the fourth quarter, Dayforce recurring revenue ex float is expected to grow in the range of 29%, 30% at constant currency, reflecting another strong quarter of go-lives, durable customer base and typical seasonality of employee volumes at the end of the year. Float revenue guidance of $39 million reflects a relatively stable yield and average balances as compared to Q3 incrementally impacted for a weaker Canadian dollar. Total revenue in Q4 is expected to grow 18% to 19% at constant currency, reflecting strengths in Dayforce recurring revenue. As we continue to build our partner and SI ecosystem, we expect our professional services revenue to moderate accordingly. The knock-on effect is a greater share of recurring revenue, helping drive margin expansion as we’ve seen throughout the year.
