S&P Global Ratings expects Ceridian HCM Holding Inc.'s increasing revenue exposure (about 72% in fiscal 2018) to cloud-based subscription offerings should support the company's topline growth, which will offset the declines from Ceridian's legacy product offering (bureau). We estimate the company's adjusted EBITDA and EBITDA margins to improve over the next 12 months driven by topline growth from the Dayforce cloud product, which enjoys high customer retention rate (above 95%) and an increasing proportion of a profitable customer base. As a result, we expect the company's growing cloud recurring revenue base to provide stable free cash flow in a highly competitive and fragmented human capital management (HCM) market. The company's exclusive focus on HCM limits its competitive position compared with
