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Q4 adjusted EBITDA increased 22% year-over-year. We achieved a 220 basis point improvement in our adjusted EBITDA margin to 21.7% of revenue. And income from continuing operations before income taxes was $12.7 million in the fourth quarter. For the full year 2018, Dayforce revenue grew 38% and Cloud revenue grew 32%, and total revenue grew 11% year-over-year. Gross margin on Cloud recurring services increased from 63% to 68% and gross margin on professional services and other improved from negative 88% to negative 41% year-over-year.

Total revenue increased by $76 million and we converted over 50% of that revenue growth of $39 million into adjusted EBITDA and adjusted EBITDA margin improved nearly 350 basis points to 21% for the full year 2018. We continued our investment in product development during 2018. Our cash investment in product development, including research and development expense and capitalized software development was $55 million, up 22% year-over-year to 7.4% of revenue. In 2018, we launched compensation management, learning management and succession planning. We also announced near term Dayforce platform features including advanced analytics, benefit decision support, engagement surveys, compensation data benchmarking and on-demand pay. We believe these product enhancements will broaden our HCM functionality and will enable us to sell additional functionality to new and existing customers.

In 2018, approximately 20% of our sales were add-on features to our existing customers. We expect the cadence of product announcements and launches in 2019 to be similar to that of 2018. Globally, we also launched native UK payroll in 2018 and already have customers live in the UK. In 2019, we are launching native Australian payroll and intend to expand our native payroll functionality into New Zealand and Ireland. In addition, we intend to expand the country's covered by Dayforce ConnectedPay solution. We also invested an additional $15 million in sales and marketing during 2018 compared to 2017. These investments contributed to strong sales throughout 2018 and in Q4 we saw strong demand from larger customers.

In our Financial Services vertical, we closed a financial service leader with more than 22,000 US employees. In the retail and hospitality verticals, we closed a 20,000 employee retail, a restaurant chain with more than 8,000 employees and a hotel chain with more than 11,000 employees. In the manufacturing vertical, we signed a major producer of electronic and fiber optic connectors and coax cable who has approximately 15,000 employees. And in the healthcare and human services segment, we signed a nursing and professional services healthcare company with approximately 9,000 professionals.

In summary, Q4 2018 was a record sales quarter and 2018 was a record sales year. We are very pleased with performance of our sales team and the continued strong demand we are seeing in the marketplace.

I would now like to briefly highlight some recent industry recognitions. In 2018, we received a record number of awards for our products, services and employee engagement. I'm especially pleased with engagement awards including Glassdoor Employees' Choice Awards for 2018 Best Places to Work in both the US and Canada. Best Places certification in both the US and Canada and our presence on list for Best Workplaces for Inclusion, for Millennials, for Women and for Technology. We believe that our culture leads to great customer experiences. We are an example of how using Dayforce at Ceridian has created a culture and innovation and performance.

I will now turn it over to Arthur to discuss our financial results and guidance with you in greater detail.

Arthur Gitajn -- Chief Financial Officer

Thank you, David, and good evening everyone. I'm going to take a few minutes to talk about our fourth quarter 2018 financial results, then I'm going to provide some highlights on our full year 2018 financial results, and finally I'll provide guidance for 2019. Starting with our fourth quarter 2018 financial results, Dayforce revenue increased by $31.3 million or 34% to $122.6 million. Cloud revenue which includes both Dayforce and Powerpay increased by $32 million or 28% to $148.3 million. And total revenue, which includes revenue from both our Cloud and Bureau solutions increased by $17.9 million or 10% to $200.3 million.

On a constant currency basis, Dayforce revenue grew by 36%, Cloud revenue grew by 30% and total revenue grew 11%. Cloud revenue growth in the fourth quarter was driven by a 26% increase in Cloud recurring services revenue and a 34% increase in Cloud professional services and other revenue. Of the $32 million increase in total Cloud revenue, $5.1 million or 16% was attributable to Bureau customers migrating to Dayforce. Excluding the impact of migrations to Dayforce, revenue from Bureau solutions declined by $9 million or 13.6%, which was in line with our expectations. Cloud revenue accounted for 74% of our total revenue in the fourth quarter of 2018, compared to 64% in the fourth quarter of 2017.

Q4 revenue from Powerpay our cloud HR and payroll solution for the Canadian small business market increased 3% to $25.7 million. On a constant currency basis, excluding the impact of the year-over-year decline in the Canadian dollar, Powerpay revenue increased by 7%. The average float balance for our customer trust funds during the fourth quarter was approximately $3.08 billion compared to $2.99 billion in the fourth quarter last year. The average yield on our float balance was 2.26% during the fourth quarter of 2018, an increase of 62 basis points compared to the average yield in the fourth quarter of 2017. As a result, income from invested customer trust funds was $17.4 million in the fourth quarter compared to $12.3 million in the fourth quarter last year.

The balanced sheet value of customer trust funds, as of December 31, 2018 was $2.6 billion compared to $4.1 billion as of December 31, 2017. The decline in the end of year balance sheet value of customer trust funds reflects the fact that the last business day of 2017 was a Friday while the last business day of 2018 was a Monday and Friday balances are higher than Monday balances.

We also continued to expand our gross margins and operating margins during the fourth quarter. While Cloud recurring services revenue grew $24.8 million or 26%, our cost of Cloud recurring services to support this growth increased by only $3.9 million or 11% and our gross margin on Cloud recurring services increased from 64% in the fourth quarter last year to 68%, reflecting an increase in the proportion of Dayforce customers live for more than two years from 59% in the fourth quarter last year to 63%. And also our ability to continue to realize economies of scale and customer support and hosting costs.

While professional services and other revenue grew $6.5 million or 29%, professional services and other costs increased by only $0.5 million for less than 2% and our negative gross margin on professional services and other improved from negative 49% in the fourth quarter last year to negative 17%, reflecting an increase in profitable post go-live professional services and productivity improvements in implementing new customers. As we discussed on our second and third quarter earnings calls, we stepped up our investments in research and development and in sales and marketing in the second half last year and our fourth quarter results reflect these initiatives.

Product development and management expenses increased by $3.9 million or 33% to $15.7 million. Sales and marketing expenses increased $4.6 million or 13% to $39.6 million and sales and marketing expenses as a percent of revenue increased from 19.2% to 19.8%. G&A expenses increased $3.8 million to $30.8 million, primarily due to costs associated with the secondary offering in November increased share based compensation and increased costs associated with being a public company. We realized an operating profit of $21.5 million in the fourth quarter, compared to operating profit of $16.1 million in the fourth quarter last year, up 34% year-over-year. And income from continuing operations before income taxes was $12.7 million, an improvement of $18.4 million compared to a loss of $5.7 million in the fourth quarter last year. Adjusted EBITDA increased by $7.9 million or 22% to $43.5 million. And adjusted EBITDA margin improved by 220 basis points to 21.7%.

Turning now to our full year 2018 financial results. Dayforce revenue increased by $123.1 million or more than 38% to $443 million, Cloud revenue which includes both Dayforce and Powerpay increased by $130 million or 32% to $534.3 million and total revenue, which includes revenue from both our Cloud and Bureau solutions increased by $75.6 million or 11% to $746.4 million. Foreign currency rates had an immaterial impact on our full-year revenue growth as the Canadian dollar was relatively flat year-over-year on an annual basis.

During our last call, we provided guidance for full year 2018 and I'm pleased to report that our actual results for total revenue exceeded the high end of the range by $3.4 million and primarily due to the revenue over achievement, our actual results for adjusted EBITDA exceeded the high end of the range by $4.1 million. Cloud annualized recurring revenue, which includes the full year impact of customers who went live during 2018 was $506.2 million at the end of 2018, up $115.2 million or 29.5% from 2017.

Annual Cloud revenue retention was 96.3% compared to 97% in 2017 and 95.7% in 2016. And Bureau revenue retention was 86.9% compared to 89.7% in 2017 and 87.4% in 2016. We continued to expand margins during 2018, our gross margin on Cloud recurring services increased from 63% in 2017 to 68% and our gross margin on professional services and other improved from negative 88% in 2017 to negative 41% in 2018. Adjusted EBITDA increased by $39.3 million or 33% to $157.1 million and adjusted EBITDA margin expanded nearly 350 basis points to 21% in 2018.

Moving to the balance sheet, as of December 31, 2018, we had cash and cash equivalents of $217.8 million, an increase of $123.6 million compared to December 31, 2017. And our total debt was $670.3 million as of December 31, 2018, a reduction of $449.5 million compared to December 31, 2017. A $123.6 million increase in cash and the $449.5 million reduction in debt were primarily attributable to proceeds from our successful IPO and refinancing of our term debt. Negative free cash flow in the first half of the year of $52.9 million, which was primarily attributable to IPO-related items and higher first half interest expense, was partially offset by positive free cash flow of $9.4 million in the third quarter and positive free cash flow of $14 million in the fourth quarter. Our capital expenditures in 2018 were $43.4 million compared to $50.6 million in 2017, included in the $43.4 million in capital expenditures were $32.2 million for software and technology and $11.2 million for property and equipment.

Turning now to our outlook for the first quarter and full year 2019, I want to highlight three critical assumptions underlying our guidance. First, our guidance reflects the adoption of ASC 606 effective January 1 this year. As we've noted on previous calls, the adoption of ASC 606 has the effected increasing professional services and other revenue and reducing recurring services revenue and certain selling expenses such as commissions and bonuses paid to the sales force will be amortized over a five-year period.

To facilitate comparisons with prior years, we provided pro forma results for each quarter in 2017 and 2018, as if the new standard had been in effect. Second, our guidance reflects the Canadian dollar to US dollar exchange rate of $1.30. Third, our guidance also assumes no changes in the US Fed funds rate or the Bank of Canada rates during 2019, so any Fed funds of Bank of Canada increases during the year will be upside to our guidance. For reference, based on current investment practices, an increase in market investment rates of 100 basis points would increase float revenue by approximately $17 million over the 12 months following a rate increase.

Now with respect to guidance for the full year fiscal 2019, we expect Cloud revenue to be in the range of $655 million to $660 million, total revenue to be in the range of $810 million to $815 million, and adjusted EBITDA to be in the range of $182 million to $187 million. For those of you modeling EPS, we're looking at net interest expense of approximately $40 million for the year or approximately $10 million per quarter, income tax expense of approximately $30 million for the year and diluted weighted average shares outstanding of approximately $148 million for the year.

For the first quarter of 2019, we expect Cloud revenue to be in the range of $154 million to $156 million, total revenue to be in the range of $203 million to $205 million and adjusted EBITDA to be in the range of $46 million to $48 million. Q1 2019 adjusted EBITDA margin is expected to be between 22.7% and 23.4% of revenue compared to 24.6% in Q1 of 2018 as restated under ASC 606. On a full year basis, we expect to continue to expand our adjusted EBITDA margin by 80 basis points to 130 basis points. However, our current guidance for Q1 adjusted EBITDA margin is slightly lower compared to the first quarter last year before our IPO, which did not reflect certain public company expenses and investments in R&D and sales and marketing.

At this time, I'm going to ask the operator to open up the lines for questions. Thank you.

Questions and Answers:

Operator

(Operator Instructions) Your first question comes from the line of Mark Murphy from JPMorgan. Your line is open.

Mark Murphy -- JPMorgan -- Analyst

Yes. Thank you very much and congrats on a nice finish to the year. So, David, I believe you mentioned Q4 booking strength with larger -- the larger customer segment. I'm curious to what extent do you attribute that to growing interest in continuous payroll versus any other factors that might have been driving it and are most of those new logos heavy on the hourly employees?

David Ossip -- Chairman and Chief Executive Officer

Thanks, Mark, nice speaking with you. The first point I would make is that our messaging around the continuous calculation, which as you know, leads to better compliance calculations as well as more efficient payroll benefits and other HCM processes efficiencies resonate even better with the larger accounts than it does with the mid-market accounts. Because in that particular size of company, anytime you have an exception, there are thousands of the same exception. In terms of the wins that I spoke about in the press release, we did a Financial Services organization with more than 20,000 employees. That I believe has a very high mix of salaried employees. So that is not a focus on hourly. We also announced a large healthcare organization, again there is a nice mix over there between salaried, they do have some hourly. And then I did speak about the multiple wins that we had in retail and hospitality, a 20,000 plus retailer. By the way, that retailer would probably have 3,000, 4,000 salaried employees. We spoke about a fast food chain and we also spoke about a large hotel chain. And obviously there would be a higher mix of hourly with that. And we also spoke about a large manufacturer, which obviously would be hourly. But in summary, you've got quite a nice mix between some large customers with salary and some customers that have a blend.

Mark Murphy -- JPMorgan -- Analyst

Okay, just as a quick follow-up, do you plan to make more incremental investments this year on the talent management side or do you think it's more critical to focus on that core payroll engine and launching native payroll in additional countries? In terms of just where you see better strategic value, better ability to monetize.

David Ossip -- Chairman and Chief Executive Officer

So, Mark, if you look at the product announcements that we've made in the latter half of 2018, you'll see it is actually quite a good blend between the focus on additional talent functionality. So for example if I go into 2019, we'll be launching engagement surveys, which is obviously talent. Even when we look at some of the compliance modules like benefits, we now talking about benefit decision support. When we -- at the end of last year, we released succession planning, which is also on the talent side. So, I believe really is if I focusing on the user experience as opposed to the module, you typically land up with quite a differentiated product and obviously, we're leveraging that continuous calculations, quite honestly applies even between the talent modules like compensation and payroll. It applies very well when you look at recruiting, bringing in some of the compliance pieces into there as well, which we believe gives us a nice advantage.

Mark Murphy -- JPMorgan -- Analyst

Thank you very much.

Operator

(Operator Instructions) Your next question comes from the line of Alex Zukin from Piper Jaffray. Your line is open.

Alex Zukin -- Piper Jaffray -- Analyst

Hi guys, thanks for taking my question. One maybe for David and a quick follow-up for Arthur. So, David, now that Leagh has been in the seat for about six months. How should we think about her biggest priorities for '19? And could you give us an update around maybe what kind of success you're seeing and attracting enterprise -- incremental enterprise sales talent held up or I guess ramping, and where do you expect it to be a year from now?

David Ossip -- Chairman and Chief Executive Officer

Right. So, Leagh has been with us for about five months now and we're delighted with the impact that she has had on the organization, just in the latter half of the year. As I pointed out, Q4 was a record sales quarter for us and we saw substantial wins in what we would term strategic markets. Also inside Leagh's domain, the professional services and other, as well as all of the other aspects of go-to-market. A lot of the priorities that Leagh and her group have been focusing on are if you're like leveling up our go-to-market strategies, particularly in the upper end of the market by taking much more of a verticalized approach to the industry is that we have seen a lot of success in.

Alex Zukin -- Piper Jaffray -- Analyst

Perfect. And then maybe just a quick follow for Arthur. Looking at the Cloud ARR number, I think, you grew 30% year-over-year in 2018, a slight deceleration from 35% the year before. I know you're not explicitly guiding to ARR, but how should we think about the sustainability of this growth cadence into next year particularly given the leveling up of the sales organization? And are there any other elements like FX or things that we should think about, when we look at that for next year?

Arthur Gitajn -- Chief Financial Officer

Well, I would guide you to look at the absolute dollar increases. The absolute dollar increase in 2017 was $101 million, the absolute dollar increase in 2018 was $115 million. I think you can kind of trend it that way. In a number of areas now we've been growing so fast, the denominator has gotten so big, it's hard to move the needle. But if you look at the actual dollar increases not only are we continuing to increase, but the increases are getting larger.

Alex Zukin -- Piper Jaffray -- Analyst

Perfect. Thank you guys.

Operator

Your next question comes from the line of Michael Turrin from Deutsche Bank. Your line is open.

Michael Turrin -- Deutsche Bank -- Analyst

Good afternoon. Thanks. Look, Dayforce live customers are big increase. I'm just wondering is there anything one-time or unique there? And are you geared now to handle a bigger throughput of customers as might be needed?

Arthur Gitajn -- Chief Financial Officer

So, Mike, let me take that. There are a few things that I would like to kind of emphasize here. The first is that we saw tremendous efficiencies in our implementation teams last year. In fact, the headcount that we had an implementation I believe was down year-over-year, even though we saw a tremendous increase in the number of accounts that we took live. In comparison, Q4 '17 we took live 146 customers, Q4 of '18 that increased to 253 customers that were taken live. The other area that I'd probably point you to is that we've seen an increase in the average revenue per client between 2017 and 2018. In 2017, the average revenue was $107,000 per customer and that increased to $119,000 per customer in 2018.

And if we actually look at it from an incremental revenue add per client, you'll see that the number in 2017 was about $153,000 per customer and that increased in 2018 to $172,000 per customer. So the incremental revenue added for new client went up by about 13% between those two years. And so we're very pleased with the increase that we're seeing in the ability to onboard and activate the customers as well as the increased revenue that we're actually getting per client. What drove that is that normally you know we don't believe that is an anomaly. We had guided, we had spoken about that we had expected Q4 to be a record quarter for us in terms of activations.

David Ossip -- Chairman and Chief Executive Officer

I'd also like to actually add one other. We are this year in 2019 increasing the number of professional services resources, unlike in 2018 where we actually decreased the headcount and the expenses. We do expect our headcount to go up slightly in professional services and other in 2019 to handle the activation of professional services group demand requirements.

Michael Turrin -- Deutsche Bank -- Analyst

Thanks, David, that's great color there. And one quick follow-on, I'm sure we're all wondering, does the recent go private acquisition of one of your direct competitors in any way changed the way you're thinking about your 2019 plans and priorities? Thanks.

David Ossip -- Chairman and Chief Executive Officer

The short answer is no. We don't believe it will have a short-term impact into the marketplace.

Michael Turrin -- Deutsche Bank -- Analyst

That's great. Thanks guys.

Operator

Your next question comes from the line of Raimo Lenschow from Barclays. Your line is open.

Raimo Lenschow -- Barclays -- Analyst

Hi. Thanks for taking my question and congrats from me as well. David, can you talk -- you gave -- the customer examples you talked about on the size of the customers seems to get bigger. Can you talk a little bit about that you're thinking about like your evolution in terms of kind of which customers you're dealing with? And is that kind of -- is that you're just getting pulled up or is that kind of part of a plan? Can you talk to that please? Thank you.

David Ossip -- Chairman and Chief Executive Officer

So, Raimo. The increase in revenue per client is largely driven by increased module density and services. As we look toward 2019, we believe it will also be driven by increased size as we move much more into the strategic market. Moving to the strategic market is twofold. First, we have been opportunistic where we have been brought into the larger accounts based on the success if you like of the continuous calculation messaging and the single database. The second part, with Leagh joining the organization, we are taking a much more disciplined approach in how we target strategic accounts in terms of taking more of a value-added sales approach to specific verticals where we can tailor the message and the benefits of the technology.

Raimo Lenschow -- Barclays -- Analyst

Okay, perfect. Thank you. Good luck.

Operator

Your next question comes from the line of Mark Marcon from R.W. Baird. Your line is open.

Mark Marcon -- Robert W. Baird -- Analyst

Good afternoon, David and Arthur. And let me add my congratulations. I'm wondering if you can talk a little bit about who you're winning some of these larger clients from? Are you seeing the change with regards to the RFP pipeline in terms of who the incumbents are, the features obviously the continuous calc and the module robustness is impressive. But just wondering what are the -- some of the key drivers both in terms of what causes you to get invited in, who you're seeing and what's -- and the key driver for winning?

David Ossip -- Chairman and Chief Executive Officer

Thanks, Mark, nice to speak with you as well. The first point I'll make is that we've seen an increase in our net promoter scores year-over-year and that increase has been most pronounced in the strategic account sector, which means that our referenceability and customer satisfaction in the large market has obviously influenced where we are brought into deals. The second piece is, as you know, we have been investing in partnerships and developing relationships with advisory firms and SI firms. Just as an FYI, we have our partnership conference scheduled for early April this year and we expect to see quite good attendance over there. Those partnerships have led to obviously higher pipeline and then obviously influencing the actual deals as well.

Mark Marcon -- Robert W. Baird -- Analyst

And can you talk about who you're going up against and if there is anything changed?

David Ossip -- Chairman and Chief Executive Officer

The competitive nature hasn't changed at all. We obviously do replacements of some of the other payroll companies. We also see replacements of the ERPs, it hasn't -- we also still see quite a bit of replacement already, old legacy technologies. So I haven't seen any market changes in that regard.

Mark Marcon -- Robert W. Baird -- Analyst

Great. Thank you.

Operator

Your next question comes from the line of Brad Zelnick from Credit Suisse. Your line is open.

Brad Zelnick -- Credit Suisse -- Analyst

(Technical Difficulty) in the first half and throughout the remainder of the year?

David Ossip -- Chairman and Chief Executive Officer

I'm sorry, Brad, I didn't catch most of the question, could you repeat it?

Brad Zelnick -- Credit Suisse -- Analyst

I'm sorry. Can you hear me now?

Arthur Gitajn -- Chief Financial Officer

Yes, we can. Thank you.

Brad Zelnick -- Credit Suisse -- Analyst

Excellent. Yes. So especially coming off of a record number of wins in Q4, based on the current pipeline that you have, how should we think about the cadence of go lives into the first half and throughout the year in 2019?

David Ossip -- Chairman and Chief Executive Officer

Brad, I don't think we give guidance into the actual count. And as you know, there is quite a lot of fluctuation between quarters in terms of the number of accounts we take live. We are scheduled to go live but based obviously on when the client has actually signed. But also based on the availability of the customer team. We do not have a backlog in terms of implementation, which means we can typically kick off the projects as quickly as the customers are able to. But as I said, Q4 was a record sales quarter. And I spoke previously -- in prior any calls that we had seen very strong demand throughout the entire of 2018. And our goal would be to obviously take those accounts live in 2019.

Brad Zelnick -- Credit Suisse -- Analyst

Thank you. That's helpful. And just a quick follow-up. Your Cloud retention rates are best-in-class. But if we look at year-on-year there is a slight downtick. Can you maybe speak to what explains for that, and specifically what Dayforce retention was?

David Ossip -- Chairman and Chief Executive Officer

Sure. So if I look at it actually in a longer term basis, 2018 was actually in line with 2016. It's exactly -- in fact, slightly higher than the midpoint of the range that we gave. We gave guidance to 95% to 97% which I think is a -- is actually a very good number for our industry. I can't speak to the exact specific as to why 2017 was so high. What I would point out though as well is that our net retention rate is above 100%.

Brad Zelnick -- Credit Suisse -- Analyst

Excellent. Thank you so much.

Operator

Your next question comes from the line of Justin Furby from William Blair. Your line is open.

Justin Furby -- William Blair -- Analyst

Hey guys, fabulous quarter. And David to start, can you give a sense for the growth trajectory -- how you're thinking about growth in '19 between the Powerpay business and Dayforce embedded in your guidance? And then just what you think in terms of the Bureau contribution in 2019 as a percentage of your growth? And I've got a quick follow-up for Arthur.

David Ossip -- Chairman and Chief Executive Officer

So, in terms of the balance, obviously, the majority of the Cloud growth is coming from Dayforce. If I look it directly in terms of the differences, if I look at Q4 on a GAAP basis, Dayforce revenue grew by 34.3%, on a constant currency basis Dayforce revenue grew by 35% in Q4 of '18. And if I look at it on a Powerpay basis on a GAAP basis, the growth rate of Powerpay was 2.8% and the constant currency growth rate was 7.4%. And as Dayforce is obviously the vast majority of the Cloud revenue, you would expect the majority of the growth of Cloud to come from the growth of Dayforce and that would obviously continue into 2019.

Justin Furby -- William Blair -- Analyst

Okay. And then the Bureau, David, in terms of the assumptions for '19 and what the percentage of mix coming from that is?

David Ossip -- Chairman and Chief Executive Officer

Sure. We expect obviously the mix of Bureau to continue to drop. Arthur, have we given guidance to what we expect the decline in Bureau to be in 2019?

Arthur Gitajn -- Chief Financial Officer

You can infer from -- we've given the total revenue in the Cloud guidance but the Bureau retention was 86.9% in 2018 versus 89.7% in 2017, 87.4% in 2016. So we continue to be in the high 80s and you can assume the same excluding migrations to Dayforce. Migrations to Dayforce accounted for approximately 18% of our increase in Cloud revenue in '18, you should expect something in the neighborhood of 13% to 17% going forward.

Justin Furby -- William Blair -- Analyst

Okay, that's helpful. And then, Arthur, just to be clear on the ARR, just the way you define it, it wouldn't include most of your Q4 bookings, is that right? I think it's just a live customer sort of run rate of ARR. And can you remind us, as you go through the year, what the seasonality of your new bookings looks like in terms of which quarters are the biggest? I think for Ulti, it was Q2 and Q4? What does it look like for you guys? Thanks.

David Ossip -- Chairman and Chief Executive Officer

It would be the same for us.

Justin Furby -- William Blair -- Analyst

Okay, perfect. Thanks, guys, nice quarter.

Operator

(Operator Instructions) Your next question comes from the line of Samad Samana from Jefferies. Your line is open.

Samad Samana -- Jefferies -- Analyst

Hi. Thanks for taking my questions. David, when we are at INSIGHTS, I think one of the things that customers that they are pretty excited about was the on-demand pay solution that you're rolling out in early 2019. I was curious if you guys determine a pricing model for that and how we should think about the potential monetization opportunity of that? And then I have a follow-up?

David Ossip -- Chairman and Chief Executive Officer

Sure. I appreciate the question. We haven't disclosed in the market the pricing, but we do have several customers that are now in the early stages of implementation with on-demand.

Samad Samana -- Jefferies -- Analyst

Great. And then have you disclosed what the pricing model is? Or maybe is it standard PEPM? Or is it based on wages? Maybe any color there would be helpful.

David Ossip -- Chairman and Chief Executive Officer

It's a per employee per month pricing model, but we haven't disclosed the dollar amounts in the market.

Samad Samana -- Jefferies -- Analyst

Great, that's helpful. And then in terms of a follow-up, I was wondering, if we look at the average number of employees live per live customer, that was -- they grew about the same or is consistent year-over-year? I'm curious, you've highlighted a lot of really nice sized deals. Should we expect the average number of employees, as you get these customers you called out this year live to increase or how do you think about growth in units live next year versus total users, as I think about our model?

David Ossip -- Chairman and Chief Executive Officer

So, if I look at it on a total users, we saw an increase of 600,000 users between 2018 and 2017. And we saw that obviously across an increase of 717 customers that were taken live in '18 as compared to 662 customers that were taken live in 2017, which was obviously an increase from 569, which were taken live in 2016. So you've seen an upward trend per year in the number of accounts that we've been activating. We haven't obviously given guidance as I mentioned earlier into the number of customers we'd expect to go live to next year. But you can see what the historical trend has been.

Samad Samana -- Jefferies -- Analyst

Great. Thanks for taking my question.

Operator

Your next question comes from the line of Chris Merwin from Goldman Sachs. Your line is open.

Chris Merwin -- Goldman Sachs -- Analyst

Okay. Thanks for taking my questions. So just a follow-up on a comment David, you made earlier about revenue per client. I think you called out module density as the main driver more so than the shift upmarket at least as it related to fiscal '18, but you continue to invest in R&D and roll out new products. Maybe can you just frame for us, how we should be thinking about the opportunity for PEPM over the long term? And then I've got a follow-up for Arthur. Thanks.

David Ossip -- Chairman and Chief Executive Officer

Chris, thank you for that. A bit more color. If I look at the number of employees per customer, it was largely constant between 2017 and 2018. You can do the math yourself 3.1 million active users in 2018 over a base of a 3,718 customers versus 3.5 million employees live at the end of '17 on a base of 3,001. And so if you do the numbers, it averages out to obviously 833, slightly different, obviously if you look at the median, which gives you actually a bit more accurate information. The increase that we saw in revenue for a client. And again, if you look at the increases, we went from $106,600 per customer in 2017 to $119,200 per customer in 2018. So a nice increase of about almost 12%.

So the increase over there was driven by the add-on and the increased PEPM that we're getting from the new clients. And you see that again, if you look at the incremental revenue per new Dayforce customer, which was $152,000 in 2017 that grew by about 13% to $172,000 in 2018. We've always spoken about the platform opportunity in the marketplace, which effectively is we get the customer for payroll benefits and time and core HR. We work on making sure that they're very happy. And then we go back to them and we sell them the additional features as we release them.

The cadence of building our products has been two to three new features per year. And as I said, we expect that cadence to continue into the future. And as such, I would expect the incremental revenue per client to go up regardless of our move up market. The second point is, with Leagh joining the organization and a more focused go-to-market plan for the strategic accounts, strategic for us by the way we'd now defined as above 6,000 employees. And that involves having a more of verticalization go-to-market strategy that extends all the way from sales to implementation to customer support. We would expect to see more success in that particular segment of the market. And so the average number of employees should go up.

Chris Merwin -- Goldman Sachs -- Analyst

All right, great, thank you for that. And then just for Arthur, it looks like professional services gross margins under 606 were negative 14% in '18. And under 605, I think you called out negative 41%. So just as we think through the 606 transition, anything you can share on the trajectory of professional services gross margins getting to breakeven, especially as we see the mix shift changeover of professional services related to customers that you already have live? Thanks.

Arthur Gitajn -- Chief Financial Officer

Sure. For the full year 2017, we see the professional services margin would gone from negative 87.8% to negative 32% under 606. For full year 2018, professional services margin would have increased from a negative 40.8% to negative 14.3% with improved. And in Q4 last year, we were at negative 17% before 606, after 606, we're at -- we're, I believe in the 10s, 10.6%. So I think that we're in -- we're probably in the minus 10% to breakeven range going forward.

Chris Merwin -- Goldman Sachs -- Analyst

Okay, perfect. Thank you.

Operator

Your next question comes from the line of Nandan Amladi from Guggenheim Partners. Your line is open.

Nandan Amladi -- Guggenheim Partners -- Analyst

Thank you. Good afternoon. Thanks for taking my question. So in the selling cycle, David, I know your customers tend to be a little bit larger 800 plus average. Are you seeing any changes in their behavior in the sense of decision making process, the number of steps you have to go through or any of that really as it relates to sort of the macro environment?

David Ossip -- Chairman and Chief Executive Officer

As you're seeing with us and others, obviously Q4 is a very healthy buying quarter. So I haven't seen any changes in the macro environment, and if I look at the pipeline into 2019, I don't see any either.

Nandan Amladi -- Guggenheim Partners -- Analyst

Okay. Thank you.

Operator

Your next question comes from the line of Walter Pritchard from Citi. Your line is open.

Walter Pritchard -- Citi -- Analyst

Hi, thanks. Two questions, one for David, one for Arthur. David, on the UK market rollout, is any update there in terms of timing contribution to -- you're thinking about for 2019? And then I had a follow-up.

David Ossip -- Chairman and Chief Executive Officer

Sure. Hi, Walter, nice to speak with you. So, we issued a press release a couple of days ago announcing a few go lives that we've had in the UK on our native payroll products that we are now beginning to see customers get activated on the major UK product. We will be having another summit in the UK, I believe it is in the May timeframe. And so we obviously are seeing pipeline development and market demand, so we're quite happy at the moment. We've also begun ramping up the sales organization in the UK. As it pertains to 2019, the impact would obviously be toward the end of the year and obviously into 2020.

Walter Pritchard -- Citi -- Analyst

Great. And then, Arthur, as it relates to the professional services allocation as we look at 2019, should we expect it to roughly look like you did in 2018 after the 606 accounting takes hold?

Arthur Gitajn -- Chief Financial Officer

Yes, I think -- again, I think Q4 is a fair indicator, yes.

Walter Pritchard -- Citi -- Analyst

Okay, great. And then actually last one, just on investments, it looks like you did ramp up your investments as it related to Q4. And I'm wondering if you think about your especially on the sales side, the kind of efficiency you're getting and so forth. How should we think about that through the course of 2019?

David Ossip -- Chairman and Chief Executive Officer

So, if we look at the actual numbers, you will see that sales and marketing expense in Q4 of '18 was $35.8 million, as compared to $31.8 million in Q4 of '17. So we increased the actual spend there quite a bit. The reason for that is obviously increased commissions, which drove a lot of it as well we have our customer conference which falls into October that is booked in Q4. Going forward, we will continue to invest in sales and marketing but the changes aren't going to be big step. So, continue to be very focused investments that have high returns.

Walter Pritchard -- Citi -- Analyst

Okay, great. Thank you very much.

Operator

I now turn the call back over to David Ossip for closing remarks.

David Ossip -- Chairman and Chief Executive Officer

Just thank you everyone for joining the call today. And I look forward to future conversations.

Operator

That concludes today's conference call. You may now disconnect.

Duration: 54 minutes

Call participants:

Jeremy Johnson -- Vice President, Finance and Investor Relations

David Ossip -- Chairman and Chief Executive Officer

Arthur Gitajn -- Chief Financial Officer

Mark Murphy -- JPMorgan -- Analyst

Alex Zukin -- Piper Jaffray -- Analyst

Michael Turrin -- Deutsche Bank -- Analyst

Raimo Lenschow -- Barclays -- Analyst

Mark Marcon -- Robert W. Baird -- Analyst

Brad Zelnick -- Credit Suisse -- Analyst

Justin Furby -- William Blair -- Analyst

Samad Samana -- Jefferies -- Analyst

Chris Merwin -- Goldman Sachs -- Analyst

Nandan Amladi -- Guggenheim Partners -- Analyst

Walter Pritchard -- Citi -- Analyst

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