Ceridian HCM Holding Inc. (CDAY) Q1 2022 Earnings Conference Call May 4, 2022 5:00 PM ET Company Participants David Ossip – Chairman & Co-Chief Executive Officer Leagh Turner – Co-Chief Executive Officer Noemie Heuland – Chief Financial Officer Conference Call Participants Siti Panigrahi – Mizuho Jared Levine – Cowen Matthew Pfau – William Blair Kevin D. McVeigh – Credit Suisse Mark Marcon – Baird Robert Simmons – D. A. Davidson Pinjalim Bora – JP Morgan Daniel Jester – BMO Capital Market Josh Reilly – Need ...

[CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements](index=3&type=section&id=3.1.%20Forward-Looking%20Statements) This section outlines the nature of forward-looking statements within the Form 10-Q, emphasizing that they are based on current expectations and assumptions, and are subject to inherent uncertainties, risks, and changes that could cause actual results to differ materially - Forward-looking statements relate to future conditions and are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, potentially causing actual results to differ materially[9](index=9&type=chunk) - Key risk factors include inability to manage growth, failure to provide new features, competitive pressures, inability to offer high-quality support, system breaches, non-compliance with laws, failure to update solutions, aging infrastructure, inability to maintain third-party relationships, inability to attract/retain employees, impact of debt obligations, and the duration/scope of the COVID-19 pandemic[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents Ceridian HCM Holding Inc.'s unaudited condensed consolidated financial statements for the three months ended March 31, 2022, including the balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, business combinations, fair value measurements, customer funds, goodwill, intangible assets, debt, employee benefit plans, share-based compensation, revenue disaggregation, accumulated other comprehensive loss, income taxes, leases, and net loss per share Condensed Consolidated Balance Sheets (March 31, 2022 vs. December 31, 2021) | (Dollars in millions) | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | **ASSETS** | | | | Cash and equivalents | $354.8 | $367.5 | | Customer funds | 7,364.2 | 3,535.8 | | Total assets | $11,059.5 | $7,166.2 | | **LIABILITIES AND EQUITY** | | | | Customer funds obligations | 7,418.5 | 3,519.9 | | Total liabilities | 8,918.7 | 4,938.7 | | Total stockholders' equity | 2,140.8 | 2,227.5 | | Total liabilities and equity | $11,059.5 | $7,166.2 | Condensed Consolidated Statements of Operations (Three Months Ended March 31, 2022 vs. 2021) | (Dollars in millions, except share and per share data) | 2022 | 2021 | | :----------------------------------------------------- | :--- | :--- | | Total revenue | $293.3 | $234.5 | | Total cost of revenue | 190.2 | 141.3 | | Gross profit | 103.1 | 93.2 | | Selling, general, and administrative | 122.0 | 95.6 | | Operating loss | (18.9) | (2.4) | | Loss before income taxes | (24.4) | (12.6) | | Net loss | $(27.4) | $(19.2) | | Net loss per share: Basic | $(0.18) | $(0.13) | | Net loss per share: Diluted | $(0.18) | $(0.13) | Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, 2022 vs. 2021) | (Dollars in millions) | 2022 | 2021 | | :----------------------------------------------------- | :--- | :--- | | Net cash provided by (used in) operating activities | $5.5 | $(4.5) | | Net cash used in investing activities | (184.7) | (404.7) | | Net cash provided by financing activities | 3,883.7 | 1,040.0 | | Net increase in cash, restricted cash, and equivalents | 3,706.2 | 634.2 | | Cash, restricted cash, and equivalents at end of period | $5,659.1 | $2,862.7 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [1. Organization](index=9&type=section&id=1.%20Organization) - Ceridian HCM Holding Inc. offers a broad range of human capital management (HCM) services and software, including payroll, tax filing, HR information systems, and time and labor management, primarily through long-term customer relationships that generate high recurring revenue[30](index=30&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information, reflecting all necessary adjustments[31](index=31&type=chunk)[32](index=32&type=chunk) - The company adopted ASU 2020-06 on January 1, 2022, using the modified retrospective method, which eliminated the debt discount for convertible debt and resulted in a **$92.9 million** increase to long-term debt, a **$77.7 million** decrease to additional paid-in capital, and a **$10.0 million** decrease to accumulated deficit[35](index=35&type=chunk) [3. Business Combinations](index=10&type=section&id=3.%20Business%20Combinations) - On December 3, 2021, Ceridian acquired ADAM HCM, a payroll and HCM company in Latin America, for **$34.5 million**[36](index=36&type=chunk) ADAM HCM Preliminary Purchase Price Allocation | (Dollars in millions) | Amount | | :-------------------- | :----- | | Goodwill | $24.0 | | Other intangible assets | 10.8 | | Total purchase price | $34.5 | [4. Fair Value Measurements](index=11&type=section&id=4.%20Fair%20Value%20Measurements) Financial Assets and Liabilities Measured at Fair Value (March 31, 2022) | (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :---- | | Available for sale customer funds assets | $— | $2,062.0 | $— | $2,062.0 | | DataFuzion contingent consideration | $— | $— | $6.8 | $6.8 | - The company recognized an expense of **$0.8 million** in Q1 2022 due to the remeasurement of the DataFuzion contingent consideration, which is classified as Level 3 due to unobservable inputs[40](index=40&type=chunk) [5. Customer Funds](index=12&type=section&id=5.%20Customer%20Funds) - Ceridian collects and temporarily holds customer funds for payroll and taxes, investing these funds to generate 'float revenue,' which are held in segregated accounts and are not available for general business use[43](index=43&type=chunk)[161](index=161&type=chunk) Investment Income from Invested Customer Funds (Float Revenue) | Period | Amount (Millions USD) | | :-------------------------- | :-------------------- | | Three Months Ended Mar 31, 2022 | $11.4 | | Three Months Ended Mar 31, 2021 | $10.7 | Invested Customer Funds (Amortized Cost and Fair Value) | (Dollars in millions) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Amortized Cost | $7,406.3 | $3,501.5 | | Fair Value | $7,350.2 | $3,514.8 | - Gross unrealized losses on available-for-sale customer funds investments totaled **$60.4 million** as of March 31, 2022, primarily due to changes in interest rates rather than credit deterioration[47](index=47&type=chunk) [6. Goodwill and Intangible Assets](index=14&type=section&id=6.%20Goodwill%20and%20Intangible%20Assets) Goodwill Balance | (Dollars in millions) | Amount | | :-------------------- | :----- | | Balance at December 31, 2021 | $2,323.6 | | Acquisition (a) | 0.5 | | Translation | 12.7 | | Balance at March 31, 2022 | $2,336.8 | (a) Relates to the ADAM HCM acquisition, with purchase accounting not yet finalized Other Intangible Assets, Net (March 31, 2022) | (Dollars in millions) | Net Amount | | :-------------------- | :--------- | | Customer lists and relationships | $87.7 | | Trade name | 179.3 | | Technology | 63.1 | | Total other intangible assets | $330.1 | Amortization Expense for Definite-Lived Intangible Assets | Period | Amount (Millions USD) | | :-------------------------- | :-------------------- | | Three Months Ended Mar 31, 2022 | $7.8 | | Three Months Ended Mar 31, 2021 | $2.2 | [7. Debt](index=15&type=section&id=7.%20Debt) Debt Obligations (March 31, 2022 vs. December 31, 2021) | (Dollars in millions) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Term Debt | $656.2 | $657.9 | | Convertible Senior Notes | 575.0 | 575.0 | | Total debt | $1,240.5 | $1,242.5 | - In March 2021, Ceridian issued **$575.0 million** in 0.25% Convertible Senior Notes due 2026, and following the adoption of ASU 2020-06 on January 1, 2022, the notes are accounted for as a single liability with a carrying amount of **$563.3 million** as of March 31, 2022[58](index=58&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) Interest Expense Related to Convertible Senior Notes | (Dollars in millions) | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | | Contractual interest expense | $0.3 | $0.1 | | Amortization of debt discount | — | 0.7 | | Amortization of debt issuance costs | 0.7 | 0.1 | | Total | $1.0 | $0.9 | - The fair value of the company's debt was estimated at **$1,149.0 million** as of March 31, 2022, and **$1,248.9 million** as of December 31, 2021, classified as a Level 2 measurement[68](index=68&type=chunk) [8. Employee Benefit Plans](index=17&type=section&id=8.%20Employee%20Benefit%20Plans) Net Periodic Pension Cost | (Dollars in millions) | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | | Interest cost | $2.2 | $1.7 | | Actuarial loss amortization | 3.4 | 4.3 | | Less: Expected return on plan assets | (3.9) | (3.3) | | Net periodic pension cost | $1.7 | $2.7 | Net Periodic Postretirement Benefit Gain | (Dollars in millions) | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | | Net periodic postretirement benefit gain | $(0.5) | $(0.5) | [9. Share-Based Compensation](index=17&type=section&id=9.%20Share-Based%20Compensation) Total Share-Based Compensation Expense | Period | Amount (Millions USD) | | :-------------------------- | :-------------------- | | Three Months Ended Mar 31, 2022 | $35.5 | | Three Months Ended Mar 31, 2021 | $22.8 | - As of March 31, 2022, there was **$9.2 million** of unrecognized share-based compensation expense for unvested performance-based stock options, expected to be recognized over 0.9 years[77](index=77&type=chunk) - As of March 31, 2022, there was **$56.7 million** of unrecognized share-based compensation expense for unvested term-based stock options, expected to be recognized over 1.2 years[79](index=79&type=chunk) - As of March 31, 2022, there was **$157.2 million** of unrecognized share-based compensation expense for unvested Restricted Stock Units (RSUs), expected to be recognized over 1.9 years[81](index=81&type=chunk) - As of March 31, 2022, there was **$78.5 million** of unrecognized share-based compensation expense for unvested Performance Stock Units (PSUs)[87](index=87&type=chunk) Global Employee Stock Purchase Plan (GESPP) Activity | Period Ended | Shares Issued | Purchase Price (per share) | | :------------- | :------------ | :------------------------- | | March 31, 2022 | 56,208 | $58.11 | [10. Revenue](index=21&type=section&id=10.%20Revenue) Disaggregation of Revenue (Three Months Ended March 31, 2022 vs. 2021) | (Dollars in millions) | 2022 | 2021 | | :-------------------- | :--- | :--- | | Dayforce Recurring | $188.6 | $145.3 | | Powerpay Recurring | 21.6 | 20.3 | | Total Cloud Revenue | $252.0 | $202.7 | | Bureau Recurring | $37.7 | $30.4 | | Total Revenue | $293.3 | $234.5 | - Recurring revenue included float revenue of **$11.4 million** for Q1 2022, up from **$10.7 million** for Q1 2021[91](index=91&type=chunk) - As of March 31, 2022, approximately **$1,130.6 million** of revenue is expected to be recognized over the next three years from remaining performance obligations, representing contracted recurring and fixed-price professional services[95](index=95&type=chunk) [11. Accumulated Other Comprehensive Loss](index=22&type=section&id=11.%20Accumulated%20Other%20Comprehensive%20Loss) Components of Accumulated Other Comprehensive Loss (March 31, 2022) | (Dollars in millions) | Amount | | :-------------------------------- | :----- | | Foreign Currency Translation Adjustment | $(161.7) | | Unrealized Gain (Loss) from Invested Customer Funds | (48.2) | | Pension Liability Adjustment | (148.0) | | Total Accumulated Other Comprehensive Loss | $(357.9) | - Other comprehensive loss before income taxes and reclassifications was **$(53.6) million** for Q1 2022, primarily driven by a **$(69.4) million** change in unrealized loss from invested customer funds[96](index=96&type=chunk) [12. Income Taxes](index=22&type=section&id=12.%20Income%20Taxes) Income Tax Expense | Period | Amount (Millions USD) | | :-------------------------- | :-------------------- | | Three Months Ended Mar 31, 2022 | $3.0 | | Three Months Ended Mar 31, 2021 | $6.6 | - The income tax expense for Q1 2022 included **$4.3 million** attributable to GILTI and **$4.4 million** attributable to share-based compensation, partially offset by a **$4.7 million** tax benefit from current operations[98](index=98&type=chunk) - As of March 31, 2022, the company had a valuation allowance of **$46.2 million** against certain deferred tax assets[97](index=97&type=chunk) [13. Leases](index=23&type=section&id=13.%20Leases) Total Lease Assets and Liabilities (March 31, 2022 vs. December 31, 2021) | (Dollars in millions) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Total lease assets | $40.5 | $41.3 | | Total lease liabilities | $51.6 | $53.6 | Total Lease Cost, Net | (Dollars in millions) | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | | Total lease cost, net | $2.8 | $1.0 | [14. Commitments and Contingencies](index=23&type=section&id=14.%20Commitments%20and%20Contingencies) - Ceridian is subject to various legal claims and proceedings in the ordinary course of business, including employment, contract, intellectual property disputes, and government audits[103](index=103&type=chunk) - Management believes that the final disposition of these proceedings will not have a material adverse effect on the company's financial position or results of operations, considering the merits of the claims and available resources[106](index=106&type=chunk) [15. Net Loss per Share](index=24&type=section&id=15.%20Net%20Loss%20per%20Share) Net Loss Per Share (Basic and Diluted) | (Dollars in millions, except share and per share data) | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :----------------------------------------------------- | :------------------------------ | :------------------------------ | | Net loss per share - basic | $(0.18) | $(0.13) | | Net loss per share - diluted | $(0.18) | $(0.13) | - Potentially dilutive weighted-average shares, including stock options, restricted stock units, and performance stock units, were excluded from diluted net loss per share calculation because their effect would have been anti-dilutive[108](index=108&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of Ceridian's financial condition and results of operations for the three months ended March 31, 2022, compared to the prior year, highlighting significant revenue growth driven by Cloud solutions, particularly Dayforce, alongside increased operating expenses leading to a higher net loss, and covering the company's business model, the impact of global events, recent acquisitions and financing activities, key performance indicators, liquidity, and capital resources Key Financial Highlights (Three Months Ended March 31, 2022 vs. 2021) | Metric | 2022 (Millions USD) | 2021 (Millions USD) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Total Revenue | $293.3 | $234.5 | 25.1% | | Cloud Revenue | $252.0 | $202.7 | 24.3% | | Net Loss | $(27.4) | $(19.2) | (42.7)% | | Adjusted EBITDA | $57.4 | $44.5 | 29.0% | | Adjusted EBITDA Margin | 19.6% | 19.0% | 0.6 pp | | Net cash provided by (used in) operating activities | $5.5 | $(4.5) | N/A | - Total revenue increased by **25.1%** to **$293.3 million**, primarily driven by a **24.3%** increase in Cloud revenue, which includes Dayforce and Powerpay solutions[135](index=135&type=chunk) - Net loss increased to **$27.4 million**, primarily due to higher share-based compensation, increased investments in product development and selling capabilities, and costs associated with the integration of APJ acquisitions[151](index=151&type=chunk) [2.1. Overview](index=25&type=section&id=2.1.%20Overview) - Ceridian is a global human capital management (HCM) software company, offering Cloud solutions (Dayforce, Powerpay) and supporting legacy Bureau solutions[111](index=111&type=chunk) - Dayforce is the flagship cloud HCM platform, providing HR, payroll, benefits, workforce management, and talent management functionality with a single employee record and real-time calculations[112](index=112&type=chunk) - Dayforce Wallet, a digital wallet for employees, provides instant access to earned wages, with over **1,100** customers signed, more than **510** live, and an average registration rate of **34%** as of March 31, 2022[113](index=113&type=chunk)[114](index=114&type=chunk) - The company had **5,609** live Dayforce customers as of March 31, 2022, adding **175** net new customers in Q1 2022[116](index=116&type=chunk) [2.2. Our Business Model](index=26&type=section&id=2.2.%20Our%20Business%20Model) - Ceridian's business model focuses on rapid growth of Dayforce and maximizing customer lifetime value through a subscription model with high customer retention[117](index=117&type=chunk) - The company estimates it takes approximately **two years** to recover implementation, customer acquisition, and other direct costs for a new Dayforce customer contract[117](index=117&type=chunk) - Additional revenue opportunities come from customer growth, expanding Dayforce solutions to more employees, and selling additional functionality to existing customers[118](index=118&type=chunk) [2.3. Global Events](index=26&type=section&id=2.3.%20Global%20Events) - The COVID-19 pandemic led to curtailed customer demand, lower professional services utilization, and negative impacts on float revenue due to interest rate cuts, though customer employment levels returned to pre-pandemic levels by the end of 2021[119](index=119&type=chunk) - The Russia-Ukraine conflict is being monitored for broader economic impacts and increased cybersecurity risks; as of the reporting date, the specific impact on Ceridian's financial condition is not material[120](index=120&type=chunk) [2.4. Recent Events](index=26&type=section&id=2.4.%20Recent%20Events) - In 2021, Ceridian completed several acquisitions: Ascender HCM (**$359.6 million**) in Asia Pacific Japan, Ideal (**$41.4 million**) for talent intelligence, DataFuzion HCM (**$12.5 million**) for data solutions, and ADAM HCM (**$34.5 million**) in Latin America[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - In March 2021, the company issued **$575.0 million** in 0.25% Convertible Senior Notes due 2026, with net proceeds of **$561.8 million** used to repay debt and for general corporate purposes[124](index=124&type=chunk)[158](index=158&type=chunk) [2.5. How We Assess Our Performance](index=27&type=section&id=2.5.%20How%20We%20Assess%20Our%20Performance) - Live Dayforce customers increased to **5,609** as of March 31, 2022, up from **5,039** in the prior year, serving as an indicator of future revenue and implementation service performance[126](index=126&type=chunk) - Dayforce recurring revenue per customer for the trailing twelve months ended March 31, 2022, was **$110,947**, an increase from **$101,230** in the comparable prior period, indicating growth in average customer size[126](index=126&type=chunk) - The company uses non-GAAP measures such as Constant Currency Revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin to evaluate underlying business performance and management effectiveness, excluding foreign currency fluctuations and non-operating decisions[128](index=128&type=chunk)[129](index=129&type=chunk) [2.6. Results of Operations](index=29&type=section&id=2.6.%20Results%20of%20Operations) Revenue Performance (Three Months Ended March 31, 2022 vs. 2021) | Revenue Category | 2022 (Millions USD) | 2021 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Total revenue | $293.3 | $234.5 | $58.8 | 25.1% | | Cloud recurring | $210.2 | $165.6 | $44.6 | 26.9% | | Dayforce recurring, excluding float | $180.3 | $137.6 | $42.7 | 31.0% | | Bureau recurring | $37.7 | $30.4 | $7.3 | 24.0% | | Float revenue | $11.4 | $10.7 | $0.7 | 6.5% | - On a constant currency basis and excluding float revenue, total revenue grew **26.0%**, with Cloud revenue growing **24.9%** and Bureau revenue growing **32.6%**[137](index=137&type=chunk) - The average float balance for customer funds increased **17.5%** to **$5,088.9 million** in Q1 2022, while the average yield declined by **11 basis points** to **0.91%**[139](index=139&type=chunk) Cost of Revenue and Gross Profit Performance (Three Months Ended March 31, 2022 vs. 2021) | Metric | 2022 (Millions USD) | 2021 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Total cost of revenue | $190.2 | $141.3 | $48.9 | 34.6% | | Product development and management | $40.4 | $25.8 | $14.6 | 56.6% | | Gross profit | $103.1 | $93.2 | $9.9 | 10.6% | | Total gross margin | 35.2% | 39.7% | (4.5) pp | (11.3)% | | Cloud recurring gross margin | 69.3% | 72.2% | (2.9) pp | (4.0)% | - Selling, general, and administrative expense increased by **$26.4 million**, driven by employee-related costs, recent acquisitions, and investment in the sales force[147](index=147&type=chunk) Net Loss and Adjusted EBITDA (Three Months Ended March 31, 2022 vs. 2021) | Metric | 2022 (Millions USD) | 2021 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Net loss | $(27.4) | $(19.2) | $(8.2) | (42.7)% | | Adjusted EBITDA | $57.4 | $44.5 | $12.9 | 29.0% | | Adjusted EBITDA margin | 19.6% | 19.0% | 0.6 pp | 3.2% | [2.7. Liquidity and Capital Resources](index=33&type=section&id=2.7.%20Liquidity%20and%20Capital%20Resources) - Primary liquidity sources include existing cash and equivalents (**$354.8 million** as of March 31, 2022), cash from operating activities, availability under the Revolving Credit Facility, and proceeds from debt/equity issuances[154](index=154&type=chunk) - Customer funds are held in segregated accounts and invested with primary objectives of principal protection and adequate liquidity, with approximately **45%-55%** in liquidity portfolios and **45%-55%** in fixed income portfolios[161](index=161&type=chunk) Cash Flow Summary (Three Months Ended March 31, 2022 vs. 2021) | (Dollars in millions) | 2022 | 2021 | | :----------------------------------------------------- | :--- | :--- | | Net cash provided by (used in) operating activities | $5.5 | $(4.5) | | Net cash used in investing activities | (184.7) | (404.7) | | Net cash provided by financing activities | 3,883.7 | 1,040.0 | | Net increase in cash, restricted cash, and equivalents | 3,706.2 | 634.2 | - Net cash provided by financing activities significantly increased to **$3,883.7 million** in Q1 2022, primarily due to a **$3,879.8 million** increase in net customer fund obligations[168](index=168&type=chunk) - Remaining performance obligations (backlog) totaled approximately **$1,130.6 million** as of March 31, 2022, representing contracted revenue for recurring and fixed-price professional services expected over the next three years[170](index=170&type=chunk) [2.8. Critical Accounting Policies and Estimates](index=35&type=section&id=2.8.%20Critical%20Accounting%20Policies%20and%20Estimates) - There were no significant changes to the company's critical accounting policies and estimates during the three months ended March 31, 2022[172](index=172&type=chunk) [2.9. Non-GAAP Measures](index=35&type=section&id=2.9.%20Non-GAAP%20Measures) - EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin are non-GAAP financial measures used by management and investors to evaluate overall operating performance, excluding items like foreign exchange gains/losses, share-based compensation, severance, restructuring fees, and other non-recurring items[173](index=173&type=chunk)[174](index=174&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (Three Months Ended March 31, 2022 vs. 2021) | Metric | 2022 (Millions USD) | 2021 (Millions USD) | | :-------------------------------- | :------------------ | :------------------ | | Net loss | $(27.4) | $(19.2) | | Interest expense, net | 5.8 | 5.6 | | Income tax expense | 3.0 | 6.6 | | Depreciation and amortization | 20.9 | 15.0 | | **EBITDA** | **2.3** | **8.0** | | Foreign exchange (gain) loss | (0.8) | 1.9 | | Share-based compensation | 35.5 | 23.0 | | Severance charges | 17.3 | 2.1 | | Restructuring consulting fees | 1.9 | 7.8 | | Other non-recurring items | 1.2 | 1.7 | | **Adjusted EBITDA** | **57.4** | **44.5** | | Adjusted EBITDA margin | 19.6% | 19.0% | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details Ceridian's exposure to market risks, including foreign currency exchange rates, interest rates, and pension obligations, explaining how these risks are managed and quantifying potential impacts, such as the sensitivity of float revenue and interest expense to changes in interest rates - Ceridian is exposed to foreign currency risk, particularly with the Canadian Dollar, but historically, foreign currency inflows have provided a natural hedge against expenses, and no active hedging program is currently in place[191](index=191&type=chunk) - Interest rate risk affects float revenue from invested customer funds; a hypothetical **100 basis point** increase in market investment rates would result in approximately a **$24 million** increase in float revenue over the ensuing twelve-month period[193](index=193&type=chunk) - Interest rate risk also impacts debt; a **100 basis point** increase in LIBOR rates would result in approximately a **$6 million** increase in interest expense, net, over the ensuing twelve-month period, as the company pays floating rates on its Term Debt and Revolving Credit Facility[196](index=196&type=chunk) - Pension obligation risk is managed through a frozen defined benefit plan, with future costs dependent on actual returns on plan assets, actuarial assumptions, contributions, and benefit experience[197](index=197&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, under the supervision of the Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2022, concluding they were effective, with no material changes in internal control over financial reporting reported during the quarter - Management, with the participation of Co-Chief Executive Officers and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of **March 31, 2022**[200](index=200&type=chunk) - There were no changes in internal control over financial reporting during the three months ended March 31, 2022, that materially affected, or are reasonably likely to materially affect, these controls[201](index=201&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Ceridian is involved in various legal proceedings in the ordinary course of business, none of which are expected to have a material adverse effect, and a proposed class action lawsuit in Ontario, Canada, alleging misrepresentations related to a pre-IPO distribution, is in its early stages, with management believing the likelihood of a material loss is remote - The company is a party to legal proceedings arising in the ordinary course of business, but none are currently believed to have a material adverse effect on its business, financial condition, or liquidity[106](index=106&type=chunk)[203](index=203&type=chunk) - A proposed class action lawsuit was filed in Ontario, Canada, alleging misrepresentations in pre-IPO disclosures regarding the distribution of the company's interest in LifeWorks Corporation Ltd., with the Ontario court rejecting the plaintiff's Norwich Application for discovery[204](index=204&type=chunk) - At this early stage, the ultimate disposition of the class action is not determinable, but management believes the likelihood of a material loss arising from this claim is **remote**[205](index=205&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - There have been no material changes in the company's risk factors from those disclosed in Part I, Item 1A, of its Annual Report on Form 10-K for the fiscal year ended December 31, 2021[206](index=206&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities and use of proceeds to report[207](index=207&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities for the period - No defaults upon senior securities to report[208](index=208&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the registrant[209](index=209&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - No other information to report[210](index=210&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the Form 10-Q, including corporate organizational documents, employment agreements, equity incentive plans, and various certifications required by SEC regulations - Exhibits include the Fourth Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws, various employment agreements, the 2018 Equity Incentive Plan, the 2022 Management Incentive Plan, and certifications from executive officers[212](index=212&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) Ceridian HCM Holding Inc. (Exact name of Registrant as specified in its Charter) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware 46-3231686 (State or other jurisdiction of incorporation or organization) For the fiscal year ended December 31, 2021 (I.R.S. Employer Identification No.) OR 3311 East Old Shakopee Road Minneapolis, Minnesota 55425 (952) 853-8100 (Address, In ...

Ceridian HCM Holding Inc. (CDAY) Q4 2021 Results Conference Call February 9, 2022 5:00 PM ET Company Participants Erik Zimmer - Executive Vice President, Head of Mergers & Acquisitions David Ossip - Chairman & Co-Chief Executive Officer Leagh Turner - Co-Chief Executive Officer Noemie Heuland - Chief Financial Officer Conference Call Participants Mark Marcon - Baird Bryan Bergin - Cowen Siti Panigrahi - Mizuho Samad Samana - Jefferies Matt Pfau - William Blair Michael Turrin - Wells Fargo Arvind Ramnani - P ...

Q3 2021 Stockholder letter Intelligence at work David Ossip Chair and CEO, Ceridian From the CEO Dear Fellow Stockholders, I am pleased to report that our business continues to perform well, and in the third quarter, we made strong progress against our growth objectives and financial guidance for the year. We exceeded our guidance in the third quarter with Dayforce recurring revenue, excluding float revenue, growing by 33%. We remain focused on driving strong execution, investing in our growth, and generati ...

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) The unaudited financial statements detail the company's financial position, operations, and cash flows as of September 30, 2021 [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The financial statements show significant growth in assets and liabilities, primarily due to acquisitions and debt issuance Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$9,001.5** | **$6,701.3** | | Cash and equivalents | $378.8 | $188.2 | | Customer funds | $5,380.3 | $3,759.4 | | Goodwill | $2,318.1 | $2,031.8 | | **Total Liabilities** | **$6,779.7** | **$4,603.1** | | Customer funds obligations | $5,345.5 | $3,697.8 | | Long-term debt, less current portion | $1,121.8 | $660.6 | | **Total Stockholders' Equity** | **$2,221.8** | **$2,098.2** | Condensed Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $257.2 | $204.4 | $742.1 | $619.7 | | Gross profit | $93.1 | $76.7 | $278.4 | $255.8 | | Operating (loss) profit | $(16.0) | $(0.6) | $(38.1) | $29.7 | | Net (loss) income | $(20.9) | $(0.8) | $(65.9) | $13.3 | | Diluted EPS | $(0.14) | $(0.01) | $(0.44) | $0.09 | Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended, in millions) | Cash Flow Activity | Sep 30, 2021 | Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $48.9 | $47.3 | | Net cash (used in) provided by investing activities | $(510.5) | $176.3 | | Net cash provided by (used in) financing activities | $2,214.4 | $(244.1) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail key events including a major debt issuance, two acquisitions, revenue disaggregation, and share-based compensation - In March 2021, the company issued **$575.0 million** in 0.25% Convertible Senior Notes due 2026, with net proceeds of **$561.8 million** after costs[32](index=32&type=chunk)[64](index=64&type=chunk) - The company completed two key acquisitions in 2021: Ascender HCM Pty Ltd for **$359.6 million** on March 1, and O5 Systems, Inc (Ideal) for **$41.4 million** on April 30[39](index=39&type=chunk)[42](index=42&type=chunk) - As of September 30, 2021, the company had approximately **$1,026.4 million** in remaining performance obligations, representing contracted revenue expected to be recognized over the next three years[103](index=103&type=chunk) Disaggregation of Revenue (Nine Months Ended Sep 30, in millions) | Revenue Source | 2021 | 2020 | | :--- | :--- | :--- | | **Total Cloud Revenue** | **$631.7** | **$535.5** | | - Dayforce | $569.4 | $478.1 | | - Powerpay | $62.3 | $57.4 | | **Total Bureau Revenue** | **$110.4** | **$84.2** | | **Total Revenue** | **$742.1** | **$619.7** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses company performance, focusing on Dayforce platform growth, COVID-19 impacts, operational results, and liquidity [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Revenue grew 25.8% in Q3 2021, driven by Cloud services, though operating loss widened due to higher growth-related expenses - The COVID-19 pandemic's impact from lower employment levels at customers was estimated to be a **$3.5 million revenue reduction** in Q3 2021[144](index=144&type=chunk) - Float revenue decreased to **$9.9 million** in Q3 2021 from $10.6 million in Q3 2020, as the average yield declined by 36 basis points to 1.16%, despite a 25.0% increase in the average float balance[148](index=148&type=chunk) - Cloud recurring gross margin improved to **72.7%** in Q3 2021 from 70.4% in Q3 2020, driven by economies of scale as the proportion of Dayforce customers live for more than two years increased to 80% from 74%[155](index=155&type=chunk) Q3 2021 vs. Q3 2020 Performance (in millions) | Metric | Q3 2021 | Q3 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $257.2 | $204.4 | 25.8% | | Cloud Revenue | $219.6 | $176.7 | 24.3% | | Gross Profit | $93.1 | $76.7 | 21.4% | | Operating Loss | $(16.0) | $(0.6) | (2566.7)% | | Net Loss | $(20.9) | $(0.8) | (2512.5)% | | Adjusted EBITDA | $39.4 | $33.2 | 18.7% | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity was significantly bolstered by a $575.0 million convertible notes issuance, ensuring sufficient capital - As of September 30, 2021, the company had cash and equivalents of **$378.8 million** and total debt of **$1,244.5 million**[185](index=185&type=chunk) - In March 2021, the company raised **$561.8 million** in net proceeds from a convertible senior notes offering, using part of the funds to repay $295.0 million under its Revolving Credit Facility[186](index=186&type=chunk) - For the nine months ended September 30, 2021, net cash from operating activities (excluding customer funds) was **$48.9 million**, while net cash used in investing activities was **$438.1 million**, primarily for acquisitions ($392.4 million) and capital expenditures ($45.7 million)[195](index=195&type=chunk)[198](index=198&type=chunk) [Non-GAAP Measures](index=41&type=section&id=Non-GAAP%20Measures) This section reconciles GAAP net loss to the non-GAAP measure of Adjusted EBITDA, which was $39.4 million for Q3 2021 Reconciliation of Net (Loss) Income to Adjusted EBITDA (in millions) | Line Item | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net (loss) income** | **$(20.9)** | **$(0.8)** | **$(65.9)** | **$13.3** | | Interest expense, net | $10.0 | $5.9 | $25.5 | $19.4 | | Income tax benefit | $(8.5) | $(5.5) | $(13.9) | $(5.7) | | Depreciation and amortization | $21.0 | $13.0 | $59.3 | $36.9 | | Share-based compensation | $31.0 | $19.3 | $85.9 | $48.5 | | Other adjustments | $5.8 | $1.3 | $24.9 | $13.5 | | **Adjusted EBITDA** | **$39.4** | **$33.2** | **$123.8** | **$125.9** | | **Adjusted EBITDA Margin** | **15.3%** | **16.2%** | **16.7%** | **20.3%** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks include foreign currency exchange rates, interest rate fluctuations, and pension obligations - The company's primary market risks are related to foreign currency exchange rates (especially Canadian Dollar), interest rates, and pension obligations[219](index=219&type=chunk) - A **100 basis point increase** in market investment rates would increase annual float revenue by approximately **$22 million**[222](index=222&type=chunk) - A **100 basis point increase** in LIBOR rates would increase annual interest expense by approximately **$7 million**[225](index=225&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2021[228](index=228&type=chunk) - **No material changes** were made to the company's internal controls over financial reporting during the third quarter of 2021[229](index=229&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company faces a proposed class action lawsuit in Canada, but management believes the likelihood of a material loss is remote - A proposed class action lawsuit was filed against the company and certain officers and directors in Ontario, Canada, on October 21, 2021, concerning disclosures made in 2018[231](index=231&type=chunk) - Management believes that the likelihood of a material loss arising from this new legal claim is **remote**[232](index=232&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) New risk factors relate to the March 2021 issuance of Convertible Senior Notes, including accounting impacts and potential dilution - There are no material changes to risk factors from the 2020 Form 10-K, except for new risks related to the **Convertible Senior Notes** and Capped Calls issued in March 2021[233](index=233&type=chunk) - The accounting method for the Convertible Notes could **adversely affect reported financial results** by increasing non-cash interest expense, though a future accounting standard update (ASU 2020-06) is expected to mitigate this[234](index=234&type=chunk)[235](index=235&type=chunk) - The company is subject to **counterparty risk**, meaning the financial institutions for the Capped Call transactions could default on their obligations, potentially leading to greater stock dilution[244](index=244&type=chunk) [Other Items (Items 2, 3, 4, 5, 6)](index=49&type=section&id=Other%20Items) This section confirms no unregistered equity sales, defaults, or other material events occurred during the quarter - The company reported **no unregistered sales** of equity securities, defaults upon senior securities, or other material information for the period[250](index=250&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk) - Mine safety disclosures are **not applicable** to the company[252](index=252&type=chunk)

Ceridian HCM Holding, Inc. (CDAY) Q2 2021 Results Earnings Conference Call August 4, 2021 5:00 PM ET Company Participants Jeremy Johnson - VP, Finance & IR David Ossip - Chairman & CEO Noemie Heuland - EVP & CFO Erik Zimmer - EVP, Head of Mergers & Acquisitions Conference Call Participants Siti Panigrahi - Mizuho Jared Levine - Cowen Daniel Jester - Citi Mark Marcon - Baird Matt Coss - JPMorgan Michael Turrin - Wells Fargo Brad Clark - BMO Matthew Pfau - William Blair Samad Samana - Jefferies Alex Zukin - W ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly reporting period ended June 30, 2021 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 001-38467 Ceridian HCM Holding Inc. (Exact name of registrant as specified in its charter) Delaware 46-3231686 (State or Other Jurisdicti ...

Ceridian HCM Holding, Inc. (CDAY) Q1 2021 Earnings Conference Call May 5, 2021 5:00 PM ET Company Participants Jeremy Johnson - VP, Finance & IR David Ossip - Chairman & CEO Noemie Heuland - EVP & CFO Conference Call Participants Jared Levine - Cowen and Company Sitikantha Panigrahi - Mizuho Securities Daniel Jester - Citigroup Mark Marcon - Robert W. Baird & Co. Matthew Coss - JPMorgan Chase & Co. Samad Samana - Jefferies Christopher Merwin - Goldman Sachs Group Scott Berg - Needham & Company Alex Zukin - ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly reporting period ended March 31, 2021 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 001-38467 Ceridian HCM Holding Inc. (Exact name of registrant as specified in its charter) Delaware 46-3231686 (State or Other Jurisdict ...