Ceridian(DAY) - 2022 Q2 - Quarterly Report

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements subject to inherent risks and uncertainties that could cause actual results to differ materially - Forward-looking statements in this report are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, potentially causing actual results to differ materially[10] - Important factors that could cause actual results to differ include regional, national, or global political, economic, business, competitive, market, and regulatory conditions[10] - Specific risk factors include inability to manage growth, failure to provide new features, intense competition, inability to offer high-quality services, system breaches, non-compliance with laws, aging technical infrastructure, inability to maintain third-party relationships, challenges in attracting and retaining employees, impact of debt obligations, and the duration and scope of the COVID-19 pandemic[13] PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's analysis of its financial condition and results of operations Item 1. Condensed Consolidated Financial Statements (unaudited) This section presents the company's unaudited condensed consolidated financial statements and accompanying notes for the periods ended June 30, 2022 and December 31, 2021 Condensed Consolidated Balance Sheets The balance sheets show a significant increase in total assets and liabilities driven by customer funds, alongside a decrease in stockholders' equity Condensed Consolidated Balance Sheet Highlights (Dollars in millions) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $9,082.3 | $7,166.2 | | Customer Funds | $5,397.0 | $3,535.8 | | Total Liabilities | $6,988.0 | $4,938.7 | | Customer Funds Obligations | $5,487.8 | $3,519.9 | | Total Stockholders' Equity | $2,094.3 | $2,227.5 | - Total assets increased significantly, primarily driven by a substantial increase in customer funds and corresponding customer funds obligations[15] - Total stockholders' equity decreased from December 31, 2021, to June 30, 2022[15] Condensed Consolidated Statements of Operations The statements of operations reflect revenue growth for both three and six-month periods, with a reduced net loss in Q2 but an increased net loss year-to-date Three Months Ended June 30 (Dollars in millions) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $301.2 | $250.4 | 20.3% | | Gross Profit | $116.0 | $92.1 | 26.0% | | Operating Loss | $(6.5) | $(19.7) | 67.0% (reduced loss) | | Net Loss | $(19.8) | $(25.8) | 23.3% (reduced loss) | Six Months Ended June 30 (Dollars in millions) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $594.5 | $484.9 | 22.6% | | Gross Profit | $219.1 | $185.3 | 18.2% | | Operating Loss | $(25.4) | $(22.1) | -14.9% (increased loss) | | Net Loss | $(47.2) | $(45.0) | -4.9% (increased loss) | - Recurring revenue was the largest component of total revenue for both periods[18] Condensed Consolidated Statements of Comprehensive Income (Loss) The statements show a significant increase in comprehensive loss for 2022, driven by foreign currency adjustments and unrealized investment losses Comprehensive Income (Loss) (Dollars in millions) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(19.8) | $(25.8) | $(47.2) | $(45.0) | | Other comprehensive (loss) income before income taxes | $(82.0) | $11.4 | $(132.7) | $9.5 | | Comprehensive Loss | $(92.6) | $(14.0) | $(153.1) | $(31.7) | - The significant increase in comprehensive loss for 2022 was primarily driven by negative changes in foreign currency translation adjustments and increased unrealized losses from invested customer funds[21] Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased due to net loss and an increase in accumulated other comprehensive loss Stockholders' Equity Highlights (Dollars in millions) | Metric | December 31, 2021 | June 30, 2022 | | :--- | :--- | :--- | | Total Stockholders' Equity | $2,227.5 | $2,094.3 | | Accumulated Deficit | $(309.2) | $(346.4) | | Accumulated Other Comprehensive Loss | $(324.8) | $(430.7) | - Total stockholders' equity decreased from December 31, 2021, to June 30, 2022, influenced by net loss and an increase in accumulated other comprehensive loss[25] - The adoption of ASU 2020-06 on January 1, 2022, resulted in cumulative-effect adjustments, including a decrease of $77.7 million to additional paid-in capital and a decrease of $10.0 million to accumulated deficit[25] Condensed Consolidated Statements of Cash Flows The statements of cash flows detail a significant net increase in cash driven by financing activities, primarily from customer funds obligations Cash Flow Summary (Six Months Ended June 30, Dollars in millions) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $38.7 | $23.1 | | Net cash used in investing activities | $(252.3) | $(409.5) | | Net cash provided by (used in) financing activities | $1,992.5 | $(17.6) | | Net increase (decrease) in cash, restricted cash, and equivalents | $1,774.0 | $(397.3) | | Cash, restricted cash, and equivalents at end of period | $3,726.9 | $1,831.2 | - A significant net increase in cash, restricted cash, and equivalents in 2022 was primarily driven by a $1,983.4 million increase in customer funds obligations under financing activities[28][182] - Investing activities for the six months ended June 30, 2022, included $450.5 million in purchases of customer funds marketable securities and $42.2 million in capital expenditures[28][180] Notes to Condensed Consolidated Financial Statements (Unaudited) These notes provide detailed explanations of significant accounting policies and specific financial statement items Note 1. Organization This note describes the company's business, which focuses on providing human capital management services and software with a high level of recurring revenue - Ceridian HCM Holding Inc and its subsidiaries offer a broad range of human capital management (HCM) services and software, including payroll, tax filing, HR information systems, and talent management[31] - The company's technology-based services are typically provided through long-term customer relationships, resulting in a high level of recurring revenue[31] Note 2. Summary of Significant Accounting Policies This note outlines the basis of preparation for the financial statements and details key accounting policies, including deferred costs and recent standard adoptions - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information, reflecting all necessary normal recurring adjustments[32][33] - Deferred costs, primarily sales commissions, were $141.6 million as of June 30, 2022, and $144.5 million as of December 31, 2021[34] - The company adopted ASU 2020-06 as of January 1, 2022, simplifying the accounting for convertible instruments by eliminating the debt discount and related deferred tax liability for its Convertible Senior Notes[36] Note 3. Business Combinations This note details the acquisition of ADAM HCM, including the purchase price allocation and resulting goodwill and intangible assets - On December 3, 2021, Ceridian acquired ADAM HCM, a payroll and HCM company in Latin America, for $34.5 million[37] - The purchase accounting for ADAM HCM was finalized as of June 30, 2022, recording $7.5 million in customer relationships, $2.9 million in developed technology, and $0.4 million in trade name as intangible assets[38] - Goodwill associated with the ADAM HCM acquisition was $24.0 million, which is deductible for income tax purposes[38] Note 4. Fair Value Measurements This note presents the fair value measurements of financial assets and liabilities, including customer funds and contingent consideration Financial Assets and Liabilities Measured at Fair Value (Dollars in millions) | Category | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Available for sale customer funds assets (Level 2) | $2,042.3 | $1,952.4 | | DataFuzion contingent consideration (Level 3) | $8.0 | $6.0 | - An expense of $2.0 million was recognized for the remeasurement of the DataFuzion contingent consideration during the six months ended June 30, 2022[41] Note 5. Customer Funds This note explains the management of customer funds, the generation of float revenue, and the composition of the investment portfolio - Ceridian collects and temporarily holds customer funds for payroll and taxes in segregated accounts, investing them to generate float revenue[44] Investment Income from Customer Funds (Float Revenue, Dollars in millions) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | $14.7 | $10.4 | | Six Months Ended June 30 | $26.1 | $21.1 | Invested Customer Funds (Amortized Cost, Dollars in millions) | Date | Amortized Cost | | :--- | :--- | | June 30, 2022 | $5,478.5 | | December 31, 2021 | $3,501.5 | - Gross unrealized losses on available-for-sale customer funds were $93.4 million at June 30, 2022, primarily due to changes in interest rates rather than credit deterioration[46][49] Note 6. Goodwill and Intangible Assets This note provides a summary of the changes in goodwill and other intangible assets, along with related amortization expenses Goodwill (Dollars in millions) | Date | Balance | | :--- | :--- | | December 31, 2021 | $2,323.6 | | June 30, 2022 | $2,302.2 | Net Other Intangible Assets (Dollars in millions) | Date | Net Amount | | :--- | :--- | | December 31, 2021 | $332.5 | | June 30, 2022 | $312.5 | Amortization Expense for Definite-Lived Intangible Assets (Dollars in millions) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | $7.6 | $9.8 | | Six Months Ended June 30 | $15.4 | $12.0 | Note 7. Debt This note details the company's debt obligations, including term debt and convertible senior notes, and the impact of recent accounting standard adoption Debt Obligations (Dollars in millions) | Debt Type | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Term Debt | $654.5 | $657.9 | | Convertible Senior Notes | $575.0 | $575.0 | | Total Debt | $1,238.5 | $1,242.5 | - The adoption of ASU 2020-06 on January 1, 2022, led to the Convertible Senior Notes being accounted for as a single liability, eliminating non-cash interest expense related to debt discount amortization[64][65] Interest Expense Related to Convertible Senior Notes (Dollars in millions) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | $1.0 | $5.3 | | Six Months Ended June 30 | $2.0 | $6.2 | - Future principal payments include $637.5 million in 2025 and $575.0 million in 2026[68] Note 8. Employee Benefit Plans This note summarizes the net periodic costs associated with the company's pension and postretirement benefit plans Net Periodic Pension Cost (Dollars in millions) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | $1.6 | $2.7 | | Six Months Ended June 30 | $3.3 | $5.4 | Net Periodic Postretirement Benefit Gain (Dollars in millions) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | $(0.4) | $(0.5) | | Six Months Ended June 30 | $(0.9) | $(1.0) | Note 9. Share-Based Compensation This note discloses the expense, outstanding awards, and unrecognized costs related to the company's share-based compensation plans - Total share-based compensation expense increased to $38.8 million for the three months ended June 30, 2022, from $31.4 million in the prior year, and to $74.3 million for the six months ended June 30, 2022, from $54.2 million in the prior year[76] - As of June 30, 2022, there were 12,426,311 stock options, RSUs, and PSUs outstanding under the 2018 EIP, with 13,733,625 shares available for future grants[76] - Unrecognized share-based compensation expense as of June 30, 2022, includes $6.4 million for performance-based stock options, $31.0 million for PSUs, and $131.2 million for RSUs[77][83][85] Note 10. Revenue This note provides a disaggregation of revenue by type and details the company's remaining performance obligations or backlog Total Revenue Disaggregation (Dollars in millions) | Revenue Type | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Cloud Revenue | $262.9 | $209.4 | $514.9 | $412.1 | | Dayforce Recurring | $194.3 | $150.6 | $382.9 | $295.9 | | Powerpay Recurring | $22.3 | $20.5 | $43.9 | $40.8 | | Bureau Recurring | $34.5 | $37.0 | $72.2 | $67.4 | - Recurring revenue includes float revenue of $14.7 million for the three months ended June 30, 2022, and $26.1 million for the six months ended June 30, 2022[91] - As of June 30, 2022, approximately $1,084.7 million of revenue is expected to be recognized over the next three years from remaining performance obligations (backlog)[95] Note 11. Accumulated Other Comprehensive Loss This note details the components and changes in accumulated other comprehensive loss, including foreign currency and investment impacts Accumulated Other Comprehensive Loss (Dollars in millions) | Component | December 31, 2021 | June 30, 2022 | | :--- | :--- | :--- | | Foreign Currency Translation Adjustment | $(177.3) | $(209.1) | | Unrealized Gain (Loss) from Invested Customer Funds | $2.8 | $(75.7) | | Pension Liability Adjustment | $(150.3) | $(145.9) | | Total | $(324.8) | $(430.7) | - The accumulated other comprehensive loss increased significantly, primarily due to foreign currency translation adjustments and unrealized losses from invested customer funds[96] Note 12. Income Taxes This note outlines the income tax expense or benefit for the periods and discusses the status of deferred tax assets and valuation allowances Income Tax Expense (Benefit) (Dollars in millions) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | $0.8 | $(12.0) | | Six Months Ended June 30 | $3.8 | $(5.4) | - As of June 30, 2022, the company had a valuation allowance of $46.0 million against certain deferred tax assets[97] - There were no unrecognized tax benefits as of June 30, 2022, and December 31, 2021[100] Note 13. Leases This note provides information on the company's lease assets, liabilities, and associated costs Lease Information (Dollars in millions) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Lease Assets | $41.6 | $41.3 | | Total Lease Liabilities | $51.5 | $53.6 | Total Lease Cost, Net (Dollars in millions) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | $2.8 | $1.1 | | Six Months Ended June 30 | $5.6 | $2.1 | Note 14. Commitments and Contingencies This note discusses the company's exposure to legal proceedings and other contingencies arising in the ordinary course of business - The company is subject to various legal proceedings in the ordinary course of business, including employment, contract, intellectual property, and government audits[103] - 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[107] Note 15. Net Loss per Share This note presents the calculation of basic and diluted net loss per share and explains the treatment of potentially dilutive securities Net Loss per Share | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Basic Net Loss per Share | $(0.13) | $(0.31) | | Diluted Net Loss per Share | $(0.13) | $(0.31) | - Potentially dilutive weighted-average shares, including stock options, restricted stock units, performance stock units, and Convertible Senior Notes, were excluded from diluted net loss per share calculations because their effect would have been anti-dilutive[108] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, business model, liquidity, and key performance indicators for the reported periods Overview This section provides an overview of the company's business as a global HCM software provider, highlighting its flagship Dayforce platform and Dayforce Wallet - Ceridian is a global human capital management (HCM) software company offering Cloud (Dayforce, Powerpay) and Bureau solutions[111] - Dayforce, the flagship cloud HCM platform, provides comprehensive HR, payroll, benefits, workforce management, and talent management functionality through a single application with continuous real-time calculations[112] - Dayforce Wallet, a digital wallet for employees, offers instant access to earned wages; as of June 30, 2022, it had over 1,190 signed customers and 640 live customers, with an average registration rate of 41%[113] Our Business Model The business model is centered on growing the Dayforce platform through a subscription model that provides high revenue visibility - The business model focuses on rapid growth of Dayforce and maximizing the lifetime value of Dayforce customer relationships[115] - The subscription model, with ratable revenue recognition and high customer retention rates, provides high visibility into future revenues[115] - It takes approximately two years to recover implementation, customer acquisition, and other direct costs for a new Dayforce customer contract[115] Global Events This section discusses the impact of global events, such as the COVID-19 pandemic and the Russia-Ukraine conflict, on the company's business - The COVID-19 pandemic adversely impacted revenue in 2020 and 2021 due to curtailed customer demand and lower float revenue, though customer employment levels returned to pre-pandemic levels by the end of 2021[117] - The company is monitoring the Russia-Ukraine conflict for broader economic impact, but its specific impact on financial condition, results of operations, and cash flows was not material as of June 30, 2022[118] Recent Events This section highlights recent strategic activities, including several acquisitions in 2021 and the issuance of convertible senior notes - In 2021, Ceridian completed several acquisitions: Ascender HCM ($359.6 million), Ideal ($41.4 million), DataFuzion ($12.5 million), and ADAM HCM ($34.5 million)[119][120] - In March 2021, the company issued $575.0 million in 0.25% Convertible Senior Notes due 2026 and entered into related capped call transactions[121] How We Assess Our Performance Management assesses performance using key metrics like Dayforce customer count, recurring revenue per customer, and non-GAAP measures like Adjusted EBITDA - Key performance measures include the number of live Dayforce customers and Dayforce recurring revenue per customer, which indicate future revenue and business performance[123][124] - Constant currency revenue is used to assess underlying business performance by excluding foreign currency rate fluctuations[125] - EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin are non-GAAP financial measures used by management and investors to evaluate overall operating performance and assess management incentives[126] Results of Operations This section provides a detailed comparative analysis of the company's operational results for the three and six-month periods ended June 30, 2022 and 2021 Three Months Ended June 30, 2022 Compared With Three Months Ended June 30, 2021 The company experienced strong revenue growth and improved profitability in the second quarter of 2022 compared to the prior year Financial Performance (Three Months Ended June 30, Dollars in millions) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $301.2 | $250.4 | 20.3% | | Cloud Recurring Revenue | $216.6 | $171.1 | 26.6% | | Net Loss | $(19.8) | $(25.8) | 23.3% (reduced loss) | | Adjusted EBITDA | $61.8 | $39.9 | 54.9% | | Adjusted EBITDA Margin | 20.5% | 15.9% | 4.6 pp | | Total Gross Margin | 38.5% | 36.8% | 1.7 pp | - Total revenue increased primarily due to an 11% increase in live Dayforce customers (excluding 2021 acquisitions) and growth in Dayforce recurring revenue per customer to $114,630[132] - Float revenue increased due to a 12.7% increase in average float balance and a 28 basis point increase in average yield[133] - Cloud recurring gross margin increased to 72.2% (76.4% adjusted), driven by an increase in Dayforce customers live for more than two years and higher float revenue[138] Six Months Ended June 30, 2022 Compared With Six Months Ended June 30, 2021 For the first half of 2022, the company saw significant revenue growth driven by Dayforce, though net loss slightly increased Financial Performance (Six Months Ended June 30, Dollars in millions) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $594.5 | $484.9 | 22.6% | | Cloud Recurring Revenue | $426.8 | $336.7 | 26.8% | | Net Loss | $(47.2) | $(45.0) | -4.9% (increased loss) | | Adjusted EBITDA | $119.2 | $84.4 | 41.2% | | Adjusted EBITDA Margin | 20.1% | 17.4% | 2.7 pp | | Total Gross Margin | 36.9% | 38.2% | -1.3 pp | - Total revenue increased due to growth in live Dayforce customers, revenue from 2021 acquisitions, and higher float revenue[151] - Float revenue increased due to a 15.2% increase in average float balance and a 7 basis point increase in average yield[152] - Cloud recurring gross margin decreased to 70.8% (75.9% adjusted), primarily due to integration costs from APJ acquisitions and resource re-balancing[158] Liquidity and Capital Resources This section outlines the company's primary sources and uses of liquidity, including cash from operations and its credit facility - Primary liquidity sources include existing cash and equivalents ($371.2 million at June 30, 2022), cash from operating activities, and availability under the Revolving Credit Facility[167] - Primary liquidity needs are for general business requirements, debt payments, capital expenditures, product development, and funding Dayforce Wallet on-demand pay requests[168] - Customer funds are held in segregated accounts and invested with primary objectives of principal protection and adequate liquidity, maintaining 45-55% in liquidity portfolios and 45-55% in fixed income portfolios[175] Statements of Cash Flows This section analyzes the cash flows from operating, investing, and financing activities for the six months ended June 30, 2022 Cash Flow Summary (Six Months Ended June 30, Dollars in millions) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $38.7 | $23.1 | | Net cash used in investing activities | $(252.3) | $(409.5) | | Net cash provided by (used in) financing activities | $1,992.5 | $(17.6) | | Net increase (decrease) in cash, restricted cash, and equivalents | $1,774.0 | $(397.3) | | Cash, restricted cash, and equivalents at end of period | $3,726.9 | $1,831.2 | - Net cash provided by operating activities in 2022 was primarily due to non-cash adjustments of $130.1 million, including share-based compensation and depreciation/amortization, offset by net loss and working capital reductions[178] - Net cash provided by financing activities in 2022 was largely driven by a $1,983.4 million increase in net customer fund obligations[182] Backlog This section quantifies the company's backlog of remaining performance obligations, representing future contracted revenue - As of June 30, 2022, backlog (remaining performance obligations) was approximately $1,084.7 million, representing contracted revenue for recurring and fixed-price professional services not yet recognized[184] Off-Balance Sheet Arrangements The company confirms it had no off-balance sheet arrangements as of the reporting date - As of June 30, 2022, the company did not have any off-balance sheet arrangements[185] Critical Accounting Policies and Estimates This section confirms no significant changes to critical accounting policies and estimates from the prior annual report - There were no significant changes to the company's critical accounting policies and estimates during the six months ended June 30, 2022, from those described in its 2021 Form 10-K[186] Non-GAAP Measures This section defines and reconciles non-GAAP financial measures, such as Adjusted EBITDA, used by management to evaluate performance - The company uses non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Cloud recurring gross margin, to evaluate operating performance and management incentives[187][188] - Adjusted EBITDA excludes foreign exchange gains/losses, share-based compensation expense and related employer taxes, severance charges, restructuring consulting fees, and certain other non-recurring items[188] Adjusted EBITDA (Dollars in millions) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $61.8 | $39.9 | $119.2 | $84.4 | | Adjusted EBITDA Margin | 20.5% | 15.9% | 20.1% | 17.4% | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risks related to foreign currency exchange rates, interest rates, and pension obligations, which it manages through normal operating and financing activities - The company is exposed to market risks from foreign currency exchange rates (primarily Canadian Dollar), interest rates (affecting float revenue, debt interest, and cash interest income), and pension obligations[208][209][210][216] - A hypothetical 100 basis point increase in market investment rates would result in approximately $24 million increase in float revenue over the ensuing twelve-month period[212] - A 100 basis point increase in LIBOR rates would result in approximately $7 million increase in interest expense, net, over the ensuing twelve-month period[213] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal controls during the quarter - Disclosure controls and procedures were evaluated and concluded to be effective as of June 30, 2022[218] - There were no material changes to internal controls over financial reporting during the three months ended June 30, 2022[219] PART II. OTHER INFORMATION This part provides supplementary information, including legal proceedings, risk factors, and exhibits filed with the report Item 1. Legal Proceedings The company is involved in various legal proceedings, including a proposed class action lawsuit, but management believes a material loss is remote - The company is subject to claims and judicial/administrative proceedings normal in the course of business, including employment-related, contract, intellectual property, and government audits[103][221] - A proposed class action lawsuit was filed in October 2021 alleging misrepresentations related to the company's 2018 disclosure concerning the distribution of its interest in LifeWorks Corporation Ltd[222] - Management believes the final disposition of current legal proceedings, including the class action, will not have a material adverse effect on the company's financial position or results of operations, with the likelihood of a material loss from the class action being remote[107][223] Item 1A. Risk Factors There have been no material changes to the company's risk factors from those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - No material changes in risk factors from those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[224] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during the period - None[225] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report during the period - None[226] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[227] Item 5. Other Information There is no other information to report under this item - None[228] Item 6. Exhibits This section lists all exhibits filed or furnished as part of the report, including organizational documents, debt instruments, and various certifications - Exhibits include the Fourth Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws, Indenture for Convertible Senior Notes, 2018 Equity Incentive Plan, and certifications from executive officers[230] SIGNATURES This section contains the official signatures of the company's executive officers, certifying the report - The report was duly signed on August 3, 2022, by David D Ossip (Co-Chief Executive Officer), Leagh E Turner (Co-Chief Executive Officer), and Noémie C Heuland (Executive Vice President and Chief Financial Officer)[235]