Ceridian Reports Fourth Quarter and Full Year 2021 Results

Minneapolis, MN and Toronto, ON, February 9, 2022

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Ceridian HCM Holding Inc. (“Ceridian”) (NYSE:CDAY) (TSX:CDAY), a global leader in human capital management (HCM) technology, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2021.

"I am very pleased to report that we closed fiscal year 2021 with strong momentum and performance with Dayforce recurring revenue, excluding float revenue, growing by 32% in the fourth quarter," said David Ossip, Chair and Co-Chief Executive Officer of Ceridian. "I am especially pleased that our focus on delivering value to our customers has allowed us to deliver strong financial and operating results, while we are simultaneously building for future growth through our investments in people and products."

Financial Highlights for the Fourth Quarter and Full Year 2021¹

Revenue Highlights

• Total revenue, which includes revenue from both Cloud and Bureau solutions, was $282.1 million and $1,024.2 million for the fourth quarter and full year of 2021, respectively, an increase of 26.6% and 21.6%, respectively, or 25.6% and 19.4% on a constant currency basis.
• Excluding float revenue, total revenue was $272.0 million and $983.1 million for the fourth quarter and full year of 2021, respectively, an increase of 28.2% and 24.4%, respectively, or 27.1% and 22.2% on a constant currency basis.
• Dayforce recurring revenue was $170.4 million and $626.6 million for the fourth quarter and full year of 2021, respectively, an increase of 30.2% and 25.3%, respectively, or 29.3% and 23.5% on a constant currency basis. 
• Excluding float revenue, Dayforce recurring revenue was $163.2 million and $596.9 million for the fourth quarter and full year of 2021, respectively, an increase of 31.8% and 28.9%, respectively, or 30.9% and 27.1% on a constant currency basis.
• Cloud revenue, which includes both Dayforce and Powerpay, was $241.4 million and $873.1 million for the fourth quarter and full year of 2021, respectively, an increase of 24.5% and 19.7%, respectively, or 23.4% and 17.3% on a constant currency basis. 
• Excluding float revenue, Cloud revenue was $232.0 million and $835.3 million for the fourth quarter and full year of 2021, respectively, an increase of 25.7% and 22.2%, respectively, or 24.6% and 19.8% on a constant currency basis.

Other Financial Highlights

• Cloud recurring gross margin² was 72.2% and 72.3% for the fourth quarter and full year of 2021, respectively, compared to 70.9% and 71.2%, respectively, and excluding float revenue, Cloud recurring gross margin improved 170 basis points and 200 basis points for the fourth quarter and full year of 2021.
• Annual Cloud revenue retention rate^3,4 was 96.8% for the full year of 2021, compared to 95.8%.
• Cloud annualized recurring revenue ("ARR")^3,4 was $779.8 million, an increase of 26.2%, or $161.9 million.
• Net loss was ($9.5) million and ($75.4) million for the fourth quarter and full year of 2021, respectively, compared to ($17.3) million and ($4.0) million. Adjusted net income⁴ was $9.3 million and $40.4 million for the fourth quarter and full year of 2021, respectively, compared to $14.0 million and $73.1 million.
• Diluted net loss per share was ($0.06) for the fourth quarter of 2021, compared to ($0.12). Adjusted diluted net income per share⁴ was $0.06 for the fourth quarter of 2021, compared to $0.09. Diluted weighted average common shares outstanding were 151.5 million and 148.1 million for the fourth quarter of 2021 and 2020, respectively, on a GAAP basis, and 157.8 million and 148.1 million for the fourth quarter of 2021 and 2020, respectively, on an Adjusted basis⁴.
• Diluted net loss per share was ($0.50) for the full year of 2021, compared to ($0.03). Adjusted diluted net income per share4 was $0.26 for the full year of 2021, compared to $0.50. Diluted weighted average common shares outstanding were 150.4 million and 146.8 million for the full year of 2021 and 2020, respectively, on a GAAP basis, and 156.8 million and 146.8 million for the full year of 2021 and 2020, respectively, on an Adjusted basis⁴.
• Adjusted EBITDA⁴ was $38.7 million and $162.5 million for the fourth quarter and full year of 2021, respectively, compared to $33.1 million and $159.0 million.
• Cash and equivalents were $367.5 million as of December 31, 2021, compared to $188.2 million as of December 31, 2020.
• Total debt was $1,242.5 million as of December 31, 2021, an increase of $569.0 million, compared to $673.5 million as of December 31, 2020.

Dayforce Live Customer Count

• 5,434 Dayforce customers³ were live on the Dayforce platform as of December 31, 2021, an increase of 10.8%.
• 5.1 million global active users³ are live on the Dayforce platform as of December 31, 2021, up 21.4% compared to 4.2 million global active users as of December 31, 2020.
• Dayforce recurring revenue per customer^4,5 was $108,631 for the trailing twelve months ended December 31, 2021, an increase of 10.1%.

Business Outlook

Based on information available as of February 9, 2022, Ceridian is issuing the following guidance for the full year and first quarter of 2022 as indicated below.  Comparisons are on a year-over-year basis, unless stated otherwise.

Full Year 2022 Guidance

• Dayforce recurring revenue, excluding float revenue, of $751 million to $762 million, or an increase of 26% to 28% on both a GAAP basis and a constant currency basis.
• Cloud revenue of $1,054 million to $1,075 million, or an increase of 21% to 23% on both a GAAP basis and a constant currency basis.
• Total revenue of $1,192 million to $1,217 million, or an increase of 16% to 19% on a GAAP basis and 17% to 19% on a constant currency basis.
• Adjusted EBITDA of $180 million to $195 million.

First Quarter 2022 Guidance

• Dayforce recurring revenue, excluding float revenue, of $177 million to $180 million, or an increase of 29% to 31% on both a GAAP basis and a constant currency basis.
• Cloud revenue of $249 million to $254 million, or an increase of 23% to 25% on both a GAAP basis and a constant currency basis.
• Total revenue of $286 million to $292 million, or an increase of 22% to 25% on both a GAAP basis and a constant currency basis.
• Adjusted EBITDA of $41 million to $47 million.

Supplemental Guidance Details

Our guidance assumes productivity gains through further integration of the Excelity and Ascender acquisitions and specifically a re-balancing of our resources across our global offices. We expect this balancing of our workforce to result in one-time severance and restructuring costs of approximately $25 million, to be accounted for in cost of recurring revenue, primarily in the first quarter of 2022. These costs will be excluded from Adjusted EBITDA. Excluding these costs, we expect Cloud recurring gross margin to continue to improve in 2022.

In addition, our guidance assumes an increase of 25 basis points in the Federal Reserve discount rate and current Bank of Canada interest rate in both March and June of 2022. Based on current market conditions, portfolio composition, and investment practices, each 100 basis point change in market investment rates would result in approximately $23 million of change in float revenue over the ensuing twelve month period.

While we experienced adverse impacts on our fourth quarter revenue from the COVID-19 pandemic in the form of lower employment levels at our customers, we ended 2021 with employment levels at our customers in-line with pre-pandemic levels. As a result, our guidance for the full year and first quarter of 2022 assumes no further improvement or reduction in employment levels at our customers due to the COVID-19 pandemic.

We have not reconciled the Adjusted EBITDA range for the full year or first quarter of 2022 to the directly comparable GAAP financial measure because applicable information for the future period, on which this reconciliation would be based, is not readily available due to uncertainty regarding, and the potential variability of, depreciation and amortization, share-based compensation expense and related employer taxes, changes in foreign currency exchange rates, and other items.

Foreign Exchange

The average U.S. dollar to Canadian dollar foreign exchange rate was $1.26 and $1.25, with a daily range of $1.23 to $1.29, and $1.20 to $1.29 for the three and twelve months ended December 31, 2021, respectively, compared to $1.30 and $1.34, with a daily range of $1.27 to $1.33, and $1.27 to $1.45 for the three and twelve months ended December 31, 2020. As of December 31, 2021, the U.S. dollar to Canadian dollar foreign exchange rate was $1.27. To present the performance of the business excluding the effect of foreign currency rate fluctuations, Ceridian presents revenue on a constant currency basis, which it believes is useful to management and investors. Revenue was calculated on a constant currency basis by applying the average foreign exchange rate in effect during the comparable prior period.

For the full year and first quarter of 2022, Ceridian’s guidance assumes an average U.S. dollar to Canadian dollar foreign exchange rate of $1.25, compared to an average rate of $1.25 for the full year of 2021.

Conference Call Details

Ceridian will host a conference call to discuss fourth quarter and fiscal year 2021 earnings at 5:00 p.m. Eastern Time on February 9, 2022. A live Zoom Video Webinar of the event can be accessed at that time, through a direct registration link at https://ceridian.zoom.us/webinar/register/WN_4QK1pmraRj6rTlTwrJARmQ. Alternatively, the event can be accessed from the Events & Presentations page on Ceridian’s Investor Relations website at https://investors.ceridian.com. A replay and transcript will be available after the conclusion of the live event on Ceridian’s Investor Relations website.

About Ceridian HCM Holding Inc.

Ceridian. Makes Work Life Better™.

Ceridian is a global human capital management software company. Dayforce, the flagship cloud HCM platform, provides human resources, payroll, benefits, workforce management, and talent management functionality. The Dayforce platform is used to optimize management of the entire employee lifecycle, including attracting, engaging, paying, deploying, and developing people. Ceridian has solutions for organizations of all sizes.

Use of Non-GAAP Financial Measures

Ceridian uses certain non-GAAP financial measures in this release including EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Adjusted diluted net income per share, revenue on a constant currency basis, Dayforce recurring revenue per customer, Cloud revenue retention rate, and Cloud ARR. Ceridian believes that EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Cloud revenue retention rate, and Cloud ARR, non-GAAP financial measures, are useful to management and investors as supplemental measures to evaluate its overall operating performance. Adjusted EBITDA and Adjusted EBITDA margin are components of Ceridian’s management incentive plan and are used by management to assess performance and to compare its operating performance to its competitors. Ceridian defines EBITDA as net income (loss) before interest, taxes, depreciation, and amortization, and Adjusted EBITDA as EBITDA, as adjusted to exclude foreign exchange gains (losses), share-based compensation expense and related employer taxes, severance charges, restructuring consulting fees, and other non-recurring items. Adjusted EBITDA margin is determined by calculating the percentage Adjusted EBITDA is of total revenue. Adjusted net income is defined as net income (loss), as adjusted to exclude foreign exchange gains (losses), share-based compensation expense and related employer taxes, severance charges, restructuring consulting fees, and other non-recurring items, all of which are adjusted for the effect of income taxes. Ceridian believes that EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income are helpful in highlighting management performance trends because EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income exclude the results of decisions that are outside the normal course of its business operations.

Ceridian’s presentation of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income are intended as supplemental measures of its performance that are not required by, or presented in accordance with, GAAP. EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income should not be considered as alternatives to net income, earnings per share, or any other performance measures derived in accordance with GAAP, or as measures of operating cash flows or liquidity. Ceridian’s presentation of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income should not be construed to imply that its future results will be unaffected by similar items to those eliminated in this presentation. EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income are included in this discussion because they are key metrics used by management to assess its operating performance.

EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income are not defined under GAAP, are not measures of net income or any other performance measures derived in accordance with GAAP, and are subject to important limitations. Ceridian’s use of the terms EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income may not be comparable to similarly titled measures of other companies in its industry and are not measures of performance calculated in accordance with GAAP.

EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income have important limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of Ceridian’s results as reported under GAAP.

In evaluating EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted net income, users should be aware that in the future Ceridian may incur expenses similar to those eliminated in this presentation.
Ceridian presents revenue on a constant currency basis to assess how its underlying businesses performed, excluding the effect of foreign currency rate fluctuations, which it believes is useful to management and investors. Revenue was calculated on a constant currency basis by applying the average foreign exchange rate in effect during the comparable prior period.

Ceridian's Dayforce recurring revenue per customer is an indicator of the average size of our Dayforce recurring revenue customers. To calculate Dayforce recurring revenue per customer, Ceridian starts with Dayforce recurring revenue on a constant currency basis by applying the prior year average exchange rate to all comparable periods for the trailing twelve months and excludes float revenue, the impact of lower employment levels due to the COVID-19 pandemic, and Ascender  and ADAM HCM revenue. This amount is divided by the number of live Dayforce customers at the end of the trailing twelve month period, excluding Ascender and ADAM HCM. Ceridian sets quarterly targets for Dayforce recurring revenue per customer and monitors progress towards those targets on a quarterly basis. Ceridian's Dayforce recurring revenue per customer may fluctuate as a result of a number of factors, including the number of live Dayforce customers and the number of customers purchasing the full HCM suite. Ceridian has not reconciled the Dayforce recurring revenue per customer because there is no directly comparable GAAP financial measure.

Ceridian derives the majority of its Cloud revenues from recurring fees, primarily per employee, per month subscription charges. It also derives recurring revenue from fees related to the rental and maintenance of clocks, charges for once-a-year services, such as year-end tax statements, and investment income on our customer funds before such funds are remitted to taxing authorities, customer employees, or other third parties. To calculate Cloud ARR, Ceridian starts with recurring revenue at year end, excluding revenue from Ascender and ADAM HCM, subtract the once-a-year charges, annualize the revenue for customers live for less than a full year to reflect the revenue that would have been realized if the customer had been live for a full year, and add back the once-a-year charges. Ceridian sets annual targets for Cloud ARR and monitors progress toward those targets on a quarterly basis. Ceridian has not reconciled the Cloud ARR because there is no directly comparable GAAP financial measure.

Ceridian's annual Cloud revenue retention rate measures the percentage of revenues that it retains from its existing Cloud customers. It uses this revenue retention rate as an indicator of customer satisfaction and future revenues. Ceridian calculates the annual Cloud revenue retention rate as a percentage, excluding Ascender and ADAM HCM, where the numerator is the Cloud ARR for the prior year, less the Cloud ARR from lost Cloud customers during that year; and the denominator is the Cloud ARR for the prior year. Ceridian sets annual targets for Cloud revenue retention rate and monitors progress toward those targets on a quarterly basis by reviewing known customer losses and anticipated future customer losses. Its Cloud revenue retention rate may fluctuate as a result of a number of factors, including the mix of Cloud solutions used by customers, the level of customer satisfaction, and changes in the number of users live on its Cloud solutions. Ceridian has not reconciled the annual Cloud revenue retention rate because there is no directly comparable GAAP financial measure.

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this press release are forward-looking statements. Forward-looking statements give Ceridian’s current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. Users can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements in this press release include statements relating to the fiscal year of 2022, as well as those relating to future growth initiatives. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “seek,” “plan,” “intend,” “believe,” “will,” “may,” “could,” “continue,” “likely,” “should,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events but not all forward-looking statements contain these identifying words. The forward-looking statements contained in this press release are based on assumptions that Ceridian has made in light of its industry experience and its perceptions of historical trends, current conditions, expected future developments and other factors that it believes are appropriate under the circumstances. As users consider this press release, it should be understood that these statements are not guarantees of performance or results. These assumptions and Ceridian’s future performance or results involve risks and uncertainties (many of which are beyond its control). These risks and uncertainties include, but are not limited to, the following:

• the impact of the Coronavirus disease 2019 (“COVID-19”) pandemic on Ceridian’s business, operations, and financial results;
• its inability to manage its growth effectively or execute on its growth strategy;
• its inability to successfully expand its current offerings into new markets or further penetrate existing markets;
• its failure to provide new or enhanced functionality and features;
• significant competition in the market in which its solutions compete;
• its failure to manage its aging technical operations infrastructure;
• system breaches, interruptions or failures, including cyber-security breaches, identity theft, or other disruptions that could compromise customer information or sensitive company information;
• its failure to comply with applicable privacy, security, data, and financial services laws, regulations and standards, including its ongoing consent order with the Federal Trade Commission regarding data protection;
• its failure to properly update its solutions to enable its customers to comply with applicable laws;
• changes in regulations governing financial services, privacy concerns, and laws or other domestic or foreign data protection regulations;
• its inability to maintain necessary third party relationships, and third party software licenses, and identify errors in the software it licenses;
• its inability to offer and deliver high-quality technical support, implementation and professional services;
• its inability to attract and retain senior management employees and highly skilled employees;
• the impact of its outstanding debt obligations on its financial condition, results of operations, and value of its common stock; or
• other risks and uncertainties described in its most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission.

Additional factors or events that could cause Ceridian’s actual performance to differ from these forward-looking statements may emerge from time to time, and it is not possible for Ceridian to predict all of them. Should one or more of these risks or uncertainties materialize, or should any of Ceridian’s assumptions prove incorrect, its actual financial condition, results of operations, future performance and business may vary in material respects from the performance projected in these forward-looking statements. In addition to any factors and assumptions set forth above in this press release, the material factors and assumptions used to develop the forward-looking information include, but are not limited to: the general economy remains stable; the competitive environment in the HCM market remains stable; the demand environment for HCM solutions remains stable; Ceridian’s implementation capabilities and cycle times remain stable; foreign exchange rates, both current and those used in developing forward-looking statements, specifically USD to CAD, remain stable at, or near, current rates; Ceridian will be able to maintain its relationships with its employees, customers and partners; Ceridian will continue to attract qualified personnel to support its development requirements and the support of its new and existing customers; and that the risk factors noted above, individually or collectively, do not have a material impact on Ceridian. Any forward-looking statement made by Ceridian in this press release speaks only as of the date on which it is made. Ceridian undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Source: Ceridian HCM Holding Inc.

For further information, please contact:

Investor Relations
1-844-829-9499
investors@ceridian.com

Public Relations
1-647-417-2117
teri.murphy@ceridian.com

¹ The quarterly and annual financial highlights are on a year-over-year basis, unless otherwise stated. All financial results are reported in U.S. dollars unless otherwise stated.
² Cloud recurring gross margin is defined as total Cloud recurring revenue less cost of Cloud recurring revenue for the applicable solution as a percentage of total Cloud recurring revenue, exclusive of any product development and management or depreciation and amortization cost allocations.
³ Excluding the 2021 acquisitions of Ascender and ADAM HCM.
⁴ This is a Non-GAAP financial measure. For Non-GAAP financial measures with a directly comparable GAAP financial measure, a reconciliation of U.S. generally accepted accounting principles (“GAAP”) to non-GAAP financial measures has been provided in this press release, included in the accompanying tables. An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.”
⁵ Excluding float revenue, the impact of lower employment levels due to the COVID-19 pandemic, Ascender and ADAM HCM revenue and on a constant currency basis.