UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM10-Q~~

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

☒	~~Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

For the quarterly reporting period ended March 31, ~~2018~~2022

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

☐	~~Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

For the transition period fromto

Commission file number001-38467

Ceridian HCM Holding Inc.

(Exact name of registrant as specified in its charter)

Delaware

46-3231686

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

3311 East Old Shakopee Road

Minneapolis, Minnesota55425

~~(952)~~(952) 853-8100

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value

CDAY

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☐☒ No ☒☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting ~~company”~~company,” and “emerging growth company” in Rule12b-2 of the Exchange ~~Act in Rule12b-2~~ ~~of the Exchange~~ Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section ~~7(a)(2)(B)~~13(a) of the ~~Securities~~Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule12b-2 of the Exchange Act). Yes ☐ No☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as the latest practicable date: ~~136,703,308~~152,644,831 shares of ~~Common Stock,~~common stock, $0.01 par value per share, as of ~~May 23, 2018.~~April 27, 2022.

Table of Contents

Ceridian HCM Holding Inc.

Table of Contents


				~~Page~~
~~CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS~~					4
~~PART I. FINANCIAL INFORMATION~~
		Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		3

PART I. FINANCIAL INFORMATION		4

Item 1.		Condensed Consolidated Financial Statements (unaudited)			6	4

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			32	25

Item 3.		Quantitative and Qualitative Disclosures about Market Risk			52	39

Item 4.		Controls and Procedures	40
			53
PART II. OTHER INFORMATION					41
~~Item 1.~~		~~Legal Proceedings~~			54
Item ~~1A.~~1.	Legal Proceedings	~~Risk Factors~~			54	41

Item 1A.	Risk Factors	41

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			54	41

Item 3.		Defaults Upon Senior Securities			54	41

Item 4.		Mine Safety Disclosures			54	41
~~Item 5.~~		~~Other Information~~			54
Item 5.	Other Information	41

Item 6.	Exhibits	~~Exhibits~~			55	42

2 | Q1 2022 Form 10-Q

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form10-Q (“Form10-Q”) contains, or incorporates by reference, not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and that are subject to the safe harbor created by those sections. Forward-looking statements, including, without limitation, statements concerning the conditions of the human capital management ~~(“HCM”)~~ solutions industry and our operations, performance, and financial condition, including, in particular, statements relating to our business, growth strategies, product development efforts, and future expenses. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “assumes,” “projects,” “could,” “may,” “will,” “should,” and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, such as those contained in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. ~~As a result,~~Consequently, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national, or global political, economic, business, competitive, market, and regulatory ~~conditions and the following:~~conditions. In particular:

~~our inability to attain or to maintain profitability;~~

~~significant competition for our solutions;~~

~~our inability to continue to develop or to sell our existing Cloud solutions;~~

•

our inability to manage our growth ~~effectively;~~effectively or execute on our growth strategy;

~~the risk that we may not be able~~•

our failure to provide new or enhanced functionality and features;

•

our inability to successfully ~~migrate our Bureau customers to our Cloud~~

~~solutions or to offset the decline~~compete in ~~Bureau revenue with Cloud revenue;~~

the market ~~for enterprise cloud computing develops slower than~~in which we ~~expect~~operate and expand our current offerings into new markets or ~~declines;~~

~~efforts~~further penetrate existing markets due to ~~increase use of~~ competition;

•

our ~~Cloud solutions~~inability to offer and ~~our other applications may not succeed;~~

~~we fail to provide enhancements~~deliver high-quality technical support, implementation and ~~new features and modifications to our solutions;~~professional services;

~~failure to comply with the Federal Trade Commission’s (“FTC”) ongoing consent order regarding data protection;~~

•

system breaches, interruptions or failures, including cyber-security breaches, identity theft, or other disruptions that could compromise ~~our~~customer information or sensitive company information;

•

our failure to comply with applicable privacy, security, data, and ~~data~~financial services laws, regulations and ~~standards;~~

~~changes in regulations governing privacy concerns and laws or other domestic or foreign~~standards, including our ongoing consent order with the Federal Trade Commission regarding data ~~protection regulations;~~protection;

~~we are unable~~•

our failure to ~~successfully expand~~properly update our ~~current offerings into new markets or further penetrate existing markets;~~

~~we are unable~~solutions to ~~meet the more complex configuration and integration demands of our large customers;~~

enable our customers ~~declining~~ to ~~renew their agreements~~comply with ~~us or renewing at lower performance fee levels;~~applicable laws;

~~we fail~~•

our failure to manage our aging technical operations infrastructure;

~~we are unable to maintain necessary third party licenses or errors;~~

•

our inability to ~~protect our intellectual property rights, proprietary technology, information, processes,~~maintain necessary third-party relationships, and~~know-how;~~

~~we fail to keep pace with rapid technological changes~~ third-party software licenses, and ~~evolving industry standards; or~~

~~changes in laws and regulations related to the Internet or changes~~identify errors in the ~~Internet infrastructure itself.~~software we license;

•

our inability to attract and retain senior management employees and highly skilled employees;

•

the impact of our outstanding debt obligations on our financial condition, results of operations, and value of our common stock; or

•

the duration and scope of the Coronavirus disease 2019 (“COVID-19”) pandemic, including the uncertainty around the surge of different variants and the actions that governmental authorities may take in all the jurisdictions where we operate.

~~See~~Please refer to Part ~~II.~~II, Item ~~IA.~~IA, “Risk Factors” of this Form 10-Q and Part I, Item IA, “Risk Factors” of our most recently filed Annual Report on Form 10-K, for the year ended December 31, 2021 (“2021 Form 10-K”), for a further description of these and other factors. Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this Form10-Q. If any of these risks materialize, or if any of the above assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this Form10-Q. For the reasons described above, we caution you against relying on any forward-looking ~~statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this Form10-Q.~~statements. Any forward-looking statement made by us in this Form 10-Q speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should be viewed as historical data.

3 | Q1 2022 Form 10-Q

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ceridian HCM Holding Inc.

Condensed Consolidated Balance Sheets

~~(Dollars in millions, except share data)~~


	March 31,			December 31,
	2022			2021
(Dollars in millions, except share data)	(unaudited)
ASSETS
Current assets:
Cash and equivalents	$	354.8		$	367.5
Restricted cash		1.9			1.9
Trade and other receivables, net		144.5			146.3
Prepaid expenses and other current assets		112.6			92.6
Total current assets before customer funds		613.8			608.3
Customer funds		7,364.2			3,535.8
Total current assets		7,978.0			4,144.1
Right of use lease asset		28.7			29.4
Property, plant, and equipment, net		134.3			128.2
Goodwill		2,336.8			2,323.6
Other intangible assets, net		330.1			332.5
Other assets		251.6			208.4
Total assets	$	11,059.5		$	7,166.2
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	8.3		$	8.3
Current portion of long-term lease liabilities		11.2			11.3
Accounts payable		49.4			51.7
Deferred revenue		48.1			48.7
Employee compensation and benefits		69.7			77.3
Other accrued expenses		23.7			24.7
Total current liabilities before customer funds obligations		210.4			222.0
Customer funds obligations		7,418.5			3,519.9
Total current liabilities		7,628.9			3,741.9
Long-term debt, less current portion		1,215.7			1,124.4
Employee benefit plans		20.2			20.7
Long-term lease liabilities, less current portion		31.1			32.7
Other liabilities		22.8			19.0
Total liabilities		8,918.7			4,938.7
Commitments and contingencies (Note 14)
Stockholders’ equity:
Common stock, $0.01 par, 500,000,000 shares authorized, 152,530,449 and 151,995,031 shares issued and outstanding, respectively		1.5			1.5
Additional paid in capital		2,823.8			2,860.0
Accumulated deficit		(326.6	)		(309.2	)
Accumulated other comprehensive loss		(357.9	)		(324.8	)
Total stockholders’ equity		2,140.8			2,227.5
Total liabilities and equity	$	11,059.5		$	7,166.2

See accompanying notes to condensed consolidated financial statements.

   March 31,
2018 December 31,
2017
   (unaudited)
ASSETS

Current assets:

Cash and equivalents
   $ 62.2 $ 99.6
Trade and other receivables, net
   81.1 79.9
Prepaid expenses
   49.2 37.9
Other current assets
   1.8 5.3


Total current assets before customer trust funds
   194.3 222.7
Customer trust funds
   4,293.9 4,099.7


Total current assets
   4,488.2 4,322.4
Property, plant, and equipment, net
   103.4 103.8
Goodwill
   2,075.8 2,087.3
Other intangible assets, net
   206.6 212.4
Other assets
   5.5 4.0


Total assets
   $ 6,879.5 $ 6,729.9


LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt
   $ —   $ —
Accounts payable
   47.6 48.8
Accrued interest
   2.7 15.9
Deferred revenue
   18.5 16.8
Employee compensation and benefits
   55.7 70.0
Other accrued expenses
   16.7 15.5


Total current liabilities before customer trust funds obligations
   141.2 167.0
Customer trust funds obligations
   4,313.2 4,105.5


Total current liabilities
   4,454.4 4,272.5
Long-term debt, less current portion
   1,120.5 1,119.8
Employee benefit plans
   147.3 152.4
Other liabilities
   53.8 56.2


Total liabilities
   5,776.0 5,600.9
Commitments and contingencies (Note 15)

Stockholders’ equity:

Senior preferred stock, $0.01 par, 70,000,000 shares authorized, 16,802,144 shares issued and outstanding as of March 31, 2018 and December 31, 2017
   190.1 184.8
Junior preferred stock, $0.01 par, 70,000,000 shares authorized, 58,244,308 shares issued and outstanding as of March 31, 2018 and December 31, 2017
   0.6 0.6
Common stock, $0.01 par, 150,000,000 shares authorized, 65,374,309 shares issued and outstanding as of March 31, 2018 and 65,285,962 shares issued and outstanding as of December 31, 2017
   0.7 0.7
Additional paid in capital
   1,568.3 1,565.4
Accumulated deficit
   (355.6 ) (348.2 )
Accumulated other comprehensive loss
   (337.7 ) (312.1 )


Total stockholders’ equity
   1,066.4 1,091.2
Noncontrolling interest
   37.1 37.8


Total equity
   1,103.5 1,129.0


Total liabilities and equity
   $ 6,879.5 $ 6,729.9

4 | Q1 2022 Form 10-Q

Table of Contents

Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Operations


	Three Months Ended March 31,
	2022			2021
(Dollars in millions, except share and per share data)	(unaudited)
Revenue:
Recurring	$	247.9		$	196.0
Professional services and other		45.4			38.5
Total revenue		293.3			234.5
Cost of revenue:
Recurring		82.3			59.7
Professional services and other		54.5			44.7
Product development and management		40.4			25.8
Depreciation and amortization		13.0			11.1
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	)
Interest expense, net		5.8			5.6
Other (income) expense, net		(0.3	)		4.6
Loss before income taxes		(24.4	)		(12.6	)
Income tax expense		3.0			6.6
Net loss	$	(27.4	)	$	(19.2	)
Net loss per share:
Basic	$	(0.18	)	$	(0.13	)
Diluted	$	(0.18	)	$	(0.13	)
Weighted-average shares outstanding:
Basic		152,124,151			148,716,050
Diluted		152,124,151			148,716,050

See accompanying notes to condensed consolidated financial statements.

5 | Q1 2022 Form 10-Q

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Ceridian HCM Holding Inc.

Condensed Consolidated Statements of ~~Operations~~Comprehensive Income (Loss)

~~(Unaudited; dollars~~


	Three Months Ended March 31,
	2022			2021
(Dollars in millions)	(unaudited)
Net loss	$	(27.4	)	$	(19.2	)
Items of other comprehensive loss before income taxes:
Change in foreign currency translation adjustment		15.6			11.0
Change in unrealized loss from invested customer funds		(69.4	)		(16.7	)
Change in pension liability adjustment (a)		3.1			3.8
Other comprehensive loss before income taxes		(50.7	)		(1.9	)
Income tax benefit, net		(17.6	)		(3.4	)
Other comprehensive (loss) income after income taxes		(33.1	)		1.5
Comprehensive loss	$	(60.5	)	$	(17.7	)

(a)

The amount of the pension liability adjustment recognized in ~~millions, except share~~the condensed consolidated statements of operations within other expense, net was $2.9 million and ~~per share data)~~$3.8 million during the three months ended March 31, 2022, and 2021, respectively.

   Three Months ended March 31,
   2018 2017
Revenue:

Recurring services
   $ 188.7 $ 171.4
Professional services and other
   20.2 15.6


Total revenue
   208.9 187.0
Cost of revenue:

Recurring services
   62.7 58.8
Professional services and other
   32.8 33.9
Product development and management
   15.4 12.8
Depreciation and amortization
   8.8 7.7


Total cost of revenue
   119.7 113.2


Gross profit
   89.2 73.8
Costs and expenses:

Selling, general, and administrative
   65.6 60.7
Other (income) expense, net
   (2.8 ) 0.9
Interest expense, net
   22.2 21.4


Total costs and expenses
   85.0 83.0


Income (loss) from continuing operations before income taxes
   4.2 (9.2 )
Income tax expense
   6.8 2.5


Loss from continuing operations
   (2.6 ) (11.7 )
Income from discontinued operations
   — 0.5


Net loss
   (2.6 ) (11.2 )


Net loss attributable to noncontrolling interest
   (0.5 ) —


Net loss attributable to Ceridian
   $ (2.1 ) $ (11.2 )


Net loss per share attributable to Ceridian—basic and diluted (Note 18)
   $ (0.11 ) $ (0.24 )
Weighted-average shares used to compute net loss per share attributable to Ceridian—basic and diluted (Note 18)
   65,314,462 65,034,610

See accompanying notes to condensed consolidated financial statements.

6 | Q1 2022 Form 10-Q

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Ceridian HCM Holding Inc.

Condensed Consolidated Statements of ~~Comprehensive Income (Loss)~~Stockholders’ Equity

~~(Unaudited, dollars in millions)~~


	Common Stock				Additional Paid In			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		$		Capital			Deficit			Loss			Equity
	(Dollars in millions, except share data, unaudited)
Balance as of December 31, 2021		151,995,031	$	1.5	$	2,860.0		$	(309.2	)	$	(324.8	)	$	2,227.5
Cumulative-effect adjustments related to the adoption of ASU 2020-06		—		—		(77.7	)		10.0			—			(67.7	)
Net loss		—		—		—			(27.4	)		—			(27.4	)
Issuance of common stock under share-based compensation plans		535,418		—		6.0			—			—			6.0
Share-based compensation		—		—		35.5			—			—			35.5
Foreign currency translation		—		—		—			—			15.6			15.6
Change in unrealized gain, net of tax of ($18.4)		—		—		—			—			(51.0	)		(51.0	)
Change in pension liability adjustment, net of tax of $0.8		—		—		—			—			2.3			2.3
Balance as of March 31, 2022		152,530,449	$	1.5	$	2,823.8		$	(326.6	)	$	(357.9	)	$	2,140.8

   Three Months ended March 31,
   2018 2017
Net loss
   $ (2.6 ) $ (11.2 )
Items of other comprehensive income (loss) before income taxes:

Change in foreign currency translation adjustment
   (16.1 ) 4.9
Change in unrealized (loss) gain from invested customer trust funds
   (13.4 ) 1.8
Change in pension liability adjustment⁽¹⁾
   2.9 2.6


Other comprehensive (loss) income before income taxes
   (26.6 ) 9.3
Income tax expense, net
   0.8 1.6


Other comprehensive (loss) income after income taxes
   (27.4 ) 7.7


Comprehensive loss
   (30.0 ) (3.5 )
Comprehensive (loss) income attributable to noncontrolling interest
   (0.7 ) 0.1


Comprehensive loss attributable to Ceridian
   $ (29.3 ) $ (3.6 )

~~(1)~~

The amount of the pension liability adjustment recognized in the consolidated statements of operations within selling, general, and administrative expense was $3.0 during the three months ended March 31, 2018, and $2.6 during the three months ended March 31, 2017.


	Common Stock				Additional Paid In			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		$		Capital			Deficit			Loss			Equity
	(Dollars in millions, except share data, unaudited)
Balance as of December 31, 2020		148,571,412	$	1.5	$	2,606.5		$	(233.8	)	$	(276.0	)	$	2,098.2
Net loss		—		—		—			(19.2	)		—			(19.2	)
Issuance of common stock under share-based compensation plans		341,975		—		11.3			—			—			11.3
Share-based compensation		—		—		22.8			—			—			22.8
Equity component of convertible senior notes		—		—		77.7			—			—			77.7
Purchase of capped calls related to convertible senior notes		—		—		(33.0	)		—			—			(33.0	)
Foreign currency translation		—		—		—			—			11.0			11.0
Change in unrealized gain, net of tax of $(4.4)		—		—		—			—			(12.3	)		(12.3	)
Change in pension liability adjustment, net of tax of $1.0		—		—		—			—			2.8			2.8
Balance as of March 31, 2021		148,913,387	$	1.5	$	2,685.3		$	(253.0	)	$	(274.5	)	$	2,159.3

See accompanying notes to condensed consolidated financial statements.

7 | Q1 2022 Form 10-Q

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Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Cash Flows

~~(Unaudited, dollars in millions)~~


	Three Months Ended March 31,
	2022			2021
	(Dollars in millions, unaudited)
Net loss	$	(27.4	)	$	(19.2	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Deferred income tax benefit		4.5			0.6
Depreciation and amortization		20.9			15.0
Amortization of debt issuance costs and debt discount		1.0			1.1
Provision for doubtful accounts		0.9			0.4
Net periodic pension and postretirement cost		1.2			2.2
Share-based compensation		35.5			22.8
Change in fair value of contingent consideration		0.8			—
Other		—			1.1
Changes in operating assets and liabilities excluding effects of acquisitions and divestitures:
Trade and other receivables		1.0			(8.1	)
Prepaid expenses and other current assets		(14.1	)		(7.1	)
Accounts payable and other accrued expenses		(4.6	)		(2.1	)
Deferred revenue		(1.1	)		4.9
Employee compensation and benefits		(8.2	)		(24.7	)
Accrued interest		(0.4	)		0.4
Accrued taxes		(3.3	)		8.6
Other assets and liabilities		(1.2	)		(0.4	)
Net cash provided by (used in) operating activities		5.5			(4.5	)
Cash Flows from Investing Activities
Purchase of customer funds marketable securities		(276.9	)		(148.5	)
Proceeds from sale and maturity of customer funds marketable securities		112.1			97.4
Expenditures for property, plant, and equipment		(2.1	)		(3.4	)
Expenditures for software and technology		(17.8	)		(11.9	)
Acquisition costs, net of cash and restricted cash acquired		—			(338.3	)
Net cash used in investing activities		(184.7	)		(404.7	)
Cash Flows from Financing Activities
Increase in customer funds obligations, net		3,879.8			513.2
Proceeds from issuance of common stock under share-based compensation plans		6.0			11.3
Repayment of long-term debt obligations		(2.1	)		(1.3	)
Proceeds from revolving credit facility		—			295.0
Repayment of revolving credit facility		—			(295.0	)
Proceeds from issuance of convertible senior notes, net of issuance costs		—			561.8
Purchases of capped calls related to convertible senior notes		—			(45.0	)
Net cash provided by financing activities		3,883.7			1,040.0
Effect of exchange rate changes on cash, restricted cash, and equivalents		1.7			3.4
Net increase in cash, restricted cash, and equivalents		3,706.2			634.2
Cash, restricted cash, and equivalents at beginning of period		1,952.9			2,228.5
Cash, restricted cash, and equivalents at end of period	$	5,659.1		$	2,862.7
Reconciliation of cash, restricted cash, and equivalents to the condensed consolidated balance sheets
Cash and equivalents	$	354.8		$	339.6
Restricted cash		1.9			2.0
Restricted cash and equivalents included in customer funds		5,302.4			2,521.1
Total cash, restricted cash, and equivalents	$	5,659.1		$	2,862.7

   Three Months ended March 31,
   2018 2017
Net loss
   $ (2.6 ) $ (11.2 )
Income from discontinued operations
   —   (0.5 )
Adjustments to reconcile net loss to net cash used in operating activities:

Deferred income tax benefit
   (0.1 ) (0.3 )
Depreciation and amortization
   14.9 14.1
Amortization of debt issuance costs and debt discount
   1.0 0.8
Net periodic pension and postretirement cost
   0.6 0.3
Share-based compensation
   2.9 4.5
Other
   (0.1 ) (0.4 )
Changes in operating assets and liabilities excluding effects of acquisitions and divestitures:

Trade and other receivables
   (1.9 ) 4.0
Prepaid expenses and other current assets
   (11.4 ) (9.3 )
Accounts payable and other accrued expenses
   (0.5 ) (5.5 )
Deferred revenue
   1.7 0.7
Employee compensation and benefits
   (16.7 ) (19.9 )
Accrued interest
   (13.1 ) (13.5 )
Accrued taxes
   6.3 (8.5 )
Other assets and liabilities
   (4.3 ) 0.7


Net cash used in operating activities—continuing operations
   (23.3 ) (44.0 )
Net cash used in operating activities—discontinued operations
   (0.1 ) (0.7 )


Net cash used in operating activities
   (23.4 ) (44.7 )
Cash Flows from Investing Activities

Purchase of customer trust funds marketable securities
   (520.6 ) (185.7 )
Proceeds from sale and maturity of customer trust funds marketable securities
   175.4 133.8
Net change in restricted cash and other restricted assets held to satisfy customer trust funds obligations
   114.8 (860.1 )
Expenditures for property, plant, and equipment
   (2.9 ) (2.6 )
Expenditures for software and technology
   (7.4 ) (6.2 )
Net proceeds from divestitures
   —   0.9


Net cash used in investing activities
   (240.7 ) (919.9 )
Cash Flows from Financing Activities

Increase in customer trust funds obligations, net
   230.4 912.0
Repurchase of stock
   —   (1.8 )
Repayment of long-term debt obligations
   (0.3 ) —


Net cash provided by financing activities
   230.1 910.2
Effect of Exchange Rate Changes on Cash
   (3.4 ) 0.7


Net decrease in cash and equivalents
   (37.4 ) (53.7 )
Cash and equivalents at beginning of period
   99.6 131.4


Cash and equivalents at end of period
   $ 62.2 $ 77.7

See accompanying notes to condensed consolidated financial statements.

8 | Q1 2022 Form 10-Q

Table of Contents

Ceridian HCM Holding Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~(Unaudited, dollars in millions, except share and per share data)~~

1. Organization

Ceridian HCM Holding Inc. and its subsidiaries (also referred to in this report as “Ceridian,” “we,” “our,” ~~and “us”~~“us,” or the “Company”) offer a broad range of services and software designed to help employers to more effectively manage employment processes, such as payroll, payroll-related tax filing, human resource information systems, employee self-service, time and labor management, employee assistance programs, and recruitment and applicant screening. Our technology-based services are typically provided through long-term customer relationships that result in a high level of recurring revenue. ~~Our operations are primarily located in the United States and Canada.~~

As of March 31, 2018, Ceridian owned a controlling financial interest in a joint venture, WorkAngel Organisation Limited (“LifeWorks”) (the “Joint Venture Company”), which offers an employee engagement platform that delivers employee assistance programs, social recognition, exclusive perks and discounts, a private social network, employee and corporate wellness, and employee engagement analytics in the United States, Canada, and the United Kingdom. Prior to the formation of the joint venture, employee assistance programs were provided by Ceridian. On January 20, 2017, WorkAngel Organisation Limited changed its name to LifeWorks Corporation Ltd. On April 30, 2018, we distributed our ownership interest in the Joint Venture Company to our stockholders of record (the “LifeWorks Disposition”) prior to our initial public offering (“IPO”). Please refer to Note 19, “Subsequent Events,” for further discussion of the LifeWorks Disposition.

As of March 31, 2018, Ceridian HCM Holding Inc. was primarily owned by Ceridian LLC (the “Parent”) and Ceridian Holding II LLC (“Ceridian Holding II”). The Parent was 100% owned by Foundation Holding LLC, which in turn was 100% owned by Ceridian Holding LLC (“Ceridian Holding”).

~~The owners of Ceridian Holding and Ceridian Holding II included (i) affiliates andco-investors~~ of Thomas H. Lee Partners, L.P. (“THL Partners”) and Cannae Holdings, LLC (“Cannae”) (THL Partners and Cannae are together referred to as the “Sponsors”), who collectively owned approximately 96% of the outstanding interests of both Ceridian Holding and Ceridian Holding II, and (ii) other individuals, who collectively owned approximately 4% of the outstanding interests of each holding company. The Sponsors initially acquired their indirect ownership interest in Ceridian Holding on November 9, 2007, when the Sponsors completed the acquisition of all of the outstanding equity of the Ceridian entities (the “2007 Merger”). The Sponsors acquired their ownership interest in Ceridian Holding II on March 30, 2016, when the Sponsors and other individuals purchased equity in Ceridian Holding II, which in turn purchased equity in Ceridian HCM Holding Inc. This equity financing transaction with Ceridian Holding II raised $150.2, of which $75.0 was contributed by Ceridian Holding II to Ceridian HCM Holding Inc. on March 30, 2016. The remaining $75.2 was committed to be funded to Ceridian HCM Holding Inc. within the following three years, and during the second quarter of 2017, the Board of Directors of Ceridian Holding II approved the funding of the remaining $75.2, which was transferred to Ceridian HCM Holding Inc. on June 28, 2017.

~~On April 30, 2018, we completed our IPO, in which we issued and sold 21,000,000 shares of common stock at a public offering price of $22.00 per share. We granted the underwriters a30-day~~ option to purchase an additional 3,150,000 shares of common stock at the offering price, which was exercised in full. A total of 24,150,000 shares of common stock were issued on April 30, 2018. Concurrently, we issued 4,545,455 shares of our common stock in a private placement at $22.00 per share. We received gross proceeds of $631.3 from the IPO and concurrent private placement before deducting underwriting discounts, commissions, and other offering related expenses. Subsequent to the IPO and concurrent private placement, we completed an internal corporate reorganization, pursuant to which the limited liability companies that hold shares in us were merged with and into Ceridian HCM Holding Inc. At the time of these transactions, these limited liability companies had no assets other than equity interests in us or the other limited liability companies. As a result of these transactions, our previous stockholders now hold shares of our common stock directly, rather than through a series of limited liability companies. These transactions had no impact on our assets, liabilities, or operations. Please refer to Note 19, “Subsequent Events,” for further discussion of the IPO and concurrent private placement. The condensed consolidated financial statements as of March 31, 2018, including share and per share amounts, do not give effect to the IPO, the concurrent private placement, or the internal reorganization, as the IPO and such transactions were completed subsequent to March 31, 2018.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“~~U.S.~~ GAAP”) for interim financial information. Accordingly, ~~they~~the unaudited condensed consolidated financial statements do not include all of the information and notes required by ~~U.S.~~ GAAP for complete financial statements. The accounting policies we follow are set forth in Note 2, “Summary of Significant Accounting Policies,” to ~~Ceridian’s audited consolidated financial statements, included in~~ our audited consolidated financial statements ~~and notes thereto for the year ended December 31, 2017 (our “2017 Annual Report”), included within~~in our ~~prospectus dated April 25, 2018, as filed with the Securities and Exchange Commission (the “SEC”) on April 26, 2018, pursuant to Rule 424(b) under the Securities Act of 1933, as amended (FileNo. 333-223905)~~ ~~(the “Prospectus”)~~2021 Form 10-K. The following notes should be read in conjunction with ~~such~~these policies and other disclosures in our ~~2017 Annual Report and Prospectus.~~2021 Form 10-K.

In the opinion of management, the unaudited condensed consolidated financial statements contained herein reflect all adjustments (consisting only of normal recurring adjustments, except as set forth in these notes to condensed consolidated financial statements) necessary to present fairly in all material aspects the financial position, results of operations, comprehensive ~~loss,~~income (loss), and cash flows from all periods presented. Interim results are not necessarily indicative of results for a full year.

Deferred Costs

~~Reverse Stock Split~~

~~On April 10, 2018, we effected a1-for-2~~ ~~reverse stock split~~Deferred costs, which primarily consist of deferred sales commissions, included within Other assets on our common stock. All of the common share and per share information referenced throughout this interim report have been retroactively adjusted to reflect this reverse stock split. Please refer to Note 19, “Subsequent Events,” for further discussion of other transactions occurring after period end which are not reflected in the condensed ~~consolidated financial statements.~~

~~Use of Estimates~~

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates that could significantly affect our results of operations or financial condition involve the assignment of fair values to goodwill and other intangible assets, the testing of impairment of long-lived assets, the determination of our liability for pensions and postretirement benefits, the determination of fair value of stock options granted, and the resolution of tax matters and legal contingencies. Please refer to our 2017 Annual Report for a further discussion of these estimates.

~~Internally Developed Software Costs~~

In accordance with Accounting Standards Codification (“ASC”) Topic 350, we capitalize costs associated with software developed or obtained for internal use when both the preliminary project stage is completed and our management has authorized further funding for the project, which it deems probable of completion. Capitalized software costs include only: (1) external direct costs of materials and services consumed in developing or obtaining the software; (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the project; and (3) interest costs incurred while developing the software. Capitalization of these costs ceases no later than the point at which the project is substantially complete and ready for its intended purpose. We do not include general and administrative costs and overhead costs in capitalizable costs. We charge research and development costs and other software maintenance costs related to software development to earnings as incurred.

~~Foreign Currency Translation~~

~~We have international operations whereby the local currencies serve as functional currencies. We translate foreign currency denominated assets and liabilities at theend-of-period~~ exchange rates and foreign currency denominated statements of operations at the weighted-average exchange rates for each period. We report the effect of changes in the U.S. dollar carrying values of assets and liabilities of our international operations that are due to changes in exchange rates between the U.S. dollar and their functional currency as foreign currency translation within accumulated other comprehensive income (loss) in the accompanying condensed consolidated statements of comprehensive income (loss). Gains and losses from transactions and translation of assets and liabilities denominated in currencies other than the functional currency of the international operation are recorded in the condensed consolidated statements of operations within other expense, net.

~~Recently Issued and Adopted Accounting Pronouncements~~

~~In May 2014 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2014-09,~~ “Revenue from Contracts with Customers,” which replaced all existing revenue guidance created by ASC Topic 606, including prescriptive industry-specific guidance. This standard’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities will need to apply more judgment and make more estimates than under the previous guidance. In July 2015 the FASB deferred the effective date for all entities by one year, making the guidance for~~non-public~~ companies effective for annual reporting periods beginning after December 15, 2018. Early adoption was permitted to the original effective date of December 15, 2016 (including interim reporting periods within that reporting period). The standard permits the use of either the retrospective or cumulative effect transition method. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. An emerging growth company can, therefore, delay adoption of certain accounting standards until those standards would otherwise apply to private companies. Management has chosen to take advantage of this extended transition period to adopt ASU~~2014-09~~ ~~beginning in the first quarter of 2019. Management anticipates using the retrospective method for adoption.~~

In preparation for this planned adoption, we have been evaluating the impact of the new standard to our financial statements and accompanying disclosures in the notes to our consolidated financial statements. Our assessment of the impact includes an evaluation of the five-step process set forth in the new standard along with the enhancement of disclosures that will be required. To date, we have developed our initial plan for implementing the standard, which includes identifying customer contracts within the scope of the new standard, identifying performance obligations within those customer contracts, and evaluating the impact of incremental variable consideration paid to obtain those customer contracts. We have also undertaken a comprehensive review of all contracts that fall under the scope of the new standard; and, as of the date of this report, we have substantially completed our review of~~in-scope~~ ~~contracts.~~

Based on analysis performed to date, we expect that adoption of the new standard will result in changes to the classification and timing of our revenue recognition. Specifically, we expect an increase in revenue classified as professional services and other revenue and a reduction in revenue classified as recurring services revenue under the new standard, as compared to current U.S. GAAP. Further, we expect that the new standard will result in changes to the timing of our revenue recognition compared to current U.S. GAAP. In compliance with the new standard, a contractual asset will be reflected on the consolidated balance sheets were $143.8 million and ~~will be amortized over the customers’ period~~$144.5 million as of ~~benefit, which is generally three years. We also expect changes to the timing of certain incremental selling, general,~~March 31, 2022, and administrative expenses, as the new standard will also require capitalizing and amortizing certain selling expenses, such as commissions and bonuses paid to the sales force. These sales expenses will be amortized over the customer’s period of benefit.

In periods of revenue growth, the changes above are expected to result in higher overall earnings before income taxes and net income when compared to current U.S. GAAP. We have not yet determined the impact of the disclosure requirements.

~~The following table presents the anticipated impacts that the adoption of ASC 606 would have~~December 31, 2021, respectively. Amortization expense for the ~~periods presented:~~

   Three Months ended March 31, 2018
   As Reported    Under ASC 606    Impact
Revenue:

Recurring services
   $ 188.7    $ 182.3    $ (6.4 )
Professional services and other
   20.2    28.9    8.7






Total revenue
   $ 208.9    $ 211.2    $ 2.3
Operating profit
   $ 26.4    $ 30.6    $ 4.2

   Three Months ended March 31, 2017
   As Reported    Under ASC 606    Impact
Revenue:

Recurring services
   $ 171.4    $ 165.5    $ (5.9 )
Professional services and other
   15.6    22.5    6.9






Total revenue
   $ 187.0    $ 188.0    $ 1.0
Operating profit
   $ 12.2    $ 14.6    $ 2.4

~~In February 2016, the FASB issued ASUNo. 2016-02,~~ ~~“Leases,” which is intended to increase transparency~~deferred costs was $12.6 million and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This standard requires balance sheet recognition$11.0 million for ~~both finance leases and operating leases. This guidance is effective fornon-public~~ companies for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The guidance is required to be adopted using a modified retrospective approach. An entity will, in effect, continue to account for leases that commence before the effective date in accordance with previous U.S. GAAP unless the lease is modified, except that lessees are required to recognize a~~right-of-use~~ asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous U.S. GAAP. We are currently evaluating the impact of the adoption of this standard.

~~In February 2018 the FASB issued ASU2018-02,~~ “Income Statement—Reporting Comprehensive Income,” which is in response to a narrow-scope financial reporting issue that arose because of the Tax Cuts and Jobs Act. The amendment in this update allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. This amendment is intended to improve the usefulness of information reported to financial statement users by requiring certain disclosures about stranded tax effects. The amendment in this update is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard. Please refer to Note 14, “Income Taxes,” for further discussion of this new guidance.

~~3. Discontinued Operations~~

~~Sale of Divested Benefits Continuation Businesses~~

In the third quarter of 2013, we entered into an agreement for the sale of certain of our customer contracts for consumer-directed benefit services, including flexible spending accounts, health reimbursement accounts, health savings accounts, commuter (parking or transit) premium-only plans, and tuition reimbursement plans (collectively, the “Consumer-Directed Benefit Services”). During the third quarter of 2015, we completed two separate transactions that resulted in the sale of our benefits administration and post-employment health insurance portability compliance businesses (the “Divested Benefits Continuation Businesses”).

These three transactions represented a strategic shift in our overall business and have had a significant impact on the financial statement results. Accordingly, the Divested Benefits Continuation Businesses, as well as the Consumer-Directed Benefit Services, have been presented as discontinued operations within the HCM segment in the condensed consolidated financial statements and accompanying notes for all periods presented. The amounts in the table below reflect the operating results and gain on sale of the Divested Benefits Continuation Businesses reported as discontinued operations, as well as supplemental disclosures of the discontinued operations:

   Three Months
ended March 31,
   2017
Net revenues
   $ —
Loss from operations before income taxes
   (0.1 )
Gain on sale of businesses
   0.9
Income tax expense
   (0.3 )
Income from discontinued operations, net of income taxes
   $ 0.5

For both sales of the Divested Benefits Continuation Businesses, consideration received was contingent upon the number and dollar value of successful customer transitions and was recorded when earned. Proceeds of $0.9 were received and earned based on the customers transitioned during the three months ended March 31, ~~2017. These proceeds were for a final purchase pricetrue-up~~ ~~related to one~~2022, and 2021, respectively.

9 | Q1 2022 Form 10-Q

Table of Contents

Recently Issued and Adopted Accounting Pronouncements from the Financial Accounting Standards Board


Standard	Issuance Date	Description	Adoption Date	Effect on the Financial Statements
Accounting Standards Update ("ASU") 2020-06,Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)	August 2020	This amendment simplifies the accounting for convertible instruments by removing certain separation models required under current GAAP for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost.	January 2022	We adopted the guidance as of January 1, 2022, using the modified retrospective method of transition. The adoption resulted in the elimination of the debt discount (and related deferred tax liability) that was recorded within equity related to our Convertible Senior Notes. The net impact of the adjustments was recorded to the opening balance of retained earnings and additional paid in capital. The impact to the condensed consolidated balance sheet was as follows: (1) increase of $92.9 million to long-term debt, (2) decrease of $77.7 million to additional paid-in capital, net of allocated issuance costs of $2.7 million and deferred tax impact of $28.2 million, and (3) decrease to accumulated deficit of $10.0 million.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	March 2020	This amendment provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.	Not yet adopted	This amendment may be elected over time through December 31, 2022 as reference rate reform activities occur. We do not expect the adoption of this guidance to have a significant impact on our financial statements.

3. Business Combinations

ADAM HCM

On December 3, 2021, we completed the acquisition of 100% of the ~~transactions.~~outstanding interests in ATI ROW, LLC and ADAM HCM MEXICO, S. de R.L de C.V (collectively, "ADAM HCM") for $34.5 million. ADAM HCM is a payroll and HCM company in Latin America.

The ~~remaining liabilities related to discontinued operations for the Divested Benefits Continuation Businesses~~purchase accounting has not been finalized as of March 31, ~~2018,~~2022. Provisional amounts relate to the tax positions, and ~~December 31, 2017, are immaterial amounts included in Other accrued expenses in our condensed consolidated balance sheets.~~

~~4. Noncontrolling Interest~~

~~On March 1, 2016,~~ we ~~entered into a strategic joint venture with WorkAngel Technology Limited (“WorkAngel”) in which we contributed our existing LifeWorks business~~expect to ~~a newly formed English limited company (WorkAngel Organisation Limited or~~finalize the “Joint Venture Company”). On January 20, 2017, WorkAngel Organisation Limited changed its name to LifeWorks Corporation Ltd. We have a controlling interest in the Joint Venture Company, including certain preferential distribution rights; therefore, the Joint Venture Company is consolidated within our financial statements, and the other joint venture ownership interest component is presented as a noncontrolling interest.

~~Shareholder distributions will occur upon a liquidation event, as defined by the joint venture agreement. We hold all~~allocation of the ~~Class A shares,~~purchase price within the one-year measurement period following the acquisition. Intangible assets recorded for this acquisition consist of $7.5 million of customer relationships, $2.9 million of developed technology, and ~~former WorkAngel shareholders hold all~~$0.4 million of trade name. Of the ~~Class B shares. Holders~~goodwill associated with this acquisition, $24.0 million is deductible for income tax purposes.

10 | Q1 2022 Form 10-Q

Table of ~~Class A shares will have rights to 75 percent~~Contents

The major classes of the distributions up to $250 million, 25 percent of the distributions between $250 and $500 million, and 50 percent thereafter. Holders of Class B shares have rights to the remaining distributions. Income attributable to noncontrolling interest has been calculated by applying the Class B distribution percentages to the joint venture earnings as reported on a stand-alone basis. During the three months ended March 31, 2018, and 2017, there was loss attributable to the noncontrolling interest of $0.5 and $0.0, respectively.

On April 30, 2018, we distributed our ownership interest in the Joint Venture Company to our stockholders of record prior to our IPO. Please refer to Note 19, “Subsequent Events,” for further discussion of the LifeWorks Disposition.

~~5. Fair Value Measurements~~

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). U.S. GAAP outlines a valuation framework and creates a fair value hierarchy intended to increase the consistency and comparability of fair value measurements and the related disclosures. Certain assets and liabilities ~~must be measured at fair value, and disclosures are required for items measured at fair value.~~

~~We measure our financial instruments using inputs from~~to which we have preliminarily allocated the ~~following three levels of the fair value hierarchy. The three levels are~~purchase price were as follows:


	(Dollars in millions)
Cash and equivalents	$	0.2
Trade receivables, prepaid expenses, and other current assets		0.9
Goodwill		24.0
Other intangible assets		10.8
Other assets		0.2
Accounts payable and other current liabilities		(1.6	)
Total purchase price	$	34.5

~~Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.~~

4. Fair Value Measurements

Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (that is, interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 inputs include unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including internal data.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

~~As of March 31, 2018, our~~Our financial assets and liabilities measured at fair value on a recurring basis were categorized as follows:


										March 31, 2022
										Level 1		Level 2			Level 3			Total
	Total		Level 1		Level 2			Level 3		(Dollars in millions)
Assets
Available for sale customer trust funds assets	$	2,092.1	$	—	$	2,092.1	(a)	$	—

Available for sale customer funds assets										$	—	$	2,062.0	(a)	$	—		$	2,062.0
Total assets measured at fair value	$	2,092.1	$	—	$	2,092.1		$	—	$	—	$	2,062.0		$	—		$	2,062.0

Liabilities
DataFuzion contingent consideration										$	—	$	—		$	6.8	(b)	$	6.8
Total liabilities measured at fair value										$	—	$	—		$	6.8		$	6.8


	December 31, 2021
	Level 1		Level 2			Level 3			Total
	(Dollars in millions)
Assets
Available for sale customer funds assets	$	—	$	1,952.4	(a)	$	—		$	1,952.4
Total assets measured at fair value	$	—	$	1,952.4		$	—		$	1,952.4

Liabilities
DataFuzion contingent consideration	$	—	$	—		$	6.0	(b)	$	6.0
Total liabilities measured at fair value	$	—	$	—		$	6.0		$	6.0

(a)

Fair value is based on inputs that are observable for the asset or liability, other than quoted prices.

(b)

For the contingent consideration related to the 2021 acquisition of ~~December 31, 2017, our financial~~certain assets and liabilities ~~measured at~~of DataFuzion HCM, Inc. ("DataFuzion"), we utilize an option pricing model, specifically a Black-Scholes-Merton model, to estimate the fair value ~~on a~~of the contingent liability as of the reporting dates. This model uses certain assumptions related to risk-free rates and volatility as well as certain judgments in forecasting annual recurring ~~basis were categorized~~revenue. The contingent consideration has been measured as ~~follows:~~Level 3 given the unobservable inputs that are significant to the measurement of liability. The contingent consideration is included within other liabilities in our condensed consolidated balance sheets.

During the three months ended March 31, 2022, we recognized expense of $0.8 million within selling, general, and administrative expense in our condensed consolidated statements of operations due to the remeasurement of the DataFuzion contingent consideration.

   Total    Level 1    Level 2 Level 3
Assets

Available for sale customer trust funds assets
   $ 1,782.1    $ —      $ 1,782.1 (a) $ —






Total assets measured at fair value
   $ 1,782.1    $ —      $ 1,782.1 $ —

11 | Q1 2022 Form 10-Q

~~(a)~~

~~Fair value is based on inputs that are observable for the asset or liability, other than quoted prices.~~

Table of Contents

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

During the three months ended March 31, ~~2018, and the year ended December 31, 2017,~~2022, we did notre-measure any financial assets or liabilities at fair value on a nonrecurring basis. During the year ended December 31, 2021, assets and liabilities acquired as part of business combinations and recognized as part of our convertible debt issuance have been recorded at fair value on a nonrecurring basis.

5. Customer Funds

~~6. Customer Trust Funds~~

~~Overview~~

In ~~connection with our U.S. and Canadian payroll and tax filing services,~~certain jurisdictions, we collect funds for payment of payroll and taxes; temporarily hold such funds ~~in trust~~ until payment is due; remit the funds to the clients’ employees and appropriate taxing ~~authority;~~authorities; file federal, state, and local tax returns; and handle related regulatory correspondence and amendments. The customer assets are held in ~~trust are~~segregated accounts intended for the specific purpose of satisfying client fund obligations and therefore are not freely available for our general business use.

~~Our~~ In the U.S. and Canada, these customer ~~trust~~ funds are held and invested with the primary objectives being to ensure adequate liquidity to meet cash flow requirements and to protect the principal balance. In accordance with these objectives, we maintain on average approximately 45% of customer trust funds in liquidity portfolios with maturities ranging from one to 120 days, consisting of high-quality bank deposits, money market mutual funds, commercial paper, or collateralized short-term investments; and we maintain on average approximately 55% of customer trust funds in fixed income portfolios with maturities ranging from 120 days to 10 years, consisting of U.S. Treasury and agency securities, Canada government and provincial securities, as well as highly rated asset-backed, mortgage-backed, municipal, corporate and bank securities. To maintain sufficient liquidity in the trust to meet payment obligations, we also have financing arrangements and may pledge fixed income securities for short-term financing.trusts.

~~Financial Statement Presentation~~

Investment income from invested customer ~~trust~~ funds, ~~constitutes~~also referred to as float revenue or float, is a component of our compensation for providing services under agreements with our customers. Investment income from invested customer ~~trust~~ funds included in recurring revenue was ~~$17.6~~$11.4 million and ~~$11.4~~$10.7 million for the three months ended March 31, ~~2018,~~2022, and ~~2017,~~2021, respectively. Investment income includes interest income, realized gains and losses from sales of customer ~~trust~~ funds’ investments, and unrealized credit losses determined to be ~~other-than-temporary.~~unrecoverable.

The amortized cost of customer ~~trust~~ funds ~~as of~~ as of March 31, ~~2018~~2022, and December 31, ~~2017,~~2021, is ~~comprised of~~ the original cost of assets acquired. The amortized cost and fair values of investments of customer ~~trust~~ funds available for sale atwere as follows:


	March 31, 2022
	Amortized		Gross Unrealized					Fair
	Cost		Gain		Loss			Value
	(Dollars in millions)
Money market securities, investments carried at cost and other cash equivalents	$	5,288.2	$	—	$	—		$	5,288.2
Available for sale investments:
U.S. government and agency securities		701.8		0.9		(25.3	)		677.4
Canadian and provincial government securities		469.6		1.0		(9.7	)		460.9
Corporate debt securities		641.2		2.2		(18.8	)		624.6
Asset-backed securities		172.1		0.2		(2.8	)		169.5
Mortgage-backed securities		2.2		—		—			2.2
Other short-term investments		60.9		—		—			60.9
Other securities		70.3		—		(3.8	)		66.5
Total available for sale investments		2,118.1		4.3		(60.4	)		2,062.0
Invested customer funds		7,406.3	$	4.3	$	(60.4	)		7,350.2
Receivables		12.2							14.0
Total customer funds	$	7,418.5						$	7,364.2

12 | Q1 2022 Form 10-Q

Table of ~~March 31, 2018 and December 31, 2017, are as follows:~~Contents

~~Investments of Customer Trust Funds at March 31, 2018~~


															December 31, 2021
															Amortized			Gross Unrealized						Fair
	Amortized Cost				Gross Unrealized						Fair Value				Cost			Gain			Loss			Value
				Gain			Loss				Fair Value			(Dollars in millions)
Money market securities, investments carried at cost and other cash equivalents	Amortized Cost	$	2,191.8									$	2,191.8			$	1,562.4		$	—		$	—		$	1,562.4
Available for sale investments:
U.S. government and agency securities		623.1				—			(14.4	)		608.7				697.8			9.5			(5.8	)		701.5
Canadian and provincial government securities		411.9				4.8			(1.9	)		414.8				399.9			5.3			(1.3	)		403.9
Corporate debt securities		781.9				0.5			(4.8	)		777.6				551.4			8.3			(3.1	)		556.6
Asset-backed securities		264.6				0.1			(3.1	)		261.6				174.2			1.5			(0.3	)		175.4
Mortgage-backed securities		12.9				—			(0.3	)		12.6				2.7			—			—			2.7
Other short-term investments																41.4			—			—			41.4
Other securities		17.0				—			(0.2	)		16.8				71.7			—			(0.8	)		70.9

Total available for sale investments		2,111.4				5.4			(24.7	)		2,092.1				1,939.1			24.6			(11.3	)		1,952.4

Invested customer trust funds		4,303.2			$	5.4		$	(24.7	)		4,283.9

Trust receivables		10.0										10.0

Total customer trust funds	$	4,313.2									$	4,293.9

Invested customer funds																3,501.5		$	24.6		$	(11.3	)		3,514.8
Receivables																18.4									21.0
Total customer funds															$	3,519.9								$	3,535.8

~~Investments of Customer Trust Funds at December 31, 2017~~

   Amortized
Cost    Gross Unrealized    Fair
Value
      Gain    Loss
Money market securities, investments carried at cost and other cash equivalents
   $ 2,309.3    $ —      $ —      $ 2,309.3
Available for sale investments:

U.S. government and agency securities
   584.6    0.1    (7.1 )    577.6
Canadian and provincial government securities
   418.2    6.6    (1.5 )    423.3
Corporate debt securities
   472.3    0.8    (2.5 )    470.6
Asset-backed securities
   280.8    —      (1.8 )    279.0
Mortgage-backed securities
   15.0    —      (0.2 )    14.8
Other securities
   17.0    —      (0.2 )    16.8








Total available for sale investments
   1,787.9    7.5    (13.3 )    1,782.1








Invested customer trust funds
   4,097.2    $ 7.5    $ (13.3 )    4,091.4





Trust receivables (a)
   8.3          8.3




Total customer trust funds
   $ 4,105.5          $ 4,099.7

The following represents the gross unrealized losses and the related fair value of the investments of customer ~~trust~~ funds available for sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss ~~position at March 31, 2018.~~ position.


																March 31, 2022
																Less than 12 months					12 months or more					Total
	Less than 12 months					12 months or more					Total					Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value
	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		(Dollars in millions)
U.S. government and agency securities	$	(9.5	)	$	493.6	$	(4.9	)	$	112.0	$	(14.4	)	$	605.6	$	(17.5	)	$	368.1	$	(7.8	)	$	113.6	$	(25.3	)	$	481.7
Canadian and provincial government securities		(1.9	)		138.1		—			—		(1.9	)		138.1		(9.3	)		243.0		(0.4	)		6.6		(9.7	)		249.6
Corporate debt securities		(4.0	)		300.8		(0.8	)		39.0		(4.8	)		339.8		(17.1	)		369.7		(1.7	)		23.0		(18.8	)		392.7
Asset-backed securities		(2.9	)		211.9		(0.2	)		17.8		(3.1	)		229.7		(2.8	)		98.1		—			—		(2.8	)		98.1
Mortgage-backed securities		(0.1	)		3.3		(0.2	)		9.1		(0.3	)		12.4
Other securities			(a)		5.0		(0.2	)		12.5		(0.2	)		17.5		(2.1	)		43.7		(1.7	)		22.6		(3.8	)		66.3

Total available for sale investments	$	(18.4	)	$	1,152.7	$	(6.3	)	$	190.4	$	(24.7	)	$	1,343.1	$	(48.8	)	$	1,122.6	$	(11.6	)	$	165.8	$	(60.4	)	$	1,288.4

~~(a)~~

~~These investments have been in an unrealized loss position; however, the amount of unrealized loss is less than $0.05.~~

Management does not believe that any individual unrealized loss was unrecoverable as of March 31, ~~2018, represents an other-than-temporary impairment.~~2022. The unrealized losses are primarily attributable to changes in interest rates and not to credit deterioration. We currently do not intend to sell or expect to be required to sell the securities before the time required to recover the amortized cost.

The amortized cost and fair value of investment securities available for sale at March 31, ~~2018,~~2022, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or to prepay obligations with or without call or prepayment penalties.

   March 31, 2018
   Cost    Fair Value
Due in one year or less
   $ 2,864.5    $ 2,864.6
Due in one to three years
   525.6    522.0
Due in three to five years
   544.8    538.0
Due after five years
   368.3    359.3




Invested customer trust funds
   $ 4,303.2    $ 4,283.9


	March 31, 2022
	Cost		Fair Value
	(Dollars in millions)
Due in one year or less	$	5,660.9	$	5,662.4
Due in one to three years		702.4		694.8
Due in three to five years		754.1		716.8
Due after five years		288.9		276.2
Invested customer funds	$	7,406.3	$	7,350.2

~~7. Property, Plant, and Equipment~~

~~Property, plant, and equipment consist~~13 | Q1 2022 Form 10-Q

Table of ~~the following:~~Contents

   March 31,    December 31,
   2018    2017
Land
   $ 7.5    $ 7.5
Software
   212.1    207.2
Machinery and equipment
   123.0    122.1
Buildings and improvements
   36.8    36.6




Total property, plant, and equipment
   379.4    373.4
Accumulated depreciation
   (276.0 )    (269.6 )




Property, plant, and equipment, net
   $ 103.4    $ 103.8

~~Depreciation expense of property, plant, and equipment totaled $9.4 and $8.7 for the three months ended March 31, 2018, and 2017, respectively.~~

8.6. Goodwill and Intangible Assets

Goodwill

Goodwill and changes therein were as ~~follows~~follows:


	(Dollars in millions)
Balance at December 31, 2020	$	2,031.8
Acquisitions		308.2
Translation		(16.4	)
Balance at December 31, 2021		2,323.6
Acquisition (a)		0.5
Translation		12.7
Balance at March 31, 2022	$	2,336.8

The purchase accounting has not been finalized for the ~~three months ended March 31, 2018 and the year ended December 31, 2017:~~

ADAM HCM acquisition. Refer to Note 3, "Business Combinations" to our condensed consolidated financial statements for additional information.

   HCM    LifeWorks    Total
Balance at December 31, 2016
   $ 1,933.1    $ 124.9    $ 2,058.0
Translation
   27.9    1.4    29.3






Balance at December 31, 2017
   1,961.0    126.3    2,087.3
Translation
   (11.0 )    (0.5 )    (11.5 )






Balance at March 31, 2018
   $ 1,950.0    $ 125.8    $ 2,075.8

Intangible Assets

Other intangible assets ~~consist~~consisted of the ~~following~~following:


	March 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net		Estimated Life Range (Years)
	(Dollars in millions)
Customer lists and relationships	$	312.1	$	(224.4	)	$	87.7	4-12
Trade name		184.6		(5.3	)		179.3	3-5 and Indefinite
Technology		236.8		(173.7	)		63.1	3-5
Total other intangible assets	$	733.5	$	(403.4	)	$	330.1


	December 31, 2021
	Gross Carrying Amount		Accumulated Amortization			Net		Estimated Life Range (Years)
	(Dollars in millions)
Customer lists and relationships	$	308.4	$	(220.4	)	$	88.0	4-12
Trade name		184.4		(3.2	)		181.2	3-5 and Indefinite
Technology		233.9		(170.6	)		63.3	3-5
Total other intangible assets	$	726.7	$	(394.2	)	$	332.5

As of October 1 each year, we perform an impairment assessment of our indefinite-lived intangible assets, which includes our Ceridian and Dayforce trade names, which have a carrying value of $167.2 million and $4.8 million, respectively as of March 31, ~~2018:~~

   Gross Carrying
Amount    Accumulated
Amortization    Net    Estimated Life
Range (Years)
Customer lists and relationships
   $ 246.8    $ (213.2 )    $ 33.6    5-15
Trade name
   173.9    (2.0 )    171.9    —
Technology
   154.4    (153.3 )    1.1    2-7







Total other intangible assets
   $ 575.1    $ (368.5 )    $ 206.6

~~Other~~2022. We continue to evaluate the use of our trade names and branding in our sales and marketing efforts. If there is a fundamental shift in the method of our branding in the future, we will assess the impact on the carrying amount of our trade name intangible assets ~~consist of~~to determine whether an impairment exists. If it is determined that an impairment has occurred, it would be recognized during the ~~following as of December 31, 2017:~~period in which the decision was made to make the fundamental shift.

   Gross Carrying
Amount    Accumulated
Amortization    Net    Estimated Life
Range (Years)
Customer lists and relationships
   $ 248.4    $ (209.3 )    $ 39.1    5-15
Trade name
   174.0    (2.1 )    171.9    —
Technology
   155.6    (154.2 )    1.4    2-7







Total other intangible assets
   $ 578.0    $ (365.6 )    $ 212.4

Amortization expense related to definite-lived intangible assets was ~~$5.5~~$7.8 million and ~~$5.4~~$2.2 million for the three months ended March 31, ~~2018,~~2022, and ~~2017,~~2021, respectively.

9.14 | Q1 2022 Form 10-Q

Table of Contents

7. Debt

Overview

Our debt obligations consisted of the following as of the periods presented:

   March 31,    December 31,
   2018    2017
Term Debt, interest rate of 5.4% and 5.1% as of March 31, 2018 and December 31, 2017, respectively
   $ 657.0    $ 657.3
Senior Notes, interest rate of 11.0% as of March 31, 2018 and December 31, 2017, respectively
   475.0    475.0
Revolving Credit Facility ($130.0 available capacity less amounts reserved for letters of credit, which were $8.1 and $8.4 as of March 31, 2018 and December 31, 2017, respectively)
   —      —




Total debt
   1,132.0    1,132.3
Less unamortized discount on Term Debt
   0.7    0.9
Less unamortized debt issuance costs on Senior Notes and Term Debt
   10.8    11.6
Less current portion of long-term debt
   —      —




Long-term debt, less current portion
   $ 1,120.5    $ 1,119.8


	March 31,		December 31,
	2022		2021
	(Dollars in millions)
Term Debt, interest rate of 2.9% and 2.6%, respectively	$	656.2	$	657.9
Revolving Credit Facility ($300.0 million available capacity less amounts reserved for letters of credit, which were $2.1 million)		—		—
Convertible Senior Notes, interest rate of 0.25%		575.0		575.0
Australia Line of Credit (AUD $2.9 million letter of credit capacity, which was fully utilized; USD $2.1 million)		—		—
Financing lease liabilities (Please refer to Note 13)		9.3		9.6
Total debt		1,240.5		1,242.5
Less unamortized discount on Term Debt and Convertible Senior Notes (a)		0.9		95.5
Less unamortized debt issuance costs on Term Debt and Convertible Senior Notes (a)		15.6		14.3
Less current portion of long-term debt		8.3		8.3
Long-term debt, less current portion	$	1,215.7	$	1,124.4

a)
We adopted ASU 2020-06 as of January 1, 2022. The unamortized discount and debt issuance costs on the Convertible Senior Notes is presented post-adoption of ASU 2020-06 as of March 31, 2022 and is presented pre-adoption of ASU 2020-06 as of December 31, 2021. Refer to the Convertible Senior Notes section below for further discussion of the impacts of the adoption of ASU 2020-06 on our condensed consolidated financial statements.

Accrued interest and fees related to the debt obligations was $0.1 million and $0.5 million as of March 31, 2022 and December 31, 2021, respectively, and is included within Other accrued expenses in our condensed consolidated balance sheets.

Senior Secured Credit Facility

~~Ceridian entered~~On April 30, 2018, we completed the refinancing of our debt by entering into a new credit ~~agreement dated as of November 14, 2014, pursuant~~agreement. Pursuant to the terms of ~~which Ceridian~~the new credit agreement, we became borrower of (i) a ~~$702.0~~$680.0 million term loan debt facility (the “Term Debt”) and (ii) a ~~$130.0~~$300.0 million revolving credit facility (the “Revolving Credit Facility”) ~~(the Term Debt and the Revolving Credit Facility are together referred to as~~(collectively, the “Senior Secured Credit Facility”). ~~The~~Our obligations under the Senior Secured Credit Facility isare secured by first priority security interests in substantially all of our assets ~~of Ceridian~~ and ~~is senior~~the domestic subsidiary guarantors, subject to ~~Ceridian’s other debt.~~ permitted liens and certain exceptions.

The Term Debt ~~has a~~will mature on April 30, 2025. We are required to make annual amortization payments in respect of the Term Debt in an amount equal to 1.00% of the original principal amount thereof, payable in equal quarterly installments of 0.25% of the original principal amount of the first lien term debt. On December 15, 2021, we completed the second amendment to our Senior Secured Credit Facility, which extended that maturity date of ~~September 2020, and~~ the Revolving Credit Facility ~~has~~form April 30, 2023 to January 29, 2025. The Revolving Credit Facility does not require amortization payments.

Convertible Senior Notes

In March 2021, we issued $575.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2026 in a ~~maturity date~~private offering to qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended, and pursuant to exemptions from the prospectus requirements of applicable Canadian securities laws, including the exercise in full by the initial purchasers of their option to purchase an additional $75.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2026 (collectively, the “Convertible Senior Notes”). The Convertible Senior Notes bear interest at a rate of 0.25% per year and interest is payable semiannually in arrears on March 15 and September ~~2019.~~15 of each year, beginning on September 15, 2021. The Convertible Senior Notes mature on March 15, 2026, unless earlier converted, redeemed or repurchased. The total net proceeds from the offering, after deducting initial purchase discounts and other debt issuance costs, were $561.8 million.

15 | Q1 2022 Form 10-Q

Table of Contents

The following table presents details of the Convertible Senior Notes:

The Convertible Senior Notes will be convertible at the option of the holders at any time only under certain circumstances as outlined in Note 9, “Debt,” to our audited consolidated financial statements in our 2021 Form 10-K. During the ~~three months~~quarter ended March 31, ~~2018, Ceridian made~~2022, the conditions allowing holders of the Convertible Senior Notes to convert have not been met. The Convertible Senior Notes were therefore not convertible during the first quarter of 2022 and are classified as a ~~final mandatorypre-payment~~noncurrent liability in our condensed consolidated balance sheet as of ~~$0.3 towards~~March 31, 2022.

On December 30, 2021, we notified the holders of the Convertible Senior Notes of our irrevocable election to settle the conversion obligation in connection with the Convertible Senior Notes submitted for conversion on or after January 1, 2022, or at maturity with a combination of cash and shares of our common stock. Generally, under this settlement method, the conversion value will be settled in cash in an amount no less than the principal ~~balance~~amount being converted, and any excess of the ~~Term Debt from~~conversion value over the ~~proceeds received from~~principal amount will be settled, at our election, in cash or shares of common stock.

On January 1, 2022, we adopted ASU 2020-06 using the ~~2016 sale~~modified retrospective transition method. Under such transition, prior-period information has not been retrospectively adjusted for this change in accounting guidance.

In accounting for the Convertible Senior Notes upon the adoption of ~~our United Kingdom and Ireland business.~~

ASU 2020-06, the Convertible Senior Notes are accounted for as a single liability, and the carrying amount of the Convertible Senior Notes was $563.3 million as of March 31, 2022, with principal of $575.0 million, net of issuance costs of $11.7 million. The Convertible Senior Notes are classified as Long-term debt, less current portion on the condensed consolidated balance sheets as of March 31, 2022. The issuance costs related to the Convertible Senior Notes are being amortized to interest expense over the contractual term of the Convertible Senior Notes at an effective interest rate of 5.1%.

The following table sets forth total interest expense recognized related to the Convertible Senior Notes for the period:

~~Ceridian issued its senior notes due~~


	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
	(Post-adoption of ASU 2020-06)		(Pre-adoption of ASU 2020-06)
	(Dollars in millions)
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

Capped Calls

In March 2021, (“in connection with the pricing of the Convertible Senior ~~Notes”~~Notes, we entered into capped call transactions with the option counterparties (the “Capped Calls”) ~~on October 1, 2013,~~. The Capped Calls each have an initial strike price of $132.20 per share, and an initial cap price of $179.26 per share, both subject to certain adjustments. The capped call transactions are generally expected to reduce potential dilution to our common stock upon any conversion of the Convertible Senior Notes and/or offset any potential cash payments we would be required to make in excess of the principal amount of $475.0 guaranteed by Parent and its payment systems business unit (“Comdata”). In connection with the Parent’s divestiture of Comdata on November 14, 2014, Ceridian met the credit conditions to allow theconverted Convertible Senior Notes, as the case may be, with such reduction and/or offset subject to ~~transition~~a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Convertible Senior Notes. As the Capped Calls qualify for a scope exception from derivative accounting for instruments that are both indexed to ~~stand-alone obligations~~the issuer's own stock and classified in stockholder’s equity in our condensed consolidated balance sheet, we have recorded an amount of ~~Ceridian. The Senior Notes are unsecured.~~

$33.0 million as a reduction to additional paid-in capital which will not be remeasured. This represents the premium of $45.0 million paid for the purchase of the Capped Calls, net of the deferred tax impact of $12.0 million.

16 | Q1 2022 Form 10-Q

Table of Contents

Future Payments and Maturities of Debt

The future principal payments and maturities of our indebtedness, excluding financing lease obligations, are as follows:

Years Ending December 31,
   Amount
2018
   $ —
2019
   —
2020
   657.0
2021
   475.0
2022
   —
Thereafter
   —


   $ 1,132.0


Years Ending December 31,	Amount
	(Dollars in millions)
2022	$	5.1
2023		6.8
2024		6.8
2025		637.5
2026		575.0
	$	1,231.2

Fair Value of Debt

Our debt does not trade in active ~~markets. Based~~markets and was considered to be a Level 2 measurement at March 31, 2022. The fair value of the Term Debt was based on the borrowing rates currently available to us for bank loans with similar terms and average maturities and the limited trades of our ~~debt,~~debt. The fair value of the Convertible Senior Notes was determined based on the closing trading price per $1,000 of the Convertible Senior Notes as of the last day of trading for the period and is primarily affected by the trading price of our common stock and market interest rates. The fair value of our ~~indebtedness~~debt was estimated to be ~~$1,150.2~~$1,149.0 million and ~~$1,154.1~~$1,248.9 million as of March 31, ~~2018~~2022, and December 31, ~~2017,~~2021, respectively.

~~Debt Refinancing~~

Using the net proceeds received from the IPO and concurrent private placement, we satisfied and discharged the indenture governing our Senior Notes on April 30, 2018, and the Senior Notes will be redeemed as of May 30, 2018. Concurrently, we completed the refinancing of our Senior Secured Credit Facility. Please refer to Note 19, “Subsequent Events,” for further discussion of these transactions.

~~10.~~8. Employee Benefit Plans

The components of net periodic cost for our defined benefit pension plan and for our postretirement benefit plan are included in the following tables:


	Three Months ended March 31,						Three Months Ended March 31,
	2018			2017			2022			2021
Net Periodic Pension Cost							(Dollars in millions)
Interest cost	$	4.1		$	4.3		$	2.2		$	1.7
Expected return on plan assets		(6.5	)		(6.6	)
Actuarial loss amortization		3.6			3.2			3.4			4.3

Less: Expected return on plan assets								(3.9	)		(3.3	)
Net periodic pension cost	$	1.2		$	0.9		$	1.7		$	2.7


	Three Months ended March 31,						Three Months Ended March 31,
	2018			2017			2022			2021
Net Periodic Postretirement Benefit							(Dollars in millions)
Service cost	$	(0.1	)	$	(0.1	)
Interest cost		0.1			0.1		$	0		$	—
Actuarial gain amortization		(0.6	)		(0.6	)		(0.5	)		(0.5	)

Prior service credit amortization								0			0
Net periodic postretirement benefit gain	$	(0.6	)	$	(0.6	)	$	(0.5	)	$	(0.5	)

~~11.~~9. Share-Based Compensation

~~HCM Share-Based Compensation Plans~~Our share-based compensation consists of stock options, restricted stock units (“RSU”), and performance-based stock units (“PSU”). We also offer an employee stock purchase plan.

~~Prior to November~~Effective October 1, 2013, ~~Ceridian~~our employees participated in a share-based compensation plan of the ultimate parent of Ceridian. The 2007 Stock Incentive Plan (“2007 SIP”) authorized the issuance of up to 10,540,540 shares of common stock of Parent to eligible participants through stock options and stock awards. Eligible participants in the 2007 SIP included the Parent’s directors, employees and consultants.

~~Effective November 1, 2013, most participants who held stock options under the 2007 SIP converted their options to a newly created option~~ plan, the 2013 Ceridian HCM Holding Inc. Stock Incentive Plan, (“as amended ("2013 ~~HCM SIP”~~SIP"). ~~A small number of participants maintained their stock options in the 2007 SIP. As of March 31, 2018, there were 10,000 stock options outstanding under the 2007 SIP.~~

The 2013 HCM SIP authorized the issuance of up to 12,500,000 shares of common stock of Ceridian to eligible participants through stock options and other stock awards. On March 20, 2017, the Board of Directors approved an increase to the number of authorized shares under the 2013 HCM SIP to 15,000,000. Eligible participants in the 2013 HCM SIP include Ceridian’s directors, employees, and consultants.

As part of the 2013 HCM SIP, the Board of Directors approved a stock appreciation rights program that authorized the issuance of up to 600,000 stock appreciation rights. As of March 31, 2018, there were 260,850 outstanding stock appreciation rights.

~~As of March 31, 2018, there were 1,823,963 shares available for future grants of stock options and stock awards under the 2013 HCM SIP.~~

Stock options awarded under the 2013 ~~HCM~~ SIP vest either annually on a pro rata basis over a ~~four-~~four- or five-year period or on a specific date if certain performance criteria are satisfied and certain equity values are attained. In addition, upon termination of ~~employment,~~service, all vested stock options ~~become eligible to~~must be exercised generally within 90 days after ~~termination.~~termination, or these awards will be forfeited. The stock option awards have a~~10-year~~10-year contractual term and have an exercise price that is not less than the fair market value of the underlying stock on the date of grant.

~~Share-based compensation expense for the HCM plans was $2.7 and $4.2 for three months ended~~ As of March 31, 2022, there were 979,424 stock options and RSUs outstanding under the 2013 SIP. We ceased granting awards under the 2013 SIP as of April 24, 2018, and ~~2017, respectively.~~do not intend to grant any additional awards under the 2013 SIP.

17 | Q1 2022 Form 10-Q

Table of Contents

On April 24, 2018, in connection with ~~the IPO,~~our initial public offering ("IPO"), the Board of Directors and our stockholders approved the Ceridian HCM Holding Inc. 2018 Equity Incentive Plan ~~(“2018~~(as amended and restated from time to time, the “2018 EIP”), which ~~authorizes~~authorized the issuance of up to 13,500,000 shares of common stock to eligible participants through equity ~~awards. Concurrent with~~awards (the “Share Reserve”). On February 23, 2022, the ~~IPO, 4,673,605~~Board of Directors approved an increase to the Share Reserve of the three percent of the number of shares of common stock ~~options were granted~~outstanding on January 31, 2022 to ~~current employees~~take place on March 31, 2022, pursuant to this evergreen refresh provision of the 2018 EIP. On February 23, 2022, our Board of Directors approved an amendment effective April 1, 2022, to remove the evergreen refresh provision of the 2018 EIP that permitted the Share Reserve to be increased on March 31 of each of the first ten calendar years during the term of the 2018 EIP, by the lesser of (i) 3 percent of the number of shares of our common stock outstanding on each January 31 immediately prior to the date of increase or (ii) such number of shares of our common stock determined by the Board of Directors.

Equity awards under the 2018 ~~EIP.~~EIP vest either annually or quarterly on a pro rata basis, generally over a one-, three-, or four-year period. In addition, upon termination of service, all vested awards must be exercised within 90 days after termination, or these awards will be forfeited. The ~~exercise price of such stock options is $22.00, the IPO price,~~equity awards have a 10-year contractual term, and the options ~~will vest over four years.~~

~~Performance-Based Stock Options~~

~~Performance-based option activity for~~have an exercise price that is not less than the ~~period~~fair market value of the ~~period is as follows:~~

   Shares    Weighted
Average
Exercise
Price
(per share)    Weighted
Average
Remaining
Contractual
Term
(in years)    Aggregate
Intrinsic Value
(in millions)
Options outstanding at December 31, 2017
   1,035,647    $ 13.46    3.5    $ —
Granted
   —      —      —      —
Exercised
   —      —      —      —
Forfeited or expired
   (5,572 )    (13.46 )    —      —








Options outstanding at March 31, 2018
   1,030,075    $ 13.46    3.2    $ —

underlying stock on the date of the grant. As of March 31, 2022, there were 13,010,207 stock options, RSUs, and PSUs outstanding and 13,606,023 shares available for future grants of equity awards under the 2018 EIP.

Total share-based compensation expense was $35.5 million and $22.8 million for the three months ended March 31, 2022, and 2021, respectively.

Performance-Based Stock Options

Performance-based stock option activity under the 2013 SIP and the 2018 EIP was as follows:


	Shares			Weighted Average Exercise Price (per share)			Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in millions)
Performance-based options outstanding at December 31, 2021		1,777,050		$	64.72			8.3	$	70.6
Granted		0			0			—		—
Exercised		(1,857	)		(13.46	)		—		—
Forfeited or expired		0			0			—		—
Performance-based options outstanding at March 31, 2022		1,775,193		$	64.78			8.0	$	6.4
Performance-based options exercisable at March 31, 2022		195,848		$	60.87			7.5	$	1.5

Certain outstanding performance-based stock options under the 2018 EIP include equity awards in which vesting conditions must be met prior to September 13, 2022. The performance criteria is based on migrations of certain customers to Dayforce. We recognize share-based compensation for performance-based stock options based on the likelihood of performance criteria achievement. The performance criteria for certain of these awards have been met and share-based compensation expense was recognized during the three months ended March 31, 2022.

As of March 31, 2022, there was ~~$5.3~~$9.2 million of share-based compensation expense related to unvested performance-based stock ~~options not yet recognized.~~

~~Term-Based Stock Options~~

~~Term-based~~ option ~~activity for the period is as follows:~~

   Shares    Weighted
Average
Exercise
Price
(per share)    Weighted
Average
Remaining
Contractual
Term
(in years)    Aggregate
Intrinsic Value
(in millions)
Options outstanding at December 31, 2017
   10,991,681    $ 16.52    6.9    $ 48.8
Granted
   175,000    20.96    —      —
Exercised
   (17,357 )    (19.76 )    —      —
Forfeited or expired
   (41,988 )    (17.38 )    —      —








Options outstanding at March 31, 2018
   11,107,336    $ 16.59    6.7    $ 48.5
Options exercisable at March 31, 2018
   7,214,169    $ 16.19    5.6    $ 34.4

~~As of March 31, 2018, there was $20.8 of share-based compensation expense related to unvested term based~~ awards not yet recognized, which is expected to be recognized over a ~~weighted average~~weighted-average period of ~~1.2~~0.9 years.

18 | Q1 2022 Form 10-Q

Table of Contents

Term-Based Stock Options

Term-based stock option activity under the 2013 SIP and the 2018 EIP was as follows:


	Shares			Weighted Average Exercise Price (per share)			Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in millions)
Term-based options outstanding at December 31, 2021		8,515,869		$	48.87			7.3	$	473.4
Granted		23,857			70.83			—		—
Exercised		(72,938	)		(36.91	)		—		—
Forfeited or expired		(33,655	)		(64.35	)		—		—
Term-based options outstanding at March 31, 2022		8,433,133		$	48.97			7.1	$	176.4
Term-based options exercisable at March 31, 2022		4,294,076		$	43.60			6.6	$	108.4

As of March 31, ~~2018, there were 7,214,169 vested term-based stock options.~~

~~Restricted Stock Units~~

~~Restricted stock units (“RSUs”) activity for the period is as follows.~~


	~~Shares~~
~~RSUs outstanding at December 31, 2017~~		~~605,990~~
~~Granted~~		—
~~Shares issued upon vesting of RSUs~~		~~(76,190~~	)
~~Forfeited or canceled~~		—

~~RSUs outstanding at March 31, 2018~~		~~529,800~~
~~RSUs releasable at March 31, 2018~~		~~125,000~~

During the three months ended March 31, 2018, 201,190 restricted stock units vested. Of the vested restricted stock units, 76,190 shares of common stock were issued, and 125,000 restricted stock units remained vested and releasable. As of March 31, 2018, there were 404,800 unvested restricted stock units outstanding. Restricted stock units generally vest annually over a three- or four-year period. As of March 31, 2018,2022, there was ~~$6.3~~$56.7 million of share-based compensation expense related to unvested ~~restricted~~term-based stock ~~units not yet recognized, which expected to be recognized over a weighted average period of 3.0 years.~~

~~Joint Venture Company Share-Based Compensation Plan~~

~~In connection with the formation of the Joint Venture Company, a share-based compensation scheme under English law (the “JV SIP”) was created. The JV SIP has authorized the issuance of 3,551,911~~ options to purchase Class C or Class D shares of the Joint Venture Company. Class C shares are ordinary shares in the Joint Venture Company with rights and liquidation preferences comparable to Class B shares. Class D shares are ordinary shares in the Joint Venture Company with rights and liquidation preferences comparable to Class A shares. Eligible participants in the JV SIP include the Joint Venture Company directors and employees.

~~Share-based compensation expense for the JV SIP was $0.2 and $0.3 for the years ended March 31, 2018 and 2017, respectively.~~

~~Class C Stock Options~~

~~Class C stock option activity for the period is as follows:~~

   Shares    Weighted
Average
Exercise
Price
(per share)    Weighted
Average
Remaining
Contractual
Term
(in years)    Aggregate
Intrinsic Value
(in millions)
Options outstanding at December 31, 2017
   1,104,474    $ 2.44    6.9    $ 3.0
Granted
   31,416    3.90    —      —
Exercised
   —      —      —      —
Forfeited or expired
   (21,590 )    (4.57 )    —      —








Options outstanding at March 31, 2018
   1,114,300    $ 2.44    6.7    $ 3.1
Options exercisable at March 31, 2018
   624,820    $ 1.74    6.5    $ 2.2

~~Class D Stock Options~~

~~Class D stock option activity for the period is as follows:~~

   Shares    Weighted
Average
Exercise
Price
(per share)    Weighted
Average
Remaining
Contractual
Term
(in years)    Aggregate
Intrinsic Value
(in millions)
Options outstanding at December 31, 2017
   986,525    $ 8.60    5.8    $ 1.0
Granted
   31,414    7.91    —      —
Exercised
   —      —      —      —
Forfeited or expired
   (26,200 )    (8.83 )    —      —








Options outstanding at March 31, 2018
   991,739    $ 8.57    5.5    $ 1.1
Options exercisable at March 31, 2018
   404,014    $ 8.58    5.5    $ 0.4

~~As of March 31, 2018, there was $2.4 of share-based compensation related to unvested awards~~ not yet recognized, which is expected to be recognized over a ~~weighted average~~weighted-average period of ~~1.8~~1.2 years.

Restricted Stock Units

RSU activity under the 2013 SIP and the 2018 EIP was as follows:


	Shares
RSUs outstanding at December 31, 2021		1,935,939
Granted		1,396,866
Shares issued upon vesting of RSUs		(248,888	)
Forfeited or canceled		(34,397	)
RSUs outstanding at March 31, 2022		3,049,520
RSUs releasable at March 31, 2022		608,573

During the three months ended March 31, 2022, 259,525 RSUs vested. As of March 31, ~~2018,~~2022, there were ~~624,820~~2,440,947 unvested RSUs outstanding and 608,573 vested ~~Class C options~~RSUs outstanding. As of March 31, 2022, there was $157.2 million of share-based compensation expense related to unvested RSUs not yet recognized, which is expected to be recognized over a weighted-average period of 1.9 years.

Performance Stock Units

PSU activity under the 2018 EIP was as follows:


	Shares
PSUs outstanding at December 31, 2021		318,745
Granted		577,015
Shares issued upon vesting of PSUs		(155,526	)
Forfeited or canceled		(8,449	)
PSUs outstanding at March 31, 2022		731,785
PSUs releasable at March 31, 2022		0

On February 24, 2022, we granted PSUs under the 2022 Ceridian HCM Holding, Inc. Management Incentive Plan (the “2022 MIP”) for the incentive period of January 1, 2022 through December 31, 2022, and ~~404,014~~also as part of long term incentive grants to certain members of management. The vesting conditions for the PSUs granted on February 24, 2022, are based on the following performance criteria: (1) the Cloud revenue, excluding float revenue (the “Cloud Revenue Goal”) (2) the adjusted EBITDA, excluding float revenue (the “Adjusted EBITDA Goal”), and (3) the Sales per employee per month (“PEPM”) annual contract value (“ACV”) (the “Sales PEPM ACV Goal”), for fiscal year 2022 (collectively the “Performance Goals”).

19 | Q1 2022 Form 10-Q

Table of Contents

Both the Cloud Revenue Goal and the Adjusted EBITDA Goal are calculated based on our operating results on a constant currency basis as adjusted to exclude: float revenue; foreign exchange gain (loss); share-based compensation expense and related employer taxes; severance charges; restructuring consulting fees; significant acquisitions or disposals and related transaction costs; as well as other non-recurring items, subject to the Board of Directors approval. The Sales PEPM ACV Goal is calculated based on the sales of our solutions on a constant currency basis that contribute to Cloud recurring revenue. Any cash payment under the 2022 MIP and the vesting conditions for the PSU awards granted in 2022 will be determined based on our performance against the achievement of the Performance Goals, and the payout that a participant can receive may be between 0% for not meeting the applicable thresholds of any of the Performance Goals, up to a maximum total payout of 167% for achieving the maximum level of all of the Performance Goals. Upon vesting of a PSU, a participant will receive shares of common stock of the Company. The probability of vesting of the PSUs related to the 2022 MIP and as part of long term incentive grants to certain members of management will continue to be evaluated throughout 2022, and share-based compensation will be recognized in accordance with that probability.

In 2021, we granted PSUs under the Ceridian HCM Holding Inc. 2021 Management Incentive Plan (the “2021 MIP”) for the incentive period of January 1, 2021 through December 31, 2021, and also as part of long term incentive grants to certain members of management. Upon vesting of a PSU, a participant will receive shares of common stock of the Company. The vesting conditions for the PSUs granted in 2021 were based on identical performance criteria, determined against our achievement of Cloud revenue and adjusted EBITDA margin goals for fiscal year 2021. On February 8, 2022, the Compensation Committee certified that we had achieved performance against the performance criteria equivalent to a total payout of 100%. As a result, the PSUs granted under the 2021 MIP vested ~~Class D options.~~in full on March 8, 2022. One-third of the PSUs granted in 2021 as part of long term incentive grants to certain members of management vested on March 8, 2022, and will vest on each of March 8, 2023, and March 8, 2024. Share-based compensation was recognized in 2021 in accordance with the achievement level and the remainder of the long term incentive grants will be expensed over the vesting period.

~~12. Supplementary Data~~As of March 31, 2022, there was $78.5 million of share-based compensation expense related to ~~Statements~~unvested PSUs not yet recognized.

Global Employee Stock Purchase Plan

On November 9, 2018, the Board of ~~Operations~~Directors approved the Ceridian HCM Holding Inc. Global Employee Stock Purchase Plan (“GESPP”), and the Company’s stockholders approved the GESPP on May 1, 2019. The GESPP authorizes the issuance of up to 2,500,000 shares of common stock to eligible participants through purchases via payroll deductions. A total of 1,845,593 shares of common stock are available for future issuances under the plan as of March 31, 2022. The purchase price is the lower of (i) 85% of the fair market value of a share of common stock on the offering date (the first trading day of the offering period commencing on January 1 and concluding on December 31) or (ii) 85% of the fair market value of a share of common stock on the purchase date. The GESPP shall continue for ten years, unless terminated sooner as provided under the GESPP. Quarterly purchase periods commence on January 1, April 1, July 1, and October 1, and shares are purchased on the last trading day of the respective purchase periods.

Our GESPP activity was as follows:

~~Other (income) expense, net consisted~~


Period Ended	Shares Issued		Purchase Price (per share)
March 31, 2022		56,208	$	58.11

20 | Q1 2022 Form 10-Q

Table of ~~foreign currency translation income~~Contents

10. Revenue

Disaggregation of ~~$2.8~~Revenue


	Three Months Ended March 31,
	2022		2021
	(Dollars in millions)
Revenue:
Cloud
Dayforce
Recurring	$	188.6	$	145.3
Professional services and other		41.6		36.8
Total Dayforce revenue		230.2		182.1
Powerpay
Recurring		21.6		20.3
Professional services and other		0.2		0.3
Total Powerpay revenue		21.8		20.6
Total Cloud revenue		252.0		202.7
Bureau
Recurring		37.7		30.4
Professional services and other		3.6		1.4
Total Bureau revenue		41.3		31.8
Total revenue	$	293.3	$	234.5

Recurring revenue includes float revenue of $11.4 million and $10.7 million for the three months ended March 31, ~~2018,~~2022, and ~~foreign currency translation expense~~2021, respectively.

Contract Balances

A contract asset is generally recorded when revenue recognized for professional service performance obligations exceed the contractual amount of ~~$0.9~~billings for ~~the three months ended~~implementation related professional services. Contract assets were $68.1 million and $62.7 million as of March 31, ~~2017. For~~2022, and December 31, 2021, respectively. Contract assets expected to be recognized in revenue within twelve months are included within Prepaid expenses and other current assets, with the ~~three months ended~~remaining contract assets included within Other assets on our condensed consolidated balance sheets.

Deferred Revenue

Deferred revenue primarily consists of payments received in advance of revenue recognition. The changes in deferred revenue were as follows:


	Three Months Ended March 31,
	2022			2021
	(Dollars in millions)
Deferred revenue, beginning of period	$	48.7		$	24.4
New billings		125.3			100.6
Acquired billings		—			14.3
Revenue recognized		(126.6	)		(95.4	)
Effect of exchange rate		0.7			(0.2	)
Deferred revenue, end of period	$	48.1		$	43.7

21 | Q1 2022 Form 10-Q

Table of Contents

Transaction Price for Remaining Performance Obligations

In accordance with ASC Topic 606, the following represents the aggregate amount of transaction price allocated to the remaining performance obligations that are unsatisfied as of the end of the reporting period. As of March 31, ~~2018,~~2022, approximately $1,130.6 million of revenue is expected to be recognized over the next three years from remaining performance obligations, which represents contracted revenue for recurring services and ~~2017,~~fixed price professional services, primarily implementation services, that has not yet been recognized, including deferred revenue and unbilled amounts that will be recognized as revenue in future periods. In accordance with the ~~foreign currency translation is~~practical expedient provided in ASC Topic 606, performance obligations that are billed and recognized as they are delivered, primarily ~~related to foreign currency remeasurement gains~~professional services contracts that are on a time and ~~losses resulting~~materials basis, are excluded from ~~intercompany receivables or payables denominated in foreign currencies.~~the transaction price for remaining performance obligations disclosed above.

~~13.~~11. Accumulated Other Comprehensive ~~Income (Loss)~~Loss

The components of accumulated other comprehensive ~~income (loss)~~loss were as follows:

   Foreign
Currency
Translation
Adjustment    Unrealized Gain
(Loss) from
Invested
Customer Trust
Funds    Pension
Liability
Adjustment    Total
Balance as of December 31, 2017
   $ (160.6 )    $ (9.0 )    $ (142.5 )    $ (312.1 )
Other comprehensive income (loss) before income taxes and reclassifications
   (15.9 )    (13.4 )    (0.1 )    (29.4 )
Income tax benefit
   —      0.8    —      0.8
Reclassifications to earnings
   —      —      3.0    3.0








Other comprehensive income (loss) attributable to Ceridian
   (15.9 )    (12.6 )    2.9    (25.6 )








Balance as of March 31, 2018
   $ (176.5 )    $ (21.6 )    $ (139.6 )    $ (337.7 )


	Foreign Currency Translation Adjustment			Unrealized Gain (Loss) from Invested Customer Funds			Pension Liability Adjustment			Total
	(Dollars in millions)
Balance as of December 31, 2021	$	(177.3	)	$	2.8		$	(150.3	)	$	(324.8	)
Other comprehensive income (loss) before income taxes and reclassifications		15.6			(69.4	)		0.2			(53.6	)
Income tax benefit (expense)		—			18.4			(0.8	)		17.6
Reclassifications to earnings		—			—			2.9			2.9
Other comprehensive income (loss)		15.6			(51.0	)		2.3			(33.1	)
Balance as of March 31, 2022	$	(161.7	)	$	(48.2	)	$	(148.0	)	$	(357.9	)

During the three months ended March 31, 2018, other comprehensive loss attributable to noncontrolling interest was $0.2, entirely related to foreign currency translation. During the three months ended March 31, 2017, other comprehensive income attributable to noncontrolling interest was $0.1, entirely related to foreign currency translation.

~~14.~~12. Income Taxes

Our income tax provision ~~(benefit)~~ represents federal, state, and international taxes on our income recognized for financial statement purposes ~~which~~and includes the ~~effect~~effects of temporary differences between financial statement income and income recognized for tax return purposes. ~~Our income~~Deferred tax ~~provision is negatively affected by~~assets and liabilities are recorded for temporary differences between the ~~need for a valuation allowance against our deferred~~financial reporting basis and the tax ~~assets.~~basis of assets and liabilities. We record a valuation allowance to reduce our deferred tax ~~asset when it is more likely than not that all or a portion of~~assets to reflect the net deferred tax ~~asset~~assets that we believe will ~~not~~ be realized. In ~~determining~~assessing the ~~requirement~~likelihood that we will be able to recover our deferred tax assets and the need for a valuation allowance, we ~~assess the~~consider all available evidence, both positive and negative, ~~evidence to estimate if sufficient~~including historical levels of pre-tax book income, expiration of net operating losses, changes in our debt and equity structure, expectations and risks associated with estimates of future taxable income, ~~will be generated to utilize our deferred~~ongoing prudent and feasible tax ~~assets not already identified~~planning strategies, as ~~requiring a valuation allowance.~~well as current tax laws. As of March 31, ~~2018, and December 31, 2017, excluding the Joint Venture Company,~~2022, we ~~continued to record~~have a ~~full~~ valuation allowance of $46.2 million against ~~our domestic~~certain deferred tax assets ~~that are not offset by the reversal~~consisting primarily of ~~deferred tax liabilities. In the future, if it is determined that we no longer have a requirement~~$13.4 million attributable to ~~record a valuation allowance against all or a portion of our~~state net operating loss carryovers, and $31.0 million attributable to deferred tax assets ~~the release of the valuation allowance would have a positive impact on our income tax provision.~~

On December 22, 2017, the Tax Cut and Jobs Act legislation (the “Act”) was signed into law. The Act made broad and complex changes to the U.S. tax code including: (a) lower U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018, (b) accelerated expensing of qualified capital investments for a specific period, and (c) a transition from a worldwide tax system to a territorial tax system.

~~ASC 740, Income Taxes, requires a company to record the effects~~recorded as part of a tax law change in the period of enactment; however, shortly after enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which allows a company to record a provisional amount when it does not have the necessary information available to complete its accounting for the change in the tax law. The FASB subsequently issued ASU~~2018-05~~ ~~to codify SAB 118 by amending ASC 740. ASU2018-05~~ continues to allow a company to record a provisional amount when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in the tax law. The measurement period ends when the company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year.previous acquisition.

We recorded an income tax expense of ~~$6.8~~$3.0 million during the three months ended March 31, ~~2018. Included in this amount are~~2022, consisting of tax expense of $4.3 million attributable to the ~~estimated impacts of requiring a current inclusion in U.S. federal~~global intangible low tax income ~~of certain earnings of controlled foreign corporations, allowing a domestic corporation an immediate deduction~~("GILTI") in the ~~U.S. taxable income for~~U.S, and $4.4 million attributable to share-based compensation, partially offset by a ~~portion~~$4.7 million tax benefit from current operations, and other tax benefits of ~~its foreign-derived intangible income, and the base erosion anti-abuse tax.~~

$1.0 million.

In January and April of 2018, the Internal Revenue Service (the “IRS”) issued guidance that provides additional clarification on certain aspects of the transition tax calculation. We did not record any change to our transition tax liability during the three months ended March 31, 2018. We are considering the additional IRS guidance as we continue to gather additional information related to the transition tax estimates and deferred tax estimates to more precisely compute the transition tax and remeasurement of deferred taxes. We anticipate additional IRS guidance relative to the impacts of the Act will be forthcoming throughout 2018.

~~The total amount of~~There were 0 unrecognized tax benefits as of March 31, ~~2018,~~2022, and December 31, ~~2017, were $10.5, including $2.1~~2021. We make adjustments to these reserves when facts and circumstances change, such as the closing of ~~accrued interest, and $10.5, including $2.2~~tax audits or the refinement of ~~accrued interest, respectively. Of~~an estimate. To the ~~total amount of unrecognized tax benefits as of March 31, 2018, $9.9 represents the amount that, if recognized, would favorably impact our effective income tax rate. It is reasonable to expect~~extent that the ~~amount~~final tax outcome of ~~unrecognized tax benefits~~these matters is different than the amounts recorded, such differences will ~~change~~affect the provision for income taxes in the ~~next twelve months; however, we do not expect the change to~~period in which such determination is made and could have a ~~significant~~material impact on our ~~results of operations or~~ financial ~~condition.~~condition and operating results.

We file income tax returns in the U.S. federal jurisdiction, various states, and foreign jurisdictions. With a few exceptions, we are no longer subject to U.S. federal, state and local, ornon-U.S. income tax examinations by tax authorities for years before ~~2014.~~2017.

22 | Q1 2022 Form 10-Q

Table of Contents

~~15.~~

13. Leases

Supplemental balance sheet information related to leases was as follows:


Lease Type	Balance Sheet Classification	March 31, 2022		December 31, 2021
		(Dollars in millions)
ASSETS
Operating lease assets	Trade and other receivables, net	$	0.2	$	0.2
Operating lease assets	Prepaid expenses and other current assets		3.6		3.4
Operating lease assets	Right of use lease asset		28.7		29.4
Financing lease assets	Property, plant, and equipment, net		8.0		8.3
Total lease assets		$	40.5	$	41.3
LIABILITIES
Current
Financing lease liabilities	Current portion of long-term debt	$	1.5	$	1.5
Operating lease liabilities	Current portion of long-term lease liabilities		11.2		11.3
Noncurrent
Financing lease liabilities	Long-term debt, less current portion		7.8		8.1
Operating lease liabilities	Long-term lease liabilities, less current portion		31.1		32.7
Total lease liabilities		$	51.6	$	53.6

The components of lease expense were as follows:


	Three Months Ended March 31,
	2022			2021
Lease Cost	(Dollars in millions)
Operating lease cost	$	2.5		$	1.2
Financing lease cost:
Depreciation of lease assets		0.3			0.3
Interest on lease liabilities		0.1			0.1
Sublease income		(0.1	)		(0.6	)
Total lease cost, net	$	2.8		$	1.0

14. Commitments and Contingencies

Legal Matters

We are subject to claims and a number of judicial and administrative proceedings considered normal in the course of our current and past operations, including employment-related disputes, contract disputes, disputes with our competitors, intellectual property disputes, government audits and proceedings, customer disputes, and tort claims. In some proceedings, the claimant seeks damages as well as other relief, which, if granted, would require substantial expenditures on our part.

Our general terms and conditions in customer contracts frequently include a provision indicating we will indemnify and hold our customers harmless from and against any and all claims alleging that the services and materials furnished by us violate any third party’s patent, trade secret, copyright, or other intellectual property right. We are not aware of any material pending litigation concerning these indemnifications.

Some of these matters raise difficult and complex factual and legal issues and are subject to many uncertainties, including the facts and circumstances of each particular action, and the jurisdiction, forum, and law under which each action is proceeding. Because of these complexities, final disposition of some of these proceedings may not occur for several years. As such, we are not always able to estimate the amount of our possible future liabilities, if any.

There can be no certainty that we may not ultimately incur charges in excess of presently established or future financial accruals or insurance coverage. Although occasional adverse decisions or settlements may occur, it is management’s opinion that the final disposition of these proceedings will not, considering the merits of the claims and available resources or reserves and insurance, and based upon the facts and circumstances currently known, have a material adverse effect on our financial position or results of operations.

23 | Q1 2022 Form 10-Q

Table of Contents

~~16. Related Party Transactions~~

~~Management Agreements~~

Ceridian is party to management agreements with affiliates of our Sponsors, Fidelity National Financial, Inc. (“FNF”) and THLM. FNF assigned its management agreement to Cannae in November 2017. Pursuant to these management agreements, Cannae and THLM each, respectively, agree to provide the Company with financial advisory, strategic, and general oversight services. These management agreements provide that we will pay annual management fees to each of Cannae and THLM in an amount equal to the greater of (a) $0.9, or (b) 0.5 percent of Adjusted EBITDA. Adjusted EBITDA, for purposes of the management agreements, is EBITDA as defined in the Ceridian Senior Secured Credit Facility, further adjusted to exclude the payments made pursuant to the management agreements and certain stock options or other equity compensation.

We recorded a management fee expense in selling, general, and administrative expense of $0.5, and $0.5 for the three months ended March 31, 2018, and 2017, respectively, related to these management agreements.

In April 2018, the management agreements terminated upon consummation of our IPO. Upon termination, the management agreements provided that we pay a termination fee equal to the net present value of the management fee for a seven year period, which was $11.3 million.

~~Indebtedness~~

~~Prior to itssplit-off~~ from FNF, Cannae was an affiliate of FNF. FNF and its subsidiaries owned $24.0 and $24.0 of the Senior Notes as of March 31, 2018, and December 31, 2017, respectively. Based on this ownership, $0.8 and $0.8 in interest payments were made to FNF and its subsidiaries during the three months ended March 31, 2018, and 2017, respectively. FNF and its subsidiaries conducted the debt transactions through third parties in the ordinary course of their business and not directly with us. Following Cannae’s~~split-off~~ ~~from FNF, FNF retained ownership of the Senior Notes.~~

~~Service and Vendor Related Agreements~~

Ceridian is a party to a service agreement with CompuCom Systems, Inc. (“CompuCom”), an investment portfolio company of THL Partners. Pursuant to the service agreement, CompuCom agrees to provide us with service desk and desk side support services. Pursuant to this arrangement, we made payments to CompuCom totaling $0.2, and $0.5 during the three months ended March 31, 2018, and 2017, respectively.

~~Other Transactions~~

We provide Dayforce and related services to The Stronach Group, for which we recorded revenue of $0.1 for the three months ended March 31, 2018. Alon Ossip, the brother of David Ossip, is the chief executive officer of The Stronach Group.

~~We provide Dayforce and related services to FNF for which we recorded revenue of $0.1 and $0.3 for the three months ended March 31, 2018, and 2017, respectively.~~

~~17. Financial Data by Segment and Geographic Area~~

~~Segments~~

As of March 31, 2018, Ceridian had two operating and reportable segments, HCM and LifeWorks, based on the separate management teams, solutions, and objectives of the businesses. Our operating and reportable segments align with how management monitored operating performance, allocates resources, and deploys capital. There were two chief operating decision makers (“CODM”), the Chief Executive Officer (“CEO”) of HCM and the CEO of LifeWorks. Both reported directly to their separate Boards of Directors.

Segment performance is based on revenues and operating income or income (loss) before interest expense and income taxes. Interest expense and income taxes are not indicative of operating performance, and, as a result are not included in the measures that are reviewed by the CODMs. The amounts in the following tables are obtained from reports used by our senior management team. There are no significant~~non-cash~~ items reported in segment profit or loss other than depreciation and amortization and share-based compensation. Total assets by segment were $6,723.8 for HCM and $155.7 for LifeWorks as of March 31, 2018, and $6,573.7 for HCM and $156.2 for LifeWorks as of December 31, 2017. Please refer to Note 8, “Goodwill and Intangible Assets,” for goodwill balances by segment.

   Three Months ended March 31, 2018
   HCM    LifeWorks    Total
Cloud revenue
   $ 125.2    $ —      $ 125.2
Bureau revenue
   62.0    —      62.0
LifeWorks revenue
   —      21.7    21.7






Total revenue
   187.2    21.7    208.9
Operating profit (loss)
   27.3    (0.9 )    26.4
Depreciation and amortization
   13.9    1.0    14.9
Capital expenditures
   $ 10.3    $ —      $ 10.3

   Three Months ended March 31, 2017
   HCM    LifeWorks    Total
Cloud revenue
   $ 90.7    $ —      $ 90.7
Bureau revenue
   76.7    —      76.7
LifeWorks revenue
   —      19.6    19.6






Total revenue
   167.4    19.6    187.0
Operating profit
   10.9    1.3    12.2
Depreciation and amortization
   13.1    1.0    14.1
Capital expenditures
   $ 8.7    $ 0.1    $ 8.8

~~Our Solutions~~

~~We categorize our solutions into three categories: Cloud HCM (“Cloud”), Bureau HCM (“Bureau”), and LifeWorks offerings.~~

Cloud revenue is generated from HCM solutions that are delivered via two cloud offerings: Dayforce and Powerpay. The Dayforce offering is differentiated from our market competition as being a single application that offers a comprehensive range of functionality, including global HR, payroll, benefits, workforce management, and talent management on web and native iOS and Android platforms. Dayforce revenue is primarily generated from monthly recurring fees charged on a PEPM basis, generally~~one-month~~ in advance of service. Also included within Dayforce revenue is implementation, staging, and other professional services revenue; revenues from the sale, rental, and maintenance of time clocks; and billable travel expenses. The Powerpay offering is our solution designed primarily for small market Canadian customers. The typical Powerpay customer has fewer than 20 employees, and the majority of the revenue is generated from recurring fees charged on a~~per-employee,per-process~~ ~~basis. Typical processes include the customer’s payroll runs,year-end~~ tax packages, and delivery of customers’ remittance advices or checks. In addition to the direct revenue earned from the Dayforce and Powerpay offerings, Cloud revenue also includes investment income generated from holding Cloud customer funds in trust before funds are remitted to taxing authorities, Cloud customer employees, or other third parties; and revenue from the sale of third party services.

Bureau revenue is generated primarily from HCM solutions delivered via a service-bureau model. These solutions are delivered via three primary service lines: payroll, payroll-related tax filing services, and outsourced human resource solutions. Revenue from payroll services is generated from recurring fees charged on a~~per-process~~ ~~basis. Typical processes include the customer’s payroll runs,year-end~~ tax packages, and delivery of customers’ remittance advices or checks. In addition to customers who use our payroll services, certain customers use our tax filing services on a stand-alone basis. Our outsourced human resource solutions are tailored to meet the needs of individual customers, and entail our contracting to perform many of the duties of a customer’s human resources department, including payroll processing, time and labor management, performance management, and recruiting. We also perform~~HCM-related~~ individual services for customers, such as check printing, wage attachment and disbursement, and ACA management. Additional items included in Bureau revenue are custom professional services revenue; investment income generated from holding Bureau customer funds in trust before funds are remitted to taxing authorities, Bureau customer employees, or other third parties; consulting services related to Bureau offerings; and revenue from the sale of third party services.

LifeWorks joint venture revenue is primarily generated from employee assistance, wellness, recognition, and incentive programs offered directly by LifeWorks in the United States, Canada, the United Kingdom and various other countries through LifeWorks’ network of contractors. LifeWorks offers employee engagement services, such as employee assistance programs, social recognition, discounts from participating vendors, a private social network, employee and corporate wellness, and employee engagement analytics.

~~Revenue by solution is as follows:~~

   Three Months ended March 31,
   2018    2017
Cloud
   $ 125.2    $ 90.7
Bureau
   62.0    76.7
LifeWorks
   21.7    19.6




Total revenue
   $ 208.9    $ 187.0

~~18.~~15. Net Loss per Share

We compute net loss per share of common stock using the treasury stock method.

Basic net loss per share is computed by dividing net loss attributable to Ceridian available to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

For the calculation of diluted net loss per share, net loss per share is adjusted by the effect of dilutive securities, including awards under our share-based compensation plans. Diluted net loss per share is computed by dividing the resulting net loss attributable to Ceridian available to common stockholders by the weighted-average number of fully diluted common shares outstanding. During the three months ended March 31, 2018, and 2017, our potential dilutive shares, such as stock options, RSUs, and shares of senior and junior convertible preferred stock were not included in the computation of diluted net loss per share as the effect of including these shares in the calculation would have been anti-dilutive.

The ~~numerators and denominators of the~~ basic and diluted net loss per share computations ~~are~~were calculated as follows:

   Three Months ended March 31,
   2018    2017
Numerator:

Net loss attributable to Ceridian
   $ (2.1 )    $ (11.2 )
Less: Income from discontinued operations
   —      0.5




Net loss from continuing operations attributable to Ceridian
   (2.1 )    (11.7 )
Less: Senior Preferred Stock dividends declared
   5.3    4.7




Net loss from continuing operations attributable to Ceridian available to common stockholders
   $ (7.4 )    $ (16.4 )




Denominator:

Weighted-average shares outstanding—basic
   65,314,462    65,034,610
Weighted-average shares outstanding—diluted
   65,314,462    65,034,610
Net loss per share from continuing operations attributable to Ceridian—basic and diluted
   $ (0.11 )    $ (0.25 )
Net income per share from discontinued operations—basic and diluted
   $ —      $ 0.01




Net loss per share attributable to Ceridian—basic and diluted
   $ (0.11 )    $ (0.24 )


	Three Months Ended March 31,
	2022			2021
	(Dollars in millions, except share and per share data)
Numerator:
Net loss	$	(27.4	)	$	(19.2	)

Denominator:
Weighted-average shares outstanding - basic		152,124,151			148,716,050
Effect of dilutive equity instruments		—			—
Weighted-average shares outstanding - diluted		152,124,151			148,716,050

Net loss per share - basic	$	(0.18	)	$	(0.13	)
Net loss per share - diluted	$	(0.18	)	$	(0.13	)

The following potentially dilutive weighted-average shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive:

   Three Months ended March 31,
   2018    2017
Senior convertible preferred stock
   16,802,144    16,802,144
Junior convertible preferred stock
   58,244,308    58,244,308
Stock options
   12,055,839    10,715,493
Outstanding RSUs
   581,440    218,741


	Three Months Ended March 31,
	2022		2021
Stock options		5,361,160		5,448,133
Restricted stock units		535,754		518,939
Performance stock units		590,284		604,193

~~Pro Forma Net Loss Per Share~~

~~Pro forma basic and~~The shares underlying the conversion option in the Convertible Senior Notes were not considered in the calculation of diluted net loss per share as the effect would have been anti-dilutive. Based on the initial conversion price, the entire outstanding principal amount of the Convertible Senior Notes as of March 31, 2022 would have been convertible into approximately 4.3 million shares of our common stock. Since we expect to settle the principal amount of the Convertible Senior Notes in cash, we use the treasury stock method for calculating any potential dilutive effect on diluted net income per share, if applicable. As a result, only the amount by which the conversion value exceeds the aggregate principal amount of the Convertible Senior Notes (the “conversion spread”) is considered in the diluted earnings per share computation. The conversion spread has a dilutive impact on diluted net income per share when the average market price of our common stock for a given period exceeds the initial conversion price of $132.20 per share for the Convertible Senior Notes. We excluded the potentially dilutive effect of the conversion spread of the Convertible Senior Notes as the average market price of our common stock during the three months ended March 31, ~~2018, has been computed to reflect~~2022 was less than the conversion price of the Convertible Senior Notes. In connection with the issuance of the Convertible Senior Notes, we entered into Capped Calls, which were not included for purposes of calculating the number of diluted shares ~~that will be~~ outstanding, after the internal corporate reorganization subsequent to our IPO and concurrent private placement, in which our senior convertible preferred stock and junior convertible preferred stock was converted into common stock. Pro forma basic and diluted net loss per share does not giveas their effect ~~to our IPO or concurrent private placement and the use of proceeds therefrom.~~

~~The numerators and denominators of pro forma basic and diluted net loss per share computations are calculated as follows:~~

   Three Months
ended March 31,
   2018
Numerator:

Net loss attributable to Ceridian
   $ (2.1 )
Less: Income from discontinued operations
   —


Net loss from continuing operations attributable to Ceridian
   $ (2.1 )


Denominator:

Weighted-average shares outstanding—basic and diluted
   65,314,462
Pro forma adjustment to reflect assumed conversion of senior convertible preferred stock
   13,124,574
Pro forma adjustment to reflect assumed conversion of junior convertible preferred stock
   29,122,075


Pro forma weighted-average shares outstanding used to computed pro forma net loss per share—basic and diluted
   107,561,111
Pro forma net loss per share from continuing operations attributable to Ceridian—basic and diluted
   $ (0.02 )
Pro forma net income per share from discontinued operations—basic and diluted
   $ —


Pro forma net loss per share attributable to Ceridian—basic and diluted
   $ (0.02 )

~~19. Subsequent Events~~

~~Reverse Stock Split~~

~~On April 10, 2018, we effected a1-for-2~~ ~~reverse stock split of our common stock. All of the common share and per share information referenced throughout this interim report~~would have been ~~retroactively adjusted to reflect this reverse stock split.~~anti-dilutive.

~~Initial Public Offering and Concurrent Private Placement~~24 | Q1 2022 Form 10-Q

~~On April 30, 2018, we completed our initial public offering (“IPO”), in which we issued and sold 21,000,000 shares~~Table of ~~common stock at a public offering price of $22.00 per share. We granted the underwriters a30-day~~ option to purchase an additional 3,150,000 shares of common stock at the offering price, which was exercised in full. A total of 24,150,000 shares of common stock were issued on April 30, 2018, with gross proceeds of $531.3 from the IPO before deducting underwriting discounts, commissions, and other offering expenses. Immediately subsequent to the closing of our IPO on April 30, 2018, THL / Cannae Investors LLC, one of our existing stockholders controlled by our Sponsors, purchased from us in a private placement $100.0 of our common stock at a price per share equal to the offering price. Based on the offering price of $22.00 per share, 4,545,455 shares were issued in this private placement. The condensed consolidated financial statements as of March 31, 2018, including share and per share amounts, do not give effect to the IPO, concurrent private placement, or the internal corporate reorganization discussed in Note 1, “Organization,” as the IPO and related transactions were completed subsequent to March 31, 2018.Contents

~~Debt Refinancing~~

Concurrently with closing of the IPO and the concurrent private placement, we applied the net proceeds from the IPO to satisfy and to discharge the indenture governing our outstanding $475.0 principal amount Senior Notes, and they will be redeemed on May 30, 2018. We also refinanced our remaining indebtedness under our (i) $702.0 (original principal amount) Senior Term Debt and (ii) $130.0 Revolving Credit Facility, including accrued interest and related costs and expenses, with new senior credit facilities consisting of a $680.0 term loan debt facility and a $300.0 revolving credit facility.

~~LifeWorks Disposition~~

Contemporaneously with the IPO and concurrent private placement, we distributed our interest in LifeWorks to our existing stockholders of record prior to the IPO on a pro rata basis in accordance with their pro rata interests in us. As a result of the LifeWorks Disposition, we no longer have any material obligations under the LifeWorks joint venture agreement. In addition, upon completion of the LifeWorks Disposition, LifeWorks is no longer a separate reportable segment, and we will no longer have a~~non-controlling~~ ~~interest on our consolidated financial statements.~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of our financial condition and results of operations ~~should be read in conjunction~~together with ~~the~~our unaudited condensed consolidated financial statements and notes thereto included elsewhere in this ~~Quarterly Report on Form10-Q~~ ~~(this “Form10-Q”)~~report and in conjunction with our audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, ~~2017 (our “2017 Annual Report”) included within our prospectus dated April 25, 2018, as~~2021, filed with the Securities and Exchange Commission ~~(the “SEC”~~(“SEC”) on ~~April 26, 2018, pursuant~~February 28, 2022 (our “2021 Form 10-K”). This discussion and analysis contains forward-looking statements, including statements regarding industry outlook, our expectations for the future of our business, and our liquidity and capital resources as well as other non-historical statements. These statements are based on current expectations and are subject to ~~Rule 424(b) under~~numerous risks and uncertainties, including but not limited to the ~~Securities Act of 1933, as amended (FileNo. 333-223905)~~ ~~(the “Prospectus”).~~risks and uncertainties described in Part II, Item 1A, “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by these forward-looking statements. Any reference to a “Note” in this discussion relates to the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this ~~Form10-Q~~report unless otherwise indicated.

Overview

Ceridian is a global human capital management (“HCM”) software company. We categorize our solutions into two categories: Cloud and Bureau solutions. Cloud revenue is generated from HCM solutions that are delivered via two cloud offerings: Dayforce, our flagship cloud HCM platform, ~~provides~~and Powerpay, a cloud human resources (“HR”), and payroll solution for the Canadian small business market. We also continue to support customers using our legacy North America Bureau solutions, which we generally stopped actively selling to new customers following the acquisition of Dayforce, and customers using our acquired Bureau solutions in Asia Pacific Japan ("APJ"). We invest in maintenance and necessary updates to support our Bureau customers and continue to migrate them to Dayforce. Revenue from our Cloud and Bureau solutions includes investment income generated from holding customer funds before funds are remitted to taxing authorities, also referred to as float revenue or float.

Dayforce provides HR, payroll, benefits, workforce management, and talent management functionality. Our platform is used by organizations, regardless of industry or size, to optimize management of the entire employee lifecycle, including attracting, engaging, paying, deploying, and developing their people. Dayforce was built as a single application from the ground up that combines a modern, consumer-grade user experience with proprietary application architecture, including a single employee record and a rules engine spanning all areas of HCM. Dayforce provides continuous real-time calculations across all modules to enable, for example, payroll administrators access to data through the entire pay period, and managers access to real-time data to optimize work schedules. Our platform is designed to make work life better for our customers and their employees by improving HCM decision-making processes, streamlining workflows, ~~exposing~~revealing strategic organizational insights, and simplifying legislative compliance. The platform is designed to ease administrative work for both employees and managers, creating opportunities for companies to increase employee engagement. We are afounder-led organization, and our culture combines the agility and innovation of astart-up with a history of deep domain and operational expertise.

Dayforce Wallet is a digital wallet for customers' employees on the Dayforce platform, which was launched in the U.S. in 2020 and Canada in 2021. The Dayforce Wallet gives our customers’ employees greater control over their financial well-being by providing them with instant access to their earnings. This on-demand pay feature allows employees more choice over when they get paid by making any day payday. Dayforce Wallet enables workers to access their already-earned wages anytime during the pay period, net of taxes, withholdings and other payroll deductions. Leveraging Dayforce’s continuous pay calculations, Dayforce Wallet processes a same-day payroll each time a worker requests their pay. The solution is compliant with federal, state, and local remittances and requires no changes to payroll processing including the funding, timing, and close-out of pay. The on-demand wages are loaded onto a paycard, which customers’ employees can use anywhere credit or debit cards are accepted, generating interchange fee revenue. The Dayforce Wallet mobile app makes it easy for customers' employees to check their pay deposits, account balance and transaction history.

As of March 31, 2022, we had more than 1,100 customers signed onto Dayforce Wallet with over 510 customers live on the product. As of March 31, 2022, the average registration rate increased to 34% of all eligible employees.

25 | Q1 2022 Form 10-Q

Table of Contents

We sell Dayforce through our direct sales force on a subscriptionper-employee,per-month (“PEPM”) basis. Our subscriptions are typically structured with an initial fixed term of between three and five years, with evergreen renewal thereafter. Dayforce can serve customers of all sizes, ranging from 100 to over 100,000 employees. We have rapidly grown the Dayforce platform to ~~more than 3,150~~5,609 live Dayforce customers as of March 31, ~~2018.~~2022.1 For the three months ended March 31, ~~2018,~~2022, we added ~~over 150~~175 net new live Dayforce customers.

In addition to Dayforce, we sell Powerpay, a cloud HR and payroll solution for the Canadian small business market, through both direct sales and established partner channels. We also continue to support customers using our Bureau solutions, which we generally stopped actively selling to new customers following the acquisition of Dayforce. We invest in maintenance and necessary updates to support our Bureau customers and continue to migrate them to Dayforce. We also own a controlling financial interest in a joint venture, LifeWorks, which offers an employee engagement platform that delivers employee assistance programs, social recognition, exclusive perks and discounts, a private social network, employee and corporate wellness programs, and employee engagement analytics in the United States, Canada, and the United Kingdom.

~~How We Generate Revenue~~

We generate recurring revenues primarily from recurring fees charged for the use of our Cloud HCM solutions, Dayforce and Powerpay, as well as from our Bureau solutions and LifeWorks joint venture. We also generate professional services and other revenue associated primarily with the work performed to assist customers with the planning, design, implementation, and staging of their cloud-based solution. Our HCM solutions are typically provided through long-term customer relationships that result in a high level of recurring revenue. For Dayforce, we primarily charge monthly recurring fees on a PEPM basis, generally~~one-month~~ in advance of service, based on the number and type of solutions provided to the customer and the number of employees and other users at the customer. Our standard Dayforce contracts are generally for a three to five-year period. The average time it takes to implement Dayforce typically ranges from three months for smaller customers to nine months for larger customers. Once Dayforce is implemented, the customer goes live, and we begin to generate recurring revenue. For Powerpay, we charge customers recurring fees on a~~per-employee,per-process~~ basis. Powerpay can typically be implemented on a remote basis within one to three days, at which point we start receiving recurring fees. For our Bureau solutions, we primarily charge recurring fees on a~~per-process~~ basis. We also generate recurring revenue from investment income from funds held in trust on behalf of our customers. The LifeWorks joint venture also generates recurring revenue, primarily from employee assistance, wellness, recognition, and incentive programs.

~~Our Solutions~~

~~We categorize our solutions into three categories: Cloud HCM, Bureau HCM, and LifeWorks solutions.~~

~~Our History~~

~~Ceridian was acquired in 2007 by affiliates andco-investors~~ of Thomas H. Lee Partners, L.P. (“THL Partners”) and Cannae Holdings, Inc., formerly known as Fidelity National Financial Ventures, LLC (“Cannae”) (THL Partners and Cannae are together referred to as the “Sponsors”). In April 2012, Ceridian acquired Dayforce Corporation, which had built Dayforce, a Cloud HCM solution. In the months following the acquisition, Dayforce founder David D. Ossip was named Chief Executive Officer of Ceridian HCM, and shortly thereafter, we generally stopped actively selling our Bureau solutions to new customers in the United States to focus our resources on expanding the Dayforce platform and growing Cloud HCM solutions. For each quarter since September 30, 2016, our Cloud HCM revenue has surpassed our Bureau HCM revenue.

As part of our strategy to focus on the growth of our Cloud HCM solutions business, we (i) sold our consumer-directed benefit services business in 2013, (ii) merged Comdata, our payment systems business unit, with FleetCor Technologies Inc. in 2014, (iii) sold our benefits administration and post-employment compliance business in 2015, and (iv) sold our United Kingdom and Ireland businesses and a portion of our operations that supported such businesses in the Republic of Mauritius in 2016. Our benefits administration and post-employee compliance business, our United Kingdom and Ireland businesses, and our divested Mauritius operations are presented as discontinued operations in our financial statements. Our consumer-directed

benefits services business and our benefits administration and post-employment compliance business are collectively referred to as our “Divested Benefits Businesses.” As a result of these transactions, we only actively sell Dayforce and Powerpay in our HCM segment, which we believe simplifies our business model and positions us well for continued growth. In 2016, we contributed our LifeWorks employee assistance program business to a joint venture, LifeWorks, that provides employee assistance, wellness, recognition, and incentives programs in the United States, Canada, and the United Kingdom. Prior to the formation of the LifeWorks joint venture, employee assistance programs were provided by Ceridian.

~~Recent Developments~~

On April 30, 2018, we completed our initial public offering (“IPO”), in which we issued and sold 21,000,000 shares of common stock at a public offering price of $22.00 per share. We granted the underwriters a~~30-day~~ option to purchase an additional 3,150,000 shares of common stock at the offering price, which was exercised in full. A total of 24,150,000 shares of common stock were issued on April 30, 2018, with gross proceeds of $531.3 million from the IPO before deducting underwriting discounts, commissions, and other offering expenses. Immediately subsequent to the closing of our IPO on April 30, 2018, THL / Cannae Investors LLC, one of our existing stockholders controlled by our Sponsors, purchased from us in a private placement $100.0 million of our common stock at a price per share equal to the offering price. Based on the offering price of $22.00 per share, 4,545,455 shares were issued in this private placement.

We applied the net proceeds from the IPO to satisfy and to discharge the indenture governing our outstanding $475.0 million principal amount Senior Notes, and they will be redeemed on May 30, 2018. Concurrently, we also refinanced our remaining indebtedness under our (i) $702.0 million (original principal amount) Senior Term Debt and (ii) $130.0 million Revolving Credit Facility, including accrued interest and related costs and expenses, with new senior credit facilities consisting of a $680.0 million term loan debt facility and a $300.0 million revolving credit facility.

~~Please refer to Note 19, “Subsequent Events,” for further discussion of these transactions.~~

Our Business Model

Our business model focuses on supporting the rapid growth of Dayforce and maximizing the lifetime value of our Dayforce customer relationships. Due to our subscription model, where we recognize subscription revenues ratably over the term of the subscription period, and our high customer retention rates, we have a high level of visibility into our future revenues. The profitability of a customer ~~to our business~~ depends, in large part, on how long they have been a customer. Because in our business model, PEPM subscription fees are not charged until the customer goes live, and because we incur costs in advance of receiving PEPM revenue that are not offset by our implementation fees, weWe estimate that it takes ~~an average of 2.5~~approximately two years before we are able to recover our implementation, customer acquisition, and other direct costs on a new Dayforce customer contract. As the proportion of Dayforce customers who have been live for two or more years increases, our related profitability increases. The following sets forth the number of live Dayforce customers at the end of each quarter presented:

   March 31, December 31, September 30, June 30, March 31, December 31,
   2018 2017 2017 2017 2017 2016
Live Dayforce customers
   3,154 3,001 2,855 2,690 2,480 2,339
Dayforce customers live for two or more years
   1,872 1,770 1,628 1,524 1,377 1,276
Proportion of Dayforce customers live for two or more years
   59 % 59 % 57 % 57 % 56 % 55 %

Over the lifetime of the customer relationship, we have the opportunity to realize additional PEPM revenue, both as the customer grows or rolls out the Dayforce solution to additional employees, and also by selling additional functionality to existing customers that do not currently utilize our full ~~platform.~~suite of capabilities. We also incur costs to manage the account, to ~~support~~retain customers, and to sell additional functionality. These costs, however, are significantly less than the costs initially incurred to acquire and to ~~implement~~take customers live.

Global Events

In March 2020, the ~~customer.~~

~~Key Factors and Trends Affecting Our Results~~World Health Organization declared the outbreak of ~~Operations~~

~~Set forth below is~~coronavirus (COVID-19) to be a ~~discussion of some~~pandemic. The global spread of the ~~key factors~~COVID-19 pandemic created significant global volatility, uncertainty, and ~~trends affecting our results of operations.~~

~~Growing our Dayforce Customer Base~~

~~A key part of our strategy is to continue to grow our Dayforce~~economic disruption. We experienced curtailed customer base. We have developed sales and marketing efforts that are designed for effective customer acquisition. As of March 31, 2018, we had more than 3,150 live Dayforce customers, an increase of approximately 670 customers as compared to the total at March 31, 2017. Our continued focus on sales execution is important to drive further penetration of the Dayforce platform and to expand our market share. We also believe that there is a significant opportunity for our solution outside of our core North American markets. Dayforce was designeddemand, primarily as a ~~global platform;~~result of declining employment levels at our customers in certain sectors, such as retail and ~~we intend to expand globally through both the expansion of our own proprietary payroll functionality,~~hospitality, as well as ~~through new and existing partnerships with local vendors, including our existing membership in~~lower customer utilization of professional services, due to the ~~Payroll Services Alliance.~~

~~Extending Product Leadership~~

We are committed to delivering market-leading HCM solutions preferred by employers and employees alike. We believe that maintaining our product leadership is critical to driving further revenue growth. Our leading market position in technology is basedeffects of the COVID-19 pandemic. While we experienced adverse impacts on our ~~ability to innovate~~revenue in 2021 and ~~to bring new solutions to market. Dayforce is designed around~~2020, we ended 2021 with employment levels at our ~~proprietary single application architecture, which features continuous calculation~~customers in-line with pre-pandemic levels. Additionally, the federal funds rate cuts by the U.S. Federal Reserve and ~~includes a single cross-domain rules engine~~the overnight rate target by the Bank of Canada in March 2020 had negative effects on our float revenue in 2021 and a complete employee record, which facilitates new innovation. Since 2012, we have developed a full suite of HCM functionality. We intend to continue to extend the functionality and breadth of our platform in the future. We have a roadmap for2020. The continued, development, which includes adding native payroll capabilities for additional countries. We intend to continue to invest in our product development and innovation to maintain our strong, differentiated technology position.

~~Retaining and Expanding Revenue from Existing Dayforce Customers~~

The economic benefits of our business model include persistent, long-lived customer relationships, as well as the opportunity to realize additional revenue from existing customers. Our annual Cloud revenue retention rate was over 95% in 2017, reflecting high retention rates with Dayforce customers, driving strong customer lifetime value. Because our subscription revenue is based on a PEPM charge, as customers grow and add more employees, we realize a corresponding increase in PEPM revenue. Moreover, with the continued launch of new functionality for our Dayforce platform, we have the opportunity to realize incremental revenue by selling additional functionality to existing customers that do not currently utilize our full platform. We believe that this opportunity is particularly strong in the enterprise segment, where customers often start with a subset of our Dayforce platform in conjunction with point solutions from other vendors that we target to replace over time.

~~Managing the Migration of our Bureau Customers to Dayforce~~

We generally stopped actively selling our Bureau solutions to new customers in the United States in 2012 and have been marketing our Dayforce platform to new and existing customers since that time. For the three months ended March 31, 2018, Bureau revenue declined by $14.7 million, or 19.2%, as compared to the three months ended March 31, 2017. Of the $14.7 million decline in Bureau revenue for the three months ended March 31, 2018, $6.1 million was associated with customers migrating to Dayforce, which represented 18%broader implications of the ~~increase in Cloud revenue during this period. As the number of Bureau customers continues to decline,~~pandemic on our results of operations and overall financial performance will depend on numerous evolving factors. Consequently, the extent of any potential impacts of COVID-19 remain uncertain and cannot be reasonably estimated.

In February 2022, the Russian Federation (“Russia”) and Belarus commenced a military action with the country of Ukraine. We are closely monitoring the unfolding events due to the Russia-Ukraine conflict and its regional and global ramifications. We do not have operations in ~~part,~~Russia, Ukraine or Belarus. We are monitoring any broader economic impact from the current crisis, including increased cybersecurity risks. The specific impact on ~~replacing~~our financial condition, results of operations, and cash flows is not material as of the ~~revenue from Bureau customer attrition~~date of these financial statements. However, to the extent that such military action spreads to other countries, intensifies, or otherwise remains active, such action could adversely affect our business, financial condition, and ~~on maintaining~~results of operations.

Recent Events

Acquisitions

On March 1, 2021, we completed the ~~profitability~~purchase of ~~services to our remaining Bureau customers. We believe that our cloud Dayforce platform~~100% of the outstanding shares of Ascender HCM Pty Limited (“Ascender”) for $359.6 million. Ascender is ~~attractive to many customers that currently use an outsourced service bureau for their~~a payroll and~~HCM-related~~ needs; and, as a result, that sales to new customers and sales of additional functionality to our growing Dayforce customer base will continue to more than offset the decline in revenue from Bureau customers. We also believe that we will continue to be able to provide services to our remaining Bureau customers at attractive margins. As we migrate our Bureau customers to Dayforce, we typically experience a revenue increase from such customers driven by increased product density on the Dayforce platform.

~~Profitably Managing our Growth~~

We carefully designed and built Dayforce to meet the needs of a homogeneous market with a common set of requirements and compliance challenges across organization sizes and industries. To support our rapid growth, we have rigorously managed our implementation and customer support operations to maintain consistent, repeatable methods and processes and to take advantage of automation. We believe that our business model enables us to realize significant operating leverage and economies of scale and that we can continue to acquire, to implement, and to support more customers and to generate more revenue without a corresponding increase in expenses. Our profitability depends in part upon our ability to achieve a balance HR solutions provider in the ~~timing~~Asia Pacific Japan region.

On April 30, 2021, we acquired 100% of the outstanding shares of O5 Systems, Inc. dba Ideal (“Ideal”) for $41.4 million. Ideal is a talent intelligence software provider based in Toronto, Ontario, Canada.

On October 4, 2021, we completed the acquisition of certain assets and ~~magnitude~~liabilities of ~~required investments~~DataFuzion HCM, Inc. (“DataFuzion”), for $12.5 million in ~~sales~~cash consideration and ~~marketing, implementation,~~future contingent consideration payments. DataFuzion designs, implements, and supports customer ~~support.~~specific data solutions that integrate HCM and ERP systems on their FUZE platform.

On December 3, 2021, we completed the acquisition of 100% of the outstanding interests in ATI ROW, LLC and ADAM HCM MEXICO, S. de R.L. de C.V. (collectively, "ADAM HCM") for $34.5 million. ADAM HCM is a payroll and HCM company in Latin America.

1Excluding the 2021 acquisitions of Ascender and ADAM HCM

26 | Q1 2022 Form 10-Q

Table of Contents

Financing and Other

In March 2021, we issued $575.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2026. In connection with the pricing of the Convertible Senior Notes, we entered into capped call transactions with the option counterparties.

How We Assess Our Performance

In assessing our performance, we consider a variety of annual and quarterly performance indicators in addition to revenue and net income. Set forth below ~~is a description~~are descriptions of our quarterly key performance measures. Additional information on our annual performance measures are described in Part II, “Item 7. Management's Discussion and Analysis" under the heading "How We Assess Our Performance" contained in our 2021 Form 10-K.

~~The following table sets forth our key performance indicators for the periods presented.~~

   Three Months Ended March 31,
   2018 2017
Live Dayforce customers
   3,154 2,480
HCM Adjusted EBITDA (a) (Dollars in millions)
   $ 43.6 $ 31.2
HCM Adjusted EBITDA margin
   23.3 % 18.6 %

~~(a)~~

~~For a reconciliation of HCM Adjusted EBITDA to HCM operating profit, please see the “HCM Adjusted EBITDA,” section below.~~

Live Dayforce Customers

~~In our business model, PEPM subscription fees are not charged until the customer goes live on the platform, and we~~We use the number of ~~customers~~ live on Dayforce customers as an indicator of future revenue and the overall performance of the business and to assess the performance of our implementation services. We ~~have 3,154~~had 5,609 customers live on Dayforce as of March 31, ~~2018.~~2022, compared to 5,039 customers live on Dayforce as of March 31, 2021.2

Dayforce Recurring Revenue Per Customer

We use Dayforce recurring revenue per customer as an indicator of the average size of our Dayforce recurring customer. Dayforce recurring revenue per customer was $110,947 for the trailing twelve months ended March 31, 2022, compared to $101,230 for the comparable period in 2021.3

To calculate Dayforce recurring revenue per customer, we start with Dayforce recurring revenue on a constant currency basis by applying the same exchange rate to all comparable periods for the trailing twelve months and exclude float revenue, the impact of lower employment levels due to COVID-19 pandemic in 2021 and 2020, 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. We calculate and monitor Dayforce recurring revenue per customer on a quarterly basis. Our Dayforce recurring revenue per customer may fluctuate as a results of a number of factors, including the number of live Dayforce customers and the number of customers purchasing the full HCM suite. We have not reconciled the Dayforce recurring revenue per customer because there is no directly comparable GAAP financial measure.

2 Excluding the 2021 acquisitions of Ascender and ADAM HCM

3 Excluding float revenue, the impact of lower employment levels in 2021 and 2020 due to the COVID-19 pandemic, Ascender and ADAM HCM revenue and on a constant currency basis

27 | Q1 2022 Form 10-Q

Table of Contents
Constant Currency Revenue
We present revenue on a constant currency basis to assess how our underlying business performed, excluding the effect of foreign currency rate fluctuations. We believe this non-GAAP financial measure is useful to management and investors. We have calculated revenue on a constant currency basis by applying the average foreign exchange rate in effect during the comparable prior period. Please refer to the “Results of Operations” section below for further information on constant currency revenue. The average U.S. dollar to Canadian dollar foreign exchange rate was $1.27, with a daily range of $1.25 to $1.29, for the three months ended March 31, 2022, compared to $1.27, with a daily range of $1.24 to $1.29 for the three months ended March 31, 2021. As of March 31, 2022, the U.S. dollar to Canadian dollar foreign exchange rate was $1.25.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin

We believe that ~~HCM~~EBITDA, Adjusted EBITDA and ~~HCM~~ Adjusted EBITDA margin,non-GAAP financial measures, are useful to management and investors as supplemental measures to evaluate our overall operating performance. ~~HCM~~EBITDA, Adjusted EBITDA and ~~HCM~~ Adjusted EBITDA margin are components of our management incentive plan and are used by management to assess performance and to compare our operating performance to our competitors. We define ~~HCM Adjusted~~ EBITDA as net income ~~or loss~~(loss) before interest, taxes, depreciation, and amortization, and Adjusted EBITDA as EBITDA, as adjusted to exclude ~~net income or loss from discontinued operations, LifeWorks EBITDA, sponsor management fees,non-cash~~ ~~charges for asset impairments, gains or losses on assets and liabilities held in a~~ foreign ~~currency other than the functional currency of a company subsidiary,non-cash~~exchange gain (loss), share-based compensation expense and related employer taxes, severance charges, restructuring consulting fees, and ~~environmental reserve charges. HCM~~certain other non-recurring items. Adjusted EBITDA margin is determined by calculating the percentage ~~HCM~~that Adjusted EBITDA is of ~~Total HCM Revenue.~~total revenue. Management believes that ~~HCM~~EBITDA, Adjusted EBITDA and ~~HCM~~ Adjusted EBITDA margin are helpful in highlighting management performance trends because ~~HCM~~EBITDA, Adjusted EBITDA and ~~HCM~~ Adjusted EBITDA margin exclude the results of decisions that are outside the ~~control~~normal course of ~~operating management.~~

~~Our presentation~~our business operations. Please refer to the “Results of ~~HCM~~Operations” section below for a discussion of EBITDA, Adjusted EBITDA and ~~HCM~~Adjusted EBITDA margin.

28 | Q1 2022 Form 10-Q

Table of Contents

Results of Operations

Three Months Ended March 31, 2022 Compared With Three Months Ended March 31, 2021



	Three Months Ended March 31,						Increase/(Decrease)						% of Revenue
	2022			2021			Amount			%			2022			2021
	(Dollars in millions)
Revenue:
Recurring
Cloud	$	210.2		$	165.6		$	44.6			26.9	%		71.7	%		70.6	%
Bureau		37.7			30.4			7.3			24.0	%		12.9	%		13.0	%
Total recurring		247.9			196.0			51.9			26.5	%		84.5	%		83.6	%
Professional services and other		45.4			38.5			6.9			17.9	%		15.5	%		16.4	%
Total revenue		293.3			234.5			58.8			25.1	%		100.0	%		100.0	%
Cost of revenue:
Recurring
Cloud		64.6			46.1			18.5			40.1	%		22.0	%		19.7	%
Bureau		17.7			13.6			4.1			30.1	%		6.0	%		5.8	%
Total recurring		82.3			59.7			22.6			37.9	%		28.1	%		25.5	%
Professional services and other		54.5			44.7			9.8			21.9	%		18.6	%		19.1	%
Product development and management		40.4			25.8			14.6			56.6	%		13.8	%		11.0	%
Depreciation and amortization		13.0			11.1			1.9			17.1	%		4.4	%		4.7	%
Total cost of revenue		190.2			141.3			48.9			34.6	%		64.8	%		60.3	%
Gross profit		103.1			93.2			9.9			10.6	%		35.2	%		39.7	%
Selling, general, and administrative		122.0			95.6			26.4			27.6	%		41.6	%		40.8	%
Operating loss		(18.9	)		(2.4	)		(16.5	)		(687.5	)%		(6.4	)%		(1.0	)%
Interest expense, net		5.8			5.6			0.2			3.6	%		2.0	%		2.4	%
Other (income) expense, net		(0.3	)		4.6			(4.9	)		(106.5	)%		(0.1	)%		2.0	%
Loss before income taxes		(24.4	)		(12.6	)		(11.8	)		(93.7	)%		(8.3	)%		(5.4	)%
Income tax expense		3.0			6.6			(3.6	)		(54.5	)%		1.0	%		2.8	%
Net loss	$	(27.4	)	$	(19.2	)	$	(8.2	)		(42.7	)%		(9.3	)%		(8.2	)%
Net profit margin (a)		(9.3	)%		(8.2	)%		(1.1	)%		(13.4	)%
Adjusted EBITDA (b)	$	57.4		$	44.5		$	12.9			29.0	%		19.6	%		19.0	%
Adjusted EBITDA margin (b)		19.6	%		19.0	%		0.6	%		3.2	%

(a)

Net profit margin is determined by calculating the percentage that net income (loss) is of total revenue.

(b)

Please refer to the “Non-GAAP Measures” section for a discussion and reconciliation of Adjusted EBITDA and Adjusted EBITDA margin, ~~are intended as supplemental measures~~non-GAAP financial measures.

29 | Q1 2022 Form 10-Q

Table of our performance that are not required by, or presented in accordance with, U.S. GAAP. HCM Adjusted EBITDA and HCM Adjusted EBITDA margin should not be considered as alternatives to operating income (loss), net income (loss), earnings per share, or any other performance measures derived in accordance with U.S. GAAP, or as measures of operating cash flows or liquidity. Our presentation of HCM Adjusted EBITDA and HCM Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by these items. HCM Adjusted EBITDA and HCM Adjusted EBITDA margin are included in this discussion because they are key metrics used by management to assess our operating performance.

Contents

HCM Adjusted EBITDA and HCM Adjusted EBITDA margin are not defined under U.S. GAAP, are not measures of net income, operating income, or any other performance measures derived in accordance with U.S. GAAP, and are subject to important limitations. Our use of the terms HCM Adjusted EBITDA and HCM Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies in our industry and are not measures of performance calculated in accordance with U.S. GAAP.

HCM Adjusted EBITDA and HCM Adjusted EBITDA margin have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

~~HCM Adjusted EBITDA and HCM Adjusted EBITDA margin do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;~~

~~HCM Adjusted EBITDA and HCM Adjusted EBITDA margin do not reflect changes in, or cash requirements for, our working capital needs;~~

~~HCM Adjusted EBITDA and HCM Adjusted EBITDA margin do not reflect any charges for the assets being depreciated and amortized that may need to be replaced in the future;~~

~~HCM Adjusted EBITDA and HCM Adjusted EBITDA margin do not reflect the impact of share-based compensation upon our results of operations;~~

~~HCM Adjusted EBITDA and HCM Adjusted EBITDA margin do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt; and~~

~~HCM Adjusted EBITDA and HCM Adjusted EBITDA margin do not reflect our income tax expense or the cash requirements to pay our income taxes.~~

~~In evaluating HCM Adjusted EBITDA and HCM Adjusted EBITDA margin, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation.~~

~~The following table reconciles HCM operating profit to HCM Adjusted EBITDA for the periods presented:~~

   Three Months ended March 31,
   2018    2017
   (Dollar in millions)
HCM operating profit
   $ 27.3    $ 10.9
Depreciation and amortization
   13.9    13.1




HCM EBITDA from continuing operations (1)
   41.2    24.0
Sponsorship management fees (2)
   0.5    0.5
Intercompany foreign exchange loss (gain)
   (2.8 )    0.8
Share-based compensation (3)
   2.7    4.2
Severance charges (4)
   1.9    1.9
Restructuring consulting fees (5)
   0.1    (0.2 )




HCM Adjusted EBITDA
   $ 43.6    $ 31.2

~~(1)~~

~~We define HCM EBITDA from continuing operations as HCM net income or loss before interest, taxes, depreciation and amortization, and net income or loss from discontinued operations.~~

~~(2)~~

Represents expenses related to our management, monitoring, consulting, transaction, and advisory fees and related expenses paid to the affiliates of our Sponsors pursuant to the management agreement with THL Managers VI, LLC (“THLM”) and Cannae. See Note 16 to our condensed consolidated financial statements, “Related Party Transactions,” for further information.

~~(3)~~

~~Represents the share-based compensation adjustment only for our HCM segment.~~

~~(4)~~

~~Represents costs for severance compensation paid to employees whose positions have been eliminated, resulting primarily from the shift of business from our Bureau solutions to our Cloud solutions.~~

~~(5)~~

Represents consulting fees and expenses incurred during the periods presented in connection with any acquisition, investment, disposition, recapitalization, equity offering, issuance or repayment of indebtedness, issuance of equity interests, or refinancing.

~~Components of Our Results of Operations~~

We have two operating and reportable segments, HCM and LifeWorks. HCM includes both of our Cloud solutions, Dayforce and Powerpay, as well as our Bureau HCM solutions. Our LifeWorks segment reflects the results of the LifeWorks joint venture.

~~Revenues~~

We have two categories of revenues: (i) recurring services and (ii) professional services and other. Recurring services revenues consist of the recurring fees that we charge for our Cloud HCM and Bureau HCM solutions, as well as LifeWorks solutions. For our Dayforce solutions, we primarily charge monthly recurring fees on a PEPM basis, generally~~one-month~~ ~~in advance of service, based on the number and type of solutions provided to the customer and the number of employees at the customer. We charge Powerpay customers recurring fees on aper-employee,per-process~~ ~~basis. For our Bureau HCM solutions, we typically charge recurring fees on aper-process~~ basis. We also generate recurring services revenue from investment income on our Cloud and Bureau customer funds held in trust before such funds are remitted to taxing authorities, customer employees, or other third parties. We refer to this investment income as float revenue. Professional services and other revenues consist primarily of charges relating to the work performed to assist customers with the implementation of their solutions. Also included in professional services and other revenues are any related training services, post-implementation professional services, and purchased time clocks. We also generate professional services and other revenues from other professional services and consulting services that we provide and for certain third party services that we arrange for our Bureau customers.

~~The following table presents our Cloud HCM revenue for both recurring and professional services and other, for both our Dayforce and Powerpay solutions for the periods presented.~~

   Three Months ended March 31,    Growth rate
year-over-year Growth rate on a
constant
currency basis (a)
   2018    2017    2018 vs. 2017 2018 vs. 2017
   (Dollar in millions)
Dayforce
   $ 102.4    $ 71.0    44.2 % 42.8 %
PowerPay
   22.8    19.7    15.7 % 10.0 %






Total Cloud revenue
   $ 125.2    $ 90.7    38.0 % 35.6 %

~~(a)~~

We present revenue growth in a constant currency to provide a framework for assessing how our underlying businesses performed, excluding the effect of foreign currency rate fluctuations. We calculate percentage change in revenue on a constant currency basis by applying a fixed 1.30 Canadian dollar to 1 U.S. dollar foreign exchange rate to revenues originally booked in Canadian dollars and 0.75 British pound sterling to 1 U.S. dollar foreign exchange rate to revenues originally booked in British pound sterling for all applicable periods.

Cloud revenue was $125.2 million for the three months ended March 31, 2018, an increase of 38.0% when compared to three months ended March 31, 2017. Dayforce revenue increased 44.2%, and Powerpay revenue increased 15.7% for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017. On a constant currency basis, Dayforce revenue increased 42.8%, and Powerpay revenue increased 10.0% for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017. Our new business sales to Dayforce customers comprised 82% of our increase in Cloud revenue for the three months ended March 31, 2018, including sales to new Dayforce customers and sales of additional functionality to existing Dayforce customers; and the remaining 18% consisted primarily of customer migration to Dayforce from our Bureau solutions.

As we focused on our Cloud HCM solutions, we generally ceased marketing our Bureau solutions to new customers in the United States in 2012 and in Canada in 2015, and have been actively marketing our Dayforce platform to these customers since that time. During the three months ended March 31, 2018, Bureau revenue declined by $14.7 million, or 19.2%, as compared to the three months ended March 31, 2017.

Our customer trust funds are invested with safety of principal and liquidity as the primary objectives. As a secondary objective, we also seek to maximize float revenue, which is affected by the balances held in our customer trust funds and the interest rates earned on invested funds. The average float balance for our customer trust funds for the three months ended March 31, 2018, was $4,072.0 million, compared to $3,764.9 million for the three months ended March 31, 2017. The average

yield was 1.75% during the three months ended March 31, 2018, an increase of 52 basis points compared to the three months ended March 31, 2017. Investment income from invested customer trust funds included in revenue was $17.6 and $11.4 for the three months ended March 31, 2018, and 2017, respectively.

~~Cost of Revenue~~

Cost of revenue consists of costs to deliver our solutions. Most of these costs are recognized as incurred. Some costs of revenue are recognized in the period that a service is sold and delivered. Other costs of revenue are recognized over the period of use or in proportion to the related revenue.

~~Share-Based Compensation Expense~~

~~We grant share-based compensation awards to certain employees, officers, andnon-employee~~ directors as long-term incentive compensation. We recognize the related expense for time-based awards ratably over the applicable vesting period. We recognize the related expense for performance-based awards upon the achievement of the performance criteria. Such expense is recognized as either cost of revenue or selling, general, and administrative expense. The following table shows the allocation of share-based compensation expense among our expense line items for the periods presented:

   Three Months ended March 31,
   2018    2017
   (Dollar in millions)
Cost of revenue:

Recurring services
   $ 0.1    $ 0.2
Professional services and other
   0.1    0.3
Product development and management
   0.1    0.2
Selling, general, and administrative
   2.6    3.8




Total share-based compensation expense
   $ 2.9    $ 4.5

Included within selling, general, and administrative expense was $0.4 million and $0.4 million of share-based compensation expense related to sales and marketing for the three months ended March 31, 2018, and 2017, respectively.

~~Results of Operations~~

~~Three Months ended March 31, 2018, Compared with Three Months ended March 31, 2017~~

~~Consolidated Results~~

~~The following table sets forth our results of operations for the periods presented.~~

   Three Months Ended Increase /
   March 31, (Decrease) % of Revenue
   2018 2017 Amount % 2018 2017
   (Dollars in millions)
Revenue:

Recurring services

Cloud
   $ 106.0 $ 76.4 $ 29.6 38.7 % 50.7 % 40.9 %
Bureau
   61.0 75.4 (14.4 ) (19.1 )% 29.2 % 40.3 %
LifeWorks
   21.7 19.6 2.1 10.7 % 10.4 % 10.5 %


Total recurring services
   188.7 171.4 17.3 10.1 % 90.3 % 91.7 %
Professional services and other
   20.2 15.6 4.6 29.5 % 9.7 % 8.3 %


Total revenue
   208.9 187.0 21.9 11.7 % 100.0 % 100.0 %
Cost of revenue:

Recurring services

Cloud
   33.1 28.9 4.2 14.5 % 15.8 % 15.5 %
Bureau
   17.6 20.4 (2.8 ) (13.7 )% 8.4 % 10.9 %
LifeWorks
   12.0 9.5 2.5 26.3 % 5.7 % 5.1 %


Total recurring services
   62.7 58.8 3.9 6.6 % 30.0 % 31.4 %
Professional services and other
   32.8 33.9 (1.1 ) (3.2 )% 15.7 % 18.1 %
Product development and management
   15.4 12.8 2.6 20.3 % 7.4 % 6.8 %
Depreciation and amortization
   8.8 7.7 1.1 14.3 % 4.2 % 4.1 %


Total cost of revenue
   119.7 113.2 6.5 5.7 % 57.3 % 60.5 %


Gross profit
   89.2 73.8 15.4 20.9 % 42.7 % 39.5 %
Costs and expenses:

Selling, general, and administrative
   65.6 60.7 4.9 8.1 % 31.4 % 32.5 %
Other (income) expense, net
   (2.8 ) 0.9 (3.7 ) (411.1 )% (1.3 )% 0.5 %
Interest expense, net
   22.2 21.4 0.8 3.7 % 10.6 % 11.4 %


Total costs and expenses
   85.0 83.0 2.0 2.4 % 40.7 % 44.4 %


Income (loss) from continuing operations before income taxes
   4.2 (9.2 ) 13.4 145.7 % 2.0 % (4.9 )%
Income tax expense
   6.8 2.5 4.3 172.0 % 3.3 % 1.3 %


Loss from continuing operations
   (2.6 ) (11.7 ) 9.1 77.8 % (1.2 )% (6.3 )%
Income from discontinued operations
   —   0.5 (0.5 ) (100.0 )% — % 0.3 %


Net loss
   (2.6 ) (11.2 ) 8.6 76.8 % (1.2 )% (6.0 )%
Net loss attributable to noncontrolling interest
   (0.5 ) —   (0.5 ) n.m. (0.2 )% — %


Net loss attributable to Ceridian
   $ (2.1 ) $ (11.2 ) $ 9.1 81.3 % (1.0 )% (6.0 )%

Revenue.The following table sets forth certain information regarding our ~~consolidated~~ revenues for the ~~three months ended March 31, 2018, compared with~~periods presented:


	Three Months Ended March 31,				Percentage change in revenue as reported			Impact of changes in foreign currency (a)			Percentage change in revenue on constant currency basis (a)
	2022		2021		2022 vs. 2021						2022 vs. 2021
	(Dollars in millions)
Revenue:
Dayforce recurring, excluding float	$	180.3	$	137.6		31.0	%		0.4	%		30.6	%
Dayforce float		8.3		7.7		7.8	%		(—	)%		7.8	%
Total Dayforce recurring		188.6		145.3		29.8	%		0.4	%		29.4	%
Powerpay recurring, excluding float		19.4		18.4		5.4	%		(0.6	)%		6.0	%
Powerpay float		2.2		1.9		15.8	%		(—	)%		15.8	%
Total Powerpay recurring		21.6		20.3		6.4	%		(0.5	)%		6.9	%
Total Cloud recurring		210.2		165.6		26.9	%		0.3	%		26.6	%
Dayforce professional services and other		41.6		36.8		13.0	%		(0.6	)%		13.6	%
Powerpay professional services and other		0.2		0.3		(33.3	)%		(—	)%		(33.3	)%
Total Cloud professional services and other		41.8		37.1		12.7	%		(0.5	)%		13.2	%
Total Cloud revenue		252.0		202.7		24.3	%		0.1	%		24.2	%
Bureau recurring, excluding float		36.8		29.3		25.6	%		(1.0	)%		26.6	%
Bureau float		0.9		1.1		(18.2	)%		(—	)%		(18.2	)%
Total Bureau recurring		37.7		30.4		24.0	%		(1.0	)%		25.0	%
Bureau professional services and other		3.6		1.4		157.1	%		(—	)%		157.1	%
Total Bureau revenue		41.3		31.8		29.9	%		(0.9	)%		30.8	%
Total revenue	$	293.3	$	234.5		25.1	%		(—	)%		25.1	%

Dayforce	$	230.2	$	182.1		26.4	%		0.2	%		26.2	%
Powerpay		21.8		20.6		5.8	%		(0.5	)%		6.3	%
Total Cloud revenue	$	252.0	$	202.7		24.3	%		0.1	%		24.2	%

Dayforce, excluding float	$	221.9	$	174.4		27.2	%		0.2	%		27.0	%
Powerpay, excluding float		19.6		18.7		4.8	%		(0.5	)%		5.3	%
Cloud float		10.5		9.6		9.4	%		(—	)%		9.4	%
Total Cloud revenue	$	252.0	$	202.7		24.3	%		0.1	%		24.2	%

Cloud recurring, excluding float	$	199.7	$	156.0		28.0	%		0.3	%		27.7	%
Bureau recurring, excluding float		36.8		29.3		25.6	%		(1.0	)%		26.6	%
Total recurring, excluding float		236.5		185.3		27.6	%		0.1	%		27.5	%
Total revenue, excluding float	$	281.9	$	223.8		26.0	%		(—	)%		26.0	%

(a)

We have calculated revenue on a constant currency basis by applying the ~~three months ended March 31, 2017.~~

average foreign exchange rate in effect during the comparable prior period.

Percentage change in
revenue as reported Impact of changes in
foreign currency (a) Percentage change in
revenue on constant
currency basis (a)
Revenue:

Cloud

Recurring services
38.7 % 2.0 % 36.7 %
Professional services and other
34.3 % 4.4 % 29.9 %

Total Cloud revenue
38.0 % 2.4 % 35.6 %
Bureau (b)
(19.2 )% 0.8 % (20.0 )%
LifeWorks
10.7 % 3.2 % 7.5 %

Total revenue
11.7 % 1.8 % 9.9 %

~~(a)~~

We present revenue growth in a constant currency to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. We calculate percentage change in revenue on a constant currency basis by applying a fixed 1.30 Canadian dollar to 1 U.S. dollar foreign exchange rate to revenues originally booked in Canadian dollars and 0.75 British pound sterling to 1 U.S. dollar foreign exchange rate to revenues originally booked in British pound sterling for all applicable periods.

~~(b)~~

~~Consists of Recurring services revenue and Professional services and other revenue related to Bureau.~~

Total revenue increased ~~$21.9~~$58.8 million, or ~~11.7%~~25.1%, to ~~$208.9~~$293.3 million for the three months ended March 31, ~~2018,~~2022, compared to ~~$187.0~~$234.5 million for the three months ended March 31, ~~2017.~~2021. This increase was primarily attributable to an increase in Cloud revenue of ~~$34.5~~$49.3 million, or ~~38.0%~~24.3%, from ~~$90.7~~$202.7 million for the three months ended March 31, ~~2017,~~2021, to ~~$125.2~~$252.0 million for the three months ended March 31, ~~2018.~~2022. The Cloud revenue increase was driven by an increase of ~~$29.6~~$44.6 million, or ~~38.7%~~26.9%, in Cloud recurring ~~services~~ revenue and ~~$4.9~~an increase of $4.7 million, or ~~34.3%~~12.7%, in Cloud professional services and other revenue. ~~The~~Cloud revenue growth was driven by both an increase in customers live on the Dayforce platform and an increase in recurring revenue per customer, as well as the addition of the Cloud ~~recurring services~~ revenue generated from acquired businesses during 2021. Bureau revenue increased $9.5 million for the three months ended March 31, 2022, primarily driven by the addition of ~~$29.6 million was due to $17.7 million~~the Bureau revenue generated from ~~new customers,add-ons,~~ ~~and revenue uplift from migrations~~acquired businesses during 2021.

30 | Q1 2022 Form 10-Q

Table of ~~Bureau customers, net of customer losses; $6.1 million from the migration of Bureau customers; and $5.8 million from increased~~Contents

Excluding float revenue ~~related to Cloud recurring services revenue. The increase in Cloud revenue of $34.5 million~~ and the increase in LifeWorks revenue of $2.1 million were partially offset by a decline in Bureau revenue of $14.7 million, or 19.2%. Excluding the impact of migrations to Dayforce, Bureau revenue declined by $8.6 million, or 11.2%.

Onon a constant currency basis, total revenue grew ~~9.9%. This adjusted revenue growth was driven by an~~26.0%, reflecting a 24.9% increase ~~of 35.6%~~ in Cloud revenue and ~~7.5% in LifeWorks revenue, partially offset by~~ a ~~decline of 20.0%~~32.6% increase in Bureau revenue. OnExcluding float revenue and on a constant currency basis, Cloud revenue growth reflected a 27.7% increase in Cloud recurring revenue and a 13.2% increase in Cloud professional services and other revenue.

Dayforce revenue increased 26.4%, and Powerpay revenue increased 5.8% for the three months ended March 31, ~~2018,~~2022, as compared to the three months ended March 31, ~~2017, was driven by Cloud~~2021. Excluding float revenue and on a constant currency basis, Dayforce revenue increased 27.0%, reflecting a 30.6% increase in Dayforce recurring ~~services~~ revenue ~~which increased by 36.7%,~~ and a 13.6% increase in Dayforce professional services and other revenue. Excluding float revenue ~~which~~and on a constant currency basis, Powerpay revenue increased ~~by 29.9%~~5.3%.

Float revenue included in recurring revenue was $11.4 million and $10.7 million for the three months ended March 31, 2022, and 2021, respectively. Float revenue associated with Cloud revenue was $10.5 million and $9.6 million for the three months ended March 31, 2022, and 2021, respectively. The average float balance for our customer funds for the three months ended March 31, 2022, was $5,088.9 million, compared to $4,331.9 million for the three months ended March 31, 2021, an increase of 17.5%. On a constant currency basis, the average float balance for our customer funds for the three months ended March 31, 2022, increased 20.4% compared to the three months ended March 31, 2021. The average yield was 0.91% during the three months ended March 31, 2022, a decline of 11 basis points compared to the average yield during the three months ended March 31, 2021. For both the three months ended March 31, 2022 and 2021, approximately 30% of our average float balance consisted of customer funds outside of the U.S., ~~as we continued to sign and to activate new customers. Of the decline in Bureau revenue, approximately 60% was attributable to~~primarily our Canadian customer ~~attrition and approximately 40% was due to customer migrations to Dayforce.~~funds.

Cost of ~~revenue~~.revenue. Total cost of revenue for the three months ended March 31, ~~2018,~~2022, was ~~$119.7~~$190.2 million, an increase of ~~$6.5~~$48.9 million, or ~~5.7%~~34.6%, compared to the three months ended March 31, ~~2017.~~

2021. Recurring cost of revenue for the three months ended March 31, 2022, increased $22.6 million, or 37.9%, compared with the three months ended March 31, 2021, primarily due to the integration of our APJ acquisitions, specifically $11.2 million of costs associated with re-balancing our resources across our global footprint resulting in one-time severance and restructuring costs. Further, the increase in recurring cost of revenue is due to additional costs related to global expansion and costs to support the growing Dayforce customer base. Professional services and other cost of revenue increased ~~by $3.9~~$9.8 million, or 21.9%, for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to costs incurred to take new customers live as well as expansion of our capabilities to serve international customers.

Product development and management expense increased $14.6 million for the three months ended March 31, ~~2018,~~2022, compared to the three months ended March 31, ~~2017, due to additional costs incurred to support the growing Dayforce customer base, partially offset by reductions in Bureau costs.~~

The reduction in cost of revenue for professional services and other of $1.1 million for the three months ended March 31, 2018, compared to the three months ended March 31, 2017, was primarily due to productivity improvements in implementing new customers, reflecting the increased experience of our implementation consultants and the continued use of automation in our implementation processes.

Product development and management expense includes costs related to software development activities that do not qualify for capitalization, such as development, quality assurance, testing of new technologies, enhancements to our existing solutions that do not result in additional functionality, and costs related to the management of our solutions.2021. The increase ~~in product development~~reflects additional personnel costs, severance, and ~~management expense of $2.6 million for the three months ended March 31, 2018, compared to the~~

~~three months ended March 31, 2017, reflected increases in Dayforce product development efforts.~~share-based compensation. For the three months ended March 31, ~~2018,~~2022, and ~~2017,~~2021, our investment in software development was ~~$14.2~~$37.7 million and ~~$12.6~~$26.2 million, respectively, ~~comprised~~consisting of ~~$8.1~~$22.6 million and ~~$7.2~~$15.2 million, of research and development expense, which is included within product development and management expense, and ~~$6.1~~$15.1 million and ~~$5.4~~$11.0 million in capitalized software development costs, respectively.

Depreciation and amortization expense associated with cost of revenue increased by ~~$1.1~~$1.9 million for the three months ended March 31, ~~2018,~~2022, compared to the three months ended March 31, ~~2017,~~2021, as we continue to capitalize Dayforce related and other development costs and subsequently amortize ~~those~~these costs.

The overall 11.7% increase in revenue outpaced the 5.7% increase in cost of revenue, and gross profit increased by $15.4 million, or 20.9%, as we continued to leverage our investment in people and processes to realize economies of scale.

~~Selling, general, and administrative expense.~~ Selling, general, and administrative expense increased $4.9 million for the three months ended March 31, 2018, compared to the three months ended March 31, 2017, reflecting increases in sales and marketing expenses and LifeWorks expenses, partially offset by a reduction in share-based compensation expense. Sales and marketing expense was $31.7 million for the three months ended March 31, 2018, compared to $27.2 million for the three months ended March 31, 2017.

~~Other expense.~~ For the three months ended March 31, 2018, we incurred $2.8 million of other income, net, compared to $0.9 million of other expense, net, for the three months ended March 31, 2017. The other income and expense, net, for the three months ended March 31, 2018, and 2017, respectively, was primarily related to foreign currency remeasurement gains and losses on intercompany receivables or payables denominated in foreign currencies. Please refer to Note 12, “Supplementary Data to Statement of Operations,” for further discussion.

~~Interest expense.~~ ~~Interest expense for the three months ended March 31, 2018, was $22.2 million, compared to $21.4 million for the three months ended March 31, 2017.~~

~~Income tax expense.~~ ~~For the three months ended March 31, 2018, we incurred income tax expense of $6.8 million, compared to $2.5 million for the three months ended March 31, 2017.~~

~~Discontinued operations.~~~~For the three months ended March 31, 2017, income from discontinued operations was $0.5 million. This income primarily relates to a final purchase pricetrue-up~~ ~~related to one of the divested benefits businesses.~~

~~Net loss attributable to Ceridian.~~ Net loss attributable to Ceridian improved by $9.1 million to $2.1 million of net loss for the three months ended March 31, 2018, compared to $11.2 million of net loss for the three months ended March 31, 2017.

~~HCM Segment Results~~

Gross profit.The following table presents ~~certain financial information concerning the HCM segment’s results of operations for the periods presented.~~

   Three Months ended    Increase /
   March 31,    (Decrease) % of Revenue
   2018    2017    Amount % 2018 2017
   (Dollars in millions)
Cloud revenue
   $ 125.2    $ 90.7    $ 34.5 38.0 % 66.9 % 54.2 %
Bureau revenue
   62.0    76.7    (14.7 ) (19.2 )% 33.1 % 45.8 %






Total HCM revenue
   $ 187.2    $ 167.4    $ 19.8 11.8 % 100.0 % 100.0 %
Operating profit
   $ 27.3    $ 10.9    $ 16.4 150.5 % 14.6 % 6.5 %
Depreciation and amortization
   13.9    13.1    0.8 6.1 % 7.4 % 7.8 %






HCM EBITDA from continuing operations (a)
   41.2    24.0    17.2 71.7 % 22.0 % 14.3 %
Other adjustments (b)
   2.4    7.2    (4.8 ) (66.7 )% 1.3 % 4.3 %






HCM Adjusted EBITDA (c)
   $ 43.6    $ 31.2    $ 12.4 39.7 % 23.3 % 18.6 %

~~(a)~~ ~~We define HCM EBITDA from continuing operations as HCM net loss before interest, taxes, depreciations and amortization, and discontinued operations.~~
~~(b)~~ ~~Other adjustments include sponsor management fees,non-cash~~ ~~charges for asset impairments, gains or losses on assets and liabilities held in a foreign currency other than the functional currency of a company subsidiary,non-cash~~ ~~share-based compensation expense, severance charges, restructuring charges, and environmental reserve charges.~~
~~(c)~~ ~~For a reconciliation of HCM Adjusted EBITDA to HCM operating profit, please refer to the “Overview” section above.~~

HCM revenue increased $19.8 million, or 11.8%, to $187.2 million for the three months ended March 31, 2018, compared to $167.4 million for the three months ended March 31, 2017. On a constant currency basis, revenue increased 10.2%. This adjusted revenue growth was driven by an increase of 35.6%, in Cloud revenue, which was partially offset by a decline of 20.0%, in Bureau revenue. The increase in Cloud revenue was driven by Cloud recurring services revenue, which increased by 36.7%, and Cloud professional services and other revenue, which increased by 29.9%. The decline in Bureau revenue was primarily attributable to customer attrition and customer migrations to Dayforce.

~~The table below presents~~ total ~~HCM segment~~ gross margin and ~~HCM~~ solution gross margins for the periods presented:

   Three Months ended March 31,
   2018 2017
Total HCM segment gross margin
   43.4 % 39.3 %
Gross margin by HCM solution:

Cloud recurring services
   68.8 % 62.2 %
Bureau recurring services
   71.1 % 72.9 %
Professional services and other
   (62.4 )% (117.3 )%


	Three Months Ended March 31,
	2022			2021
Total gross margin		35.2	%		39.7	%
Gross margin by solution:
Cloud recurring		69.3	%		72.2	%
Bureau recurring		53.1	%		55.3	%
Professional services and other		(20.0	)%		(16.1	)%

~~HCM segment~~

Total gross margin is defined as total ~~HCM~~ gross profit as a percentage of total ~~HCM~~ revenue, which is inclusive of ~~HCM~~ product development and management costs, as well as ~~HCM~~ depreciation and amortization associated with cost of revenue. Gross margin for each ~~HCM~~ solution in the table above is defined as total revenue less cost of revenue for the applicable solution as a percentage of total revenue for that related ~~HCM~~ solution, which is exclusive of any product development and management or depreciation and amortization cost allocations. ~~Cloud recurring services~~

31 | Q1 2022 Form 10-Q

Table of Contents

Total gross margin ~~was 68.8%~~ for the three months ended March 31, ~~2018,~~2022, declined 450 basis points compared to ~~62.2%~~total gross margin for the three months ended March 31, ~~2017. Bureau recurring services gross margin was 71.1%~~2021 due to increased severance related to the re-balancing of our resources across our global footprint and share-based compensation, as well as continued development and expansion of our service offerings. Gross profit increased by $9.9 million, or 10.6% for the three months ended March 31, ~~2018,~~2022 compared to ~~72.9%~~the three months ended March 31, 2021, primarily due to the $58.8 million or 25.1% increase in revenue which outpaced the increase in cost of revenue.

Cloud recurring gross margin was 69.3% for the three months ended March 31, ~~2017.~~2022, compared to 72.2% for the three months ended March 31, 2021. The decrease in cloud recurring gross margin is primarily due to the integration of our APJ acquisitions, specifically a re-balancing of our resources across our global footprint resulting in one-time severance and restructuring costs. Excluding the impact of share-based compensation and related employer taxes, severance expense, and certain other non-recurring items, cloud recurring gross margin increased by 220 basis points, primarily due to an increase in the proportion of Dayforce customers live for more than two years, which increased from 76% as of March 31, 2021, to 80% as of March 31, 2022, and was also attributable to economies of scale in hosting and customer support as we continue to take customers live on Dayforce. Bureau recurring gross margin declined from 55.3% for the three months ended March 31, 2021, to 53.1% for the three months ended March 31, 2022, reflecting a higher proportion of customer support costs to support the end-of-life of our legacy Bureau payroll services, as well as lower margins on acquired Bureau services. Professional services and other gross margin was ~~(62.4)~~(20.0)% for the three months ended March 31, ~~2018, improving from (117.3)~~2022, compared to (16.1)% for the three months ended March 31, ~~2017,~~2021, reflecting ~~an increase in profitable postgo-live~~ ~~professional services~~additional costs to take new customers live, expansion of our capabilities to serve international customers, and ~~productivity improvements in implementing new customers.~~increased share-based compensation.

~~HCM operating profit~~Selling, general, and ~~HCM Adjusted EBITDA~~administrative expense. Selling, general, and administrative expense increased ~~$16.4~~$26.4 million ~~and $12.4 million, respectively,~~ for the three months ended March 31, ~~2018,~~2022, compared to the three months ended March 31, ~~2017,~~2021. Excluding the impact of share-based compensation and related employer taxes, restructuring consulting fees, severance expense, amortization of acquisition-related intangible assets, and certain other non-recurring items, selling, general, and administrative expenses increased by $17.5 million. This adjusted increase reflects an increase of $8.9 million in general and administrative expense and $8.6 million in sales and marketing expense, both of which are primarily ~~due to a $19.8 million~~driven by employee-related costs. The increase in ~~revenue, which flowed through~~general and administrative expense is also driven by additional expense recognized in relation to ~~improve gross margin.~~

our recent acquisitions. The increase in sales and marketing expense primarily represents investment in our sales force in order to support our growth initiatives.Please refer to the “Non-GAAP Measures” section for additional information on the excluded items.

~~LifeWorks Segment Results~~

~~The following table presents certain financial information concerning the LifeWorks segment’s financial results:~~

   Three Months ended    Increase /
   March 31,    (Decrease) % of Revenue
   2018 2017    Amount % 2018 2017
   (Dollars in millions)
Revenue
   $ 21.7 $ 19.6    $ 2.1 10.7 % 100.0 % 100.0 %
Operating (loss) profit
   $ (0.9 ) $ 1.3    $ (2.2 ) (169.2 )% (4.1 )% 6.6 %
Depreciation and amortization
   1.0 1.0    —   — % 4.6 % 5.1 %




LifeWorks EBITDA (a)
   0.1 2.3    (2.2 ) (95.7 )% 0.5 % 11.7 %
Other adjustments (b)
   0.2 0.3    (0.1 ) (33.3 )% 0.9 % 1.5 %




LifeWorks Adjusted EBITDA
   $ 0.3 $ 2.6    $ (2.3 ) (88.5 )% 1.4 % 13.3 %

~~(a)~~

~~We define LifeWorks EBITDA as LifeWorks net income before taxes, depreciation and amortization.~~

~~(b)~~

~~Other adjustments includenon-cash~~ ~~share-based compensation expense.~~

~~On a constant currency basis, LifeWorks revenue increased 7.5%~~Interest expense, net. Interest expense, net was relatively consistent at $5.8 million and $5.6 million for the three months ended March 31, ~~2018,~~2022, and 2021, respectively.

Other (income) expense, net. For the three months ended March 31, 2022, and 2021, we realized other income, net of $0.3 million and incurred other expense, net of $4.6 million, respectively. Other income, net was comprised of foreign currency translation gain, partially offset by net periodic pension expense for the three months ended March 31, 2022. For the three months ended March 31, 2021, other expense, net was comprised of foreign currency translation loss and net periodic pension expense.

Income tax expense. For the three months ended March 31, 2022, and 2021, we recorded income tax expense of $3.0 million and $6.6 million, respectively. The $3.6 million decrease in income tax expense was primarily due to the $4.7 million tax benefit from current operations, partially offset by $1.0 million of other tax expenses and benefits.

Net loss. We realized net loss of $27.4 million for the three months ended March 31, 2022, compared to $19.2 million for the three months ended March 31, 2021. The increase in net loss is primarily due to higher share-based compensation, investments in product development and selling capabilities, and further integration of the APJ acquisitions, specifically a re-balancing of our resources across our global footprint. For the three months ended March 31, 2022 and 2021, net profit margin was (9.3)% and (8.2)%, respectively.

Adjusted EBITDA. Adjusted EBITDA increased by $12.9 million to $57.4 million, for the three months ended March 31, 2022, compared to the three months ended March 31, ~~2017.~~

~~LifeWorks operating (loss) profit~~2021, and ~~LifeWorks~~ Adjusted EBITDA ~~declined $2.2 million and $2.3 million, respectively,~~margin was 19.6% for the three months ended March 31, ~~2018,~~2022, compared ~~to the three months ended March 31, 2017, primarily driven by an increase of $1.9 million in selling, general, and administrative expense.~~

~~LifeWorks Adjusted EBITDA~~

~~We report our financial results in accordance~~ with ~~U.S. GAAP. To supplement this information, we also use LifeWorks~~ Adjusted EBITDA a~~non-GAAP~~ ~~financial measure, in this Form10-Q.~~ ~~We define LifeWorks Adjusted EBITDA as net income or loss before interest, taxes, depreciation, and amortization, as adjusted to excludenon-cash~~ share-based compensation expense for our LifeWorks segment. Management believes that LifeWorks Adjusted EBITDA is helpful in highlighting management performance trends because LifeWorks Adjusted EBITDA excludes the resultsmargin of ~~decisions that are outside the control of operating management. By providing thisnon-GAAP~~ financial measure, management believes we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.

Our presentation of LifeWorks Adjusted EBITDA is intended as a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. GAAP. LifeWorks Adjusted EBITDA should not be considered as an alternative to operating income (loss), net income (loss), earnings per share, or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or operating cash flows or as measures of liquidity. Our presentation of LifeWorks Adjusted EBITDA should not be construed to imply that our future results will be unaffected by these items. LifeWorks Adjusted EBITDA is included in this Form~~10-Q~~ ~~because it is a key metric used by management to assess our operating performance.~~

LifeWorks Adjusted EBITDA is not defined under U.S. GAAP, is not a measure of net income, operating income or any other performance measure derived in accordance with U.S. GAAP, and is subject to important limitations. Our use of the term LifeWorks Adjusted EBITDA may not be comparable to similarly titled measures of other companies in our industry and is not a measure of performance calculated in accordance with U.S. GAAP.

LifeWorks Adjusted EBITDA has important limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

~~LifeWorks Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;~~

~~LifeWorks Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;~~

~~LifeWorks Adjusted EBITDA does not reflect any charges for the assets being depreciated and amortized that may have to be replaced in the future;~~

~~LifeWorks Adjusted EBITDA does not reflect the impact of share-based compensation upon our results of operations; and~~

~~LifeWorks Adjusted EBITDA does not reflect our income tax expense or the cash requirements to pay our income taxes.~~

~~In evaluating LifeWorks Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation.~~

~~Unaudited Pro Forma Consolidated Financial Data~~

The following unaudited pro forma condensed consolidated financial data consists of our unaudited pro forma condensed consolidated statement of operations and unaudited pro forma condensed consolidated statement of cash flows19.0% for the three months ended March 31, 2018, and our unaudited pro forma condensed consolidated balance sheet as of March 31, 2018. You should read the information set forth below together with the “Results of Operations” section above, the historical condensed consolidated financial statements and the corresponding notes included elsewhere in this Form~~10-Q.~~ The unaudited pro forma condensed consolidated statement of operations and unaudited pro forma condensed consolidated statement of cash flows for the three months ended March 31, 2018 and the unaudited pro forma condensed consolidated balance sheet as of March 31, 2018, have been adjusted to give effect2021. Please refer to the ~~distribution~~“Non-GAAP Measures” section for a discussion and reconciliation of ~~shares of LifeWorks. The stockholders will receive these interests in a taxable distribution;~~Adjusted EBITDA and ~~based on current estimates of the value of our interest in LifeWorks at the time of the disposition, we currently anticipate that we will incur approximately $3.2 million of foreign taxes~~Adjusted EBITDA margin and use approximately $96.0 million of our U.S. federal net operating losses to offset the U.S. tax gain. The net operating losses are currently subject to a full valuation allowance, therefore, the tax gain recognition and resulting use of the net operating loss and release of the valuation allowance result in no anticipated U.S. tax expense.

The following unaudited pro forma condensed consolidated balance sheet, statement of operations, and statement of cash flows have been derived from our historical condensed consolidated financial statements included elsewhere in this Form~~10-Q.~~ ~~The statements are for informational purposes only and do not purport to represent what our financial position and results of operations actually would have been had the LifeWorks disposition occurred~~additional information on the ~~dates indicated, or to project our financial performance for any future period.~~excluded items.

~~The unaudited pro forma condensed consolidated balance sheet adjustments assume that our distribution~~32 | Q1 2022 Form 10-Q

Table of LifeWorks occurred as of March 31, 2018. The unaudited pro forma consolidated statements of operations and unaudited pro forma condensed consolidated statement of cash flows assume that the separation occurred as of January 1, 2018.Contents

The adjustment amounts primarily represent the LifeWorks segment amounts as presented in our financial statements with the addition of $3.2 million of foreign tax expense expected to be incurred by Ceridian as a result of expected gains recognized on the taxable distribution of LifeWorks to our stockholders. The adjustment to the income tax expense is comprised of two components: (i) the elimination of the LifeWorks tax expense of $1.0 million, and (ii) the addition of the $3.2 million expected tax expense to be incurred on the distribution. No pro forma adjustments are necessary for the expected use of net operating losses to offset taxable gains expected in the U.S., as they are subject to a full valuation allowance and would not have an impact on our financial statements. No other adjustments were necessary.

Ceridian HCM Holding Inc.
Unaudited Pro Forma Condensed
Consolidated Balance Sheet

   March 31, 2018
   Ceridian
Historical    Adjustments    Ceridian
Pro Forma
   (Dollars in millions)
ASSETS

Current assets:

Cash and equivalents
   $ 62.2    $ 7.6    $ 54.6
Trade and other receivables, net
   81.1    15.1    66.0
Prepaid expenses
   49.2    1.7    47.5
Other current assets
   1.8    —      1.8






Total current assets before customer trust funds
   194.3    24.4    169.9
Customer trust funds
   4,293.9    —      4,293.9






Total current assets
   4,488.2    24.4    4,463.8
Property, plant, and equipment, net
   103.4    1.6    101.8
Goodwill
   2,075.8    125.8    1,950.0
Other intangible assets, net
   206.6    5.1    201.5
Other assets
   5.5    2.0    3.5






Total assets
   $ 6,879.5    $ 158.9    $ 6,720.6






LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt
   $ —      $ —      $ —
Accounts payable
   47.6    6.0    41.6
Accrued interest
   2.7    —      2.7
Deferred revenue
   18.5    2.5    16.0
Employee compensation and benefits
   55.7    1.5    54.2
Other accrued expenses
   16.7    0.4    16.3






Total current liabilities before customer trust funds obligations
   141.2    10.4    130.8
Customer trust funds obligations
   4,313.2    —      4,313.2






Total current liabilities
   4,454.4    10.4    4,444.0
Long-term debt, less current portion
   1,120.5    —      1,120.5
Employee benefit plans
   147.3    —      147.3
Other liabilities
   53.8    10.6    43.2






Total liabilities
   5,776.0    21.0    5,755.0
Total equity
   1,103.5    137.9    965.6






Total liabilities and equity
   $ 6,879.5    $ 158.9    $ 6,720.6

Ceridian HCM Holding Inc.
Unaudited Pro Forma Condensed
Consolidated Statement of Operations

   Three Months Ended March 31, 2018
   Ceridian
Historical Adjustments Ceridian
Pro Forma
   (Dollars in millions)
Revenue:

Recurring services
   $ 188.7 $ 21.7 $ 167.0
Professional services and other
   20.2 —   20.2


Total revenue
   208.9 21.7 187.2
Cost of revenue:

Recurring services
   62.7 12.0 50.7
Professional services and other
   32.8 —   32.8
Product development and management
   15.4 1.7 13.7
Depreciation and amortization
   8.8 0.1 8.7


Total cost of revenue
   119.7 13.8 105.9


Gross profit
   89.2 7.9 81.3
Costs and expenses:

Selling, general, and administrative
   65.6 8.8 56.8
Other (income) expense, net
   (2.8 ) —   (2.8 )
Interest expense, net
   22.2 —   22.2


Total costs and expenses
   85.0 8.8 76.2


Income (loss) from continuing operations before income taxes
   4.2 (0.9 ) 5.1
Income tax expense
   6.8 (2.2 ) 9.0


Loss from continuing operations
   (2.6 ) 1.3 (3.9 )
Income from discontinued operations
   —   —   —


Net loss
   (2.6 ) 1.3 (3.9 )


Net loss attributable to noncontrolling interest
   (0.5 ) (0.5 ) —


Net loss attributable to Ceridian
   $ (2.1 ) $ 1.8 $ (3.9 )

Ceridian HCM Holding Inc.
Unaudited Pro Forma Condensed
Consolidated Statement of Cash Flows

   Three Months Ended March 31, 2018
   Ceridian
Historical Adjustments Ceridian
Pro Forma
   (Dollars in millions)
Net loss
   $ (2.6 ) $ 1.3 $ (3.9 )
Adjustments to reconcile net loss to net cash used in operating activities:
   —
Deferred income tax benefit
   (0.1 ) —   (0.1 )
Depreciation and amortization
   14.9 1.0 13.9
Amortization of debt issuance costs and debt discount
   1.0 —   1.0
Net periodic pension and postretirement cost
   0.6 —   0.6
Share-based compensation
   2.9 0.2 2.7
Other
   (0.1 ) —   (0.1 )
Changes in operating assets and liabilities excluding effects of acquisitions and divestitures:
   (39.9 ) (0.2 ) (39.7 )


Net cash used in operating activities—continuing operations
   (23.3 ) 2.3 (25.6 )
Net cash used in operating activities—discontinued operations
   (0.1 ) —   (0.1 )


Net cash used in operating activities
   (23.4 ) 2.3 (25.7 )
Cash Flows from Investing Activities
   —
Purchase of customer trust funds marketable securities
   (520.6 ) —   (520.6 )
Proceeds from sale and maturity of customer trust funds marketable securities
   175.4 —   175.4
Net change in restricted cash and other restricted assets held to satisfy customer trust funds obligations
   114.8 —   114.8
Expenditures for property, plant, and equipment
   (2.9 ) —   (2.9 )
Expenditures for software and technology
   (7.4 ) —   (7.4 )


Net cash used in investing activities
   (240.7 ) —   (240.7 )
Cash Flows from Financing Activities
   —
Increase in customer trust funds obligations, net
   230.4 —   230.4
Repayment of long-term debt obligations
   (0.3 ) —   (0.3 )


Net cash provided by financing activities
   230.1 —   230.1
Effect of Exchange Rate Changes on Cash
   (3.4 ) —   (3.4 )


Net decrease in cash and equivalents
   (37.4 ) 2.3 (39.7 )
Cash and equivalents at beginning of period
   99.6 5.3 94.3


Cash and equivalents at end of period
   $ 62.2 $ 7.6 $ 54.6

Liquidity and Capital Resources

Our primary sources of liquidity are our existing cash and equivalents, cash provided by operating activities, ~~borrowings~~availability under our ~~credit facilities,~~Revolving Credit Facility, and proceeds from debt issuances and equity offerings. As of March 31, ~~2018,~~2022, we had cash and equivalents of ~~$62.2~~$354.8 million and ~~availability under~~ our ~~revolving credit facility of $45.0 million. No cash amounts were drawn on the revolving credit facility as of March 31, 2018. Our~~ total ~~indebtedness~~debt balance was ~~$1,132.0 million as of March 31, 2018. Please refer to Note 9, “Debt,” to our condensed consolidated financial statements, for further information on our indebtedness.~~$1,240.5million.

Our primary liquidity needs are related to funding of general business requirements, including the payment of interest and principal on our ~~indebtedness, working capital,~~debt, capital expenditures, ~~pension contributions,~~product development, and ~~product development.~~funding Dayforce Wallet on demand pay requests. From time to time, we have made investments in businesses or acquisitions of companies, which are also liquidity needs.

~~Concurrently~~As of March 31, 2022, we held $1.9 million of restricted cash as collateral for bank guarantees. The bank guarantees provide financial assurance that we will fulfill certain lease obligations. The cash is restricted as to withdrawal or use while the related bank guarantee is outstanding.

On February 26, 2021, we elected to borrow $295.0 million under the Revolving Credit Facility to fund our acquisition of Ascender on March 1, 2021. We repaid the $295.0 million draw on March 5, 2021 with ~~closing~~proceeds from the issuance of our Convertible Senior Notes.

In March 2021, we issued $575.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2026. The total net proceeds from the offering, after deducting initial purchase discounts and issuance costs, were $561.8 million. In connection with the Convertible Senior Notes, we entered into capped call transactions which are expected to reduce the potential dilution of our common stock upon any conversion of the ~~IPO and~~Convertible Senior Notes and/or offset any cash payments we could be required to make in excess of the ~~concurrent private placement on April 30, 2018, we applied~~principal amount of converted Convertible Senior Notes. We used an aggregate amount of $45.0 million of the net proceeds of the Convertible Senior Notes to ~~satisfy~~purchase the Capped Calls. Please refer to Note 7, “Debt,” to our condensed consolidated financial statements for further information on our Convertible Senior Notes, and ~~discharge~~ the ~~indenture governing our outstanding $475.0~~related indenture. We used the remainder of the net proceeds from the offering (i) to repay $295.0 million principal amount ~~Senior Notes, and they will be redeemed on May 30, 2018. We also refinanced our remaining indebtedness~~ under ~~our (i) $702.0 million (original principal amount) Senior Term Debt and (ii) $130.0 million~~the Revolving Credit Facility and pay related accrued interest and ~~related costs~~(ii) for general corporate purposes.

On December 15, 2021, we completed the second amendment to the Senior Secured Credit Facility, in which the maturity date of the Revolving Credit Facility was extended from April 30, 2023 to January 29, 2025.

We believe that our cash flow from operations, available cash and equivalents, and availability under our Revolving Credit Facility will be sufficient to meet our liquidity needs for the foreseeable future. Dayforce Wallet on demand pay requests are currently funded from our operating cash balances, until it is reimbursed by the customers through their normal payroll funding cycles. We evaluate the creditworthiness of each customer utilizing the Dayforce Wallet feature. We anticipate that to the extent that we require additional liquidity, it will be funded through the issuance of equity, the incurrence of additional indebtedness, or a combination thereof. We cannot provide assurance that we will be able to obtain this additional liquidity on reasonable terms, or at all. Additionally, our liquidity and our ability to meet our obligations and to fund our capital requirements and Dayforce Wallet on demand pay requests are also dependent on our future financial performance, which is subject to general economic, financial, and other factors that are beyond our control. Accordingly, we cannot provide assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available from additional indebtedness or otherwise to meet our liquidity needs. If we decide to pursue one or more significant acquisitions, we may incur additional debt or sell additional equity to finance such acquisitions, which would result in additional expenses with new senior credit facilities consisting of a $680.0 million term loan debt facility and a $300.0 million revolving credit facility. Please refer to Note 19, “Subsequent Events,” for further discussion of these transactions.or dilution.

Our customer ~~trust~~ funds are held and invested with the primary objectives being to protect the principal balance and to ensure adequate liquidity to meet cash flow ~~requirements and to protect the principal balance. In accordance with these objectives,~~requirements. Accordingly, we maintain on average approximately 45% to 55% of customer ~~trust~~ funds in liquidity portfolios with maturities ranging from one to 120 days, consisting of high-quality bank deposits, money market mutual funds, commercial paper, or collateralized short-term investments; and we maintain on average approximately 45% to 55% of customer ~~trust~~ funds in fixed income portfolios with maturities ranging from 120 days to 10 years, consisting of U.S. Treasury and agency securities, Canada government and provincial securities, as well as highly rated asset-backed, ~~mortgage- backed,~~mortgage-backed, municipal, corporate, and bank securities. To maintain sufficient liquidity ~~in the trust~~ to meet payment obligations, we also have financing arrangements and may pledge fixed income securities for short-term financing. The customer assets are held in ~~trust are~~segregated accounts intended for the specific purpose of satisfying client fund obligations and therefore are not freely available for our general business use.

We believe that our cash flow from operations, availability under our revolving credit facility, and available cash and equivalents will be sufficient to meet our liquidity needs for the foreseeable future. We anticipate that to the extent that we require additional liquidity, it will be funded through the issuance33 | Q1 2022 Form 10-Q

Table of equity, the incurrence of additional indebtedness, or a combination thereof. We cannot assure you that we will be able to obtain this additional liquidity on reasonable terms, or at all. Additionally, our liquidity and our ability to meet our obligations and to fund our capital requirements are also dependent on our future financial performance, which is subject to general economic, financial, and other factors that are beyond our control. Accordingly, we cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available from additional indebtedness or otherwise to meet our liquidity needs. Although we have no specific current plans to do so, if we decide to pursue one or more significant acquisitions, we may incur additional debt or sell additional equity to finance such acquisitions, which would result in additional expenses or dilution.

Contents

Statements of Cash Flows

~~The following table provides a summary of cash flows from operating, investing, and financing activities from the periods presented.~~

   Three Months ended March 31,
   2018    2017
Net cash flows

Net cash used in operating activities—continuing operations
   $ (23.3 )    $ (44.0 )
Net cash used in investing activities
   (240.7 )    (919.9 )
Net cash provided by financing activities
   230.1    910.2
Net cash flows used in discontinued operations
   (0.1 )    (0.7 )
Effect of exchange rate on cash
   (3.4 )    0.7




Net cash flows used
   (37.4 )    (53.7 )
Cash and equivalents at end of period
   $ 62.2    $ 77.7
Net cash flows of customer trust funds

Net cash used in investing activities—continuing operations
   $ (230.4 )    $ (912.0 )
Net cash provided by financing activities—continuing operations
   230.4    912.0




Net cash flows provided by customer trust funds—continuing operations
   $ —      $ —

Changes in cash flows due to purchases of customer ~~trust~~ fund marketable securities and proceeds from the sale or maturity of customer ~~trust~~ fund marketable securities, ~~and~~as well as the ~~net increase (decrease)~~carrying value of ~~restricted cash held~~customer fund accounts as of period end dates can vary significantly due to ~~satisfy customer trust fund obligations are primarily due to~~several factors, including the specific day of the week the period ends, which impacts the timing of funds collected from customers and payments made to satisfy customer ~~obligations. Customer trust fund cash flows are significantly affected by the period end day of the week relative~~obligations to ~~customer payment cycles.~~employees, taxing authorities, and others. The customer ~~trust~~ funds are fully segregated from our operating cash accounts and are evaluated and tracked separately by management. ~~Therefore, to provide meaningful information to~~The table below summarizes the ~~readers,~~activity within the ~~following discussion is regarding the net~~condensed consolidated statements of cash ~~flows excluding customer trust funds.~~flows:

Three Months Ended March 31,

2022

2021

(Dollars in millions)

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

Effect of exchange rate changes on cash, restricted cash, and equivalents

1.7

3.4

Net increase in cash, restricted cash, and equivalents

3,706.2

634.2

Cash, restricted cash, and equivalents at beginning of period

1,952.9

2,228.5

Cash, restricted cash, and equivalents at end of period

5,659.1

2,862.7

Cash and equivalents

354.8

339.6

Restricted cash and equivalents

5,304.3

2,523.1

Total cash, restricted cash, and equivalents

$
5,659.1

$
2,862.7

Operating Activities

Net cash ~~used in~~provided by operating activities ~~from continuing operations of $23.3~~was $5.5 million during the three months ended March 31, ~~2018, was~~2022, primarily attributable to net ~~changes in working capital of $39.9 million and net~~ loss of ~~$2.6~~$27.4 million ~~partially~~ offset by the net impact of adjustments for certainnon-cash items ~~primarily $14.9~~of $64.8 million, including $35.5 million of non-cash share-based compensation expense, $20.9 million of depreciation and amortization, and ~~$2.9 million~~deferred income tax expense of ~~share-based compensation expense. Net changes in~~$4.5 million. Additionally, there were net working capital reductions of $31.9 million. The net working capital reductions included ~~reductions~~ an increase of $14.1 million in ~~liabilities for~~prepaid expenses and other current assets, primarily due to an increase in annual software contracts and contract assets, a decrease of $8.2 million in employee compensation and benefits primarily due to annual incentive payments made in the first quarter of 2022 related to our 2021 incentive plans, and a decrease of $4.6 million in accounts payable and other accrued ~~incentive compensation; reductions in liabilities~~expenses primarily due to timing of payments. Included within net cash flows provided by operating activities for ~~accrued interest primarily as a result of $34.8~~the three months ended March 31, 2022, was $5.3 million in cash interest payments on our long-term ~~debt;~~debt and ~~increases~~$5.7 million in cash tax payments, net of refunds.

Net cash used in operating activities was $4.5 million during the three months ended March 31, 2021, primarily attributable to net working capital reductions of $28.5 million and net loss of $19.2 million, largely offset by the net impact of adjustments for certain non-cash items of $43.2 million, including $22.8 million of non-cash share-based compensation expense and $15.0 million of depreciation and amortization. The net working capital reductions included a $24.7 million reduction in liabilities for employee compensation and benefits due to payments of accrued commissions and incentive compensation, an $8.1 million increase in accounts receivable due to timing of receipts, a $7.1 million increase in prepaid expenses and other current assets, primarily due to payments for annual maintenance ~~contracts.~~contracts, partially offset by an increase of $8.6 million of accrued taxes primarily due to tax accruals. Included within net cash flows ~~used in~~provided by operating activities for the three months ended March 31, ~~2018,~~2021, was ~~$5.5~~$4.4 million in cash ~~taxes~~interest payments on our long-term debt and ~~$1.9~~$0.2 million in ~~pension payments.~~cash tax payments, net of refunds.

~~Net~~Investing Activities

During the three months ended March 31, 2022, net cash used in ~~operating~~investing activities was $184.7 million, consisting of purchases of customer funds marketable securities of $276.9 million and capital expenditures of $19.9 million, partially offset by proceeds from ~~continuing operations~~the sale and maturity of ~~$44.0~~customer funds marketable securities of $112.1 million. Our capital expenditures included $17.8 million for software and technology and $2.1 million for property and equipment.

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During the three months ended March 31, 2021, net cash used in investing activities was $404.7 million, consisting of acquisition costs, net of cash acquired of $338.3 million, purchases of customer funds marketable securities of $148.5 million, and capital expenditures of $15.3 million, partially offset by proceeds from the sale and maturity of customer funds marketable securities of $97.4 million. Our capital expenditures included $11.9 million for software and technology and $3.4 million for property and equipment.

Financing Activities

Net cash provided by financing activities was $3,883.7 million during the three months ended March 31, ~~2017, was~~2022. This cash inflow is primarily attributable to an increase in net ~~changes in working capital~~customer fund obligations of ~~$51.3~~$3,879.8 million and ~~net loss~~proceeds from issuance of ~~$11.2~~common stock upon exercise of stock options of $6.0 million, partially offset by ~~certainnon-cash~~ items, primarily $14.1 million of depreciation and amortization and $4.5 million of share-based compensation expense. Net changes in working capital included reductions in liabilities for employee compensation and benefits, primarily due to payments of accrued incentive compensation; reductions in liabilities for accrued interest, primarily due to semi-annual payments on our long-term ~~debt; increases~~debt obligations of $2.1 million.

Net cash provided by financing activities was $1,040.0 million during the three months ended March 31, 2021. This cash inflow is primarily attributable to proceeds from the issuance of our Convertible Senior Notes of $561.8 million, increase in ~~prepaid expenses~~net customer fund obligations of $513.2 million, proceeds from issuance of common stock upon exercise of stock options of $11.3 million, partially offset by the purchase of the capped calls related to the Convertible Senior Notes of $45.0 million and ~~other current assets,~~payments on our long-term debt obligations of $1.3 million.

Backlog

Backlog is equivalent to our remaining performance obligations, which represents contracted revenue for recurring and fixed price professional services, primarily ~~due~~implementation services, that has not yet been recognized, including deferred revenue and unbilled amounts that will be recognized as revenue in future periods. As of March 31, 2022, our remaining performance obligations were approximately $1,130.6 million. Please refer to ~~annual maintenance contracts,~~Note 10, “Revenue,” to our condensed consolidated financial statements for further discussion of our remaining performance obligations.

Off-Balance Sheet Arrangements

As of March 31, 2022, we did not have any “off-balance sheet arrangements” (as such term is defined in Item 303 of Regulation S-K).

Critical Accounting Policies and ~~reductions in liabilities for accrued taxes.~~Estimates

~~Investing Activities~~

During the three months ended March 31, ~~2018,~~2022, there were no significant changes to our critical accounting policies and estimates as described in Part II, “Item 7. Management's Discussion and Analysis" under the heading "Critical Accounting Policies and Estimates" contained in our 2021 Form 10-K.

Non-GAAP Measures

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, non-GAAP financial measures, are useful to management and investors as supplemental measures to evaluate our overall operating performance. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are components of our management incentive plan and are used by management to assess performance and to compare our operating performance to our competitors.

We define 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 certain other non-recurring items. Adjusted EBITDA margin is determined by calculating the percentage that Adjusted EBITDA is of total revenue. Management believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are helpful in highlighting management performance trends because EBITDA, Adjusted EBITDA and Adjusted EBITDA margin exclude the results of decisions that are outside the control of operating management.

35 | Q1 2022 Form 10-Q

Table of Contents

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

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not defined under GAAP, are not measures of net income (loss) or any other performance measures derived in ~~investing activities from continuing operations excluding customer trust fund activity was $10.3 million, related~~accordance with GAAP, and are subject to ~~capital expenditures.~~important limitations. Our use of the terms EBITDA, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies in our industry and are not measures of performance calculated in accordance with GAAP.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin do not reflect the following:

•

our cash expenditures or future requirements for capital expenditures ~~included $7.4 million~~or contractual commitments;

•

changes in, or cash requirements for, ~~software~~our working capital needs;

•

any charges for the assets being depreciated and ~~technology~~amortized that may need to be replaced in the future;

•

the impact of share-based compensation and ~~$2.9 million~~related employer taxes upon our results of operations;

•

the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

•

our income tax expense or the cash requirements to pay our income taxes; and

•

certain other non-recurring items.

In evaluating EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation.

The following table reconciles net loss to EBITDA, Adjusted EBITDA for ~~property~~the periods presented:


	Three Months Ended March 31,
	2022			2021
	(Dollars in millions)
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 (a)		2.3			8.0
Foreign exchange (gain) loss		(0.8	)		1.9
Share-based compensation (b)		35.5			23.0
Severance charges (c)		17.3			2.1
Restructuring consulting fees (d)		1.9			7.8
Other non-recurring items (e)		1.2			1.7
Adjusted EBITDA	$	57.4		$	44.5
Net profit margin (f)		(9.3	)%		(8.2	)%
Adjusted EBITDA margin		19.6	%		19.0	%

(a)

We define EBITDA as net income or loss before interest, taxes, and ~~equipment. For~~depreciation and amortization.

(b)

Represents share-based compensation expense and related employer taxes.

(c)

Represents costs for severance compensation paid to employees whose positions have been eliminated or who have been terminated not for cause.

(d)

Represents consulting fees and expenses incurred during the ~~three months ended March 31, 2018, capital expenditures~~periods presented in connection with any acquisition, investment, disposition, recapitalization, equity offering, issuance or repayment of debt, issuance of equity interests, or refinancing.

36 | Q1 2022 Form 10-Q

Table of Contents

(e)

Represents (1) the impact of the fair value adjustment for ~~software development were $6.1 million which is included~~the DataFuzion contingent consideration in ~~capitalized expenditures for software~~2022, (2) the difference between the historical five-year average pension expense and ~~technology.~~

~~During~~ the ~~three months ended March 31, 2017, net cash used~~current period actuarially determined pension expense associated with the planned termination of the frozen U.S. pension plan and related changes in ~~investing activities from continuing operations excluding customer trust fund activity was $7.9 million, primarily related to capital expenditures, partially offset by net proceeds from divestitures~~investment strategy associated with protecting the now fully funded status in 2022 and 2021, and (3) charges of $0.9 million. Our capital expenditures included $6.2 million for software and technology and $2.6 million for property and equipment. For the three months ended March 31, 2017, capital expenditures for software development were $5.4 million which is included in capitalized expenditures for software and technology.

~~Financing Activities~~

~~Net cash used in financing activities from continuing operations excluding the change in customer trust fund obligation was~~ $0.3 million during the three months ended March 31, ~~2018, related to repayment of long-term debt obligations.~~

~~Net cash used in financing activities from continuing operations excluding the change in customer trust fund obligation was $1.8 million during the three months ended March 31, 2017,~~2021 related to the ~~repurchase~~abandonment of certain leased facilities

(f)

Net profit margin is determined by calculating the percentage that net (loss) income is of total revenue.

The following tables present a reconciliation of our ~~stock.~~

~~Cash Flows from Discontinued Operations~~

During the three months ended March 31, 2018, net cash used in discontinued operations was $0.1 million. During the three months ended March 31, 2017, net cash used in discontinued operations was $0.7 million. The cash flows from discontinued operationsreported results to our non-GAAP Adjusted EBITDA basis for all periods ~~primarily relate to~~presented:


	Three Months Ended March 31, 2022
	As reported			Share-based compensation		Severance charges		Other (a)			Adjusted (b)
	(Dollars in millions)
Cost of revenue:
Recurring
Cloud	$	64.6		$	3.5	$	9.6	$	—		$	51.5
Bureau		17.7			0.4		1.5		—			15.8
Total recurring		82.3			3.9		11.1		—			67.3
Professional services and other		54.5			2.9		0.2		—			51.4
Product development and management		40.4			5.8		3.3		—			31.3
Depreciation and amortization		13.0			—		—		—			13.0
Total cost of revenue		190.2			12.6		14.6		—			163.0
Sales and marketing		58.4			5.2		2.1		—			51.1
General and administrative		63.6			17.7		0.6		10.5			34.8
Operating (loss) profit		(18.9	)		35.5		17.3		10.5			44.4
Other (income) expense, net		(0.3	)		—		—		(0.4	)		0.1
Depreciation and amortization		20.9			—		—		(7.8	)		13.1
EBITDA	$	2.3		$	35.5	$	17.3	$	2.3		$	57.4
Interest expense, net		5.8			—		—		—			5.8
Income tax expense (c)		3.0			—		—		(15.0	)		18.0
Depreciation and amortization		20.9			—		—		7.8			13.1
Net (loss) income	$	(27.4	)	$	35.5	$	17.3	$	(4.9	)	$	20.5

(a)

Other includes amortization of acquisition-related intangible assets, restructuring consulting fees, foreign exchange gain, the impact of the fair value adjustment for the DataFuzion contingent consideration, and the difference between the historical five-year average pension expense and the current period actuarially determined pension expense associated with the planned termination of the frozen U.S. pension plan and related changes in ~~working capital.~~

~~Critical Accounting Policies and Estimates~~

~~There~~investment strategy associated with protecting the now fully funded status.

(b)

The Adjusted amount is a non-GAAP financial measure.

(c)

Income tax effects have been ~~no material changes to our critical accounting policies and estimates from~~calculated based on the ~~information provided~~statutory tax rates in effect in the ~~“Management’s Discussion~~U.S. and ~~Analysis~~foreign jurisdictions during the period.

37 | Q1 2022 Form 10-Q

Table of ~~Financial Conditions and Results~~Contents


	Three Months Ended March 31, 2021
	As reported			Share-based compensation		Severance charges		Other (a)			Adjusted (b)
	(Dollars in millions)
Cost of revenue:
Recurring
Cloud	$	46.1		$	1.9	$	—	$	—		$	44.2
Bureau		13.6			0.4		0.7		—			12.5
Total recurring		59.7			2.3		0.7		—			56.7
Professional services and other		44.7			1.9		—		—			42.8
Product development and management		25.8			3.1		0.2		—			22.5
Depreciation and amortization		11.1			—		—		—			11.1
Total cost of revenue		141.3			7.3		0.9		—			133.1
Sales and marketing		46.1			2.8		0.8		—			42.5
General and administrative		49.5			12.9		0.4		10.3			25.9
Operating (loss) profit		(2.4	)		23.0		2.1		10.3			33.0
Other expense, net		4.6			—		—		3.3			1.3
Depreciation and amortization		15.0			—		—		(2.2	)		12.8
EBITDA	$	8.0		$	23.0	$	2.1	$	11.4		$	44.5
Interest expense, net		5.6			—		—		—			5.6
Income tax expense (c)		6.6			—		—		(3.8	)		10.4
Depreciation and amortization		15.0			—		—		2.2			12.8
Net (loss) income	$	(19.2	)	$	23.0	$	2.1	$	9.8		$	15.7

(a)

Other includes amortization of Operations—Critical Accounting Policies and Estimates” contained in our 2017 Annual Report. For discussion of recently issued and adopted accounting pronouncements, please refer to Note 2, “Summary of Significant Accounting Policies,” to our condensed consolidated financial statements included herein.

~~Off-Balance~~ ~~Sheet Arrangements~~

~~We do not and, as of March 31, 2018, we did not, have anyoff-balance~~ sheet arrangements (as that term is defined in applicable SEC rules) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

~~Forward-Looking Statements~~

~~The foregoing Management’s Discussion and Analysis of Financial Condition and Results of Operations~~acquisition-related intangible assets, foreign exchange loss, restructuring consulting fees, the difference between the historical five-year average pension expense and the ~~following Quantitative and Qualitative Disclosures about Market Risk contain certain forward-looking statements within~~current period actuarially determined pension expense associated with the ~~meaning of Section 27A~~planned termination of the ~~Securities Act~~frozen U.S. pension plan and related changes in investment strategy associated with protecting the now fully funded status, and charges related to the abandonment of ~~1933, as amended, and Section 21E of~~certain leased facilities.

(b)

The Adjusted amount is a non-GAAP financial measure.

(c)

Income tax effects have been calculated based on the Securities Exchange Act of 1934, as amended. These forward-looking statements represent our expectations or beliefs, including, but not limited to, our expectations concerning our operations and financial performance and condition. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “assumes,” “projects,” “could,” “may,” “will,” “should,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that are difficult to predict. Our actual results could differ materially from those containedstatutory tax rates in effect in the ~~forward-looking statements due to risks~~U.S. and ~~uncertainties associated with fluctuations in our quarterly operating results, concentration~~foreign jurisdictions during the period.

38 | Q1 2022 Form 10-Q

Table of our product offerings, development risks involved with new products and technologies, competition, our contractual relationships with third parties, contract renewals with business partners, compliance by our customers with the terms of their contracts with us, and other factors disclosed in our filings with the SEC. Other factors that may cause such differences include, but are not limited to, those discussed in this Form~~10-Q~~ and the Prospectus, including the risk factors set forth in “Risk Factors” of the Prospectus. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law or the terms of our indebtedness. These risks and uncertainties should be considered in evaluating any forward-looking statements contained herein.Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks related to foreign currency exchange rates, interest rates, and pension obligations. We seek to minimize or to manage these market risks through normal operating and financing activities. These market risks may be amplified by events and factors surrounding global events. We do not trade or use instruments with the objective of earning financial gains on the market fluctuations, nor do we use instruments where there are not underlying exposures.

Foreign Currency Risk. Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Canadian Dollar. Our exposure to foreign currency exchange rates has historically been partially hedged as our foreign currency denominated inflows create a natural hedge against our foreign currency denominated expenses. Accordingly, our results of operations and cash flows were not materially affected by fluctuation in foreign currency exchange rates, and we believe that a hypothetical 10% change in foreign currency exchange rates or inability to access foreign funds would not materially affect our ability to meet our operational needs or result in a material foreign currency loss in the future. Due to the relative size of our international operations to date, we have not instituted an active hedging program. We expect our international operations to continue to grow in the near term, and we are monitoring the foreign currency exposure to determine if we should begin a hedging program.

Interest Rate Risk. In ~~connection with our U.S. and Canadian payroll and tax filing services,~~certain jurisdictions, we collect funds for payment of payroll and taxes; temporarily hold such funds in ~~trust~~segregated accounts until payment is due; remit the funds to the customers’ employees and appropriate taxing authority; file federal, state and local tax returns; and handle related regulatory correspondence and amendments. We invest the ~~U.S.~~ customer ~~trust~~ funds ~~primarily~~ in high- quality bank deposits, money market mutual funds, commercial paper or collateralized short-term investments. We may also invest these funds in ~~U.S. Treasury and agency~~government securities, as well as highly rated asset-backed, mortgage-backed, ~~municipal,~~corporate, and ~~corporate~~bank securities. ~~Our Canadian~~

We have exposure to risks associated with changes in laws and regulations that may affect customer ~~trust funds~~fund balances. For example, a change in regulations, either reducing the amount of taxes to be withheld or allowing less time to remit taxes to government authorities, would reduce our average customer fund balances and float revenue. Based on current market conditions, portfolio composition and investment practices, a 100 basis point increase in market investment rates would result in approximately $24 million increase in float revenue over the ensuing twelve month period. There are ~~invested~~no incremental costs of revenue associated with changes in ~~securities issued by the government and provinces of Canada, highly rated Canadian banks and corporations, asset-backed trusts, and mortgages.~~float revenue.

We do not enter into investments for trading or speculative purposes. Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we classify our securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be ~~other-than-temporary.~~unrecoverable.

We do not believe that ~~an increase or decrease~~a change in interest rates of 100 basis points would have a material effect on our operating results or financial condition. Fluctuations in the value of our investment securities caused by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive income, and are realized only if we sell the underlying securities.

A 100 basis point increase in the LIBOR rates would result in approximately $6 million increase in our interest expense, net over the ensuring twelve-month period. Please refer to Note 9, "Debt" for additional information.

We pay floating rates of interest on our Term Debt and Revolving Credit Facility. The interest paid on these borrowings will fluctuate up or down in relation to changes in market interest rates.

Pension Obligation Risk. We provide a pension plan for certain current and former U.S. employees that closed to new participants on January 2, 1995. In 2007, the U.S. pension plan was amended (1) to exclude from further participation any participant or former participant who was not employed by the company or another participating employer on January 1, 2008, (2) to discontinue participant contributions, and (3) to freeze the accrual of additional benefits as of December 31, 2007. In applying relevant accounting policies, we have made critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets, discount rates, and health care cost trends. The cost of pension benefits in future periods will depend on actual returns on plan assets, assumptions for future

39 | Q1 2022 Form 10-Q

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periods, contributions, and benefit experience. ~~In 2017, we contributed $25.3 million to our pension plan.~~ The effective discount rate used in accounting for pension and other benefit obligations in ~~2017~~2021 ranged from ~~3.01%~~2.00% to ~~3.25%~~2.36%. The expected rate of return on plan assets for qualified pension benefits in ~~2018~~2022 is ~~6.30%~~3.30%.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure~~Disclosure controls and procedures, as defined in Rule13(a)-15(e) ~~of the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form10-Q~~ ~~pursuant to Rule13a-15(b)~~ of the Exchange ~~Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure~~Act, are controls and procedures ~~as of the end of the period covered by this Quarterly Report on Form10-Q~~that are ~~effective at a reasonable assurance level in ensuring~~designed to ensure that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated to our management, including our ~~Chief~~Co-Chief Executive ~~Officer~~Officers and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management ~~including~~has evaluated, under the supervision and with the participation of our ~~Chief~~Co-Chief Executive ~~Officer~~Officers and Chief Financial Officer, ~~does not expect~~the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q pursuant to Rule 13a-15(b) of the Exchange Act. Based on that evaluation, our Co-Chief Executive Officers and Chief Financial Officer have concluded that our disclosure controls and procedures ~~will prevent or detect all errors and all fraud. We have not engaged an independent registered accounting firm to perform an audit of our internal control over financial reporting~~ as of ~~any balance sheet date or for any period reported in our financial statements. Presently, we are not an accelerated filer, as such term is defined by Rule12b-2~~the end of the Exchange Act, therefore; our management is not presently required to perform an annual assessment of the effectiveness of our internal control over financial reporting. This requirement could apply as early as our Annual Report onperiod covered by this Form~~10-K~~ ~~for the year ending December 31, 2019 if certain triggers requiring accelerated filing deadlines~~ 10-Q are met prior to that. Our independent public registered accounting firm will first be required to attest to the effectiveness of our internal control over financial reporting for our Annual Report on Form~~10-K~~ ~~for the first year we are no longer an “emerging growth company”.~~effective. While our disclosure controls and procedures are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected.

Changes in Internal Control over Financial Reporting

There were no changes to our internal ~~control~~controls over financial reporting during the three months ended March 31, ~~2018,~~2022, that have materially affected, or that are reasonably likely to materially affect, our internal ~~control~~controls over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, we believe would individually or taken together have a material adverse effect on our business, financial condition or liquidity.

On October 21, 2021, a claim was issued by purported stockholder, Bluemoon Capital Ltd., in the Superior Court of Justice of Ontario, Canada. The claim is against the Company, together with David Ossip, Chair and Co-Chief Executive Officer of the Company, Arthur Gitajn, former EVP and Chief Financial Officer of the Company, Gnaneshwar Rao, director of the Company and Brent Bickett, director of the Company, as well as certain third parties. The action, which is a proposed class action, alleges misrepresentations and negligence in connection with the disclosure made by the Company in its April 25, 2018 Prospectuses (which were later incorporated by reference into the Company’s May 24, 2018 Interim Financial Statements and MD&A) regarding matters surrounding the Company’s distribution to its pre-IPO stockholders of its 50% interest in LifeWorks Corporation Ltd. On January 19, 2022, the Ontario court rejected the Norwich Application for discovery by plaintiff (equitable or discretionary remedy in Canada for disclosure of documentation to form an action), which had been filed prior to filing the class action on the basis that it did not meet the key criteria for pre-action discovery. Plaintiff has appealed this decision.

The action seeks unspecified monetary damages under the Ontario Securities Act and at common law.

At this early stage of the proceeding, the ultimate disposition is not yet determinable, but we believe that the likelihood of a material loss arising out of this claim is remote.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes toin our ~~principal risks that we believe are material to our business, results of operations and financial condition, from the~~ risk factors ~~previously~~from those disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the ~~prospectus, dated April 25, 2018, filed pursuant to Rule 424(b)(4) with the SEC on April 26, 2018, relating to our initial public offering which is accessible on the SEC’s website at www.sec.gov.~~fiscal year ended December 31, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Initial Public Offering~~None.

On April 30, 2018, we completed an initial public offering (“IPO”) of our common stock. In connection with the IPO, we issued and sold 24,150,000 shares of common stock at a price to the public of $22.00 per share. Prior to completion of the IPO, those shares were unregistered. However, as a result of their registration and sale pursuant to the IPO, we received approximately $531.3 million in gross proceeds before deducting underwriting discounts, commissions and other offering related expenses. None of the expenses associated with the IPO were paid to directors, officers, persons owning 10% or more of any class of our equity securities or to their associates or to our affiliates. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC acted as representatives of the underwriters for the offering.

~~We registered the shares under the Securities Act on a Registration Statement on FormS-1~~ ~~(RegistrationNo. 333-223905),~~ ~~which was filed with the SEC on March 26, 2018 and declared effective on April 25, 2018.~~

~~The IPO closed on April 30, 2018. The offering terminated after all of the shares of common stock were sold.~~

~~There was no material change in the planned use of proceeds from our IPO as described in our Prospectus.~~

~~Concurrent Private Placement~~

Immediately subsequent to our IPO on April 30, 2018, THL / Cannae Investors LLC, one of our existing stockholders controlled by our Sponsors, purchased from us in a private placement $100.0 million of our common stock at a price per share equal to the initial public offering price. Based on the IPO price of $22.00 per share, 4,545,455 shares were issued in this private placement.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(a) Exhibits

The following exhibits are filed or furnished as a part of this report:


Exhibit No.		Description

3.1		~~Third~~Fourth Amended and Restated Certificate of Incorporation of Ceridian HCM Holding Inc. (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed by the Company on May 5, 2021).

3.2		Second Amended and Restated Bylaws of Ceridian HCM Holding Inc.

~~4.1~~		~~Certificate of Common Stock.~~

~~4.2~~		~~Indenture, dated October 1, 2013, among Ceridian HCM Holding Inc., the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee~~ (incorporated by reference to Exhibit ~~4.2~~3.1 to the Current Report on Form~~S-1~~ ~~Registration Statement~~ 8-K filed by ~~Ceridian HCM Holding Inc.~~the Company on ~~March 26, 2018 (No.333-223905))~~February 9, 2022).

~~4.3~~ 10.1*		~~First Supplemental Indenture, dated August 8, 2014,~~Amended and Restated Employment Agreement, effective February 9, 2022, between Leagh E. Turner and Ceridian ~~HCM Holding Inc. and Wells Fargo Bank, National Association, as trustee~~Canada Ltd. (incorporated by reference to Exhibit ~~4.3~~10.1 to the Current Report on Form~~S-1~~ ~~Registration Statement~~ 8-K filed by the Company on February 9, 2022).

10.2***		Third Amendment to Employment Agreement, effective February 23, 2022, between Christopher R. Armstrong and Ceridian HCM, Inc.

10.3***		First Amendment to Employment Agreement, effective February 23, 2022, between Stephen Holdridge and Ceridian HCM, Inc.

10.4***		Sales Incentive Plan for Rakesh Subramanian, effective February 23, 2022 (redacted).

10.5***		Ceridian HCM Holding Inc. 2018 Equity Incentive Plan (amended and restated as of April 1, 2022) (refiled herewith to correct a scrivener's error in the effective date in the version filed as Exhibit 10.1 to the Company's Current Report on ~~March 26, 2018 (No.333-223905))~~Form 8-K filed with the SEC on February 24, 2022).

~~4.4~~ 10.6*		~~Registration Rights Agreement by and among~~ Ceridian HCM Holding Inc. ~~and~~2022 Management Incentive Plan (incorporated by reference to Exhibit 10.2 to the ~~other parties thereto.~~Current Report on Form 8-K filed by the Company on February 24, 2022).

~~31.1~~ 10.7*		Form of Performance Stock Unit Award Agreement (for awards made after January 1, 2022) (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the Company on February 24, 2022).

10.8*		Form of Performance Stock Unit Award Agreement (for Canadian executive awards made after January 1, 2022) (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by the Company on February 24, 2022).

10.9*		Form of Restricted Stock Unit Award Agreement (for awards made after January 1, 2022) (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by the Company on February 24, 2022).

31.1**		Certification of ~~Principal~~Co-Principal Executive Officer Pursuant to Rules13a-14(a) and15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

~~31.2~~ 31.2**		Certification of ~~Principal Financial~~Co-Principal Executive Officer Pursuant to Rules13a-14(a) and15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

~~32.1~~ 31.3**		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Co-Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~32.2~~ 32.2**		Certification of Co-Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.3**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~101.INS~~ 101.INS**		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

~~101.SCH~~ 101.SCH**		Inline XBRL Taxonomy Extension Schema Document

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~~101.CAL~~ 101.CAL**		Inline XBRL Taxonomy Extension Calculation Linkbase Document

~~101.DEF~~ 101.DEF**		Inline XBRL Taxonomy Extension Definition Linkbase Document

~~101.LAB~~ 101.LAB**		Inline XBRL Taxonomy Extension Label Linkbase Document

~~101.PRE~~ 101.PRE**		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104**		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~SIGNATURES~~* Management compensatory plan or arrangement.

** Filed herewith.

*** Management compensatory plan or arrangement and filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of ~~1933,~~1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			~~CERIDIAN HCM HOLDING INC.~~

	CERIDIAN HCM HOLDING INC.

Date: May ~~24, 2018~~			~~By:~~	4, 2022	By:	/s/ David D. Ossip
		Name:			~~Name:~~ David D. Ossip
					~~Title: Chief Executive Officer~~
					~~(Principal Executive Officer)~~



~~Date: May 24, 2018~~				~~By:~~	~~/s/ Arthur Gitajn~~
		Title:			~~Name: Arthur Gitajn~~ Co-Chief Executive Officer
			(Co-Principal Executive Officer)

Date: May 4, 2022	By:	/s/ Leagh E. Turner
		Name: Leagh E. Turner
		Title: Co-Chief Executive Officer
		(Co-Principal Executive Officer)

Date: May 4, 2022	By:	/s/ Noémie C. Heuland
		Name:	Noémie C. Heuland
		Title:	Executive Vice President and Chief Financial Officer
					(Principal Financial ~~Officer~~Officer)
					~~(Principal Financial Officer and~~	~~Principal Accounting Officer)~~

44 | Q1 2022 Form 10-Q


	March 31, 2018			December 31, 2017
	(unaudited)
ASSETS
Current assets:
Cash and equivalents	$	62.2		$	99.6
Trade and other receivables, net		81.1			79.9
Prepaid expenses		49.2			37.9
Other current assets		1.8			5.3

Total current assets before customer trust funds		194.3			222.7
Customer trust funds		4,293.9			4,099.7

Total current assets		4,488.2			4,322.4
Property, plant, and equipment, net		103.4			103.8
Goodwill		2,075.8			2,087.3
Other intangible assets, net		206.6			212.4
Other assets		5.5			4.0

Total assets	$	6,879.5		$	6,729.9

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	—		$	—
Accounts payable		47.6			48.8
Accrued interest		2.7			15.9
Deferred revenue		18.5			16.8
Employee compensation and benefits		55.7			70.0
Other accrued expenses		16.7			15.5

Total current liabilities before customer trust funds obligations		141.2			167.0
Customer trust funds obligations		4,313.2			4,105.5

Total current liabilities		4,454.4			4,272.5
Long-term debt, less current portion		1,120.5			1,119.8
Employee benefit plans		147.3			152.4
Other liabilities		53.8			56.2

Total liabilities		5,776.0			5,600.9
Commitments and contingencies (Note 15)
Stockholders’ equity:
Senior preferred stock, $0.01 par, 70,000,000 shares authorized, 16,802,144 shares issued and outstanding as of March 31, 2018 and December 31, 2017		190.1			184.8
Junior preferred stock, $0.01 par, 70,000,000 shares authorized, 58,244,308 shares issued and outstanding as of March 31, 2018 and December 31, 2017		0.6			0.6
Common stock, $0.01 par, 150,000,000 shares authorized, 65,374,309 shares issued and outstanding as of March 31, 2018 and 65,285,962 shares issued and outstanding as of December 31, 2017		0.7			0.7
Additional paid in capital		1,568.3			1,565.4
Accumulated deficit		(355.6	)		(348.2	)
Accumulated other comprehensive loss		(337.7	)		(312.1	)

Total stockholders’ equity		1,066.4			1,091.2
Noncontrolling interest		37.1			37.8

Total equity		1,103.5			1,129.0

Total liabilities and equity	$	6,879.5		$	6,729.9


	Three Months ended March 31, 2018
	As Reported		Under ASC 606		Impact
Revenue:
Recurring services	$	188.7	$	182.3	$	(6.4	)
Professional services and other		20.2		28.9		8.7

Total revenue	$	208.9	$	211.2	$	2.3
Operating profit	$	26.4	$	30.6	$	4.2


	Three Months ended March 31, 2017
	As Reported		Under ASC 606		Impact
Revenue:
Recurring services	$	171.4	$	165.5	$	(5.9	)
Professional services and other		15.6		22.5		6.9

Total revenue	$	187.0	$	188.0	$	1.0
Operating profit	$	12.2	$	14.6	$	2.4


	Three Months ended March 31,
	2017
Net revenues	$	—
Loss from operations before income taxes		(0.1	)
Gain on sale of businesses		0.9
Income tax expense		(0.3	)
Income from discontinued operations, net of income taxes	$	0.5


	March 31, 2018
	Cost		Fair Value
Due in one year or less	$	2,864.5	$	2,864.6
Due in one to three years		525.6		522.0
Due in three to five years		544.8		538.0
Due after five years		368.3		359.3

Invested customer trust funds	$	4,303.2	$	4,283.9


	HCM			LifeWorks			Total
Balance at December 31, 2016	$	1,933.1		$	124.9		$	2,058.0
Translation		27.9			1.4			29.3

Balance at December 31, 2017		1,961.0			126.3			2,087.3
Translation		(11.0	)		(0.5	)		(11.5	)

Balance at March 31, 2018	$	1,950.0		$	125.8		$	2,075.8


	Shares			Weighted Average Exercise Price (per share)			Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in millions)
Options outstanding at December 31, 2017		1,035,647		$	13.46			3.5	$	—
Granted		—			—			—		—
Exercised		—			—			—		—
Forfeited or expired		(5,572	)		(13.46	)		—		—

Options outstanding at March 31, 2018		1,030,075		$	13.46			3.2	$	—


	March 31,			December 31,			September 30,			June 30,			March 31,			December 31,
	2018			2017			2017			2017			2017			2016
Live Dayforce customers		3,154			3,001			2,855			2,690			2,480			2,339
Dayforce customers live for two or more years		1,872			1,770			1,628			1,524			1,377			1,276
Proportion of Dayforce customers live for two or more years		59	%		59	%		57	%		57	%		56	%		55	%


	Three Months ended March 31,				Growth rate year-over-year			Growth rate on a constant currency basis (a)
	2018		2017		2018 vs. 2017			2018 vs. 2017
	(Dollar in millions)
Dayforce	$	102.4	$	71.0		44.2	%		42.8	%
PowerPay		22.8		19.7		15.7	%		10.0	%

Total Cloud revenue	$	125.2	$	90.7		38.0	%		35.6	%


	Three Months Ended						Increase /
	March 31,						(Decrease)						% of Revenue
	2018			2017			Amount			%			2018			2017
	(Dollars in millions)
Revenue:
Recurring services
Cloud	$	106.0		$	76.4		$	29.6			38.7	%		50.7	%		40.9	%
Bureau		61.0			75.4			(14.4	)		(19.1	)%		29.2	%		40.3	%
LifeWorks		21.7			19.6			2.1			10.7	%		10.4	%		10.5	%

Total recurring services		188.7			171.4			17.3			10.1	%		90.3	%		91.7	%
Professional services and other		20.2			15.6			4.6			29.5	%		9.7	%		8.3	%

Total revenue		208.9			187.0			21.9			11.7	%		100.0	%		100.0	%
Cost of revenue:
Recurring services
Cloud		33.1			28.9			4.2			14.5	%		15.8	%		15.5	%
Bureau		17.6			20.4			(2.8	)		(13.7	)%		8.4	%		10.9	%
LifeWorks		12.0			9.5			2.5			26.3	%		5.7	%		5.1	%

Total recurring services		62.7			58.8			3.9			6.6	%		30.0	%		31.4	%
Professional services and other		32.8			33.9			(1.1	)		(3.2	)%		15.7	%		18.1	%
Product development and management		15.4			12.8			2.6			20.3	%		7.4	%		6.8	%
Depreciation and amortization		8.8			7.7			1.1			14.3	%		4.2	%		4.1	%

Total cost of revenue		119.7			113.2			6.5			5.7	%		57.3	%		60.5	%

Gross profit		89.2			73.8			15.4			20.9	%		42.7	%		39.5	%
Costs and expenses:
Selling, general, and administrative		65.6			60.7			4.9			8.1	%		31.4	%		32.5	%
Other (income) expense, net		(2.8	)		0.9			(3.7	)		(411.1	)%		(1.3	)%		0.5	%
Interest expense, net		22.2			21.4			0.8			3.7	%		10.6	%		11.4	%

Total costs and expenses		85.0			83.0			2.0			2.4	%		40.7	%		44.4	%

Income (loss) from continuing operations before income taxes		4.2			(9.2	)		13.4			145.7	%		2.0	%		(4.9	)%
Income tax expense		6.8			2.5			4.3			172.0	%		3.3	%		1.3	%

Loss from continuing operations		(2.6	)		(11.7	)		9.1			77.8	%		(1.2	)%		(6.3	)%
Income from discontinued operations		—			0.5			(0.5	)		(100.0	)%		—	%		0.3	%

Net loss		(2.6	)		(11.2	)		8.6			76.8	%		(1.2	)%		(6.0	)%
Net loss attributable to noncontrolling interest		(0.5	)		—			(0.5	)		n.m.			(0.2	)%		—	%

Net loss attributable to Ceridian	$	(2.1	)	$	(11.2	)	$	9.1			81.3	%		(1.0	)%		(6.0	)%


	Percentage change in revenue as reported			Impact of changes in foreign currency (a)			Percentage change in revenue on constant currency basis (a)
Revenue:
Cloud
Recurring services		38.7	%		2.0	%		36.7	%
Professional services and other		34.3	%		4.4	%		29.9	%

Total Cloud revenue		38.0	%		2.4	%		35.6	%
Bureau (b)		(19.2	)%		0.8	%		(20.0	)%
LifeWorks		10.7	%		3.2	%		7.5	%

Total revenue		11.7	%		1.8	%		9.9	%


	Ceridian HCM Holding Inc. Unaudited Pro Forma Condensed Consolidated Balance Sheet
	March 31, 2018
	Ceridian Historical		Adjustments		Ceridian Pro Forma
	(Dollars in millions)
ASSETS
Current assets:
Cash and equivalents	$	62.2	$	7.6	$	54.6
Trade and other receivables, net		81.1		15.1		66.0
Prepaid expenses		49.2		1.7		47.5
Other current assets		1.8		—		1.8

Total current assets before customer trust funds		194.3		24.4		169.9
Customer trust funds		4,293.9		—		4,293.9

Total current assets		4,488.2		24.4		4,463.8
Property, plant, and equipment, net		103.4		1.6		101.8
Goodwill		2,075.8		125.8		1,950.0
Other intangible assets, net		206.6		5.1		201.5
Other assets		5.5		2.0		3.5

Total assets	$	6,879.5	$	158.9	$	6,720.6

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	—	$	—
Accounts payable		47.6		6.0		41.6
Accrued interest		2.7		—		2.7
Deferred revenue		18.5		2.5		16.0
Employee compensation and benefits		55.7		1.5		54.2
Other accrued expenses		16.7		0.4		16.3

Total current liabilities before customer trust funds obligations		141.2		10.4		130.8
Customer trust funds obligations		4,313.2		—		4,313.2

Total current liabilities		4,454.4		10.4		4,444.0
Long-term debt, less current portion		1,120.5		—		1,120.5
Employee benefit plans		147.3		—		147.3
Other liabilities		53.8		10.6		43.2

Total liabilities		5,776.0		21.0		5,755.0
Total equity		1,103.5		137.9		965.6

Total liabilities and equity	$	6,879.5	$	158.9	$	6,720.6

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company