UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly reporting period ended September 30, 2023

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

For the transition period from to

Commission file number 001-38467

 

Ceridian HCM Holding Inc.

(Exact name of registrant as specified in its charter)

Delaware	46-3231686
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

3311 East Old Shakopee Road

Minneapolis, Minnesota 55425

(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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-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: 156,127,011 shares of common stock, $0.01 par value per share, as of November 2, 2023.

Ceridian HCM Holding Inc.

Table of Contents

		Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		3
PART I. FINANCIAL INFORMATION		4
Item 1.	Condensed Consolidated Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	42
Item 4.	Controls and Procedures	43
PART II. OTHER INFORMATION		45
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47

2 | Q3 2023 Form 10-Q

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ("Form 10-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 solutions industry and our operations, performance, and financial condition, and 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.

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. 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. In particular:

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

•our failure to provide new or enhanced functionality and features;

•our inability to successfully compete in the market in which we operate and expand our current offerings into new markets or further penetrate existing markets due to competition;

•our inability to offer and deliver high-quality technical support, implementation and professional services;

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

•our failure to comply with applicable privacy, security, data, and financial services laws, regulations and standards, including our ongoing consent order with the Federal Trade Commission regarding data protection;

•our failure to properly update our solutions to enable our customers to comply with applicable laws;

•our failure to manage our aging technical operations infrastructure;

•our inability to maintain necessary third-party relationships, and third-party software licenses, and identify errors in the 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.

Please refer to Part II, Item 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, 2022 (“2022 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 Form 10-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 Form 10-Q. For the reasons described above, we caution against relying on any forward-looking 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 | Q3 2023 Form 10-Q

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ceridian HCM Holding Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
	2023			2022
(Dollars in millions, except share data)
ASSETS
Current assets:
Cash and equivalents	$	510.3		$	431.9
Restricted cash		0.8			0.8
Trade and other receivables, net		236.3			180.1
Prepaid expenses and other current assets		119.1			98.0
Total current assets before customer funds		866.5			710.8
Customer funds		5,048.1			4,729.5
Total current assets		5,914.6			5,440.3
Right of use lease assets, net		19.5			24.3
Property, plant, and equipment, net		211.1			174.9
Goodwill		2,270.7			2,280.0
Other intangible assets, net		244.9			281.6
Other assets		282.4			262.4
Total assets	$	8,943.2		$	8,463.5
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	7.5		$	7.8
Current portion of long-term lease liabilities		6.9			10.0
Accounts payable		66.5			54.3
Deferred revenue		47.8			41.2
Employee compensation and benefits		75.5			97.4
Other accrued expenses		41.5			24.0
Total current liabilities before customer funds obligations		245.7			234.7
Customer funds obligations		5,165.8			4,845.1
Total current liabilities		5,411.5			5,079.8
Long-term debt, less current portion		1,210.9			1,213.4
Employee benefit plans		12.1			17.7
Long-term lease liabilities, less current portion		20.4			23.7
Other liabilities		21.4			19.5
Total liabilities		6,676.3			6,354.1
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.01 par, 500,000,000 shares authorized, 155,978,986 and    153,856,645 shares issued and outstanding, respectively		1.6			1.5
Additional paid in capital		3,123.8			2,965.5
Accumulated deficit		(363.4	)		(372.6	)
Accumulated other comprehensive loss		(495.1	)		(485.0	)
Total stockholders’ equity		2,266.9			2,109.4
Total liabilities and stockholders' equity	$	8,943.2		$	8,463.5

See accompanying notes to condensed consolidated financial statements.

4 | Q3 2023 Form 10-Q

Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023		2022
(Dollars in millions, except share and per share data)
Revenue:
Recurring	$	325.4		$	263.8		$	958.2	$	762.8
Professional services and other		52.1			51.8			155.8		147.3
Total revenue		377.5			315.6			1,114.0		910.1
Cost of revenue:
Recurring		80.5			77.1			239.4		234.4
Professional services and other		66.1			61.0			197.0		172.6
Product development and management		53.3			44.8			153.5		125.0
Depreciation and amortization		17.1			13.7			47.4		40.0
Total cost of revenue		217.0			196.6			637.3		572.0
Gross profit		160.5			119.0			476.7		338.1
Selling, general, and administrative		134.0			122.7			382.4		367.2
Operating profit (loss)		26.5			(3.7	)		94.3		(29.1	)
Interest expense, net		8.9			7.4			27.2		19.9
Other expense, net		5.1			5.9			6.6		11.4
Income (loss) before income taxes		12.5			(17.0	)		60.5		(60.4	)
Income tax expense		16.3			4.0			51.3		7.8
Net (loss) income	$	(3.8	)	$	(21.0	)	$	9.2	$	(68.2	)
Net (loss) income per share:
Basic	$	(0.02	)	$	(0.14	)	$	0.06	$	(0.45	)
Diluted	$	(0.02	)	$	(0.14	)	$	0.06	$	(0.45	)
Weighted-average shares outstanding:
Basic		155,693,712			153,184,846			155,026,472		152,691,008
Diluted		155,693,712			153,184,846			158,184,807		152,691,008

See accompanying notes to condensed consolidated financial statements.

5 | Q3 2023 Form 10-Q

Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
(Dollars in millions)
Net (loss) income	$	(3.8	)	$	(21.0	)	$	9.2		$	(68.2	)
Items of other comprehensive loss before income taxes:
Change in foreign currency translation adjustment		(19.0	)		(48.5	)		(12.3	)		(80.3	)
Change in unrealized loss from invested customer funds		(6.8	)		(33.0	)		(1.5	)		(139.9	)
Change in pension liability adjustment (a)		1.5			2.9			4.5			8.9
Other comprehensive loss before income taxes		(24.3	)		(78.6	)		(9.3	)		(211.3	)
Income tax (benefit) expense, net		(1.4	)		(8.0	)		0.8			(34.8	)
Other comprehensive loss after income taxes		(22.9	)		(70.6	)		(10.1	)		(176.5	)
Comprehensive loss	$	(26.7	)	$	(91.6	)	$	(0.9	)	$	(244.7	)

(a)The amount of the pension liability adjustment recognized in the condensed consolidated statements of operations within other expense, net was $1.5 million and $2.9 million during the three months ended September 30, 2023, and 2022, respectively and $4.5 million and $8.7 million during the nine months ended September 30, 2023, and 2022, respectively.

See accompanying notes to condensed consolidated financial statements.

6 | Q3 2023 Form 10-Q

Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Common Stock				Additional Paid In		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		$		Capital		Deficit			Loss			Equity
(Dollars in millions, except share data)
Balance as of December 31, 2022		153,856,645	$	1.5	$	2,965.5	$	(372.6	)	$	(485.0	)	$	2,109.4
Net income		—		—		—		9.9			—			9.9
Issuance of common stock under share-based compensation plans		1,150,281		0.1		14.7		—			—			14.8
Share-based compensation expense		—		—		40.2		—			—			40.2
Foreign currency translation		—		—		—		—			1.2			1.2
Change in unrealized loss, net of tax of ($6.3)		—		—		—		—			17.6			17.6
Change in pension liability adjustment, net of tax of ($0.4)		—		—		—		—			1.1			1.1
Balance as of March 31, 2023		155,006,926	$	1.6	$	3,020.4	$	(362.7	)	$	(465.1	)	$	2,194.2
Net income		—		—		—		3.1			—			3.1
Issuance of common stock under share-based compensation plans		522,795		—		8.5		—			—			8.5
Share-based compensation expense		—		—		41.5		—			—			41.5
Foreign currency translation		—		—		—		—			5.5			5.5
Change in unrealized loss, net of tax of $4.9		—		—		—		—			(13.7	)		(13.7	)
Change in pension liability adjustment, net of tax of ($0.4)		—		—		—		—			1.1			1.1
Balance as of June 30, 2023		155,529,721	$	1.6	$	3,070.4	$	(359.6	)	$	(472.2	)	$	2,240.2
Net loss		—		—		—		(3.8	)		—			(3.8	)
Issuance of common stock under share-based compensation plans		449,265		—		17.1		—			—			17.1
Share-based compensation		—		—		36.3		—			—			36.3
Foreign currency translation		—		—		—		—			(19.0	)		(19.0	)
Change in unrealized loss, net of tax of $1.8		—		—		—		—			(5.0	)		(5.0	)
Change in pension liability adjustment, net of tax of ($0.4)		—		—		—		—			1.1			1.1
Balance as of September 30, 2023		155,978,986	$	1.6	$	3,123.8	$	(363.4	)	$	(495.1	)	$	2,266.9

7 | Q3 2023 Form 10-Q

	Common Stock				Additional Paid In			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		$		Capital			Deficit			Loss			Equity
(Dollars in millions, except share data)
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 expense		—		—		35.5			—			—			35.5
Foreign currency translation		—		—		—			—			15.6			15.6
Change in unrealized loss, 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
Net loss		—		—		—			(19.8	)		—			(19.8	)
Issuance of common stock under share-based compensation plans		503,145		—		7.3			—			—			7.3
Share-based compensation expense		—		—		38.8			—			—			38.8
Foreign currency translation		—		—		—			—			(47.4	)		(47.4	)
Change in unrealized loss, net of tax of ($10.0)		—		—		—			—			(27.5	)		(27.5	)
Change in pension liability adjustment, net of tax of $0.8		—		—		—			—			2.1			2.1
Balance as of June 30, 2022		153,033,594	$	1.5	$	2,869.9		$	(346.4	)