Segment Reporting

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segment Reporting

12. Segment Reporting

Effective January 1, 2023, the Company's former Hosted business revenues and gross profit are reported in Other as the business is no longer core to the Company’s operations. There is no change in composition among the Employer Solutions and Professional Services segments.

Additionally, the Company changed its measure of segment profit and loss that is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the Company’s segments and assessing business performance.

Prior to January 1, 2023, the Company reported its measure of segment profit as earnings before interest, taxes, depreciation and intangible amortization adjusted for the impact of certain non-cash and other items that the Company does not consider in the evaluation of ongoing operational performance. Effective January 1, 2023, the Company's measure of segment profit is gross profit, which is defined as revenue less cost of services. Accordingly, prior period amounts have been reclassified to conform to the current period presentation, in all material respects.

The Company’s reportable segments have been determined using a management approach, which is consistent with the basis and manner in which the Company’s chief operating decision maker (“CODM”) uses financial information for the purposes of allocating resources and evaluating performance. The Company’s Chief Executive Officer is its CODM. The CODM evaluates the performance of the Company based on its total revenue and segment profit.

The CODM also uses revenue and segment gross profit to manage and evaluate our business, make planning decisions, and as performance measures for Company-wide bonus plans. These key financial measures provide an additional view of our operational performance over the long-term and provide useful information that we use in order to maintain and grow our business.

The accounting policies of the segments are the same as those described in Note 2 “Accounting Policies and Practices.” The Company does not report assets by reportable segments as this information is not reviewed by the CODM on a regular basis.

Information regarding the Company’s current reportable segments is as follows (in millions):

	Revenue
	Three Months Ended		Three Months Ended
	March 31,		March 31,
	2023		2022
Employer Solutions
Recurring	$	669	$	570
Project		54		53
Total Employer Solutions		723		623
Professional Services
Recurring		33		30
Project		65		60
Total Professional Services		98		90
Total Reportable Segments		821		713
Other		10		12
Total revenue	$	831	$	725

There was no single client who accounted for more than 10% of the Company’s revenues in any of the periods presented.

	Segment Profit
	Three Months Ended			Three Months Ended
	March 31,			March 31,
	2023			2022
Employer Solutions	$	238		$	204
Professional Services		19			19
Total Gross Profit		257			223
Selling, general and administrative		185			140
Depreciation and intangible amortization		85			85
Operating Income (Loss)		(13	)		(2	)
(Gain) Loss from change in fair value of financial instruments		25			(13	)
(Gain) Loss from change in fair value of tax receivable agreement		8			(5	)
Interest expense		33			29
Other (income) expense, net		3			(1	)
Income (Loss) Before Taxes	$	(82	)	$	(12	)

Recast of Segment Information

As a result of the Company’s segment changes noted above, the Company recast its segment revenues and profit measure to conform to current year presentation for the three and six months ended June 30, 2022, the three and nine months ended September 30, 2022 and for the fiscal year ended December 31, 2022.

	Revenue
	Three Months Ended		Six Months Ended		Three Months Ended		Nine Months Ended		Twelve Months Ended
	June 30,		June 30,		September 30,		September 30,		December 31,
	2022		2022		2022		2022		2022
Employer Solutions:
Recurring	$	559	$	1,129	$	583	$	1,712	$	2,467
Project		55		108		62		170		251
Total Employer Solutions		614		1,237		645		1,882		2,718
Professional Services:
Recurring		32		62		32		94		128
Project		59		119		63		182		243
Total Professional Services		91		181		95		276		371
Total Reportable Segments		705		1,418		740		2,158		3,089
Other		10		22		10		32		43
Total	$	715	$	1,440	$	750	$	2,190	$	3,132

	Segment Profit
	Three Months Ended			Six Months Ended			Three Months Ended			Nine Months Ended			Twelve Months Ended
	June 30,			June 30,			September 30,			September 30,			December 31,
	2022			2022			2022			2022			2022
Employer Solutions	$	200		$	404		$	189		$	593		$	911
Professional Services		20			39			23			62			86
Other		(1	)		(1	)		—			(1	)		(1	)
Total Gross Profit		219			442			212			654			996
Selling, general and administrative		157			297			178			475			671
Depreciation and intangible amortization		85			170			84			254			339
Operating Income (Loss)		(23	)		(25	)		(50	)		(75	)		(14	)
(Gain) Loss from change in fair value of financial instruments		(50	)		(63	)		10			(53	)		(38	)
(Gain) Loss from change in fair value of tax receivable agreement		(38	)		(43	)		(20	)		(63	)		(41	)
Interest expense		29			58			31			89			122
Other (income) expense, net		(7	)		(8	)		(6	)		(14	)		(16	)
Income (Loss) Before Taxes	$	43		$	31		$	(65	)	$	(34	)	$	(41	)