Q3 2022 Ceridian HCM Holding Inc Earnings Call

Well today, we have our co Ceos, David asset and Lee Turner, and our CFO Nuomi Hulond.

As a reminder, all participants are in listen only mode and a question and answer session will follow the opening remarks before I hand, the call over to David I want to remind everyone that our commentary may include forward looking statements. These statements are subject to risks and uncertainties that could cause <unk> results to differ.

For materially from historical experience or present expectations.

A description of some of these risks and uncertainties can be found in the reports we file with the Securities and Exchange Commission such as the cautionary statements in our filings.

Additionally over the course of this call we will reference non-GAAP measures to describe our performance.

Please review our earnings press release and filings with the SEC for a rationale behind the use of non-GAAP measures and for a full reconciliation of these GAAP to non-GAAP metrics.

Both our earnings press release, and SEC filings are available on the Ceridian Investor Relations website.

As a final note a replay of this call will also be available on our Investor Relations website.

And with that I'd like to turn the call over to David.

Hello, everyone and thank you for joining our Q3 earnings call today I'll speak about our very strong performance in the quarter and continued company momentum as winter, it's an exciting product highlights as we prepare for our clinical customer conference insights taking place next week.

Lee will elaborate on datacom market momentum and our continued ability to scale.

And then there Amy will provide commentary on the Q3 results and full year guidance before we open the call for questions.

Let me start with our financial performance we.

We had a very strong third quarter.

We exceeded the high end of our guidance across all metrics. Despite the headwinds of a stronger U S economy.

Our pet Chem revenue growth remained strong and float income continues to benefit from a return to a more normalized interest rate environment.

On a constant currency basis.

<unk> recurring revenue grew 32% and 27% excluding <unk>.

Our business continues to scale very well.

I am pleased to report that adjusted EBITDA was $63 $5 million.

61% improvement year on year.

And adjusted EBITDA margin was 21% of revenue.

And the expansion versus a year ago, when the business operating at 15, 3%.

Adjusted cloud recurring gross margins of 74, 8% expanded 50 basis points year over year.

We continue to invest in sales and product innovation to fuel durable revenue growth.

While also demonstrating our ability to scale operation.

Third quarter operating cash flows were $52 $1 million in the third quarter.

<unk> from last year, and driven by operating margin expansion and slight benefits.

Our brand promise has always been to make work life better.

The reality of the post pandemic World is the way people work has permanently changed and as a result, the demand for <unk> remains robust.

Furthermore, in a difficult market every organization worldwide is focused on efficient growth and the most significant asset companies have is its people.

<unk> has always promised delivery of quantifiable value, meaning real money saving an ROI back to our customers.

We are the engine that helps companies determine the most efficient high value way of engaging employees across the enterprise.

While also providing real time insights and reporting.

This delivers quantifiable value for the organization.

Given the new reality of work and the fact that every organization describing to operate efficiently in today's market conditions, It's clear why demand for <unk> is growing.

Year to date sales are up significantly and our pipeline remained strong all of which I will ask Lee to discuss in more detail and amendment.

Turning to technology and product innovation, we are very pleased to report that will be a third year in a row. We have been named a leader by Gartner Magic quadrant for cloud <unk> suites for organizations that have more than 1000 employees.

It's worth noting that we.

Are the only pure play HCM vendor in the leaders quadrant.

Alongside the ERP vendors.

We have continually said our ability to innovate at pace and scale, where resulting are separating ourselves from our competition.

We believe that has been clearly validated and at a point in time when demand for what we do remains strong.

Consistent pace of innovation allows us to expand our addressable market across all segments and geographies simultaneously.

It's serving the world's largest global multinationals.

Delivering full suite capabilities in our major markets.

We'll break in centuries old models around how and when people get paid.

So far in 2022, we have delivered more than 840, new features to our customers.

And we're not done.

In the quarter, we delivered the following technology that makes work life better for our customers.

<unk> knowledge management, which provides HR professionals with the ability to create knowledge bases that empower employees defined ounces today, a common HR and compliance question proactively.

<unk> knowledge management is delivered seamlessly to employees.

Through our engagement employee experience hub.

Mobile Timesheet management that provides managers with a fast and efficient way to view and edit and manage client information for the teams directly on their mobile devices.

And integration studios.

Which provide self service enterprise integration capabilities, enabling customers to build deploy and manage their integrations with April .

Integrations G&A automates many of the traditional manual integration or 14th task that companies wrestle with and in June makes our customers more efficient.

Further if the strength of our highly differentiated technology.

Single solution and continuous calculation engine.

It allows us to deliver innovation like <unk>, where we continue to see incredible market momentum.

Today more than 1340 customers have signed for the <unk> wallet and as a 750 online.

Average registrations continue to trend at 45% of eligible users and the typical warrant user uses the wallet about 25 times per month.

These trends illustrate what our customers are telling us which is that day fourth warhead is modern payroll.

It is increasingly becoming an expectation from employees across organizations of all sizes and industries.

Record April's warranted he is differentiated and natural allows employees to get paid when they want in real time with no additional cost to the employee all the employer.

By improving employees financial wellness.

<unk> cost of the alternatives and while significantly reducing employee turnover and cost for our customers.

All of this and more will be on full display at our annual customer conference held live for the first time in three years, starting next week November 7th attempting in Las Vegas.

Reflective of our market demand.

We have a high number of attendees across both customers and prospective customers and we look forward to introducing you to what I believe will be another paradigm breaking innovation.

Before passing it over to Lee to give you more details on our results. Let me conclude by saying I'm very pleased Ccs continuing to execute on all of our growth initiatives and making meaningful progress on our path to 30% adjusted EBITDA and operating cash flow generation.

We have a long committed to beating the market, leading global HCM company and in this quarter is continued proof our back.

Lee I'll turn it over to you.

Thank you David as David noted, we're continuing to execute on our gross leverage while at the same time, demonstrating our ability to drive scale.

In Q3, we saw continued momentum across all segments.