Higher revenue driven by significant increase in new name customer bookings, existing customer cloud migrations across UKG suite
UKG, a leading provider of HR, payroll, and workforce management solutions for all people, today announced fourth quarter and fiscal year 2022 results, ending September 30, 2022. Fourth quarter revenue grew to $960 million and full-year revenue increased to $3.656 billion. Subscription revenue grew 15% in fiscal 2022, compared with the prior year. 1
"We closed fiscal 2022 with unbelievably strong momentum. The fourth quarter was our most successful quarter in company history, despite the inflationary environment we are in," said Chris Todd, CEO at UKG. "There continues to be healthy demand for UKG solutions across the entire business. Net new customers continue to select UKG full HCM suite solutions at a record pace across the SMB, mid-market, and enterprise segments, while existing customers continue to add on additional UKG products and migrate to the most modern solutions. I absolutely love our customers, the products we deliver, and our strategy that inspires organizations worldwide to make strategic investments in UKG to help their businesses and their people thrive."
Fourth Quarter and Fiscal 2022 Consolidated Business Highlights
- UKG spent approximately $625 million on research and development (R&D) in fiscal 2022, up 13% year over year, to enhance its industry-leading HCM and workforce management offerings.
Over the past five years, UKG has spent $2.5 billion in R&D, the industry's largest investment focused solely on HCM and workforce management cloud solutions. Beyond several innovations recently announced at its Aspire customer event in November — including the introduction of the UKG Great Place to Work Hub — fiscal 2022 highlights included:
- UKG Wallet, a financial-wellness platform designed to provide immediate access to earned wages while empowering people with budgeting tools, educational resources, and financial counseling;
- UKG InTouch DX with UKG TouchFree ID, a facial-scan timeclock option to help people feel safer, clock in faster, and securely unlock scheduling, time off, and other workplace functions via a contactless experience.
- With the introduction of UKG FleX, UKG continues to expand the UKG Marketplace, one of the largest and most collaborative technology partner ecosystems serving the HCM industry, with integrations, solution extensions, and custom applications from more than 315 partners, including a new collaboration with Uber to help organizations offer impactful rewards and incentives to their people.
- UKG was twice recognized by Google Cloud for driving diversity and inclusion in the field of DevOps and for delivering solutions that help mitigate employee burnout, especially during the COVID-19 pandemic.
UKG closed six acquisitions in 17 months — including the November 2022 acquisition of workforce planning startup Quorbit — as part of its aggressive growth and product roadmap strategy. Acquisitions completed in fiscal 2022 include:
- HR and workforce management solutions provider Ascentis Corporation, whose customers are migrating to modern UKG cloud solutions at a fast rate;
- Longtime Puerto Rico and Caribbean reseller partner Interboro Systems Corporation, which helped UKG expand further into the LATAM and Caribbean markets; and
- SpotCues, maker of an award-winning mobile communications and engagement platform for frontline workers, now known as UKG Talk.
- UKG continues to be recognized by leading global analyst firms — including new fourth quarter accolades from Fosway Group recognizing UKG as a Strategic Challenger and as a Core Leader in the 2022 Fosway 9-Grid™ for Cloud HR, and NelsonHall naming UKG a Leader in the annual New World of Workforce Management and Payroll Services NEAT report.
- UKG Pro, UKG Dimensions, and UKG Ready all received Leader rankings from influential software review sites — including FeaturedCustomers, G2, SoftwareReviews, and TrustRadius — as a direct result of customer ratings, reviews, and interviews.
- UKG surpassed 70,000 customers worldwide in fiscal 2022 and nearly doubled the number of $1 million-plus ARR deals compared with fiscal 2021, due to growing demand for UKG Pro full HCM suite capabilities alongside leading workforce management.
- The company's SMB bookings, primarily led by UKG Ready solutions, grew by 72% in the quarter and 56% year over year.
Both new name and longtime customers selected UKG HR, payroll, and workforce management solutions in the fourth quarter, including companies such as:
- A popular big-box department store employing more than 30,000 people across 320-plus locations in Australia and New Zealand;
- A global specialist in energy management and automation, operating in more than 100 countries, with more than 150,000 employees globally;
- The logistics arm of one of the largest department stores in Mexico, with thousands of employees working across more than 40 distribution centers;
- A well-known supermarket chain specializing in natural and organic foods, with more than 500 retail and non-retail locations in Canada, the U.K. and the U.S.;
- One of the world's largest food producers and a recognized leader in protein, with 115,000 employees;
- The second-largest franchisee in the U.S. that operates more than 1,740 locations in 12 states, with more than 22,000 employees;
- One of America's top-ranked academic health centers, with over 17,000 employees;
- The largest supermarket chain in the Netherlands, with nearly 100,000 employees;
- The second-largest employer in Switzerland, with about 54,000 employees across the country; and
- An award-winning, private sector market leader in Canada's capital city of Ottawa, specializing in providing full-scale security solutions.
- Customers with widely shared successes stories included First PREMIER Bank and PREMIER Bankcard, HOA Brands, Dana-Farber Cancer Institute, and Red Gold Foods.
In the first quarter of 2022, UKG announced the award-winning UKG Close the Gap Initiative — a multimillion-dollar global pay equity initiative to drive awareness and action to resolve pay disparities for women and underrepresented groups — and expanded the program throughout the year with activities including:
- A historic, multiyear partnership with the National Women's Soccer League (NWSL) that will make the 2023 UKG NWSL Challenge Cup the first-ever women's professional soccer tournament to achieve pay equity with the equivalent men's game; and
- Releasing the results of a major pay equity in America study in September conducted by Harvard Business Review Analytic Services, titled "Making Pay Equity Work For All."
- UKG received dozens of third-party honors and awards in 2022 for its people practices and innovative culture, highlighted by ranking #40 on the Forbes World's Best Employers list and #2 on the Forbes America's Best Large Employers list in its category, while earning a 100% score on the 2022 Corporate Equality Index from the Human Rights Campaign Foundation. In the fourth quarter, UKG was honored specifically for its diversity, equity, inclusion, and belonging (DEI&B) initiatives by:
- UKG grew total headcount by 1,500 employees in fiscal 2022 — accelerating nearly two-times faster than it did in fiscal 2021— to bring its global employee population beyond 15,000, including welcoming Pat Wadors as its new chief people officer.
"Our success is driven by our U Krewers' incredible teamwork, creativity, perseverance, and dedication and care we all share for our customers," said Todd. "In 2023, we are positioned to capitalize on the incredible opportunities in front of us, including taking UKG and our customers to the next era of what HCM technology can do for their people and their businesses with the UKG Great Place to Work Hub. If we continue to execute on our strategy, we'll be on track to reach $4 billion in revenue a year ahead of our initial goals."
At UKG, our purpose is people. As strong believers in the power of culture and belonging as the secret to success, we champion great workplaces and build lifelong partnerships with our customers to show what's possible when businesses invest in their people. Born from a historic merger that created one of the world's leading HCM cloud companies, our Life-work Technology approach to HR, payroll, and workforce management solutions for all people helps more than 70,000 organizations around the globe and across every industry anticipate and adapt to their employees' needs beyond just work. To learn more, visit ukg.com.
Footnote 1: All financial information within this press release is presented using non-GAAP financial measures and are approximate amounts. UKG believes that non-GAAP measures of financial results provide useful information regarding certain financial and business trends relating to UKG results of operations. Non-GAAP revenue consists of GAAP revenue excluding the effect of the write-down of deferred revenue associated with purchase accounting for certain mergers and acquisitions. EBITDA consists of EBITDA per the definition under the Company's credit agreement, which excludes items such as: (1) share-based compensation expense for stock options and stock awards in accordance with ASC 718 and compensation expenses related to ordinary dividends; (2) depreciation of property, plant, and equipment; (3) amortization of intangible assets; (4) acquisition-related deferred revenue and prepaid commissions write-downs and expenses including advisory, legal, accounting, acquired employee-related costs, and integration costs; and (5) unusual costs or one-time expenses. For purposes of calculating growth rates, prior years have been restated for acquisitions and dispositions.
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