Subscription revenue up 20%, profitability grew faster than revenue in Q1 Fiscal 2023
LOWELL, Mass. & WESTON, Fla.–(BUSINESS WIRE)–UKG, a leading provider of HR, payroll, and workforce management solutions for all people, today announced financial results for the first quarter of fiscal 2023, ending December 31, 2022.
UKG total revenue for the quarter surpassed $1 billion for the first time in company history, up 15%, highlighted by subscription revenue growing 20% year over year. Earnings before interest, tax, depreciation, and amortization (EBITDA) grew faster than revenue in the mid-20th percentile.1
“Crossing $1 billion in revenue in a single quarter is a major milestone in UKG history and further proof of customer confidence in our company, our solutions, and our people,” said Chris Todd, CEO at UKG. “Customer migrations to our modern cloud solutions more than doubled compared with last year, and we saw an all-time high of new customers selecting full-suite HR, payroll, and workforce management solutions. Our investment in the SMB market led to strong sales growth of our UKG Ready product. We also announced the most new offerings we ever have in a single quarter as UKG. We are firing on all cylinders across the business, as companies of all sizes and across all industries recognize how UKG solutions can drive higher productivity, optimize teamwork, and create more opportunities for people to thrive.”
First Quarter 2023 Business Highlights
Following a record-setting 2022 for research and development spend, UKG announced its largest number of new product innovations, programs, and enhancements ever in a single quarter, including:
UKG Great Place To Work® Hub, an industry-first solution that combines decades of Great Place To Work benchmarks and Trust Index™ survey results with UKG Pro HCM data to help leaders unlock the true drivers of engagement and performance at their organizations and make more informed decisions about diversity, equity, inclusion, and belonging (DEI&B) across their teams;
UKG FleX, a modern technology platform purpose-built to help organizations evolve alongside the needs of their people by connecting the business with applications that meet people where they want to work — whether within UKG or other systems of communication and engagement.
Growing partnerships within the technology ecosystem allowing UKG solutions to be embedded into popular systems of engagement and communication, including an expanded collaboration with Microsoft, which allows employees to complete important actions in the application they prefer;
UKG Labs, a startup ecosystem and virtual laboratory of early-stage companies from around the world, with products and ideas poised to help transform the HCM landscape;
The creation of a culture-focused partner ecosystem that will help even more businesses create truly great workplace experiences; and
A new UKG Diversity Accelerator Program to funnel highly targeted and meaningful support and resources to diverse-owned and diversity-focused companies within the technology ecosystem.
In an early win, UKG Diversity Accelerator Program partner Hive Learning earned a Brandon Hall Gold Award for the “Best Advance in Diversity and Inclusion Innovation” for its work with UKG to roll out the company’s Unified Foundational Learning program, a critical initiative that furthers the UKG mission to advance DEI&B at work.
UKG also acquired Quorbit, a U.K.-based startup specializing in long-term workforce planning solutions for people in frontline and hourly roles, which will help customers thoughtfully and deliberately forecast labor budgets and staffing needs as far as several years into the future with UKG Strategic Workforce Planning.
Leading global analyst firms continue to recognize UKG for solutions like these and the company’s commitment to the HCM market, with first quarter accolades from:
NelsonHall positioning UKG as the Overall Leader in the New World Workforce Management 2022 NEAT vendor evaluation;
Nucleus Research naming UKG a Leader in the Workforce Management Value Matrix 2022;
Fosway Group, Europe’s top HR analyst group, recognizing UKG as a Core Leader (UKG Ready) and Strategic Challenger (UKG People Operations) in the 9-Grid™ for Cloud HR; and
Brandon Hall Group honoring UKG with a Gold Award in the “Best Advance in Social Impact Innovation” for its Close the Gap pay equity initiative.
Direct feedback from customers about creating exceptional customer experiences and building trusted partnerships led to UKG being honored with several peer-review accolades, including:
TrustRadius presenting UKG with 15 different Top-Rated Awards across its enterprise, mid-market, and SMB solutions; and
Customer Relationship Management Institute (CRMI) presenting UKG with the NorthFace Scoreboard Award for excellence in customer service and support, with high scores in Educational Experience, Implementation Experience, Equipment Experience, and Support Experience.
UKG surpassed 75,000 customers worldwide in the first quarter, with new name and longtime customers selecting UKG HR, payroll, and workforce management solutions, including:
The largest glass producer in the Western Hemisphere and #1 in Mexico;
A U.S. entertainment and restaurant destination with more than 140 locations nationwide;
One of Australia’s largest beauty retailers with more than 100 locations in Australia and New Zealand;
A global healthcare company based in the U.S. with more than 35,000 employees;
A leading U.S. nonprofit committed to health and wellbeing with more than 10,000 employees;
A publicly traded food and beverage manufacturer in Guyana;
An American technology and telecommunications company with operations spread across half of the U.S.;
One of Australia’s major universities with 20,000 employees and 55,000 students;
A U.S.-based global manufacturer of food products with brands sold in more than 80 countries;
One of the world’s leading research universities with 20,000 employees in New York; and
A premier hospitality and gaming destination on the Las Vegas Strip.
Eight UKG customers were honored as part of the annual Innovation Awards competition at its inaugural UKG Aspire customer conference, where nearly 5,000 customers, partners, and HCM thought leaders explored the power of purpose and aspiration at work during the four-day event.
UKG continues to earn its own accolades for an award-winning culture and the way it treats customers, its people, and the community, with honors such as:
Newsweek naming UKG to its inaugural America’s Greatest Workplaces for Diversity list, with the company earning a perfect five-star rating;
Forbes ranking UKG #40 overall and #6 in its category of World’s Best Employers;
Computerworld selecting UKG as the #5 Best Place to Work in IT; and
Jobs review sites Comparably and Fairygodboss awarding UKG seven awards based on reviews and evaluations from UKG employees, including Best Company for Diversity, Best Company for Women, Best Technology Companies for Women, Best Company for Perks and Benefits, Best Company for Work-Life Balance, and the Best Companies Where CEOs Support Gender Diversity.
The UKG Close the Gap initiative also earned the company a spot on the second-annual Fast Company Brands That Matter list, which recognizes companies and nonprofits that have achieved relevance through cultural impact and social engagement, and those brands that inspire others to get involved in critical causes.
UKG announced its annual HR Megatrends that will impact the world at work at large, with the three 2023 trends to watch: Navigating the Human Energy Crisis; Optimizing Organizational Plasticity; and The Gen X Leadership Effect.
UKG also launched a multi-channel Fairytale Workplace ad campaign — including a broadcast commercial that has been viewed more than 3 million times in less than three months on YouTube — that demonstrates to leaders that, when organizations use HR, payroll, and workforce management software that puts employees first, they will see better business results.
“As the largest U.S.-based private enterprise software company, we’re in position to help improve the work experience for tens of millions of people around the world,” said Todd. “When this change happens, the people and the business win.”
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 75,000 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 amounts are approximate. 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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