(Source: Business Wire)
Ultimate Software (Nasdaq:ULTI), a leading provider of end-to-end
strategic human resources, payroll, and talent management solutions,
announced today its financial results for the third quarter of 2009. For
the quarter ended September 30, 2009, Ultimate reported total revenues
of $48.2 million, an increase of 10%, and recurring revenues of $34.2
million, a 28% increase, both compared with the third quarter of 2008.
GAAP net loss for the third quarter of 2009 was $0.5 million, or $0.02
per diluted share, versus GAAP net loss of $3.1 million, or $0.12 per
diluted share, for the third quarter of 2008.
Non-GAAP net income for the third quarter of 2009, which excludes
stock-based compensation and amortization of acquired intangibles, was
$1.6 million, or $0.06 per diluted share, compared with non-GAAP net
loss of $0.1 million, or $0.00 per diluted share, for the third quarter
of 2008.
"Our recurring revenue and customer retention metrics remained strong in
the third quarter this year, and the buying behavior of our third
quarter new customers indicates that the market continues to have an
appetite for the full range of options we offer in our unified human
resources, payroll and talent management solution-set," said Scott
Scherr, CEO, president, and founder of Ultimate.
"More than six hundred UltiPro users attended our second annual global
user conference in the quarter, and customer comments on our solutions
and quality of service were very enthusiastic." (For more detail, see
"Business Highlights" below.)
Ultimate's financial results teleconference will be held today, October
27, 2009, at 5:00 p.m. Eastern Time, through Vcall at http://www.investorcalendar.com/IC/CEPage.asp?ID=149881.
The call will be available for replay at the same address beginning at
9:00 p.m. Eastern Time the same day. Windows Media Player or Real Player
software is required to listen to the call and can be downloaded from
the site. Forward-looking information about future company performance
will be discussed during the teleconference call.
Financial Highlights
Recurring revenues -- consisting of maintenance revenues, Intersourcing
revenues from our Software-as-a-Service (SaaS) offering of UltiPro and
subscription revenues from per-employee-per-month fees generated by
business service providers -- grew by 28% for the third quarter of 2009
versus the third quarter of 2008. Intersourcing revenues and, to a
lesser extent, maintenance revenues, were the principal factors in the
growth of recurring revenues.
Non-GAAP operating income for the third quarter of 2009 was $2.7
million compared with a $0.3 million non-GAAP operating loss for the
third quarter of 2008. (For more detail, see "Unaudited Reconciliation
of Non-GAAP Financial Measures to GAAP Financial Measures.")
Ultimate's annualized retention rate was more than 97% for its
existing recurring revenue customer base as of September 30, 2009.
The combination of cash, cash equivalents, and marketable securities
was $30.7 million as of September 30, 2009. For the quarter ended
September 30, 2009, the Company generated $5.6 million in cash from
operations. For the nine months ended September 30, 2009, the Company
generated $16.2 million in cash from operations.
Days sales outstanding were 67 days at September 30, 2009,
representing a reduction of 4 days compared with days sales
outstanding at December 31, 2008.
Stock Repurchase Plan
During the quarter ended September 30, 2009, the Company repurchased
263,250 shares of the Company's Common Stock for $7.2 million in cash
under its previously announced stock repurchase plan ("Stock Repurchase
Plan") which left 203,175 shares of Common Stock available for
repurchase under the Stock Repurchase Plan as of September 30, 2009.
On October 26, 2009, the Company's Board of Directors extended the Stock
Repurchase Plan (originally approved by the Board in late 2000) by
authorizing the repurchase of up to 1,000,000 additional shares of the
Company's Common Stock. Accordingly, an aggregate of 1,203,175 shares of
Common Stock are available for repurchase under the Stock Repurchase
Plan as of today's date. The extent and timing of repurchase
transactions will depend on market conditions and other business
considerations.
Business Highlights
Connections 2009, Ultimate's second annual global user conference, was
held September 15-18. Co-sponsored by Dell® and IBM®, Connections 2009
brought together more than 600 UltiPro users from companies across North
America, such as Callaway Golf, First Horizon, Fujitsu America, Sony
Music Entertainment, Texas Roadhouse, and Yamaha Corporation of America.
Financial Outlook
Ultimate provides the following financial guidance for the 2009 full
year and preliminary financial guidance for the 2010 full year:
For the year 2009:
Recurring revenues to increase by approximately 26% over those in 2008;
Total revenues to increase by approximately 10% over those in 2008; and
Operating margin, on a non-GAAP basis (discussed below), of between 6%
and 7%.
For the year 2010, preliminary:
Recurring revenues to increase by 26% to 29% in 2010 over those in
2009;
Total revenues to increase between 18% and 20% over those in 2009; and
Operating margins, on a non-GAAP basis (discussed below), of between
10% and 12%.
Operating margin expectations were determined on a non-GAAP basis using
the methodologies identified under the caption "Use of Non-GAAP
Financial Information" in this press release. Non-cash equity-based
compensation expense for 2009 and 2010 is expected to be approximately
$13.5 million and $14.0 million, respectively.
Forward-Looking Statements
Certain statements in this press release are, and certain statements on
the teleconference call may be, forward-looking statements within the
meaning provided under the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are made only as of the date
hereof. These statements involve known and unknown risks and
uncertainties that may cause the Company's actual results to differ
materially from those stated or implied by such forward-looking
statements, including risks and uncertainties associated with
fluctuations in the Company's quarterly operating results, concentration
of the Company's product offerings, development risks involved with new
products and technologies, competition, contract renewals with business
partners, compliance by our customers with the terms of their contracts
with us, and other factors disclosed in the Company's filings with the
Securities and Exchange Commission. The Company undertakes no obligation
to publicly update or revise any forward-looking statements, whether as
a result of new information, future events, or otherwise.
About Ultimate Software
A leading provider of end-to-end strategic human resources, payroll, and talent
management solutions, Ultimate markets its award-winning UltiPro
products as on-demand services through Software-as-a-Service (SaaS) and
as on-premise software. Based in Weston, FL, the Company employs more
than 900 professionals who are focused on developing the highest quality
products and services. In 2009, Ultimate was awarded first place in the
American Business Awards' national People's Choice competition for
Favorite New SaaS Product and was ranked the #1 best medium-sized
company to work for in America by the Great Place to Work® Institute for
the second consecutive year. In 2008, Ultimate was the first HR/payroll
SaaS provider to be audited and awarded the ISO/IEC 27001:2005
Certification for security management and was recognized for having the
#1 "Best Product Development Team" in the nation by the American
Business Awards. Ultimate has more than 1,800 customers representing
diverse industries, including such organizations as The Container Store,
Elizabeth Arden, Major League Baseball, The New York Yankees Baseball
Team, Nintendo of America, Ruth's Chris Steak House, and Sony Music
Entertainment. More information on Ultimate's products and services can
be found at www.ultimatesoftware.com.
UltiPro and Intersourcing are registered trademarks of The Ultimate
Software Group, Inc. All other trademarks referenced are the property of
their respective owners.
THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
Revenues:
Recurring $ 34,153 $ 26,738 $ 97,664 $ 77,811
Services 13,792 15,002 43,131 42,287
License 252 2,172 3,527 8,782
Total revenues 48,197 43,912 144,322 128,880
Cost of revenues:
Recurring 9,959 7,927 28,432 21,454
Services 11,593 12,751 35,032 34,630
License -- 463 598 1,355
Total cost of revenues 21,552 21,141 64,062 57,439
Gross profit 26,645 22,771 80,260 71,441
Operating expenses:
Sales and marketing 13,049 12,483 39,768 35,548
Research and development 9,940 9,912 28,860 28,090
General and administrative 4,351 4,697 13,239 13,398
Total operating expenses 27,340 27,092 81,867 77,036
Operating loss (695 ) (4,321 ) (1,607 ) (5,595 )
Other income (expense):
Interest and other expense (29 ) (33 ) (111 ) (173 )
Other income, net 30 168 141 747
Total other income, net 1 135 30 574
Loss before income taxes (694 ) (4,186 ) (1,577 ) (5,021 )
Benefit for income taxes 225 1,135 365 1,509
Net loss $ (469 ) $ (3,051 ) $ (1,212 ) $ (3,512 )
Net loss per share:
Basic $ (0.02 ) $ (0.12 ) $ (0.05 ) $ (0.14 )
Diluted $ (0.02 ) $ (0.12 ) $ (0.05 ) $ (0.14 )
Weighted average shares outstanding:
Basic 24,539 24,613 24,416 24,654
Diluted 24,539 24,613 24,416 24,654
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The following table sets forth the stock-based compensation expense
(excluding the income tax effect, or "gross") resulting from stock-based
arrangements and the amortization of acquired intangibles that are
recorded in the Company's unaudited condensed consolidated statements of
operations for the periods indicated (in thousands):
For the Three MonthsEnded September 30, For the Nine MonthsEnded September 30,
2009 2008 2009 2008
Stock-based compensation:
Cost of recurring revenues $ 170 $ 191 $ 506 $ 689
Cost of service revenues 326 479 994 1,565
Cost of license revenues -- 2 -- 9
Sales and marketing 1,776 2,043 5,311 5,656
Research and development 316 316 926 1,257
General and administrative 735 924 2,175 2,793
Total non-cash stock-based compensation expense $ 3,323 $ 3,955 $ 9,912 $ 11,969
Amortization of acquired intangibles:
General and administrative $ 55 $ 46 $ 147 $ 139
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THE ULTIMATE SOFTWARE GROUP, INC.