Record Total Revenue and Recurring Revenue Results for Quarter and Year
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Ultimate Software, a leading provider of end-to-end strategic human resources, payroll, and talent management solutions, announced today its financial results for the fourth quarter and year ended December 31, 2009. For the fourth quarter of 2009, Ultimate reported recurring revenues of $35.7 million, a 24% increase, and total revenues of $52.3 million, an increase of 5%, both compared with 2008′s fourth quarter. GAAP net income for the fourth quarter of 2009 was $0.1 million, or $0.00 per diluted share, versus $0.6 million, or $0.02 per diluted share, for the fourth quarter of 2008.
Non-GAAP net income (which excludes stock-based compensation and amortization of acquired intangibles) for the fourth quarter of 2009 was $2.6 million, or $0.10 per diluted share, compared with non-GAAP net income of $2.7 million, or $0.11 per diluted share, for the fourth quarter of 2008. See “Use of Non-GAAP Financial Information” below.
For 2009, recurring revenues increased 25% to $133.4 million, and total revenues increased 10% to $196.6 million, both as compared with the prior year. For 2009, the GAAP net loss was $1.1 million, or $0.05 per diluted share, as compared with a GAAP net loss of $2.9 million, or $0.12 per diluted share, for 2008.
“2009 was a successful year for Ultimate. Our recurring revenue grew by more than 25% and our client retention rate remained strong at 97%,” said Scott Scherr, CEO, president, and founder of Ultimate.
“We also attained our 2009 operating income plan and have a solid foundation in place for 2010.”
Financial Highlights
– Ultimate’s total revenues for 2009 increased by 16% compared with that of 2008, excluding license revenues from 2009 and 2008 and the 2008 recurring revenues associated with a former business service provider. Excluding these same items, the incremental non-GAAP operating margin was 39% for 2009.
– Ultimate’s recurring revenue gross margin covered all operating expenses in 2009′s fourth quarter on a non-GAAP basis.
– Recurring revenues — primarily consisting of Intersourcing revenues from our Software-as-a-Service offering of UltiPro and maintenance revenues — grew by 24% for the fourth quarter of 2009 and by 25% for the 2009 year, both versus comparable 2008 periods. 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 fourth quarter of 2009 was $4.4 million and $12.9 million for the 2009 year. (For more detail, see “Unaudited Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures.”)
– Ultimate’s annualized retention rate was 97% for its existing recurring revenue customer base as of December 31, 2009.
– The combination of cash, cash equivalents, and marketable securities was $33.2 million as of December 31, 2009 compared with $23.0 million as of December 31, 2008. For the quarter ended December 31, 2009, the Company generated $7.3 million in cash from operations and repurchased 188,600 shares of the Company’s issued and outstanding $0.01 par value common stock (“Common Stock”) for $5.0 million, under its previously announced stock repurchase plan (“Stock Repurchase Plan”). For the twelve months ended December 31, 2009, the Company generated $23.5 million in cash from operations and repurchased 451,850 shares of the Company’s Common Stock for $12.2 million under its Stock Repurchase Plan. As of December 31, 2009, we had 1,014,575 shares available for repurchase in the future under our Stock Repurchase Plan.
– Days sales outstanding were 68 days at December 31, 2009, representing a reduction of 3 days compared with days sales outstanding at December 31, 2008.
Business Highlights for 2009 Year
– Ultimate was honored for the second consecutive time to be named the #1 best medium-sized company to work for in America by the Great Place to Work(R) Institute, Inc., the same research and management consultancy that produces FORTUNE(R)’s “100 Best Companies to Work For” list for large companies. Ultimate is the only organization to receive the number one position twice in this category.
– Ultimate’s UltiPro won first place in the People’s Choice Stevie competition for Favorite New SaaS Product sponsored by the American Business Awards. Other products competing in this category were Salesforce.com, Cisco WebEx, Citrix Online, NetSuite, and Peopleclick. The nationwide online vote was open to the public.
– Ultimate was named a winner of THINKstrategies’ Best of SaaS Showplace (BoSS) Awards. The BoSS Awards are presented by THINKstrategies to bring greater attention to Software-as-a-Service and cloud-computing companies that produce tangible business benefits.
– Ultimate’s customer support center was awarded Service Capability & Performance (SCP) certification for best practices for the 11th consecutive year. The SCP Standards represent the global benchmark for service excellence and are recognized by leading technology companies around the world.
– 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
2010 Financial Guidance:
Ultimate provides the following financial guidance for 2010 (which differs from the guidance provided on October 27, 2009):
For the first quarter of 2010:
– Recurring revenues of approximately $39 million;
– Total revenues of approximately $55 million; and
– Operating margins, on a non-GAAP basis (discussed below), of approximately 6%.
For the year 2010:
– Recurring revenues to increase by approximately 27% in 2010 over those in 2009;
– Operating margins, on a non-GAAP basis (discussed below), of approximately 10%; and
– Total revenues to increase by approximately 18% over those in 2009.
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 2010 is expected to be between $13.5 million and $14.0 million.
For more information on Ultimate Software, please visit www.ultimatesoftware.com
Matt Lafata, HRchitect
