- Record Recurring Revenues of $158.5 Million, Up by 27%
- Total Revenues of $186.5 Million, Up by 27%
Weston, FL, July 26, 2016 – Ultimate Software (Nasdaq: ULTI), a leading provider of human capital management (HCM) solutions in the cloud, announced today its financial results for the second quarter ended June 30, 2016. Ultimate reported recurring revenues of $158.5 million, a 27% increase, and total revenues of $186.5 million, a 27% increase, both compared with 2015’s second quarter.
GAAP net income for the second quarter of 2016 was $1.7 million, or $0.06 per diluted share, as compared with GAAP net income of $3.7 million, or $0.12 per diluted share, for the second quarter of 2015. Non-GAAP net income for the second quarter of 2016, which excludes stock – based compensation expense and amortization of acquired intangibles, was $22.7 million, or $0.76 per diluted share.
Non-GAAP net income for the second quarter of 2015 was $18.4 million, or $0.62 per diluted share. See “Use of Non-GAAP Financial Information” below.
“We had a strong second quarter. We executed on all of our key financial objectives and delivered the best quarter in our history for new-business contracts, and our year-over-year customer retention rate again exceeded 97%,” said Scott Scherr, founder, president, and CEO of Ultimate.
“It is a great honor that our UltiPro solution was awarded the highest overall customer satisfaction rating among a field of 96 solutions in the Summer 2016 Core HR Software Grid report by G2 Crowd, the world’s leading business-software review platform.
UltiPro earned a score of 98% for customer satisfaction, exceeding the category average of 56%, with satisfaction scores determined by reviews from software users. We are also pleased to be ranked #8 on Forbes’ 2016 ‘Most Innovative Growth Companies’ list and named ‘Best Customer Service Department of the Year’ by Network Products Guide in its 2016 IT World awards, both announced in the second quarter.”
Financial Highlights
•Recurring revenues from our cloud offering grew by 27% for the second quarter of 2016 as compared with the same period in 2015.
Recurring revenues were 85% of total revenues for the second quarter of 2016 and 84% of total revenues for the second quarter of 2015.
•Ultimate’s total revenues for the second quarter of 2016 increased by 27%, as compared with those for the second quarter of 2015.
•Ultimate’s annualized retention rate, on a rolling 12-month basis, exceeded 97% for its recurring-revenue-cloud customer base as of June 30, 2016, which compares with greater than 96% for the same period of the prior year.
•Cash flows from operating activities for the second quarter of 2016 were $20.4 million, compared with $17.6 million for the second quarter of 2015. For the six months ended June 30, 2016, Ultimate generated $52.5 million in cash from operations, compared with $43.6 million for the six months ended June 30, 2015.
•In the second quarter of 2016, Ultimate acquired the assets of Capital Analytics, Inc. (d/b/a Vestrics), which is engaged in the business of analytics for human capital and workforce optimization software.
Stock Repurchases
The combination of cash, cash equivalents, and corporate marketable securities was $104.9 million as of June 30, 2016,
compared with $129.4 million as of December 31, 2015. During the six months ended June 30, 2016, we used a combined total of $48.3 million in relation to the purchase of our common stock, $0.01 par value common stock(“Common Stock”) and to settle employee taxes for restricted stock vestings—$29.7 million to acquire 190,400 shares of our outstanding Common Stock under our previously announced stock repurchase plan (the “Stock Repurchase Plan”), and $18.6 million to acquire 117,877 shares of our Common Stock to settle employees’ tax withholding obligations associated with their restricted stock that vested during the period. We have 1,342,005 shares available for repurchase under our Stock Repurchase Plan.
Financial Outlook
Ultimate provides the following financial guidance for the third quarter ending September 30, 2016, and full year 2016:
For the third quarter of 2016:
•Recurring revenues of approximately $165 million,
•Total revenues of approximately $197 million,
and
•Operating margin, on a non-GAAP basis (discussed below), of approximately 19%.
For the year 2016:
•Recurring revenues to increase by approximately 26% over 2015,
•Total revenues to increase by approximately 26% over 2015, and
•Operating margin, on a non-GAAP basis (discussed below), of approximately 21%. 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.
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