For 2015, recurring revenues increased 23% to $516.2 million, and total revenues increased 22% to $618.1 million, both as compared with the prior year. For 2015, GAAP net income was $22.7 million, or $0.76 per diluted share, compared with GAAP net income of $44.7 million, or $1.52 per diluted share, for 2014. For 2015, non-GAAP net income, which excludes stock-based compensation expense and amortization of acquired intangible assets, was $78.8 million, or $2.65 per diluted share. For 2014, non-GAAP net income, which excludes stock-based compensation expense, amortization of acquired intangible assets and an income tax benefit for research and development tax credits (for the years 1998-2013), was $61.8 million or $2.11 per diluted share. Included in GAAP net income for the 12 months ended December 31, 2014, was a one-time $12.1 million tax credit for research and development activities for federal and state income tax purposes, covering years 1998-2013, which was recorded in the third quarter of 2014.
Financial Highlights
•Recurring revenues grew by 26% for the fourth quarter of 2015 and by 23% for the 2015 year—both as compared with the same periods in 2014. The increase was attributable to revenue growth from our cloud offering. Recurring revenues were 84% of total revenues for 2015 versus 83% for 2014.
• Ultimate’s total revenues for the fourth quarter of 2015 increased by 26%, as compared with those for the fourth quarter of 2014. Ultimate’s total revenues for 2015 increased by 22% compared with those for 2014.
• Ultimate’s annualized retention rate, on a rolling 12-month basis, exceeded 97% for its recurring revenue cloud customer base as of December 31, 2015, which compares with greater than 96% for the prior year.
• Cash flows from operating activities for the fourth quarter of 2015 were $35.3 million, compared with $16.5 million for the same period in 2014. For the 12 months ended December 31, 2015, Ultimate generated $110.8 million in cash from operations, compared with $80.6 million for the 12 months ended December 31, 2014. The combination of cash, cash equivalents, and marketable securities was $129.4 million as of December 31, 2015, compared with $118.5 million as of December 31, 2014.
Stock Repurchases
During the 12 months ended December 31, 2015, we used $43.1 million to acquire 250,969 shares of our $0.01 par value common stock (“Common Stock”) under our previously announced stock repurchase plan (“Stock Repurchase Plan”), and we used $35.0 million to acquire 181,167 shares of our Common Stock to settle employees’ tax withholding obligations associated with their restricted stock that vested during the period. We have 532,405 shares available for repurchase under our Stock Repurchase Plan.
Business Highlights
• Ultimate and NetSuite, the industry’s leading provider of cloud-based financials/ERP and omnichannel commerce software suites, announced a strategic alliance to integrate the UltiPro HCM solution and the NetSuite ERP suite, giving businesses the ability to manage their entire business lifecycle —from financials, supply chain, and customer relationship management to payroll, human resources, and talent management—through two of the industry’s leading cloud solutions.
• Ultimate delivered numerous new features in our Summer release, such as a new “at-a-glance” dashboard for predictive metrics on employee performance and retention ,and a variety of expanded configurability options, such as increased workflow configurability and more flexibility in creating and managing integrations to other business systems through the new intuitive graphical design of UltiPro’s Integration Studio.
• Ultimate delivered 180 new features and enhancements in
our Winter release, including more than 60 customer ideas. One new feature-set is called “My Leadership Actions,” where UltiPro helps managers become more effective leaders by suggesting potential best-practice actions to take as follow-up to information they learn about team members in predictive analytics. Managers have a choice of 16 different categories of employee engagement, such as Growth Opportunities, Collaboration, Meaningful Work, and Life Change.
• To facilitate compliance with the Patient Protection and Affordable Care Act (PPACA, also most commonly known as ACA), Ultimate delivered UltiPro’s ACA Toolkit to our customers before the end of 2015, providing them with the capabilities they need to complete all of the required reporting, forms, and filing for the 2016 deadline.
• Ultimate introduced ACA Employer Services for customers who prefer to have Ultimate’s assistance in filing and managing ACA reporting. Ultimate received certification from the Internal Revenue Service’s ACA Information Returns Program, giving us the ability to electronically file compliance documents on behalf of our customers.
• Nucleus Research named Ultimate a “Leader” in its “HCM Technology Value Matrix Second Half 2015.”
• Forbes magazine ranked Ultimate #7 on its 2015 list of the “Most Innovative Growth Companies.”
• Information Week named Ultimate to its Elite 100 list, the Top 100 Business Technology Innovators.
• Fortune magazine ranked Ultimate #21 on its “100 Best Companies to Work For” list in March 2015. This honor built upon our #20 ranking in 2014, #9 in 2013, and #25 in 2012, in addition to our previous recognition twice as the #1 medium-size company to work for in America by the Great Place to Work Institute in 2008 and 2009.
• Fortune also ranked Ultimate #6 on its “2015 100 Best Workplaces for Millennials,” #1 on its “2015 Best Workplaces for Hispanics and Latinos,” and, also in 2015, #3 for African Americans, #4 for Diversity, #2 for Camaraderie, and #23 for Women.
• Bloomberg Business reported in November 2015 that, from a universe of approximately 445,000 companies, Ultimate received the #1 rating for positive-performance outlook from its employees on Glassdoor. Our employees gave Ultimate a greater-than- 90% positive business outlook, more than double the Glassdoor company average of 43%.
• Fortune ranked Ultimate #1 on its list of “10 Best Large Workplaces in Technology” in January 2016.
Financial Outlook Ultimate provides the following financial guidance for 2016:
For the first quarter of 2016:
• Recurring revenues of approximately $150 million,
• Total revenues of approximately $180 million, and
• Operating margin, on a non-GAAP basis (discussed below), of approximately 18%.
For the year 2016:
• Recurring revenues to increase by approximately 26% over 2015,
• Total revenues to increase by approximately 25% over 2015, and
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