Ultimate Software Group Inc. (ULTI) filed Quarterly Report for the period ended 2009-09-30.
Ultimate Software is a leader in delivering Web-based payroll and employee management solutions to organizations of all sizes. Ultimate Software's fully integratedaward-winning UltiPro suite enables businesses to manage human resources and payroll strategically and cost-effectivelybenefiting everyone in the organization. Ultimate Software offers application hosting through IBM Global Services and a business-to-business Web portalproviding access to value-added resources via the Internet. Ultimate Software Group Inc. has a market cap of $680.06 million; its shares were traded at around $27.63 with and P/S ratio of 3.81.
Highlight of Business Operations:
Recurring revenues increased 27.7 % to $34.2 million for the three months ended September 30, 2009 from $26.7 million for the three months ended September 30, 2008, and 25.5% to $97.7 million for the nine months ended September 30, 2009 from $77.8 million for the nine months ended September 30, 2008. The increases for the three and nine months ended September 30, 2009 were primarily due to increases in Intersourcing revenues and, to a lesser extent, maintenance revenues (discussed below).
License revenues decreased 88.4% to $0.3 million for the three months ended September 30, 2009 from $2.2 million for the three months ended September 30, 2008. For the nine months ended September 30, 2009, license revenues decreased 59.8% to $3.5 million from $8.8 million for the nine months ended September 30, 2008. The decreases in the three and nine month periods ended September 30, 2009 were principally due to the Company s decision not to sell perpetual licenses to new customers after April 1, 2009.
Cost of recurring revenues increased 25.6% to $10.0 million for the three months ended September 30, 2009 from $7.9 million for the three months ended September 30, 2008 and 32.5% to $28.4 million for the nine months ended September 30, 2009 from $21.5 million for the nine months ended September 30, 2008. The $2.1 million and $6.9 million increases in cost of recurring revenues for the three and nine months ended September 30, 2009, respectively, were primarily due to increases in both Intersourcing costs and maintenance costs. Intersourcing costs increased principally as a result of the growth in Intersourcing operations and increased sales, including higher depreciation and amortization of related computer equipment supporting the hosting operations, increased hosting data center costs and, to a lesser extent, increased labor costs, amortization of capitalized software and increased third-party royalty fees for UltiPro time, attendance and scheduling sales. Maintenance costs increased primarily due to higher labor costs commensurate with the growth in the Company s recurring revenues customer base.
Cost of services revenues decreased 9.1% to $11.6 million for the three months ended September 30, 2009 from $12.8 million for the three months ended September 30, 2008, and increased 1.2% to $35.0 million for the nine months ended September 30, 2009 from $34.6 million for the nine months ended September 30, 2008. Cost of services revenues decreased for the three months ended September 30, 2009 primarily due to lower IP costs and lower labor and related costs (including fewer billable Enterprise consultants, partially offset by higher Workplace implementation labor costs). Cost of services revenues increased for the nine months ended September 30, 2009 principally due to an increase in costs of implementation, mainly attributable to labor costs associated with building the Workplace implementation infrastructure, partially offset by decreased costs of IP s.
Research and development expenses consist primarily of software development personnel costs. Research and development expenses increased 0.3% to $9.9 million for the three months ended September 30, 2009 from $9.9 million for the three months ended September 30, 2008, and 2.7% to $28.9 million for the nine months ended September 30, 2009 from $28.1 million for the nine months ended September 30, 2008 principally due to higher labor costs related to the ongoing development of Core UltiPro and Optional Features, partially offset by lower third-party consulting costs.
General and administrative expenses consist primarily of salaries and benefits of executive, administrative and financial personnel, as well as external professional fees and the provision for doubtful accounts. General and administrative expenses decreased 7.4% to $4.4 million for the three months ended September 30, 2009 from $4.7 million for the three months ended September 30, 2008. General and administrative expenses decreased 1.2% to $13.2 million for the nine months ended September 30, 2009 from $13.4 million for the nine months ended September 30, 2008. The decreases for the three and nine months ended September 30, 2009 were primarily due to lower labor-related costs and a decrease in the provision for doubtful accounts.
ULTI is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Ron Baron of Baron Funds.
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