Ultimate Software Group Inc. (ULTI, Financial) filed Quarterly Report for the period ended 2009-06-30.
Ultimate Software is a leader in delivering Web-based payroll and employee management solutions to organizations of all sizes. Ultimate Software\'s fully integrated award-winning UltiPro suite enables businesses to manage human resources and payroll strategically and cost-effectively benefiting everyone in the organization. Ultimate Software offers application hosting through IBM Global Services and a business-to-business Web portal providing access to value-added resources via the Internet. Ultimate Software Group Inc. has a market cap of $656.75 million; its shares were traded at around $26.97 with and P/S ratio of 3.68.
License revenues decreased 56.9% to $1.3 million for the three months ended June 30, 2009 from $3.0 million for the three months ended June 30, 2008. For the six months ended June 30, 2009, license revenues decreased 50.5% to $3.3 million from $6.6 million for the six months ended June 30, 2008. The decreases in the three and six month periods ended June 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 36.6% to $9.6 million for the three months ended June 30, 2009 from $7.0 million for the three months ended June 30, 2008 and 36.6% to $18.5 million for the six months ended June 30, 2009 from $13.5 million for the six months ended June 30, 2008. The $2.6 million and $4.9 million increases in cost of recurring revenues for the three and six months ended June 30, 2009 was primarily due to increases in both Intersourcing costs and maintenance costs. The increase in Intersourcing costs was principally due to 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. The increase in maintenance costs was primarily related to increased labor costs commensurate with the growth in the Company s customer base.
Cost of services revenues increased 5.0% to $11.1 million for the three months ended June 30, 2009 from $10.6 million for the three months ended June 30, 2008, and 7.1% to $23.4 million for the six months ended June 30, 2009 from $21.9 million for the six months ended June 30, 2008. The increases in cost of services revenues for the three and six months ended June 30, 2009 were primarily due to an increase in costs of implementation, mainly attributable to labor costs associated with building the Workplace implementation infrastructure.
Income taxes for each of the three and six months ended June 30, 2009 included a benefit of $0.1 million. Income taxes for the three and six months ended June 30, 2008 included a benefit of $0.6 million and $0.4 million, respectively. Net operating loss carryforwards available at December 31, 2008, expiring at various times from 2011 through 2028 and which are available to offset future taxable income, approximated $73.9 million. The timing and levels of future profitability may result in the expiration of net operating loss carryforwards before utilization. Additionally, utilization of such net operating losses may be limited as a result of cumulative ownership changes in the Company s equity instruments.
As of June 30, 2009, the Company had $31.3 million in cash, cash equivalents and total investments in marketable securities, reflecting a net increase of $8.3 million since December 31, 2008. This $8.3 million increase was mainly due to cash provided by operating activities of $10.6 million and, to a lesser extent, proceeds from the issuance of Common Stock from stock option exercises during the six months ended June 30, 2009 of $1.7 million, partially offset by cash purchases of property and equipment and principal payments on financed equipment totaling $3.3 million.
Read the The complete ReportULTI is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Ron Baron of Baron Funds.
Ultimate Software is a leader in delivering Web-based payroll and employee management solutions to organizations of all sizes. Ultimate Software\'s fully integrated award-winning UltiPro suite enables businesses to manage human resources and payroll strategically and cost-effectively benefiting everyone in the organization. Ultimate Software offers application hosting through IBM Global Services and a business-to-business Web portal providing access to value-added resources via the Internet. Ultimate Software Group Inc. has a market cap of $656.75 million; its shares were traded at around $26.97 with and P/S ratio of 3.68.
Highlight of Business Operations:
Recurring revenues increased 28.6 % to $32.6 million for the three months ended June 30, 2009 from $25.4 million for the three months ended June 30, 2008, and 24.4% to $63.5 million for the six months ended June 30, 2009 from $51.1 million for the six months ended June 30, 2008. The increases for the three and six months ended June 30, 2009 were primarily due to increases in Intersourcing revenues and, to a lesser extent, maintenance revenues (discussed below).License revenues decreased 56.9% to $1.3 million for the three months ended June 30, 2009 from $3.0 million for the three months ended June 30, 2008. For the six months ended June 30, 2009, license revenues decreased 50.5% to $3.3 million from $6.6 million for the six months ended June 30, 2008. The decreases in the three and six month periods ended June 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 36.6% to $9.6 million for the three months ended June 30, 2009 from $7.0 million for the three months ended June 30, 2008 and 36.6% to $18.5 million for the six months ended June 30, 2009 from $13.5 million for the six months ended June 30, 2008. The $2.6 million and $4.9 million increases in cost of recurring revenues for the three and six months ended June 30, 2009 was primarily due to increases in both Intersourcing costs and maintenance costs. The increase in Intersourcing costs was principally due to 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. The increase in maintenance costs was primarily related to increased labor costs commensurate with the growth in the Company s customer base.
Cost of services revenues increased 5.0% to $11.1 million for the three months ended June 30, 2009 from $10.6 million for the three months ended June 30, 2008, and 7.1% to $23.4 million for the six months ended June 30, 2009 from $21.9 million for the six months ended June 30, 2008. The increases in cost of services revenues for the three and six months ended June 30, 2009 were primarily due to an increase in costs of implementation, mainly attributable to labor costs associated with building the Workplace implementation infrastructure.
Income taxes for each of the three and six months ended June 30, 2009 included a benefit of $0.1 million. Income taxes for the three and six months ended June 30, 2008 included a benefit of $0.6 million and $0.4 million, respectively. Net operating loss carryforwards available at December 31, 2008, expiring at various times from 2011 through 2028 and which are available to offset future taxable income, approximated $73.9 million. The timing and levels of future profitability may result in the expiration of net operating loss carryforwards before utilization. Additionally, utilization of such net operating losses may be limited as a result of cumulative ownership changes in the Company s equity instruments.
As of June 30, 2009, the Company had $31.3 million in cash, cash equivalents and total investments in marketable securities, reflecting a net increase of $8.3 million since December 31, 2008. This $8.3 million increase was mainly due to cash provided by operating activities of $10.6 million and, to a lesser extent, proceeds from the issuance of Common Stock from stock option exercises during the six months ended June 30, 2009 of $1.7 million, partially offset by cash purchases of property and equipment and principal payments on financed equipment totaling $3.3 million.
Read the The complete ReportULTI is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Ron Baron of Baron Funds.
