| [July 29, 2014] |
 |
Ultimate Reports Q2 2014 Financial Results
WESTON, Fla. --(Business Wire)--
Ultimate Software (Nasdaq:ULTI), a leading cloud provider of people
management solutions, announced today its financial results for the
second quarter of 2014. For the quarter ended June 30, 2014, Ultimate
reported recurring revenues of $102.1 million, a 26% increase, and total
revenues of $122.0 million, a 25% increase, both compared with 2013's
second quarter. GAAP net income for the second quarter of 2014 was $6.4
million, or $0.22 per diluted share, versus GAAP net income of $4.9
million, or $0.17 per diluted share, for the second quarter of 2013.
Non-GAAP net income, which excludes stock-based compensation expense and
amortization of acquired intangible assets, was $13.4 million, or $0.46
per diluted share, for the second quarter of 2014, compared with
non-GAAP net income of $9.7 million, or $0.34 per diluted share, for the
second quarter of 2013. See "Use of Non-GAAP Financial Information"
below.
"This year's second quarter results position us well to achieve our 2014
goals and give us a solid foundation for our future goals. Recurring
revenues increased by 26% to $102 million and total revenues by 25% to
$122 million, both compared with those in Q2 2013, and our non-GAAP
operating margin was on the positive side of our target at 18.7%. At the
same time, our customer retention rate continued to remain above 96% for
the trailing 12 months ending June 30, 2014," said Scott Scherr,
founder, president, and CEO of Ultimate.
"We are honored by recent recognition we received: Forbes ranking
Ultimate #8 on its 2014 list of the 'Most Innovative Growth Companies'; Great
Places to Work ranking us #4 on its list of 'Ten Great Places to
Work for Millennials'; and InformationWeek ranking us #50 on its
'Elite 100' list and featuring Ultimate's platform-as-a-service UCloud
in its article, '20 Great Ideas to Steal in 2014.' We are also very
pleased that G2 Crowd, the business software review site that
ranks companies based upon user comments and social data, has listed
Ultimate as a 'Leader' in HR Management Software and positioned UltiPro
as the highest in customer satisfaction in its quadrant."
Ultimate's financial results teleconference will be held today, July 29,
2014, at 5:00 p.m. Eastern Time, through Vcall at www.investorcalendar.com/IC/CEPage.asp?ID=172440.
The call will be available for replay at the same address beginning at
9:00 p.m. Eastern Time today. Windows Media Player software is required
to listen to the call and can be downloaded from the site.
Forward-looking information about future company performance will be
discussed during the teleconference call.
Financial Highlights
-
Recurring revenues grew by 26% for the second quarter of 2014 compared
with 2013's second quarter. The increase was primarily attributable to
revenue growth from our cloud offering. Recurring revenues were 84% of
total revenues for the second quarter of 2014.
-
Ultimate's total revenues for the second quarter of 2014 increased by
25% compared with those for the second quarter of 2013.
-
Our operating income increased by 36%, on a non-GAAP basis, for the
second quarter of 2014 to $22.9 million as compared with $16.8 million
for the same period of 2013. Our non-GAAP operating margin was 18.7%
for the second quarter of 2014 versus 17.2% for the second quarter of
2013.
-
Ultimate's annualized retention rate exceeded 96% for its existing
recurring revenue customer base as of June 30, 2014.
-
Net income, on a non-GAAP basis, for the second quarter of 2014
increased to $13.4 million compared with $9.7 million for the second
quarter of 2013.
-
Cash flows from operating activities for the quarter ended June 30,
2014 were $15.4 million, compared with $14.4 million for the same
period of 2013. For the six months ended June 30, 2014, Ultimate
generated $41.0 million in cash from operations, compared with $32.5
million for the six months ended June 30, 2013. The combination of
cash, cash equivalents, and marketable securities was $91.3 million as
of June 30, 2014, compared with $90.2 million as of December 31, 2013.
-
Days sales outstanding were 63 days at June 30, 2014, representing a
reduction of seven days compared with days sales outstanding at
December 31, 2013.
Stock Repurchases
-
During the six months ended June 30, 2014, we used $10.7 million to
acquire 66,068 shares of issued and outstanding $0.01 par value common
stock ("Common Stock") to settle the employee tax withholding
liability resulting from the vesting of our employees' restricted
stock holdings.
-
During the six months ended June 30, 2014, we paid $20.0 million to
repurchase 162,791 shares of our issued and outstanding Common Stock,
under our previously announced stock repurchase plan ("Stock
Repurchase Plan"). As of June 30, 2014, we had 783,374 shares of
Common Stock available for repurchase in the future under our Stock
Repurchase Plan.
Financial Outlook
Ultimate provides the following financial guidance for the third quarter
ending September 30, 2014, and full year 2014:
For the third quarter of 2014:
-
Recurring revenues of approximately $107 million,
-
Total revenues of approximately $127 million, and
-
Operating margin, on a non-GAAP basis (discussed below), of
approximately 19%.
For the year 2014:
-
Recurring revenues to increase by approximately 25% over 2013,
-
Total revenues to increase by approximately 23% over 2013, and
-
Operating margin, on a non-GAAP basis (discussed below), of
approximately 20%.
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.
Forward-Looking Statements
Certain statements in this press release are, and certain statements on
the teleconference call may be, forward-looking statements within the
meaning provided under the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are made only as of the date
hereof. These statements involve known and unknown risks and
uncertainties that may cause Ultimate's actual results to differ
materially from those stated or implied by such forward-looking
statements, including risks and uncertainties associated with
fluctuations in Ultimate's quarterly operating results, concentration of
Ultimate's product offerings, development risks involved with new
products and technologies, competition, contract renewals with business
partners, compliance by our customers with the terms of their contracts
with us, and other factors disclosed in Ultimate's filings with the
Securities and Exchange Commission. Ultimate undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
About Ultimate Software
Ultimate is a leading cloud provider of people management solutions,
with more than 17 million people records in the cloud. Built on the
belief that people are the most important ingredient of any business,
Ultimate's award-winning UltiPro delivers HR, payroll, talent,
compensation, and time management solutions that seamlessly connect
people with the information and resources they need to work more
effectively. Founded in 1990, the company is headquartered in Weston,
Florida, and has more than 2,000 professionals focused on developing the
highest quality solutions and services. In 2014, Ultimate was ranked #20
on FORTUNE's list of the 100 Best Companies to Work For; ranked #8 on Forbes'
2014 list of the 'Most Innovative Growth Companies'; ranked #4 on Great
Places to Work/Great Rated's 2014 list of 'Ten Great Places to Work
for Millennials'; ranked #50 on InformationWeek's 'Elite 100'
list; recognized as a 'Leader' in Nucleus Research's HCM Technology
Value Matrix; and awarded the highest rating by Constellation Research
in its Cloud Buyer's Bill of Rights Certification. Ultimate has
approximately 2,700 customers with employees in 150 countries, including
Adobe Systems Incorporated, Bloomin' Brands, Culligan International,
Major League Baseball, Pep Boys, Texas Rangers Baseball, and Texas
Roadhouse. More information on Ultimate's products and services for
people management can be found at www.ultimatesoftware.com.
UltiPro is a registered trademark of The Ultimate Software Group, Inc.
All other trademarks referenced are the property of their respective
owners.
|
THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
(In thousands, except per share amounts)
|
|
|
|
For the Three Months
Ended June 30,
|
|
For the Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring
|
|
$
|
102,108
|
|
|
$
|
80,754
|
|
|
$
|
199,526
|
|
|
$
|
158,836
|
|
|
Services
|
|
19,841
|
|
|
16,392
|
|
|
43,049
|
|
|
35,837
|
|
|
License
|
|
48
|
|
|
323
|
|
|
500
|
|
|
713
|
|
|
Total revenues
|
|
121,997
|
|
|
97,469
|
|
|
243,075
|
|
|
195,386
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring
|
|
28,422
|
|
|
22,543
|
|
|
55,376
|
|
|
44,371
|
|
|
Services
|
|
21,037
|
|
|
18,030
|
|
|
43,111
|
|
|
37,758
|
|
|
License
|
|
11
|
|
|
73
|
|
|
83
|
|
|
163
|
|
|
Total cost of revenues
|
|
49,470
|
|
|
40,646
|
|
|
98,570
|
|
|
82,292
|
|
|
Gross profit
|
|
72,527
|
|
|
56,823
|
|
|
144,505
|
|
|
113,094
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
29,462
|
|
|
22,672
|
|
|
58,291
|
|
|
45,582
|
|
|
Research and development
|
|
20,433
|
|
|
16,864
|
|
|
40,153
|
|
|
32,994
|
|
|
General and administrative
|
|
11,244
|
|
|
8,285
|
|
|
22,303
|
|
|
17,212
|
|
|
Total operating expenses
|
|
61,139
|
|
|
47,821
|
|
|
120,747
|
|
|
95,788
|
|
|
Operating income
|
|
11,388
|
|
|
9,002
|
|
|
23,758
|
|
|
17,306
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense
|
|
(106
|
)
|
|
(56
|
)
|
|
(172
|
)
|
|
(136
|
)
|
|
Other income, net
|
|
96
|
|
|
6
|
|
|
171
|
|
|
47
|
|
|
Total other (expense) income
|
|
(10
|
)
|
|
(50
|
)
|
|
(1
|
)
|
|
(89
|
)
|
|
Income before income taxes
|
|
11,378
|
|
|
8,952
|
|
|
23,757
|
|
|
17,217
|
|
|
Provision for income taxes
|
|
(5,015
|
)
|
|
(4,050
|
)
|
|
(10,511
|
)
|
|
(7,795
|
)
|
|
Net income
|
|
$
|
6,363
|
|
|
$
|
4,902
|
|
|
$
|
13,246
|
|
|
$
|
9,422
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.23
|
|
|
$
|
0.18
|
|
|
$
|
0.47
|
|
|
$
|
0.34
|
|
|
Diluted
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
0.45
|
|
|
$
|
0.33
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
28,252
|
|
|
27,735
|
|
|
28,224
|
|
|
27,606
|
|
|
Diluted
|
|
29,218
|
|
|
28,875
|
|
|
29,284
|
|
|
28,812
|
|
|
|
The following table sets forth the stock-based compensation expense
resulting from stock-based arrangements (excluding the income tax
effect, or "gross") and the amortization of acquired intangibles that
are recorded in Ultimate's unaudited condensed consolidated statements
of income for the periods indicated (in thousands):
|
|
|
For the Three Months
Ended June 30,
|
|
For the Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Stock-based compensation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of recurring revenues
|
|
$
|
1,382
|
|
|
$
|
973
|
|
|
$
|
2,622
|
|
|
$
|
1,837
|
|
Cost of services revenues
|
|
1,133
|
|
|
864
|
|
|
2,188
|
|
|
1,824
|
|
Sales and marketing
|
|
4,937
|
|
|
3,185
|
|
|
9,734
|
|
|
6,281
|
|
Research and development
|
|
1,178
|
|
|
816
|
|
|
2,448
|
|
|
1,586
|
|
General and administrative
|
|
2,548
|
|
|
1,940
|
|
|
5,024
|
|
|
3,847
|
|
Total non-cash stock-based compensation expense
|
|
$
|
11,178
|
|
|
$
|
7,778
|
|
|
$
|
22,016
|
|
|
$
|
15,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
286
|
|
|
-
|
|
|
575
|
|
|
-
|
|
Total amortization of acquired intangibles
|
|
$
|
286
|
|
|
$
|
-
|
|
|
$
|
575
|
|
|
$
|
-
|
|
|
|
THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
|
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
80,967
|
|
|
$
|
79,794
|
|
|
Investments in marketable securities
|
|
7,780
|
|
|
8,682
|
|
|
Accounts receivable, net
|
|
84,354
|
|
|
85,676
|
|
|
Prepaid expenses and other current assets
|
|
32,528
|
|
|
29,374
|
|
|
Deferred tax assets, net
|
|
949
|
|
|
1,015
|
|
|
Total current assets before funds held for clients
|
|
206,578
|
|
|
204,541
|
|
|
Funds held for clients
|
|
461,901
|
|
|
262,227
|
|
|
Total current assets
|
|
668,479
|
|
|
466,768
|
|
|
Property and equipment, net
|
|
75,147
|
|
|
58,186
|
|
|
Goodwill
|
|
26,169
|
|
|
26,942
|
|
|
Investments in marketable securities
|
|
2,548
|
|
|
1,771
|
|
|
Intangible assets, net
|
|
7,704
|
|
|
8,274
|
|
|
Other assets, net
|
|
18,603
|
|
|
17,340
|
|
|
Deferred tax assets, net
|
|
21,250
|
|
|
18,913
|
|
|
Total assets
|
|
$
|
819,900
|
|
|
$
|
598,194
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
7,341
|
|
|
$
|
6,422
|
|
|
Accrued expenses
|
|
26,647
|
|
|
26,040
|
|
|
Deferred revenue
|
|
103,649
|
|
|
102,686
|
|
|
Capital lease obligations
|
|
3,576
|
|
|
2,949
|
|
|
Other borrowings
|
|
670
|
|
|
2,264
|
|
|
Total current liabilities before client fund obligations
|
|
141,883
|
|
|
140,361
|
|
|
Client fund obligations
|
|
461,901
|
|
|
262,227
|
|
|
Total current liabilities
|
|
603,784
|
|
|
402,588
|
|
|
Deferred revenue
|
|
256
|
|
|
498
|
|
|
Deferred rent
|
|
2,724
|
|
|
2,687
|
|
|
Capital lease obligations
|
|
3,369
|
|
|
2,240
|
|
|
Other borrowings
|
|
128
|
|
|
593
|
|
|
Deferred income tax liability
|
|
1,244
|
|
|
1,371
|
|
|
Total liabilities
|
|
611,505
|
|
|
409,977
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Preferred Stock, $.01 par value
|
|
-
|
|
|
-
|
|
|
Series A Junior Participating Preferred Stock, $.01 par value
|
|
-
|
|
|
-
|
|
|
Common Stock, $.01 par value
|
|
324
|
|
|
321
|
|
|
Additional paid-in capital
|
|
342,493
|
|
|
315,691
|
|
|
Accumulated other comprehensive loss
|
|
(1,334
|
)
|
|
(1,442
|
)
|
|
Accumulated deficit
|
|
5,437
|
|
|
(7,809
|
)
|
|
|
|
346,920
|
|
|
306,761
|
|
|
Treasury stock, at cost
|
|
(138,525
|
)
|
|
(118,544
|
)
|
|
Total stockholders' equity
|
|
208,395
|
|
|
188,217
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
819,900
|
|
|
$
|
598,194
|
|
|
|
|
THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In thousands)
|
|
|
|
For the Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
13,246
|
|
|
$
|
9,422
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
8,955
|
|
|
7,742
|
|
|
Provision for doubtful accounts
|
|
1,096
|
|
|
1,131
|
|
|
Non-cash stock-based compensation expense
|
|
22,016
|
|
|
15,375
|
|
|
Income taxes
|
|
10,253
|
|
|
7,679
|
|
|
Excess tax benefits from employee stock plan
|
|
(12,651
|
)
|
|
(8,623
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
226
|
|
|
(1,070
|
)
|
|
Prepaid expenses and other current assets
|
|
(3,154
|
)
|
|
(3,982
|
)
|
|
Other assets
|
|
(1,263
|
)
|
|
654
|
|
|
Accounts payable
|
|
919
|
|
|
(1,216
|
)
|
|
Accrued expenses and deferred rent
|
|
644
|
|
|
3,312
|
|
|
Deferred revenue
|
|
721
|
|
|
2,047
|
|
|
Net cash provided by operating activities
|
|
41,008
|
|
|
32,471
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Purchases of marketable securities
|
|
(6,085
|
)
|
|
(6,800
|
)
|
|
Maturities of marketable securities
|
|
6,208
|
|
|
7,452
|
|
|
Net purchases of client funds securities
|
|
(199,674
|
)
|
|
(162,868
|
)
|
|
Purchases of property and equipment
|
|
(21,014
|
)
|
|
(14,069
|
)
|
|
Net cash used in investing activities
|
|
(220,565
|
)
|
|
(176,285
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Repurchases of Common Stock
|
|
(19,981
|
)
|
|
-
|
|
|
Net proceeds from issuances of Common Stock
|
|
3,029
|
|
|
5,706
|
|
|
Excess tax benefits from employee stock plan
|
|
12,651
|
|
|
8,623
|
|
|
Shares acquired to settle employee tax withholding liability
|
|
(10,727
|
)
|
|
(6,693
|
)
|
|
Principal payments on capital lease obligations
|
|
(1,930
|
)
|
|
(1,803
|
)
|
|
Repayments of other borrowings
|
|
(2,059
|
)
|
|
(1,728
|
)
|
|
Net increase in client fund obligations
|
|
199,674
|
|
|
162,868
|
|
|
Net cash provided by financing activities
|
|
180,657
|
|
|
166,973
|
|
|
Effect of foreign currency exchange rate changes on cash
|
|
73
|
|
|
(783
|
)
|
|
Net increase in cash and cash equivalents
|
|
1,173
|
|
|
22,376
|
|
|
Cash and cash equivalents, beginning of period
|
|
79,794
|
|
|
58,817
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
80,967
|
|
|
$
|
81,193
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
152
|
|
|
$
|
176
|
|
|
Cash paid for taxes
|
|
$
|
314
|
|
|
$
|
265
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
Capital lease obligations to acquire new equipment
|
|
$
|
3,677
|
|
|
$
|
1,224
|
|
|
Stock consideration adjustment recorded for acquisitions
|
|
$
|
(818
|
)
|
|
$
|
-
|
|
|
|
|
THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
|
|
Unaudited Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended June 30,
|
|
For the Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
Non-GAAP operating income reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
11,388
|
|
|
9,002
|
|
|
23,758
|
|
|
17,306
|
|
|
Operating income, as a % of total revenues
|
|
9.3
|
%
|
|
9.2
|
%
|
|
9.8
|
%
|
|
8.9
|
%
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock-based compensation expense
|
|
$
|
11,178
|
|
|
$
|
7,778
|
|
|
$
|
22,016
|
|
|
$
|
15,375
|
|
|
Non-cash amortization of acquired intangible assets
|
|
286
|
|
|
-
|
|
|
575
|
|
|
-
|
|
|
Non-GAAP operating income
|
|
$
|
22,852
|
|
|
$
|
16,780
|
|
|
$
|
46,349
|
|
|
$
|
32,681
|
|
|
Non-GAAP operating income, as a % of total revenues
|
|
18.7
|
%
|
|
17.2
|
%
|
|
19.1
|
%
|
|
16.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
6,363
|
|
|
$
|
4,902
|
|
|
$
|
13,246
|
|
|
$
|
9,422
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock-based compensation expense
|
|
11,178
|
|
|
$
|
7,778
|
|
|
$
|
22,016
|
|
|
$
|
15,375
|
|
|
Non-cash amortization of acquired intangible assets
|
|
286
|
|
|
-
|
|
|
575
|
|
|
-
|
|
|
Income tax effect
|
|
(4,464
|
)
|
|
(2,978
|
)
|
|
(8,722
|
)
|
|
(5,894
|
)
|
|
Non-GAAP net income
|
|
$
|
13,363
|
|
|
$
|
9,702
|
|
|
27,115
|
|
|
$
|
18,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income, per diluted share, reconciliation: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, per diluted share
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
0.45
|
|
|
0.33
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock-based compensation expense
|
|
0.38
|
|
|
0.27
|
|
|
0.75
|
|
|
0.53
|
|
|
Non-cash amortization of acquired intangible assets
|
|
0.01
|
|
|
-
|
|
|
0.02
|
|
|
-
|
|
|
Income tax effect
|
|
(0.15
|
)
|
|
(0.10
|
)
|
|
(0.29
|
)
|
|
(0.20
|
)
|
|
Non-GAAP net income, per diluted share
|
|
$
|
0.46
|
|
|
$
|
0.34
|
|
|
$
|
0.93
|
|
|
$
|
0.66
|
|
|
Shares used in calculation of GAAP and non-GAAP net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
28,252
|
|
|
27,735
|
|
|
28,224
|
|
|
27,606
|
|
|
Diluted
|
|
29,218
|
|
|
28,875
|
|
|
29,284
|
|
|
28,812
|
|
|
(1) The non-GAAP net income per diluted share reconciliation is
calculated on a diluted weighted average share basis for GAAP net
income periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Financial Information
This press release contains non-GAAP financial measures. Ultimate
believes that non-GAAP measures of financial results provide useful
information to management and investors regarding certain financial and
business trends relating to Ultimate's financial condition and results
of operations. Ultimate's management uses these non-GAAP results to
compare Ultimate's performance to that of prior periods for trend
analyses, for purposes of determining executive incentive compensation,
and for budget and planning purposes. These measures are used in monthly
financial reports prepared for management and in quarterly financial
reports presented to Ultimate's Board of Directors. These measures may
be different from non-GAAP financial measures used by other companies.
These non-GAAP measures should not be considered in isolation or as an
alternative to such measures determined in accordance with generally
accepted accounting principles in the United States (GAAP). The
principal limitation of these non-GAAP financial measures is that they
exclude significant expenses that are required by GAAP to be recorded.
In addition, they are subject to inherent limitations as they reflect
the exercise of judgment by management about which expenses are excluded
from the non-GAAP financial measures.
To compensate for these limitations, Ultimate presents its non-GAAP
financial measures in connection with its GAAP results. Ultimate
strongly urges investors and potential investors in Ultimate's
securities to review the reconciliation of its non-GAAP financial
measures to the comparable GAAP financial measures that are included in
this press release (under the caption "Unaudited Reconciliation of
Non-GAAP Financial Measures to GAAP Financial Measures") and not to rely
on any single financial measure to evaluate its business.
Ultimate presents the following non-GAAP financial measures in this
press release: non-GAAP operating income, non-GAAP operating income, as
a percentage of total revenues (or non-GAAP operating margin), non-GAAP
net income and non-GAAP net income, per diluted share. We exclude the
following items from these non-GAAP financial measures as appropriate:
Stock-based compensation expense. Ultimate's non-GAAP financial
measures exclude stock-based compensation expense, which consists of
expenses for stock options and stock and stock unit awards recorded in
accordance with Accounting Standards Codification 718, "Compensation -
Stock Compensation." For the three and six months ended June 30, 2014,
stock-based compensation expense was $11.2 million and $22.0 million,
respectively, on a pre-tax basis. For the three and six months ended
June 30, 2013, stock-based compensation expense was $7.8 million and
$15.4 million, respectively, on a pre-tax basis. Stock-based
compensation expense is excluded from the non-GAAP financial measures
because it is a non-cash expense that Ultimate does not consider part of
ongoing operations when assessing its financial performance. Ultimate
believes that such exclusion facilitates the comparison of results of
ongoing operations for current and future periods with such results from
past periods. For GAAP net income periods, non-GAAP reconciliations are
calculated on a diluted weighted average share basis.
Amortization of acquired intangible assets. In accordance with
GAAP, operating expenses include amortization of acquired intangible
assets over the estimated useful lives of such assets. For the three and
six months ended June 30, 2014, the amortization of acquired intangible
assets was $0.3 million and $0.6 million, respectively. There was no
amortization of acquired intangible assets for the three and six months
ended June 30, 2013. Amortization of acquired intangible assets is
excluded from Ultimate's non-GAAP financial measures because it is a
non-cash expense that Ultimate does not consider part of ongoing
operations when assessing its financial performance. Ultimate believes
that such exclusion facilitates comparisons to its historical operating
results and to the results of other companies in the same industry,
which have their own unique acquisition histories.
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