Record Recurring Revenues of $60.9 Million, Up by 22%
Record Total Revenues of $78.3 Million, Up by 21%
Ultimate Software (Nasdaq:ULTI), a leading cloud provider of people management solutions, announced today its financial results for the first quarter of 2012. For the quarter ended March 31, 2012, Ultimate reported recurring revenues of $60.9 million, a 22% increase, and total revenues of $78.3 million, a 21% increase, both compared with 2011's first quarter. GAAP net income for the first quarter of 2012 was $1.0 million, or $0.04 per diluted share, versus GAAP net income of $0.3 million, or $0.01 per diluted share, for the first quarter of 2011.
Non-GAAP net income, which excludes stock-based compensation and amortization of acquired intangible assets, was $3.7 million, or $0.13 per diluted share, for the first quarter of 2012 compared with non-GAAP net income of $2.8 million, or $0.10 per diluted share, for the first quarter of 2011. See "Use of Non-GAAP Financial Information" below.
"We had a strong first quarter for 2012 across all our key areas. Sales, activation of new customers, and recurring revenues all exceeded our expectations. This performance gives us momentum and better visibility into our full-year 2012 results while keeping us solidly on track for achieving our 2013 goals," said Scott Scherr, CEO, president, and founder of Ultimate. "Our new Enterprise and Workplace customers continued the trend of attaching talent management products, such as our Recruitment, Onboarding, Performance Management, and Time Management, to their core purchases in significant numbers, indicating that the HR market remains motivated by a desire to unify HCM processes under one umbrella.
"We had our most successful Connections customer conference ever at the end of March this year. More than 1,200 people attended to learn about Ultimate's strategic roadmap, industry best practices, and technology trends and to share ideas while networking with peers, analysts, and Ultimate leaders. Ninety-six percent of those who completed our satisfaction survey rated the conference as 'excellent' or 'good'."
Financial Highlights
Recurring revenues grew by 22% for the first quarter of 2012 compared with 2011's first quarter. The increase was primarily attributable to revenue growth from our Software-as-a-Service ("SaaS") offering. Recurring revenues for the first quarter of 2012 were 78% of total revenues as compared with 77% of total revenues for the same period of last year.
The operating income (or operating margin), on a non-GAAP basis, for the first quarter of 2012 was $6.4 million, or 8.2%, as compared with $4.9 million, or 7.6%, for the same period last year.
Ultimate's annualized retention rate was 96% for its existing recurring revenue customer base as of March 31, 2012.
The combination of cash, cash equivalents, and marketable securities was $67.0 million as of March 31, 2012, compared with $55.3 million as of December 31, 2011. Cash flows from operating activities for the quarter ended March 31, 2012 were $14.5 million, compared with $8.8 million for the same period last year.
Days sales outstanding were 59 days at March 31, 2012, representing a reduction of twelve days compared with days sales outstanding at December 31, 2011.
Financial Outlook
2012 Financial Guidance:
Ultimate provides the following financial guidance for the second quarter ending June 30, 2012, and full year 2012:
For the second quarter of 2012:
Recurring revenues of approximately $64.0 million,
Total revenues of approximately $79.0 million, and
Operating margin, on a non-GAAP basis (discussed below), of approximately 10%.
For the year 2012:
Recurring revenues to increase by approximately 25% over 2011,
Total revenues to increase by approximately 23% over 2011, and
Operating margin, on a non-GAAP basis (discussed below), of approximately 15%.
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. Non-cash equity-based compensation expense for 2012 is expected to be approximately $20.0 million.
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