Ultimate Software Group Inc. (ULTI, Financial) filed Quarterly Report for the period ended 2010-03-31.
Ultimate Software Group Inc. has a market cap of $790.43 million; its shares were traded at around $31.84 with and P/S ratio of 4.02. ULTI is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Ron Baron of Baron Funds, RS Investment Management, Jim Simons of Renaissance Technologies LLC.
Cost of recurring revenues increased 28.4% to $11.4 million for the three months ended March 31, 2010 from $8.9 million for the three months ended March 31, 2009. The $2.5 million increase in cost of recurring revenues for the three months ended March 31, 2010 was primarily due to increases in both maintenance costs and SaaS costs. Maintenance costs increased primarily due to higher labor costs commensurate with the growth in Ultimate s recurring revenues customer base. SaaS costs increased principally as a result of the growth in SaaS operations and increased sales, including increased third party data center costs, increased labor costs, and, to a lesser extent, amortization of capitalized software and increased third-party license fees to support the growth in sales from our SaaS Offering.
At December 31, 2009, we had approximately $82.1 million and $0.8 million of net operating loss carryforwards for Federal and foreign income tax reporting purposes, respectively, available to offset future taxable income. Of the total net operating loss carryforwards, approximately $82.1 million was attributable to deductions from the exercise of non-qualified employee, and non-employee director, stock options, the benefit of which will primarily be credited to paid-in capital and deferred tax assets when realized. Such carryforwards expire from 2011 through 2029. Utilization of such carryforwards may be limited as a result of cumulative ownership changes in Ultimate s equity instruments.
This $1.9 million increase was primarily due to cash provided by operations of $5.0 million, partially offset by cash purchases of property and equipment (including principal payments on financed purchases) of $1.8 million and repurchases of Common Stock (net of proceeds from the issuance of Common Stock from employee and non-employee director stock option exercises) of $1.3 million.
Net cash used in investing activities was $51.4 million for the three months ended March 31, 2010 as compared to $2.0 million for the three months ended March 31, 2009. The increase of $49.4 million from the comparable period in 2009 was primarily attributable to an increase in funds received from and held on behalf of Ultimate s customers using the UltiPro tax filing offering (“UltiPro Tax Filing Customer Funds”), with such funds being invested by us in overnight repurchase agreements backed by U.S. Treasury or U.S. Government Agency securities of $47.1 million, and an increase in cash purchases of marketable securities of $1.8 million, partially offset by a decrease in cash provided from the maturities of marketable securities of $1.2 million and, to a lesser extent, a decrease in capitalized software costs of $0.6 million.
Net cash provided by financing activities was $48.3 million for the three months ended March 31, 2010 as compared to $3.0 million for the three months ended March 31, 2009. The $45.3 million increase was primarily related to an increase of $47.1 million in UltiPro Tax Filing Customer Funds received, and a $1.9 million increase in proceeds from the issuance of Common Stock from stock option exercises, partially offset by a $3.7 million increase in repurchases of Common Stock pursuant to Ultimate s stock repurchase plan.
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Ultimate Software Group Inc. has a market cap of $790.43 million; its shares were traded at around $31.84 with and P/S ratio of 4.02. ULTI is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Ron Baron of Baron Funds, RS Investment Management, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
License revenues decreased 68.6% to $0.6 million for the three months ended March 31, 2010, from $2.0 million for the three months ended March 31, 2009. The $1.4 million decrease in the three month period ended March 31, 2010 was principally due to Ultimate s decision not to sell perpetual licenses to new customers after April 1, 2009 as there were no new sales of perpetual licenses in the quarter ended March 31, 2010. However, we did sell licenses of Optional Features to existing license customers during the first fiscal quarter of 2010.Cost of recurring revenues increased 28.4% to $11.4 million for the three months ended March 31, 2010 from $8.9 million for the three months ended March 31, 2009. The $2.5 million increase in cost of recurring revenues for the three months ended March 31, 2010 was primarily due to increases in both maintenance costs and SaaS costs. Maintenance costs increased primarily due to higher labor costs commensurate with the growth in Ultimate s recurring revenues customer base. SaaS costs increased principally as a result of the growth in SaaS operations and increased sales, including increased third party data center costs, increased labor costs, and, to a lesser extent, amortization of capitalized software and increased third-party license fees to support the growth in sales from our SaaS Offering.
At December 31, 2009, we had approximately $82.1 million and $0.8 million of net operating loss carryforwards for Federal and foreign income tax reporting purposes, respectively, available to offset future taxable income. Of the total net operating loss carryforwards, approximately $82.1 million was attributable to deductions from the exercise of non-qualified employee, and non-employee director, stock options, the benefit of which will primarily be credited to paid-in capital and deferred tax assets when realized. Such carryforwards expire from 2011 through 2029. Utilization of such carryforwards may be limited as a result of cumulative ownership changes in Ultimate s equity instruments.
This $1.9 million increase was primarily due to cash provided by operations of $5.0 million, partially offset by cash purchases of property and equipment (including principal payments on financed purchases) of $1.8 million and repurchases of Common Stock (net of proceeds from the issuance of Common Stock from employee and non-employee director stock option exercises) of $1.3 million.
Net cash used in investing activities was $51.4 million for the three months ended March 31, 2010 as compared to $2.0 million for the three months ended March 31, 2009. The increase of $49.4 million from the comparable period in 2009 was primarily attributable to an increase in funds received from and held on behalf of Ultimate s customers using the UltiPro tax filing offering (“UltiPro Tax Filing Customer Funds”), with such funds being invested by us in overnight repurchase agreements backed by U.S. Treasury or U.S. Government Agency securities of $47.1 million, and an increase in cash purchases of marketable securities of $1.8 million, partially offset by a decrease in cash provided from the maturities of marketable securities of $1.2 million and, to a lesser extent, a decrease in capitalized software costs of $0.6 million.
Net cash provided by financing activities was $48.3 million for the three months ended March 31, 2010 as compared to $3.0 million for the three months ended March 31, 2009. The $45.3 million increase was primarily related to an increase of $47.1 million in UltiPro Tax Filing Customer Funds received, and a $1.9 million increase in proceeds from the issuance of Common Stock from stock option exercises, partially offset by a $3.7 million increase in repurchases of Common Stock pursuant to Ultimate s stock repurchase plan.
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