Human Resources: Ultimate Software Reports Q2 2007

    WESTON, Fla.--(BUSINESS WIRE)--July 26, 2007--Ultimate Software
(Nasdaq:ULTI), a leading provider of end-to-end strategic human
resources, payroll, and talent management solutions, announced today
financial results for its second quarter of 2007. For the quarter
ended June 30, 2007, Ultimate Software reported total revenues of
$35.0 million, an increase of 23% compared with the second quarter of
2006, and recurring revenues of $21.1 million, a 36% increase over the
same period of the previous year. GAAP net income for the second
quarter of 2007 was $6.4 million, or $0.23 per diluted share, versus a
GAAP net income of $2.2 million, or $0.08 per diluted share, for the
second quarter of 2006. Included in GAAP net income for the second
quarter of 2007 was a onetime settlement fee of $4.3 million, net of
related costs and income taxes (see Financial Highlights below).
Excluding stock-based compensation and amortization of acquired
intangibles, non-GAAP net income for the second quarter of 2007 was
$8.4 million, or $0.30 per diluted share, compared with non-GAAP net
income for the second quarter of 2006 of $3.4 million, or $0.12 per
diluted share.

    New annual recurring revenues (ARR) were $7.0 million for the
second quarter of 2007. (See Financial Highlights below for
definition.)

    "Our all-important recurring revenues grew by 36% in this year's
second quarter, and we are well positioned for a strong second-half
performance," said Scott Scherr, CEO, president, and founder of
Ultimate Software.

    Ultimate Software's financial results teleconference will be held
today, July 26, 2007, at 5:00 p.m. Eastern Time, via World Investor
Link at http://www.vcall.com/IC/CEPage.asp?ID=118385. The call will be
available for replay at the same address beginning at 9:00 p.m.
Eastern Time the same day. 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 may be
discussed during the teleconference call.

    Financial Highlights

    -- Recurring revenues - consisting of maintenance revenues,
        revenues from our hosted offering of UltiPro through
        Intersourcing, and subscription revenues from
        per-employee-per-month fees generated by business service
        providers - grew by 36% for the second quarter of 2007
        compared with the same quarter of 2006. Intersourcing revenues
        and, to a lesser extent, maintenance revenues, were the
        principal factors in the year-over-year growth in recurring
        revenues.

    -- New ARR attributable to sales during the second quarter of
        2007 were $7.0 million. New ARR represent the expected
        one-year value from (i) new Intersourcing sales (including
        prorated onetime charges); (ii) maintenance revenues related
        to new license sales; (iii) recurring revenues from new
        business service providers; and (iv) recurring revenues from
        additional sales to Ultimate Software's existing client base.

    -- Included in other income, net, in the statements of operations
        for the three and six months ended June 30, 2007, is a
        non-recurring settlement fee of $4.4 million, net of related
        costs, resulting from the early termination of a multiyear
        business arrangement with one of our business partners that
        decided to exit the payroll business (the "Non-Recurring
        Settlement"). The impact of the Non-Recurring Settlement on
        GAAP net income and diluted earnings per share was an increase
        of $4.3 million and $0.15, respectively, for the three months
        ended June 30, 2007 and $4.3 million and $0.16, respectively,
        for the six months ended June 30, 2007, including income taxes
        relating to this transaction. Excluding the impact of the
        Non-Recurring Settlement, our financial guidance, provided in
        our February 7, 2007 release, is unaffected. In addition, the
        early termination of this business arrangement is not expected
        to have a material impact on our revenues in 2007 or
        thereafter.

    -- The combination of cash, cash equivalents, and marketable
        securities was $38.1 million as of June 30, 2007, compared
        with $33.0 million as of December 31, 2006. In the second
        quarter of 2007, the Company generated $10.8 million in cash
        from operations. During the second quarter of 2007, the
        Company also repurchased 118,700 shares of the Company's
        Common Stock for $3.3 million, pursuant to the Company's
        previously announced stock repurchase program.

    -- Days sales outstanding were 66 days at June 30, 2007,
        representing a reduction of 8 days compared with days sales
        outstanding at December 31, 2006.

    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 the Company's actual
results to differ materially from those stated or implied by such
forward-looking statements, including risks and uncertainties
associated with fluctuations in the Company's quarterly operating
results, concentration of the Company'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 the Company's filings with the Securities and Exchange Commission.
The Company 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

    A leading provider of end-to-end strategic human resources,
payroll, and talent management solutions, Ultimate Software markets
its award-winning UltiPro products as on-demand services through its
software-as-a-service offering, Intersourcing, and as licensed
software. Based in Weston, FL, Ultimate Software employs more than 700
professionals who are focused on developing the highest quality
products and services. Ultimate Software's IT team won a first place
award for its management of Intersourcing, from the American Business
Awards in 2007, and its customer service team won two first-place
awards for service excellence in 2006, one from the Service & Support
Professionals Association and another from the American Business
Awards. Ultimate Software was named a "Leader" in Forrester Research
Inc.'s 2006 U.S. Midmarket HR solutions Wave ranking and ranked #3 on
the 2006 and 2007 lists of the Best Medium-Sized Companies to Work For
in America by the Great Place to Work Institute. Ultimate Software
customers represent diverse industries and include such organizations
as The Container Store, Elizabeth Arden, The Florida Marlins Baseball
Team, The New York Yankees Baseball Team, Nintendo of America, Ruth's
Chris Steak House, and SkyWest Airlines. More information on Ultimate
Software's products and services can be found at
www.ultimatesoftware.com.

    UltiPro and Intersourcing are registered trademarks of The
Ultimate Software Group, Inc. All other trademarks referenced are the
property of their respective owners.