[April 24, 2012]

Ultimate Reports Q1 2012 Financial Results

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'."

Ultimate's financial results teleconference will be held today, April 24, 2012, at 5:00 p.m. Eastern Time, through Vcall at http://www.investorcalendar.com/IC/CEPage.asp?ID=167836. 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 or Real 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 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 (News - Alert)") 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.

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

Ultimate is a leading cloud provider of people management solutions. Built on the belief that people are the most important ingredient of any business, Ultimate's award-winning UltiPro delivers HR, payroll, and talent 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 1,400 professionals focused on developing the highest quality solutions and services. In 2012, Ultimate was ranked #25 on FORTUNE'S "100 Best Companies to Work For" list. Ultimate has more than 2,300 customers with employees in 115 countries, including Adobe Systems (News - Alert) Incorporated, The Container Store, Culligan International, Major League Baseball, The New York Yankees Baseball Team, and Ruth's Chris Steak House. 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 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 operations for the periods indicated (in thousands):

Ultimate entered into capital lease obligations to acquire new equipment totaling $1,172 and $519 for the three months ended March 31, 2012, and 2011, respectively.

(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 judgments 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 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 months ended March 31, 2012, stock-based compensation expense was $4.4 million on a pre-tax basis. For the three months ended March 31, 2011, stock-based compensation expense was $3.9 million on a pre-tax basis. Stock-based compensation expense is excluded from the non-GAAP financial measures because it is a non-cash expenses 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. There was no amortization of acquired intangible assets for the three months ended March 31, 2012. For the three months ended March 31, 2011, the amortization of acquired intangible assets was $28 thousand. 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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