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The Ultimate Software Group, Inc. (ULTI): Is Chasing Gains From HCM Cloud Software Worth the Risk?

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In every crisis there’s an opportunity, so it’s always been said. Going by this oft-repeated dictum, The Ultimate Software Group, Inc. (NASDAQ:ULTI) is one equity worth some due diligence as it is directly downstream of a crisis in global employability, which the ManpowerGroup posited in its 2012 annual survey. In a nutshell, this poll avers that “one in three employers worldwide cannot find qualified talent.”

Is there a boy crying wolf here? Methinks not. A separate study by Deloitte Research tells of an “impending talent crunch,” specifically a “talent crisis in global manufacturing.” This research predicts that the ratio of the 65-years-and-older population to the active labor force will rise to 36% from 25% among industrialized economies and select emerging economies between 2000 and 2020. To address this concern on an aging and thinning workforce, the study advances some strategies aimed at attracting and engaging Generation Y (defined as those born 1982–1993 entering the labor force for the first time) into careers in the manufacturing sector.

For the headhunters’ tool kit

The Ultimate Software Group, Inc. (NASDAQ:ULTI)The Ultimate Software Group, Inc. (NASDAQ:ULTI), based in Weston, FL, is in a position to be at the cusp of implementing these strategies not only in manufacturing but also in business and industry at large. For headhunters of corporate HRs, the company’s cloud-based human capital management (HCM) tools include an UltiPro Recruitment solution. With this tool, the recruitment process is made easier and quicker as it streamlines and automates all activities associated with searching and acquiring top talents. The company’s UltiPro software package combines all aspects of HR management, such as payroll, talent management, payroll and benefits administration, onboarding, performance and succession management, career development, workforce analytics, and global unified HCM.

Credit: The Ultimate Software Group, Inc. (NASDAQ:ULTI)

Peers in California

Cloud-based HR management applications are also the core competencies of Cornerstone OnDemand, Inc. (NASDAQ:CSOD), which is based in Los Angeles, CA. The company’s software solutions help its clients not only to recruit, connect, train, and manage their employees but also to empower them and increase their productivity.
Cornerstone OnDemand, Inc. (NASDAQ:CSOD)’s suite of four clouds encompasses all stages of the employee lifecycle: Recruiting Cloud, Learning Cloud, Performance Cloud, and Extended Enterprise Cloud.

Another California company, Jive Software Inc (NASDAQ:JIVE) based in Palo Alto, can likewise contribute in addressing human resource management issues, though less on head hunting. The cloud-based social business collaboration software it develops and markets engages not only employees but its clients’ customers as well. This platform enables users to pursue initiatives at enhanced revenue generation, reduced operating costs, and increased customer retention.

A catch-up game

Ultimate Software Cornerstone Jive Software
Market Cap $3.04 billion $2 billion $1.07 billion
Customer Base* 2,500+ companies 1,237 800
2013 1st Q Revenue $78.1 million $37.7 million $33.9 million
2013 1st Q Net Income (Loss) $4.5 million ($9.9 million) ($16.6 million)
2013 1st Q EPS (Loss) $0.16 ($0.20) ($0.25)

*as of end-2012

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