Specialist
Former VP & Senior Manager, East at Ultimate Software Group Inc
Agenda
- Cloud-based human capital management (HCM) industry trends
- Ultimate Software's (NASDAQ: ULTI) competitive dynamics vs Workday (NASDAQ: WDAY) and Ceridian (NYSE: CDAY)
- Ability to move upmarket to large enterprise
- Growth drivers and obstacles
- Outlook for 2019 and beyond
Questions
1.
Can you share your updated perspective on the HCM and payroll markets, highlighting 2-3 key trends?
2.
What product and operational factors are driving Ultimate’s success, with the company exhibiting high margins vs many of its peers in the HCM market?
3.
Ultimate recently announced that it will be taken private at an USD 11bn valuation. How might a take- private situation strategically benefit Ultimate and what opportunities might it present? What areas of Ultimate’s product suite or broader strategy could benefit from it being a private company?
4.
Can you highlight what you view as strengths and weaknesses in Ultimate’s product suite, as well as areas that you think need addressing?
5.
What are your thoughts on the view that Ultimate is weaker on workforce management and needs to partner with Infor. To what extent could Ultimate build out their workforce management capabilities organically? Or do you foresee them making acquisitions in the workforce management segment?
6.
How do Ultimate’s payroll capabilities differ from ADP’s? You mentioned an impressive statistic on Ultimate’s ability to service major league sports teams, but where does ADP fall short in that area? What core ADP customer set could Ultimate potentially steal share from?
7.
Do you expect anything in particular to impede Ultimate’s ability to continue to move upmarket, compete and take share from Workday, Oracle and ADP on payroll and HCM?
8.
You mentioned that Ultimate’s payroll portfolio is strong in North America. How does the company’s payroll presence differ internationally? To what extent would a move to large enterprise depend on being able to service the global market?
9.
Ultimate has around 5,600 organisations in its customer base. What opportunity do you think the company has for new logo acquisition moving forward? Where would you expect new logos to fit in amidst the mid-market, large enterprise and geographically?
10.
Can you compare Ultimate, Ceridian and Workday? Why might a customer choose Ultimate over the others?
11.
How competitive has the lower end of the payroll market been, among the likes of Paycom, Paylocity and Paycor, in your experience? Are these players able to move to the mid-market to challenge Ultimate?
12.
How does Ultimate price relative to the market? Would you consider it premium? Can you assess the company’s payroll pricing structure and how this differs on the HCM side?
13.
How common is it for Ultimate to upsell its existing customers or cross-sell to other elements of its portfolio, perhaps payroll customers to HCM?
14.
How important do you think the PeopleDoc acquisition is for Ultimate and its international exposure? Will the company be able to penetrate further into Europe from this deal? How might this impact the company’s efforts to build out its product suite?
15.
Do you see any other obvious areas of acquisition, either in the HR tech landscape or elsewhere, that you think Ultimate should pursue?
16.
You mentioned that you were with Ultimate before it was a cloud offering. Can you outline the company’s transition to cloud? Is its cloud penetration near 100% or are there pieces of the portfolio that need to shift to a SaaS model?
17.
Ultimate is known for its customer success, but what recurring themes, customer pain points or common issues occur with its customers?
18.
Can you outline Ultimate’s third-party sales channel strategy and its importance to the company’s success? Where does this need to be built out or strengthened?
19.
Why do you think Ultimate’s operating margin is so strong? One read would be that perhaps it is not investing in other areas for long term growth. Is it operational excellence or a different allocation of spend? Can you share any anecdotes on how it has been so efficient?
20.
What is your view on Ultimate’s ability to innovate and drive products organically from R&D vs peers?
21.
You mentioned the strength of Ultimate’s CEO, but what is your opinion on its wider management team? Is it the right team to continue to lead the company? Can you share any historical pain points?
22.
What is the typical contract length and terms for Ultimate’s customers? What is behind the company’s high renewal rates? How has Ultimate changed since the customers coming up for renewal this year were onboarded?
23.
Can you share a best- and worst-case scenario for Ultimate over the next 12-24 months? What risk factors should investors be paying attention to? What factors or challenges does the company need to address?
24.
Do you think that Ultimate can continue to increase its already-high operating margin? Do you expect the company to face pricing pressure or commoditisation as more HR solutions penetrate the HCM market?
25.
Is there anything else that you think would be useful to highlight to analysts monitoring the HCM market and Ultimate specifically? What key questions should they be considering?
