10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number:                                           0-24347

THE ULTIMATE SOFTWARE GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware	65-0694077
(State or other jurisdiction of incorporation	(I.R.S. Employer Identification No.)
or organization)

2000 Ultimate Way, Weston, FL	33326
(Address of principal executive offices)	(Zip Code)

(954) 331 - 7000

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑  No ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the Registrant was required to submit and post such files).  Yes ☑  No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or reviews financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 2, 2018, there were 31,199,901 shares of the Registrant’s common stock, par value $0.01, outstanding.

THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

	Page
Part I – Financial Information:
Item 1 – Financial Statements:
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017	1
Unaudited Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2018 and June 30, 2017	2
Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2018 and June 30, 2017	3
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and June 30, 2017	4
Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	27
Item 4 – Controls and Procedures	28
Part II – Other Information:
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 6 – Exhibits	30
Signatures	31
Certifications

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PART 1 – FINANCIAL INFORMATION

ITEM 1. Financial Statements

THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	As of June 30, 2018			As of December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	184,855		$	155,685
Investments in marketable securities	3,274			9,434
Accounts receivable, net of allowance for doubtful accounts of $1,300 for 2018 and $900 for 2017	195,247			190,989
Deferred contract costs, prepaid expenses and other current assets	78,116			71,602
Total current assets before funds held for customers	461,492			427,710
Funds held for customers	624,110			563,062
Total current assets	1,085,602			990,772
Property and equipment, net	274,841			243,664
Goodwill	35,484			35,808
Intangible assets, net	19,227			20,862
Deferred contract costs and other assets, net	114,623			53,409
Deferred tax assets, net	30,242			32,696
Total assets	$	1,560,019		$	1,377,211
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14,125		$	16,099
Accrued expenses and other liabilities	93,990			60,394
Deferred revenue	212,997			197,088
Capital lease obligations	6,511			5,474
Total current liabilities before customer funds obligations	327,623			279,055
Customer funds obligations	625,511			564,031
Total current liabilities	953,134			843,086
Deferred revenue	1,431			1,773
Deferred rent	8,695			5,349
Capital lease obligations	6,346			4,477
Other long-term liabilities	2,375			4,250
Deferred income tax liability	380			251
Total liabilities	972,361			859,186
Stockholders’ equity:
Series A Junior Participating Preferred Stock, $.01 par value, 500,000 shares authorized, no shares issued or outstanding	—			—
Preferred Stock, $.01 par value, 2,000,000 shares authorized, no shares issued or outstanding	—			—
Common Stock, $.01 par value, 50,000,000 shares authorized, 35,287,303 and 34,787,986 shares issued as of June 30, 2018 and December 31, 2017, respectively	353			348
Additional paid-in capital	629,156			609,160
Accumulated other comprehensive loss	(7,013		)	(5,912		)
Accumulated earnings	176,521			125,788
	799,017			729,384
Treasury stock, 4,657,995 shares, at cost, for 2018 and 2017	(211,359		)	(211,359		)
Total stockholders’ equity	587,658			518,025
Total liabilities and stockholders’ equity	$	1,560,019		$	1,377,211

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these financial statements.

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THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2018			2017			2018			2017
Revenues:
Recurring	$	239,458		$	195,147		$	476,045		$	385,128
Services	31,704			29,545			71,872			68,055
Total revenues	271,162			224,692			547,917			453,183
Cost of revenues:
Recurring	66,623			52,539			129,488			102,608
Services	35,949			31,715			77,857			71,346
Total cost of revenues	102,572			84,254			207,345			173,954
Gross profit	168,590			140,438			340,572			279,229
Operating expenses:
Sales and marketing	66,207			67,015			137,404			136,375
Research and development	50,004			34,997			96,978			71,155
General and administrative	32,270			31,472			63,992			61,676
Total operating expenses	148,481			133,484			298,374			269,206
Operating income	20,109			6,954			42,198			10,023
Other income (expense):
Interest and other expense	(100		)	(165		)	(297		)	(445		)
Other income, net	794			81			1,179			307
Total other income (expense), net	694			(84		)	882			(138		)
Income before income taxes	20,803			6,870			43,080			9,885
(Provision) benefit for income taxes	(7,123		)	(2,341		)	(8,406		)	1,884
Net income	$	13,680		$	4,529		$	34,674		$	11,769
Net income per share:
Basic	$	0.45		$	0.15		$	1.14		$	0.40
Diluted	$	0.44		$	0.15		$	1.11		$	0.38
Weighted average shares outstanding:
Basic	30,619			29,751			30,512			29,645
Diluted	31,113			30,623			31,164			30,639

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these financial statements.

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THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2018			2017			2018			2017
Net income	$	13,680		$	4,529		$	34,674		$	11,769
Other comprehensive (loss) income:
Unrealized gain (loss) on investments in marketable available-for-sale securities	90			(94		)	(232		)	(324		)
Unrealized (loss) gain on foreign currency translation adjustments	(501		)	445			(962		)	607
Other comprehensive (loss) income, before tax	(411		)	351			(1,194		)	283
Income tax benefit related to items of other comprehensive income	2			37			92			129
Other comprehensive (loss) income, net of tax	$	(409	)	$	388		$	(1,102	)	$	412
Comprehensive income	$	13,271		$	4,917		$	33,572		$	12,181

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these financial statements.

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THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Six Months Ended June 30,
	2018			2017
Cash flows from operating activities:
Net income	$	34,674		$	11,769
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,068			16,551
Provision for doubtful accounts	4,836			3,364
Non-cash stock-based compensation expense	67,353			73,144
Income taxes	7,618			(2,394		)
Net amortization of premiums and accretion of discounts on available-for-sale securities	(269		)	262
Changes in operating assets and liabilities:
Accounts receivable	(9,094		)	(10,044		)
Deferred contract costs, prepaid expenses and other current assets	(28,831		)	(10,557		)
Deferred contract costs and other assets	(13,956		)	(3,563		)
Accounts payable	(1,974		)	316
Accrued expenses, other liabilities and deferred rent	24,997			(2,333		)
Deferred revenue	13,657			12,979
Net cash provided by operating activities	118,079			89,494
Cash flows from investing activities:
Purchases of property and equipment	(41,062		)	(43,540		)
Purchases of marketable securities	(168,199		)	(122,625		)
Proceeds from sales and maturities of marketable securities	99,553			73,069
Net change in money market securities and other cash equivalents held to satisfy customer funds obligations	13,795			35,684
Net cash used in investing activities	(95,913		)	(57,412		)
Cash flows from financing activities:
Net proceeds from issuances of Common Stock	2,923			4,541
Shares acquired to settle employee tax withholding liabilities	(51,766		)	(34,745		)
Principal payments on capital lease obligations	(3,217		)	(3,148		)
Payments of other long-term liabilities	(1,875		)	—
Net change in customer funds obligations	61,480			25,238
Net cash provided by (used in) financing activities	7,545			(8,114		)
Effect of exchange rate changes on cash	(541		)	298
Net increase in cash and cash equivalents	29,170			24,266
Cash and cash equivalents, beginning of period	155,685			73,773
Cash and cash equivalents, end of period	$	184,855		$	98,039
Supplemental disclosure of cash flow information:
Cash paid for interest	$	270		$	238
Cash paid for taxes	$	3,617		$	1,048
Non-cash investing and financing activities:
Capital lease obligations to acquire new equipment	$	6,123		$	4,119
Stock based compensation for capitalized software	$	1,782		$	2,021
Software agreement	$	—		$	6,500

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these financial statements.

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THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Operations

The Ultimate Software Group, Inc. and subsidiaries (“Ultimate,” “we,” “us” or “our”) is a leading provider of cloud-based human capital management solutions, often referred to as human capital management (“HCM”). Ultimate's UltiPro product suite (“UltiPro”) is a comprehensive, engaging solution that has human resources ("HR"), payroll, and benefits management at its core and includes global people management, available in 14 languages with more than 37 country-specific localizations. The solution is delivered via software-as-a-service ("SaaS"), now more commonly known as the cloud computing model, to organizations based in the United States and Canada, including those with global workforces. UltiPro is designed to deliver the functionality businesses need to manage the complete employment life cycle from recruitment to retirement. We market our UltiPro solutions primarily to enterprise companies, which we define as organizations with 2,501 or more employees, including those with 10,000 or more employees; mid-market companies, which we define as those having 501-2,500 employees; and strategic market companies, which we define as those having 100-500 employees. UltiPro is marketed primarily through our enterprise, mid-market and strategic direct sales teams.

2. Basis of Presentation, Consolidation and the Use of Estimates

The accompanying unaudited condensed consolidated financial statements of Ultimate have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The information in this quarterly report should be read in conjunction with Ultimate’s audited consolidated financial statements and notes thereto included in Ultimate’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC on February 26, 2018 (the “Form 10-K”).

The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting only of normal, recurring adjustments) which are, in the opinion of Ultimate’s management, necessary for a fair presentation of the information for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Interim results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of operating results for the full fiscal year or for any future periods.

The unaudited condensed consolidated financial statements reflect the financial position and operating results of Ultimate and include its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

3. Accounting Standards and Significant Accounting Policies

Recently Adopted Accounting Standards

In April 2018, we adopted Accounting Standards Update ("ASU") No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," ("ASU 2018-02"). ASU 2018-02 allows companies to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income to retained earnings. The unaudited condensed consolidated balance sheets reflect the reclassification out of accumulated other comprehensive income. The Company's policy for releasing disproportionate income tax effects from accumulated other comprehensive income utilizes the aggregate approach. The adoption of ASU 2018-02 did not have an impact on the our unaudited condensed consolidated statements of income or cash flows.

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Topic 606”).Topic 606 supersedes the revenue requirements in ASU Topic 605, Revenue Recognition ("Topic 605") and requires the recognition of revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services and includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which discusses the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. Collectively, we refer to Topic 606 and Subtopic 340-40 as the "new standard."

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Effective January 1, 2018, we adopted the requirements of the new standard, utilizing the modified retrospective method of transition with the new standard applied to all customer contracts that were not completed on the effective date of the new standard. Adoption of the new standard resulted in changes to our accounting policies for revenue recognition, as detailed below.

The impact of adopting the new standard on our revenues resulted in an immaterial increase to deferred revenue and had a material impact on our unaudited condensed consolidated balance sheet, as a result of the amortization period over which deferred contract costs to obtain related subscription contracts are recognized. Under Topic 605, we deferred incremental commission costs to obtain a contract and amortized those costs over the initial term of the related subscription contract, which is generally 2-3 years. During our assessment of the new standard, we did not identify any incremental contract costs from what was capitalized under Topic 605. We analyzed our customer contract term periods and our customer life, taking into consideration technological changes for our UltiPro product offering, and based on our assessment of the new standard, we amortize the deferred contract costs over 7 years on a systematic basis, consistent with the pattern of transfer of the goods or services to which the asset relates.

The cumulative effect of the changes made to our January 1, 2018 balance sheet for the adoption of the new standard were as follows (in thousands):

	Balance as of December 31, 2017		Adjustments Due to Adoption of Topic 606			Balance as of January 1, 2018
Assets
Deferred contract costs, prepaid expenses and other current assets	$	71,602	$	(22,318	)	$	49,284
Total current assets	990,772		(22,318		)	968,454
Deferred contract costs and other assets, net	53,409		47,259			100,668
Deferred tax assets, net	32,696		(6,803		)	25,893
Total assets	$	1,377,211	$	18,138		$	1,395,349
Liabilities
Deferred revenue	$	197,088	$	1,909		$	198,997
Total current liabilities	843,086		1,909			844,995
Deferred income tax liability	251		170			422
Total liabilities	859,186		2,079			861,265
Stockholders' Equity
Accumulated earnings	125,788		16,059			141,847
Total stockholders' equity	518,025		16,059			534,084
Total liabilities and stockholders' equity	$	1,377,211	$	18,138		$	1,395,349

In accordance with the requirements of the new standard, the disclosure for the quantitative effect and the significant changes between the reported results under the new standard and those that would have been reported under legacy GAAP (i.e., Topic 605) on our unaudited consolidated condensed income statement and balance sheet was as follows (in thousands):

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	For the Three Months Ended June 30, 2018							For the Six Months Ended June 30, 2018
	As Reported - Topic 606		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)			As Reported - Topic 606		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)
Income Statement
Revenues
Recurring revenues	$	239,458	$	239,776	$	(318	)	$	476,045	$	476,806	$	(761	)
Operating Expenses
Sales and marketing	66,207		71,325		(5,118		)	137,404		148,479		(11,075		)
Net income	$	13,680	$	8,879	$	4,801		$	34,674	$	24,359	$	10,315

	As of June 30, 2018
	As Reported - Topic 606		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)
Balance Sheet
Assets
Deferred contract costs, prepaid expenses and other current assets	$	78,116	$	99,189	$	(21,073	)
Deferred contract costs and other assets, net	114,623		57,365		57,258
Liabilities
Deferred revenue	212,997		210,212		2,785
Stockholders' Equity
Accumulated earnings	176,521		143,121		33,400

In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118,” ("SAB 118"). The ASU amends Topic 740 to incorporate SEC guidance issued in its Staff Bulletin SAB 118. SAB 118 addressed the application of generally accepted accounting principles in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act. The amendments in this update were effective upon issuance, at which time the Company adopted the standard. Adoption of this standard did not have a material impact on the Company’s financial condition or results of operations.

Summary of Significant Accounting Policies

Except for the accounting policy for revenue recognition that was updated as a result of adopting Topic 606, there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 26, 2018, that have had a material impact on our unaudited condensed consolidated financial statements and related notes.

Revenue Recognition

Effective January 1, 2018, we recognize revenues in accordance with Topic 606. The core principle of Topic 606 is that revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. To achieve the core principle of Topic 606, we perform the following steps:

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1)    Identify the contract(s) with a customer;

2)    Identify the performance obligations in the contract;

3)    Determine the transaction price;

4)    Allocate the transaction price to the performance obligations in the contract; and

5)    Recognize revenue when (or as) we satisfy a performance obligation.

The significant majority of our two major revenue sources-recurring and services is derived from contracts with customers. Recurring revenues are primarily related to our subscription-based SaaS performance obligations. Services revenues are primarily related to implementation services for our SaaS customers (including activation services as well as post-live work typically billed on a time and materials basis) and, to a much lesser extent, fees for other services, including the provision of payroll-related forms, sales of time clocks and the printing of W-2 and Affordable Care Act ("ACA") forms for certain customers, as well as certain client reimbursable out-of-pocket expenses. Fees charged to subscription-based SaaS performance obligations are each priced on a per-employee-per-month (“PEPM”) basis for a given calendar month based on usage and fees charged for implementation services and are typically priced on a fixed fee basis for activating the product offering. A majority of our SaaS subscription revenues are satisfied over time, because they are simultaneously received and consumed by the customer, with certain SaaS performance obligations satisfied at a point in time. Our activation services revenues are satisfied over time because they are simultaneously received and consumed by the customer.

Our SaaS performance obligations are each priced based on the number of active customer employees, as of the signing of the contract, at the contract PEPM rate over the initial contract term. Our activation services are based on a fixed fee charged to our customers. There is typically no variable consideration related to our SaaS performance obligations or our activation services, nor do they include a significant financing component, non-cash consideration, or consideration payable to a customer. Our SaaS performance obligations are typically billed quarterly in advance while our activation services are billed over the implementation period.

Our SaaS arrangements include multiple performance obligations and transaction price allocations are based on the stand-alone selling price ("SSP") for each performance obligation. There is an observable input for SSP for each of the SaaS performance obligations. Since activation services do not have directly observable pricing, the SSP is estimated using market conditions and observable inputs, which is calculated based on historical average discounts off our standard price list.

For our performance obligations, the consideration allocated to cloud subscription revenues is recognized as recurring revenues, typically using the output method, over the initial contract period, as those subscription-based services are consumed, typically commencing with the date the customer processes their first live payroll using UltiPro (referred to as going "Live"). The consideration allocated to activation services is recognized as services revenues based on the proportion performed, using reasonably dependable estimates (in relation to progression through activation phases), by product.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for Ultimate on January 1, 2019 and early adoption is permitted. The standard requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are evaluating the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures. We have not yet determined the effect the standard will have on our ongoing financial reporting.

4.    Funds held for Customers, Corporate Investments in Marketable Securities and Fair Value of Financial Instruments

We classify our investments in marketable securities with readily determinable fair values as available-for-sale. Available-for-sale securities consist of debt and equity securities not classified as trading securities or as securities to be held to maturity. Unrealized gains and losses, net of tax, on available-for-sale securities are reported as a net amount in accumulated other comprehensive income in stockholders’ equity until realized. Realized gains and losses resulting from available-for-sale securities are included in other income, net, in the unaudited condensed consolidated statements of income. There were no significant reclassifications of realized gains and losses on available-for-sale securities to the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2018 and June 30, 2017.

Gains and losses on the sale of available-for-sale securities are determined using the specific identification method.   There was $844 thousand and $704 thousand of net unrealized loss on available-for-sale securities as of June 30, 2018 and December 31, 2017, respectively.

The amortized cost, net unrealized loss and fair value of our funds held for customers and corporate investments in marketable available-for-sale securities as of June 30, 2018 and December 31, 2017 are shown below (in thousands):

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	As of June 30, 2018							As of December 31, 2017
	Amortized Cost		Net Unrealized Gain/(Loss)			Fair Value (1)		Amortized Cost		Net Unrealized (Loss)/Gain			Fair Value (1)
Type of issue:
Funds held for customers – money market securities and other cash equivalents	$	340,517	$	—		$	340,517	$	354,312	$	—		$	354,312
Available-for-sale securities:
Corporate debentures – bonds	—		—			—		2,848		(4		)	2,844
Commercial paper	1,338		—			1,338		—		—			—
U.S. Agency bonds	284,437		(844		)	283,593		209,443		(693		)	208,750
U.S. Treasury bills	1,487		—			1,487		5,876		(6		)	5,870
Asset-Backed securities	449		—			449		721		(1		)	720
Total corporate investments and funds held for customers	$	628,228	$	(844	)	$	627,384	$	573,200	$	(704	)	$	572,496

_________________

(1) Included within available-for-sale securities as of June 30, 2018 and December 31, 2017 are corporate investments with fair values of $3.3 million and $9.4 million, respectively. Included within available-for-sale securities as of June 30, 2018 and December 31, 2017 are funds held for customers with fair values of $283.6 million and $208.8 million, respectively. All available-for-sale securities were included in Level 2 of the fair value hierarchy.

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of June 30, 2018 are as follows (in thousands):

	Securities in unrealized loss position less than 12 months				Securities in unrealized loss position greater than 12 months					Total
	Gross unrealized losses		Fair market value		Gross unrealized losses			Fair market value		Gross unrealized losses			Fair market value
Corporate debentures – bonds	$	—	$	—	$	—		$	—	$	—		$	—
Commercial paper	—		—		—			—		—			—
U.S. Agency bonds	—		—		(883		)	244,625		(883		)	244,625
U.S. Treasury bills	—		—		—			—		—			—
Asset-Backed securities	—		449		—			—		—			449
Total	$	—	$	449	$	(883	)	$	244,625	$	(883	)	$	245,074

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2017 are as follows (in thousands):

	Securities in unrealized loss position less than 12 months					Securities in unrealized loss position greater than 12 months					Total
	Gross unrealized losses			Fair market value		Gross unrealized losses			Fair market value		Gross unrealized losses			Fair market value
Corporate debentures – bonds	$	(1	)	$	699	$	—		$	—	$	(1	)	$	699
Commercial paper	—			—		—			—		—			—
U.S. Agency bonds	(408		)	74,940		(285		)	133,811		(693		)	208,751
U.S. Treasury bills	—			—		(6		)	5,869		(6		)	5,869
Asset-Backed securities	—			—		—			—		—			—
Total	$	(409	)	$	75,639	$	(291	)	$	139,680	$	(700	)	$	215,319

The amortized cost and fair value of the marketable available-for-sale securities, by contractual maturity, as of June 30, 2018, are shown below (in thousands):

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	Corporate Investments				Investments with Funds Held for Customers				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,274	$	3,274	$	208,610	$	208,039	$	211,884	$	211,313
Due after one year	—		—		75,827		75,554		75,827		75,554
Total	$	3,274	$	3,274	$	284,437	$	283,593	$	287,711	$	286,867

The amortized cost and fair value of the marketable available-for-sale securities, by contractual maturity, as of December 31, 2017, are shown below (in thousands):

	Corporate Investments				Investments with Funds Held for Customers				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	9,445	$	9,434	$	164,072	$	163,641	$	173,517	$	173,075
Due after one year	—				45,371		45,109		45,371		45,109
Total	$	9,445	$	9,434	$	209,443	$	208,750	$	218,888	$	218,184

We classify and disclose fair value measurements in one of the following three categories of fair value hierarchy:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities.

Level 2 - Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Our assets that are measured by management at fair value on a recurring basis are generally classified within Level 1 or Level 2 of the fair value hierarchy. We have had assets in the past, and may have assets in the future, classified within Level 1 of the fair value hierarchy. No assets or investments were classified within Level 1 of the fair value hierarchy as of June 30, 2018 or as of December 31, 2017. We did not have any transfers into and out of Level 1 or Level 2 during the three and six months ended June 30, 2018 or the twelve months ended December 31, 2017. No assets or investments were classified as Level 3 as of June 30, 2018 or as of December 31, 2017.

The types of instruments valued by management, based on quoted prices in less active markets, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency, include corporate debentures and bonds, commercial paper, U.S. agency bonds and U.S. Treasury bills and asset-backed securities owned by Ultimate. Such instruments are generally classified within Level 2 of the fair value hierarchy. Ultimate uses consensus pricing, which is based on multiple pricing sources, to value its fixed income investments. The following table sets forth, by level within the fair value hierarchy, financial assets accounted for at fair value as of June 30, 2018 and December 31, 2017 (in thousands):

	As of June 30, 2018								As of December 31, 2017
	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
Corporate debentures – bonds	$	—	$	—	$	—	$	—	$	2,844	$	—	$	2,844	$	—
Commercial paper	1,338		—		1,338		—		—		—		—		—
U.S. Agency bonds	283,593		—		283,593		—		208,750		—		208,750		—
U.S. Treasury bills	1,487		—		1,487		—		5,870		—		5,870		—
Asset-Backed securities	449		—		449		—		720		—		720		—
Total	$	286,867	$	—	$	286,867	$	—	$	218,184	$	—	$	218,184	$	—

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Assets measured at fair value on a recurring basis were presented in the unaudited condensed consolidated balance sheet as of June 30, 2018 and the audited consolidated balance sheet as of December 31, 2017 as short-term and long-term investments in marketable securities. There were no financial liabilities accounted for at fair value as of June 30, 2018 and December 31, 2017.

5. Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, which range from 2 to 15 years. Leasehold improvements and assets under capital leases are amortized over the shorter of the estimated useful life of the asset or the term of the lease, which range from 3 to 15 years. Maintenance and repairs are charged to expense when incurred; betterments are capitalized. Upon the sale or retirement of assets, the cost, accumulated depreciation and amortization are removed from the accounts and any gain or loss is recognized.

Property and equipment as of June 30, 2018 and December 31, 2017 consist of the following (in thousands):

	As of June 30, 2018		As of December 31, 2017
Computer equipment	$	198,262	$	185,034
Internal-use software	206,493		178,093
Leasehold improvements	48,087		43,556
Other property and equipment	24,446		22,572
Property and equipment	477,288		429,255
Less: accumulated depreciation and amortization	202,447		185,591
Property and equipment, net	$	274,841	$	243,664

We capitalize computer software development costs related to software developed for internal use in accordance with Accounting Standards Codification ("ASC") Topic 350-40, Intangibles Goodwill and Other-Internal Use Software. During the three and six months ended June 30, 2018, we capitalized $12.8 million and $27.4 million, respectively, of computer software development costs related to a development project to be sold in the future as a cloud product only (the "Development Project"). There were $13.6 million and $26.2 million of software development costs related to the Development Project which were capitalized in the three and six months ended June 30, 2017, respectively. For the three and six months ended June 30, 2018 and June 30, 2017, these capitalized costs were primarily direct labor costs. As a component of these direct labor costs we capitalized $0.8 million and $1.8 million of stock-based compensation costs during the three and six months ended June 30, 2018, respectively. During the three and six months ended June 30, 2017, we capitalized $1.0 million and $2.0 million, respectively, of stock-based compensation costs. These capitalized costs are included with internal-use software in property and equipment in the unaudited condensed consolidated balance sheets and purchases of property and equipment in the unaudited condensed consolidated statements of cash flows. Internal-use software is amortized on a straight-line basis over its estimated useful life, commencing after the software development is substantially complete and the software is ready for its intended use. At each balance sheet date, we evaluate the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. During the three and six months ended June 30, 2018 there were $2.1 million and $3.9 million, respectively, of amortization associated with certain product modules of the Development Project which were ready for their intended use. During the three and six months ended June 30, 2017 there were $1.0 million and $2.0 million, respectively, of amortization associated with certain product modules of the Development Project which were ready for their intended use. The amortization of capitalized software is included in cost of recurring revenues.

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6. Deferred Contract Costs, Prepaid Expenses and Other Current Assets

Deferred contract costs, prepaid expenses and other current assets as of June 30, 2018 and December 31, 2017 consist of the following (in thousands):

	As of June 30, 2018		As of December 31, 2017
Deferred contract costs	$	34,985	$	38,519
Prepaid expenses	31,763		20,088
Other current assets	11,368		12,995
Total deferred contract costs, prepaid expenses and other current assets	$	78,116	$	71,602

Deferred contract costs, which are primarily deferred sales commissions earned by our sales force and are considered incremental and recoverable costs of obtaining a contract with a customer, were $35.0 million as of June 30, 2018 and $38.5 million as of December 31, 2017. Amortization expense for the deferred contract costs was $5.5 million and $10.9 million for the three and six months ended June 30, 2018, respectively. Amortization expense for the deferred contract costs was $9.8 million and $18.3 million for the three and six months ended June 30, 2017, respectively. There was no impairment loss in relation to the costs capitalized for the periods presented.

Included in deferred contract costs and other assets, net are deferred contract costs of $102.2 million as of June 30, 2018 and $45.5 million as of December 31, 2017. Deferred contract costs are primarily deferred sales commissions earned by our sales force and are considered incremental and recoverable costs of obtaining a contract with a customer. The amortization of these deferred contract costs are expected to start after one year.

7. Goodwill and Intangible Assets

Goodwill

Goodwill represents the excess of cost over the net tangible and identifiable intangible assets of acquired businesses. Goodwill amounts are not amortized, but rather tested for impairment at least annually. Identifiable intangible assets acquired in business combinations are recorded based upon fair value at the date of acquisition and amortized over their estimated useful lives.

The changes in the carrying value of goodwill since December 31, 2017 were as follows (in thousands):

Goodwill, December 31, 2017	$	35,808
Translation adjustment for the six months ended June 30, 2018 (1)	(324		)
Goodwill, June 30, 2018	$	35,484

__________________________

(1) Represents the impact of the foreign currency translation of the portion of goodwill that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such goodwill is translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income (loss).

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Intangible Assets

The following tables present our acquired intangible assets as of the dates specified below (in thousands):

	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Cumulative Translation Adjustment (1)			Net Carrying Amount		Weighted Average Remaining Useful Life
Developed technology	$	23,300	$	(5,521	)	$	(959	)	$	16,820	5.7
Customer relationships	4,700		(2,409		)	—			2,291		4.3
Non-compete agreements	300		(300		)	—			—		0.0
	$	28,300	$	(8,230	)	$	(959	)	$	19,111	5.6
	December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Cumulative Translation Adjustment (1)			Net Carrying Amount		Weighted Average Remaining Useful Life
Developed technology	$	23,300	$	(4,355	)	$	(895	)	$	18,050	6.0
Customer relationships	4,700		(2,004		)	—			2,696		4.5
Non-compete agreements	300		(300		)	—			—		0.0
	$	28,300	$	(6,659	)	$	(895	)	$	20,746	5.9

____________________________

(1) Represents the impact of the foreign currency translation of the portion of acquired intangible assets that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such intangible assets are translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive (loss) income.

Acquired intangible assets are amortized over their estimated useful life, generally three to ten years, in a manner that reflects the pattern in which the economic benefits are consumed. Included in acquired intangible assets as of June 30, 2018 and December 31, 2017 were $0.1 million of assets with indefinite lives. Amortization expense for acquired intangible assets was $0.8 million and 1.6 million for the three and six months ended June 30, 2018, respectively, and 0.8 million and 1.6 million for the three and six months ended June 30, 2017, respectively.

8. Earnings Per Share

Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted average number of common shares outstanding (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

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The following table is a reconciliation of the shares of Ultimate's issued and outstanding $0.01 par value common stock ("Common Stock") used in the computation of basic and diluted net income per share for the three and six months ended June 30, 2018 and 2017 (in thousands):

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2018	2017	2018	2017
Basic weighted average shares outstanding	30,619	29,751	30,512	29,645
Effect of dilutive equity instruments	494	872	652	994
Diluted weighted average shares outstanding	31,113	30,623	31,164	30,639
Options to purchase shares of Common Stock and other stock-based awards outstanding which are not included in the calculation of diluted income per share because their impact is anti-dilutive	—	1	1	5

9. Foreign Currency

The financial statements of Ultimate’s foreign subsidiaries, The Ultimate Software Group of Canada, Inc. (“Ultimate Canada”) and The Ultimate Software Group of Asia, PTE. LTD. ("Ultimate Asia"), have been translated into U.S. dollars. The functional currency of Ultimate Canada is the Canadian dollar. Assets and liabilities are translated into U.S. dollars at period-end exchange rates. Income and expenses are translated at the average exchange rate for the reporting period. The resulting translation adjustments, representing unrealized gains or losses, are included in accumulated other comprehensive (loss) income, a component of stockholders’ equity. Realized gains and losses resulting from foreign exchange transactions are included in total operating expenses in the unaudited condensed consolidated statements of income. There were no significant realized gains and losses resulting from foreign exchange transactions to the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2018 and June 30, 2017.

For the three and six months ended June 30, 2018, Ultimate had unrealized translation losses of $0.5 million and $1.0 million, respectively. For the three and six months ended June 30, 2017, Ultimate had unrealized translation gains of $0.4 million and $0.6 million, respectively. Included in accumulated other comprehensive loss, as presented in the accompanying unaudited condensed consolidated balance sheets, are cumulative unrealized translation losses of $6.4 million as of June 30, 2018 and $5.4 million as of December 31, 2017.

10. Stock-Based Compensation

Summary of Plans

Our Amended and Restated 2005 Equity and Incentive Plan (the “Plan”) authorizes the grant of options (“Options”) to non-employee directors, officers and employees of Ultimate to purchase shares of Common Stock.  The Plan also authorizes the grant to such persons of restricted and non-restricted shares of Common Stock, stock appreciation rights, stock units and cash performance awards (collectively, together with the Options, the “Awards”).

As of June 30, 2018, the aggregate number of shares of Common Stock that were available to be issued under all Awards granted under the Plan was 1,815,862 shares.

The following table sets forth the non-cash stock-based compensation expense resulting from stock-based arrangements that were recorded in our unaudited condensed consolidated statements of income for the periods indicated (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Non-cash stock-based compensation expense:
Cost of recurring revenues	$	3,994	$	2,981	$	7,426	$	5,797
Cost of services revenues	2,362		1,935		4,735		3,924
Sales and marketing	17,074		19,785		33,411		37,196
Research and development	4,241		3,134		7,550		5,911
General and administrative	6,486		11,443		14,231		20,316
Total non-cash stock-based compensation expense	$	34,157	$	39,278	$	67,353	$	73,144

Stock-based compensation for the three and six months ended June 30, 2018 was $34.2 million and $67.4 million, respectively, as compared with stock-based compensation of $39.3 million and $73.1 million for the three and six months ended June 30, 2017, respectively. The decreases of $5.1 million and $5.7 million in stock-based compensation for the three and six month periods, respectively, included decreases of $6.5 million and $7.4 million, respectively, associated with modifications and terminations made to the Company’s change in control plans in March 2015, February 2016, and February 2017.  These changes were made to better align management's incentives with long-term value creation for our shareholders. As part of the modifications in connection with the terminations of the change in control plans, time-based restricted stock awards (vesting over three years) were granted to certain senior officers in March 2015, February 2016, and February 2017.

Stock-based compensation expense associated with modifications and terminations made to the Company’s change-in-control plans in March 2015, February 2016, and February 2017, is shown in the table below (in thousands):

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	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Stock-based compensation expense:
Stock-based compensation expense	$	23,857	$	22,433	$	43,845	42,245
Stock-based compensation expense related to change in control plans	10,300		16,845		23,508		30,899
Total non-cash stock-based compensation expense	$	34,157	$	39,278	$	67,353	$	73,144

Net cash proceeds from the exercise of Options were $0.4 million and $2.9 million for the three and six months ended June 30, 2018, respectively, and $3.0 million and $4.5 million for the three and six months ended June 30, 2017, respectively.

Stock Option, Restricted Stock and Restricted Stock Unit Activity

There were no Options granted during the three and six months ended June 30, 2018. The following table summarizes stock option activity (for previously granted Options) for the six months ended June 30, 2018 (in thousands, except per share amounts):

Stock Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2017	114		$	29.24	0.4	$	21,476
Granted	—		—		0	—
Exercised	(99	)	29.54		0	—
Forfeited or expired	—		—		0	—
Outstanding at June 30, 2018	15		$	27.24	0.2	$	3,377
Exercisable at June 30, 2018	15		$	27.24	0.2	$	3,377

The aggregate intrinsic value of Options in the table above represents total pretax intrinsic value (i.e., the difference between the closing price of Common Stock on the last trading day of the reporting period and the exercise price times the number of shares) that would have been received by the option holders had all option holders exercised their Options on June 30, 2018. The amount of the aggregate intrinsic value changes, based on the fair value of Common Stock. Total intrinsic value of Options exercised was $3.4 million and $20.2 million for the three and six months ended June 30, 2018, respectively, and $18.2 million and $28.1 million for the three and six months ended June 30, 2017, respectively. All previously granted Options were fully vested as of December 31, 2011 and, therefore, no Options vested during the three and six months ended June 30, 2018 and June 30, 2017, respectively.

As of June 30, 2018, there were no unrecognized compensation costs related to non-vested Options expected to be recognized as all previously granted Options were fully vested as of December 31, 2011.

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The following table summarizes restricted stock awards and restricted stock unit awards granted during the three months ended June 30, 2018 and June 30, 2017 (in thousands):

	For the Three Months Ended June 30,
	2018	2017
Restricted Stock Awards:
Non-Employee Directors	2	4
Senior Officers	25	—
Total Restricted Stock Awards Granted	27	4
Restricted Stock Unit Awards:
Non-Senior Officers and Other Employees	27	13
Total Restricted Stock Unit Awards Granted	27	13

The following table summarizes the activity pertaining to Common Stock previously issued under restricted stock awards and restricted stock unit awards which vested during the three months ended June 30, 2018 and June 30, 2017 (in thousands):

	For the Six Months Ended June 30,
	2018				2017
	Shares Vested	Shares Retained (1)	Amount Retained (in millions) (1)	Shares Issued	Shares Vested	Shares Retained (1)	Amount Retained (in millions) (1)	Shares Issued
Restricted Stock Awards:
Non-Employee Directors	3	—	$0.0	3	29	—	$0.0	29
Senior Officers	396	150	34.0	246	278	109	21.2	169
Non-Senior Officers and Other Employees	5	2	0.3	3	2	1	0.1	1
Total Restricted Stock Awards	404	152	$34.3	252	309	110	$21.3	199
Restricted Stock Unit Awards:
Non-Senior Officers and Other Employees	224	76	$17.5	148	187	69	$13.4	118
Total Restricted Stock Unit Awards	224	76	$17.5	148	187	69	$13.4	118

______________________________

(1) During the six months ended June 30, 2018 and June 30, 2017, of the shares released, 228,098 and 178,564 shares, respectively, were retained by Ultimate and not issued, in satisfaction of withholding payroll tax requirements applicable to the payment of such awards.

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The following table summarizes restricted stock award and restricted stock unit activity for the six months ended June 30, 2018 (in thousands, except per share values):

	Restricted Stock Awards				Restricted Stock Unit Awards
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017	882		$	179.95	630		$	170.73
Granted	230		231.65		322		230.79
Vested and released	(405	)	170.23		(224	)	175.06
Forfeited or expired	—		—		(20	)	203.34
Outstanding at June 30, 2018	707		$	202.33	708		$	208.62

As of June 30, 2018, $109.6 million of total unrecognized compensation costs related to non-vested restricted stock awards were expected to be recognized over a weighted average period of 1.71 years. As of June 30, 2018, $113.0 million of total unrecognized compensation costs related to non-vested restricted stock unit awards were expected to be recognized over a weighted average period of 1.93 years.

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11.     Deferred Revenue and Performance Obligations

During the three months ended June 30, 2018 and 2017, $150.5 million and $124.7 million, respectively, of recurring revenues recognized, were included in the deferred revenue balances at the beginning of the respective periods. During the six months ended June 30, 2018 and 2017, $159.0 million and $132.3 million, respectively, of recurring revenues recognized, were included in the deferred revenue balances at the beginning of the respective periods. Services revenues recognized in the same periods from deferred revenue balances at the beginning of the respective periods were not material.

Transaction Price Allocated to the Remaining Performance Obligations

As of June 30, 2018, approximately $1.7 billion of revenue is expected to be recognized from remaining SaaS performance obligations which includes the remaining period of their initial contract term as well as the remaining renewal periods under contract as of June 30, 2018. We expect to recognize revenue on approximately 47 percent of these remaining performance obligations over the next 12 months, with the balance recognized thereafter. Revenue from remaining performance obligations for services as of June 30, 2018 was not material.

12. Immaterial Correction of Prior Period Financial Statements

As described in Note 17 in our Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 26, 2018, we revalued our net deferred tax assets to implement the federal Tax Cuts and Jobs Act (the "Tax Act") which the federal government passed on December 22, 2017. During the year ended December 31, 2017, immaterial errors were discovered in prior periods in the reporting of the GAAP income tax expense associated with the stock-based compensation for certain of our executive officers. While we have concluded that the impact of these errors on our previously-issued unaudited condensed consolidated statements of income and unaudited condensed consolidated statements of comprehensive income was not material, we have revised our previously-reported unaudited condensed consolidated statements of income and unaudited condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2017. The revisions include a decrease to GAAP net income for the three months ended June 30, 2017 of $0.5 million, as a result of the increase to our GAAP income tax expense for the second quarter of 2017, and a decrease to GAAP net income for the six months ended June 30, 2017 of $0.6 million. For the second quarter of 2017, there was no impact on previously reported cash flows, pre-tax income and non-GAAP results. The revisions to our unaudited condensed consolidated statements of income and unaudited condensed consolidated statements of comprehensiveincome for the three and six months ended June 30, 2017 are as follows (in thousands, except per share amounts):

Unaudited Condensed Consolidated Statements of Income	For the Three Months Ended						For the Six Months Ended
	June 30, 2017						June 30, 2017
	As Reported			As Revised			As Reported		As Revised
Income before income taxes	$	6,870		$	6,870		$	9,885	$	9,885
(Provision) benefit for income taxes	(1,868		)	(2,341		)	2,451		1,884
Net income	$	5,002		$	4,529		$	12,336	$	11,769
Net income per share:
Basic	$	0.17		$	0.15		$	0.42	$	0.40
Diluted	$	0.16		$	0.15		$	0.40	$	0.38
Unaudited Condensed Consolidated Statement of Comprehensive Income
Net income	$	5,002		$	4,529		$	12,336	$	11,769
Other comprehensive income, net of tax	388			388			412		412
Comprehensive income	$	5,390		$	4,917		$	12,748	$	12,181

13. Subsequent Event

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On July 27, 2018, Ultimate acquired PeopleDoc SAS, a simplified joint-stock company (société par actions simplifiée) organized under the laws of France ("PeopleDoc"). Ultimate Software acquired PeopleDoc for approximately $300 million, using a combination of cash and shares of Ultimate Software common stock, with approximately $75 million of cash paid at the closing, 560,150 shares of Common Stock delivered at the closing, 43,522 restricted stock awards granted at the closing, 35,295 shares of Common Stock to be delivered at future dates and approximately $50 million of cash to be paid 12 months after the closing date. On August 5, 2018, our Board of Directors approved an Addendum to our Plan and a form of Restricted Stock Unit Award Agreement to allow the granting of Awards to French employees of PeopleDoc.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the financial condition and results of operations of The Ultimate Software Group, Inc. and its subsidiaries (“Ultimate,” “we,” “us,” or “our”) should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”) and in conjunction with Ultimate’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2018 (the “Form 10-K”).

Business Overview

Ultimate Software is a leading provider of cloud-based human capital management solutions, often referred to as human capital management (“HCM”). Ultimate's UltiPro product suite (“UltiPro”) is a comprehensive, engaging solution that has human resources ("HR"), payroll, and benefits management at its core and includes global people management, available in 14 languages with more than 37 country-specific localizations. The solution is delivered via software-as-a-service ("SaaS"), now more commonly known as the cloud computing model, to organizations based in the United States and Canada, including those with global workforces. As of June 30, 2018, we had approximately 4,400 organizations as customers and approximately 40 million people records in our HCM cloud. We attained our leadership position, we believe, through our focus on unified HCM, people-centric product design, cloud technology, and strong customer relationships.

UltiPro is designed to deliver the functionality businesses need to manage the complete employee life cycle from recruitment to retirement and to facilitate high levels of employee engagement with their employers and one another. The solution includes unified feature sets for recruiting and onboarding, HR management and compliance, benefits management and online enrollment, payroll, performance management, employee engagement surveying, compensation management with salary planning, budgeting, incentive award planning, succession management, learning management, reporting and analytical decision-making and predictive tools, and time capture, scheduling, attendance tracking, and absence accruals. UltiPro has role-based features for HR professionals, executives, managers, administrators, and employees whether they are in or out of the office, including access to business-critical information on mobile devices such as the iPhone, iPad, and other smartphones and tablets.

Our customers tell us that UltiPro helps them to streamline talent management, HR and payroll processes to significantly reduce administrative and operational costs while also empowering them to manage the talent in their workforces more strategically. UltiPro provides our customers tools to analyze workforce trends for better decision making, identify high-performing talent within their organizations, predict who future high-performers and retention risks will be with a high degree of accuracy, find critical information quickly, and perform routine business activities efficiently.

Our cloud offering of UltiPro provides web-based access to comprehensive HCM functionality for organizations that want to simplify delivery and support of their business applications. We have found that UltiPro is attractive to companies that want to focus on their core competencies to increase sales and profits while we supply and manage the hardware, infrastructure, ongoing maintenance, and backup services for our customers.

We market our UltiPro solutions primarily to enterprise companies, which we define as organizations with 2,501 or more employees, including those with 10,000 employees and larger; mid-market companies, which we define as those having 501-2,500 employees; and strategic market companies, which we define as those having 100-500 employees. Our mid-market and strategic customers have access to nearly all the features that our larger enterprise companies have through UltiPro, plus a bundled services package. Since many companies in the mid- and strategic markets do not have information technology (“IT”) staff on their premises to help with system deployment or ongoing management issues, we have created a bundled services package to give these customers a high degree of convenience by handling system configuration, business rules, and other situations for them “behind the scenes.” UltiPro is marketed primarily through our enterprise, mid-market, and strategic direct sales teams.

In addition to UltiPro's HCM functionality, our customers have the option to purchase a number of additional capabilities on a per-employee-per-month (“PEPM”) basis, which are available to enhance and complement the core

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functionality of UltiPro and which are based on the particular business needs of our customers. These optional UltiPro capabilities currently include (i) the talent acquisition suite (recruitment and onboarding); (ii) the talent management suite (performance management, talent predictors, and succession management); (iii) learning management; (iv) employee engagement surveys; (v) compensation management; (vi) benefits enrollment; (vii) time management; (viii) payment services; (ix) wage attachments; (x) UltiPro ACA toolkit and (xi) other optional features (collectively, “Optional Capabilities”).

All Optional Capabilities are priced solely on a subscription basis. Some of the Optional Capabilities are available to enterprise, mid-market and strategic market customers while others are available exclusively to either enterprise, mid-market or strategic market customers, and availability is based on the needs of the respective customers, the number of their employees and the complexity of their HCM environment.

The key drivers of our business are (i) growth in recurring revenues; (ii) operating income, excluding non-cash stock-based compensation, amortization of acquired intangibles, and transaction costs for business combinations ("Non-GAAP Operating Income"); and (iii) retention of our customers once our solutions are sold (“Customer Retention”). For the three months ended June 30, 2018, our (i) recurring revenues grew by 22.7%, compared with the same period in 2017, and (ii) Non-GAAP Operating Income was $56.2 million, or 20.7% of total revenues, as compared with $47.0 million, or 20.9% of total revenues, for the same period in 2017. For the six months ended June 30, 2018, our (i) recurring revenues grew by 23.6%, compared with the same period in 2017, and (ii) Non-GAAP Operating Income was $112.2 million or 20.5% of total revenues, as compared with $84.7 million, or 18.7% of total revenues, for the same period in 2017. As of June 30, 2018, our Customer Retention, on a trailing twelve-month basis, was approximately 96% for our recurring revenue cloud customer base. See “Non-GAAP Financial Measures” below.

Our ability to achieve significant revenue growth in the future will depend upon the success of our direct sales force and our ability to adapt our sales efforts to address the evolving markets for our products and services. We provide our sales personnel with comprehensive and continuing training with respect to technology and market place developments. Aside from sales commissions, we also provide various incentives to encourage our sales representatives, including stock-based compensation awards based upon performance.

The HCM market is intensely competitive. We address competitive pressures through improvements and enhancements to our products and services, the development of additional features of UltiPro and a comprehensive marketing team and process that distinguishes Ultimate and its products from the competition.  Our focus on customer service, which enables us to maintain a high Customer Retention rate, also helps us address competitive pressures.

As our business has grown, we have become increasingly subject to the risks arising from adverse changes in domestic and global economic conditions. If general economic conditions were to deteriorate, we may experience delays in our sales cycles, increased pressure from prospective customers to offer discounts and increased pressure from existing customers to renew expiring recurring revenue agreements for lower amounts. We address continuing economic pressures by, among other things, efforts to control growth of our operating expenses through the monitoring of controllable costs and vendor negotiations.

Ultimate has two primary revenue sources: recurring revenues and services revenues. The primary component of recurring revenues is subscription revenues from our cloud offering of UltiPro. The majority of services revenues are derived from implementation consulting services.

As cloud units are sold, the recurring revenue backlog associated with UltiPro grows, enhancing the predictability of future revenue streams. Cloud revenues include ongoing monthly subscription fees, priced on a PEPM basis. Revenue recognition for our recurring revenue stream is typically triggered when the customer processes its first payroll using UltiPro (or goes “Live”).

Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.  Ultimate’s critical accounting estimates, as discussed in "Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations," included in the Form 10-K, have not significantly changed with the exception of our revenue recognition policy due to the adoption of Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Topic 606”). See note 3 in our Notes to Unaudited Condensed Consolidated Financial Statements for further discussion on Topic 606.

Results of Operations

The following table sets forth the unaudited condensed consolidated statements of income data of Ultimate, as a percentage of total revenues, for the periods indicated:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Revenues:
Recurring	88.3	%	86.9	%	86.9	%	85.0	%
Services	11.7		13.1		13.1		15.0
Total revenues	100.0		100.0		100.0		100.0
Cost of revenues:
Recurring	24.6		23.4		23.6		22.6
Services	13.2		14.1		14.2		15.8
Total cost of revenues	37.8		37.5		37.8		38.4
Gross profit	62.2		62.5		62.2		61.6
Operating expenses:
Sales and marketing	24.4		29.8		25.1		30.1
Research and development	18.5		15.6		17.7		15.7
General and administrative	11.9		14.0		11.7		13.6
Total operating expenses	54.8		59.4		54.5		59.4
Operating income	7.4		3.1		7.7		2.2
Other income (expense):
Interest expense and other	0.1		(0.1	)	—		(0.1	)
Other income, net	0.3		—		0.1		0.1
Total other income (expense), net	0.4		(0.1	)	0.1		—
Income before income taxes	7.8		3.0		7.8		2.2
(Provision) benefit for income taxes	(2.6	)	(1.0	)	(1.5	)	0.5
Net income	5.2	%	2.0	%	6.3	%	2.7	%

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The following table sets forth the non-cash stock-based compensation expense resulting from stock-based arrangements that is recorded in our unaudited consolidated statements of income for the periods indicated (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Cost of recurring revenues	$	3,994	$	2,981	$	7,426	$	5,797
Cost of services revenues	2,362		1,935		4,735		3,924
Sales and marketing	17,074		19,785		33,411		37,196
Research and development	4,241		3,134		7,550		5,911
General and administrative	6,486		11,443		14,231		20,316
Total stock-based compensation expense	$	34,157	$	39,278	$	67,354	$	73,144

Revenues

Our revenues are derived from recurring revenues and services revenues.

Total revenues increased20.7% to $271.2 million for the three months ended June 30, 2018 from $224.7 million for the three months ended June 30, 2017 and 20.9% to $547.9 million for the six months ended June 30, 2018 from $453.2 million for the six months ended June 30, 2017.

Recurring revenues, primarily consisting of subscription-based SaaS revenues, increased22.7% to $239.5 million for the three months ended June 30, 2018, from $195.1 million for the three months ended June 30, 2017 and 23.6% to $476.0 million for the six months ended June 30, 2018, from $385.1 million for the six months ended June 30, 2017. The increases for the three and six months ended June 30, 2018 in recurring revenues, was primarily based on the revenue impact of incremental units sold to customers that have processed their first payroll using UltiPro (or gone "Live") since June 30, 2017, including the UltiPro core product and, to a lesser extent, Optional Capabilities of UltiPro. Cloud subscription-based SaaS revenues are recognized as recurring revenues over the initial contract period, as those services are delivered, typically commencing with the Live date.

Our annual revenue customer retention rate for our recurring revenue cloud customer base was approximately 96% as of June 30, 2018 (calculated on a 12-month rolling basis), which is consistent with the same period of the prior year. The impact on recurring revenues of UltiPro units sold has been a gradual increase from one reporting period to the next, based on the incremental effect of revenue recognition of the subscription fees over the terms of the related contracts as sales in backlog go Live.

Services revenues increased7.3% to $31.7 million for the three months ended June 30, 2018 from $29.5 million for the three months ended June 30, 2017 and 5.6% to $71.9 million for the six months ended June 30, 2018 from $68.1 million for the six months ended June 30, 2017. The increase in services revenues for the three month period was primarily due to additional implementation revenues to support increased sales, from both Ultimate's implementation consultants as well as third party implementation partners. The increase in services revenues for the six month period was mainly attributable to additional implementation revenues to support increased sales, from both Ultimate's implementation consultants as well as third party implementation partners and, to a lesser extent, an increase in other services revenues mainly attributable to our print services for certain customers.

Cost of Revenues

Cost of revenues consists of the costs of recurring and services revenues. Cost of recurring revenues primarily consists of costs to provide customer support services ("Customer Support") to cloud customers, the cost of providing periodic updates and the cost of recurring subscription revenues, including hosting data center costs and, to a lesser extent, amortization of capitalized software. Cost of services revenues primarily consists of costs to provide implementation services and training to Ultimate’s customers and, to a lesser extent, costs related to sales of payroll-related forms, time clocks and print services, as well as costs associated with certain client reimbursable out-of-pocket expenses.

Total cost of revenues increased21.7% to $102.6 million for the three months ended June 30, 2018, from $84.3 million for the three months ended June 30, 2017 and 19.2% to $207.3 million for the six months ended June 30, 2018, from $174.0 million for the six months ended June 30, 2017.

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Cost of recurring revenues increased26.8% to $66.6 million for the three months ended June 30, 2018 from $52.5 million for the three months ended June 30, 2017 and 26.2% to $129.5 million for the six months ended June 30, 2018 from $102.6 million for the six months ended June 30, 2017. The increases in the cost of recurring revenues for the three- and six-month periods were primarily due to increases in both cloud costs and Customer Support costs, as described below, and, to a lesser extent, increased amortization of capitalized software costs from the development costs related to a development project to be sold in the future as a cloud product only (the "Development Project") which resulted from product modules becoming available for their intended use since June 30, 2017.

• For the three and six months ended June 30, 2018, the increases in cloud costs was principally as a result of the growth in cloud operations from increased sales, including increased labor costs and, to a lesser extent, increased variable costs associated with our cloud operations.

• The increases in Customer Support costs for the three and six months ended June 30, 2018 were primarily due to higher labor costs commensurate with the growth in the number of cloud customers serviced.

Cost of services revenues increased13.4% to $35.9 million for the three months ended June 30, 2018 from $31.7 million for the three months ended June 30, 2017 and 9.1% to $77.9 million for the six months ended June 30, 2018 from $71.3 million for the six months ended June 30, 2017. The increases in cost of services revenues for the three- and six-month periods were primarily due to the increased costs of implementation, including higher labor and related costs, and, to a lesser extent, the increased use of third-party implementation partners.

Sales and Marketing

Sales and marketing expenses consist primarily of salaries and benefits, sales commissions, travel and promotional expenses, and facility and communication costs for direct sales offices, as well as advertising and marketing costs. Sales and marketing expenses decreased1.2% to $66.2 million for the three months ended June 30, 2018 from $67.0 million for the three months ended June 30, 2017 and increased 0.8% to $137.4 million for the six months ended June 30, 2018 from $136.4 million for the six months ended June 30, 2017. The decrease in the sales and marketing expenses for the three months ended June 30, 2018 was primarily due to lower sales commissions resulting from the adoption of Topic 606 due to the longer amortization period under this new standard, partially offset by increased labor and related costs (including the impact of an increase in sales personnel) and increased advertising and marketing expenses. See Note 3 in our Notes to Unaudited Condensed Consolidated Financial Statements for more on Topic 606. The increase in sales and marketing expenses for the six months ended June 30, 2018 was primarily due to increased labor and related costs (including the impact of an increase in sales personnel) and, to a lesser extent, higher advertising and marketing expenses, partially offset by lower sales commissions resulting from the adoption of Topic 606 due to the longer amortization period under this new standard. For the three and six months ended June 30, 2018, there was a decrease in stock based compensation expense for a portion of certain non-cash, stock-based compensation relating to one-time grants of restricted stock awards given to certain officers whose rights to receive cash payments upon a change in control of Ultimate were terminated due to the full vesting of those restricted stock awards which were granted in February 2015.

Research and Development

Research and development expenses consist primarily of software development personnel costs. Research and development expenses increased42.9% to $50.0 million for the three months ended June 30, 2018 from $35.0 million for the three months ended June 30, 2017 and 36.3% to $97.0 million for the six months ended June 30, 2018 from $71.2 million for the six months ended June 30, 2017. The increases in research and development expenses for the three- and six-month periods were principally due to higher labor and related costs associated with the ongoing development of UltiPro and Optional Capabilities, including the impact of increased personnel costs (predominantly from additional headcount), net of capitalized labor costs. During the three months ended June 30, 2018 and June 30, 2017, we capitalized a total of $12.8 million (including $0.8 million in non-cash stock-based compensation) and $13.6 million (including $1.0 million in non-cash stock-based compensation), respectively, for internal-use software costs from the Development Project. During the six months ended June 30, 2018 and June 30, 2017, we capitalized a total of $27.4 million (including $1.8 million in non-cash stock-based compensation) and $26.2 million (including $2.0 million in non-cash stock-based compensation), respectively, for the Development Project. The capitalized costs for this Development Project were from direct labor costs and, to a lesser extent, third party consulting fees for the three and six months ended June 30, 2018. During the three and six months ended June 30, 2018, there were $2.1 million and $3.9 million respectively, of amortization associated with certain product modules of the Development Project which were ready for their intended use. The amortization of capitalized software is included in cost of recurring revenues.

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General and Administrative

General and administrative expenses consist primarily of salaries and benefits of executive, administrative and financial personnel, as well as facility costs, external professional fees and the provision for doubtful accounts. General and administrative expenses increased2.5% to $32.3 million for the three months ended June 30, 2018 from $31.5 million for the three months ended June 30, 2017 and 3.8% to $64.0 million for the six months ended June 30, 2018 from $61.7 million for the six months ended June 30, 2017. The increases in general and administrative expenses for the three- and six-month periods were primarily due to higher labor and related costs, including increased personnel to support Ultimate's growth in operations, increased professional fees and an increase in the provision for doubtful accounts.

Income Taxes

Income taxes for the three and six months ended June 30, 2018 included a consolidated tax provision of $7.1 million and $8.4 million, respectively. The effective income tax rate for the three and six months ended June 30, 2018 was 34.2% and 19.5%, respectively. Income taxes for the three and six months ended June 30, 2017 included a consolidated tax provision of $2.3 million and a consolidated tax benefit of $1.9 million, respectively. The effective income tax rate for the three and six months ended June 30, 2017 was 34.2% and (19.1%), respectively. The effective income tax rate for the three and six months ended June 30, 2018 included the reduction in the federal statutory tax rate from 35% to 21% effective January 1, 2018 due to the passing of the federal Tax Cuts and Jobs Act by the federal government on December 22, 2017. Although the statutory tax rate decreased, the increase in the effective income tax rate for the six months ended June 30, 2018 compared to June 30, 2017 is primarily attributable to a significantly higher pre-tax net income for the six months ended June 30, 2018 and lower excess tax benefit from the application of ASU 2016-09. Consequentially, the impact (benefit) to the effective tax rate of the excess benefits resulting from the application of ASU 2016-09 was significantly lower for the six months ended June 30, 2018.

For the three and six months ended June 30, 2018, we realized an excess tax benefit of $8.1 million and $9.0 million, respectively, from the application of ASU 2016-09. For the twelve months ended December 31, 2017, we realized an excess tax benefit of $20.9 million from the application of ASU 2016-09.

At December 31, 2017, we had approximately $135.0 million of net operating loss carryforwards for federal income tax reporting purposes available to offset future taxable income. 

The carryforwards expire from 2018 through 2035, for federal and state income tax reporting purposes. Utilization of such net operating loss carryforwards may be limited as a result of cumulative ownership changes in Ultimate’s equity instruments due to ownership change provisions of Internal Revenue Code Section 382 and similar state law provisions. As of June 30, 2018, we are under an ongoing Internal Revenue Service examination of our U.S. Federal income tax return for the year ended December 31, 2014.

As of December 31, 2017, we had $8.9 million of gross unrecognized tax benefits resulting from a research and development credit attributable to the years 1998 through 2017, that if recognized would affect the annual effective tax rate. It is often difficult to predict the final outcome of any particular uncertain tax position. Consequently, management will adjust the amount of the unrecognized tax benefits upon expiration of the statute of limitations for the effected years or when new facts or circumstances arise that would support an adjustment.

We recognized $29.9 million of deferred tax assets, net of deferred tax liabilities, as of June 30, 2018. If estimates of taxable income are decreased, a valuation allowance may need to be provided for some or all deferred tax assets, which will cause an increase in income tax expense. 

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the accounting required. The Company, in accordance with SAB 118, will record and revise reasonable estimates of the income tax effects of the Tax Act in the first period after data or future guidance is available. For the current and subsequent tax years, we will continue to assert the position of indefinite re-investment of earnings in Canada and Singapore. We will apply the exception to the comprehensive recognition of deferred income taxes to the undistributed earnings of our foreign subsidiaries, The Ultimate Software Group of Canada, Inc. and The Ultimate Software Group of Asia, PTE. LTD. The indefinite reinvestment criteria includes state taxes and withholding taxes that arise from repatriation under IRC Section 965(n), which are not material.

Liquidity and Capital Resources

In recent years, we have funded operations primarily from cash flows generated from operations.

As of June 30, 2018, we had $188.1 million in cash, cash equivalents and short-term corporate investments in marketable securities (collectively, "Cash"), reflecting a net increase of $23.0 million since December 31, 2017.  The total increase in Cash for the six month period was primarily from cash provided by operations of $118.1 million and proceeds from the issuances of Common Stock from employee and non-employee director stock option exercises of $2.9 million, partially offset by cash used to settle the employee tax withholding liability for vesting of restricted stock awards and restricted stock units of $51.8 million, cash purchases of property and equipment (including principal payments on financed equipment) of $44.3 million (which includes $25.6 million of capitalized labor costs and third party consulting fees, paid in cash, associated with the Development Project).

Our operating cash inflows primarily consist of payments received from our UltiPro customers. Our operating cash outflows primarily consist of cash we invest in personnel and infrastructure to support the anticipated growth of our business, payments to vendors directly related to our services, payments under arrangements with third party vendors who provide hosting infrastructure services in connection with UltiPro, related sales and marketing costs, costs of operations and systems development and programming costs. Net cash provided by operating activities increased $28.6 million during the six months ended June 30, 2018 to $118.1 million, as compared with $89.5 million for the six months ended June 30, 2017. This increase was primarily due to an increase in cash operating income (after adjusting for non-cash expenses) of $30.6 million, partially offset by decreased cash from working capital.

The net cash used in investing activities was $95.9 million for the six months ended June 30, 2018, as compared with a net cash outflow of $57.4 million for the six months ended June 30, 2017.  The increase of $38.5 million was primarily

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attributable to a net change in funds received from our customers using the UltiPro payment services offering (“UltiPro Payment Services”) of $21.9 million, and an increase in the purchases of marketable securities of $45.6 million (which includes purchases for the period of $164.9 million of funds held for customers being invested in marketable securities in addition to our corporate funds), partially offset by an increase in the maturities of marketable securities of $26.5 million (which includes the maturities for the period of $90.1 million of marketable securities originally purchased with funds held for customers in addition to our corporate funds). During the six months ended June 30, 2018, we capitalized software development costs related to the Development Project totaling $27.4 million (including $1.8 million from the non-cash impact of capitalized stock-based compensation expense), which was classified as property and equipment. We invest our customer funds in available for sale securities along with our corporate funds in accordance with our internal investment strategies. The portfolio predominantly consists of investment grade securities with long-term ratings of AAA and AA+ and short-term ratings A-1/P-1. Customer funds not invested in available for sale securities, temporarily held by us as a result of our UltiPro Payment Services, are invested in U.S. Government money market funds that invest in short-term, high quality money market instruments which consist of U.S. Treasury and U.S. Government Agency obligations and repurchase agreements collateralized by such obligations. The money market funds are rated AAA by Standard & Poor's and Aaa by Moody's. Any residual customer funds are held primarily in our bank accounts.

Net cash provided by financing activities was $7.5 million for the six months ended June 30, 2018, as compared with $8.1 million net cash used in financing activities for the six months ended June 30, 2017. The $15.6 million increase in cash provided by financing activities was primarily related to a net change of $36.2 million in customer funds obligations for our UltiPro Payment Services, partially offset by a decrease of $1.6 million in cash proceeds from the issuance of our Common Stock for stock option exercises, an increase of $17.0 million in cash used to settle employee tax withholding liabilities upon the vesting of their restricted stock awards and restricted stock unit awards, and an increase in cash used for the payments of other liabilities of $1.9 million.

Days sales outstanding (or "DSOs"), calculated on a trailing three-month basis, as of June 30, 2018 were 66 days as compared with 68 days as of June 30, 2017.

Deferred revenues were $214.4 million at June 30, 2018, as compared with $198.9 million at December 31, 2017. The increase of $15.6 million in deferred revenues was primarily due to incremental sales.

We believe that cash and cash equivalents, investments in marketable securities, equipment financing, other borrowings and cash generated from operations will be sufficient to fund our operations for at least the next 12 months. This belief is based upon, among other factors, management’s expectations for future revenue growth, controlled expenses and collections of accounts receivable.

As of June 30, 2018, we did not have any material commitments for capital expenditures, except for anticipated capitalized costs associated with the Development Project.

Off-Balance Sheet Arrangements

We do not, and, as of June 30, 2018, we did not, have any off-balance sheet arrangements (as that term is defined in applicable SEC rules) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Quarterly Fluctuations

Our quarterly revenues and operating results have varied significantly in the past and are likely to vary substantially from quarter to quarter in the future. Our operating results may fluctuate as a result of a number of factors, including, but not limited to, increased expenses (especially as they relate to product development, sales and marketing and the use of third-party consultants), timing of product releases, increased competition, variations in the mix of revenues, announcements of new products by us or our competitors and capital spending patterns of our customers. We establish our expenditure levels based upon our expectations as to future revenues, and, if revenue levels are below expectations, expenses can be disproportionately high. A drop in near term demand for our products could significantly affect both revenues and profits in any quarter. Operating results achieved in previous fiscal quarters are not necessarily indicative of operating results for the full fiscal year or for any future periods. As a result of these factors, there can be no assurance that we will be able to maintain profitability on a quarterly basis. We believe that, due to the underlying factors for quarterly fluctuations, quarter-to-quarter comparisons of Ultimate’s operations are not necessarily meaningful and that such comparisons should not be relied upon as indications of future performance.

Forward-Looking Statements

The foregoing Management’s Discussion and Analysis of Financial Condition and Results of Operations and the following Quantitative and Qualitative Disclosures about Market Risk contain certain forward-looking statements within the

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meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent our expectations or beliefs, including, but not limited to, our expectations concerning our operations and financial performance and condition. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that are difficult to predict. Ultimate’s actual results could differ materially from those contained in the forward-looking statements due to risks and uncertainties associated with fluctuations in our quarterly operating results, concentration of our product offerings, development risks involved with new products and technologies, competition, our contractual relationships with third parties, 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 SEC. Other factors that may cause such differences include, but are not limited to, those discussed in this Form 10-Q and the Form 10-K, including the risk factors set forth in "Part I, Item 1A. Risk Factors" of the Form 10-K. Ultimate undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

Item 10 (e) of Regulation S-K, "Use of Non-GAAP Financial Measures in Commission Filings," defines and prescribes the use of non-GAAP financial information. Our measure of Non-GAAP Operating Income, which excludes non-cash stock-based compensation, amortization of acquired intangibles and transaction costs related to business combinations, meets the definition of a non-GAAP financial measure.

We believe that this non-GAAP measure of financial results provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Management uses this non-GAAP result to compare our performance to that of prior periods for trend analyses, for purposes of determining executive incentive compensation, and for budget and planning purposes. This measure is used in monthly financial reports prepared for management and in quarterly financial reports presented to our Board of Directors. This measure may be different from non-GAAP financial measures used by other companies.

This non-GAAP measure should not be considered in isolation or as an alternative to such measures determined in accordance with GAAP. The principal limitation of this non-GAAP financial measure is that it excludes significant expenses that are required by GAAP to be recorded. In addition, it is subject to inherent limitations as it reflects the exercise of judgment by management about which expenses are excluded from the non-GAAP financial measure.

To compensate for these limitations, we present our non-GAAP financial measure in connection with our GAAP result. We strongly urge investors and potential investors in our securities to review the reconciliation of our non-GAAP financial measure to the comparable GAAP financial measure that is included in the table below and not to rely on any single financial measure to evaluate its business.

We exclude the following items from the non-GAAP financial measure, Non-GAAP Operating Income (and the related non-GAAP operating income, as a percentage of total revenue (or non-GAAP operating margin)), as appropriate:

Stock-based compensation expense. Our non-GAAP financial measure excludes stock-based compensation expense, which consists of expenses for stock options and stock and stock unit awards recorded in accordance with ASC 718, “Compensation - Stock Compensation.” For the three and six months ended June 30, 2018, stock-based compensation expense was $34.2 million and $67.4 million, respectively, on a pre-tax basis. For the three and six months ended June 30, 2017, stock-based compensation expense was $39.3 million and $73.1 million, respectively, on a pre-tax basis. Stock-based compensation expense is excluded from the non-GAAP financial measures because it is a non-cash expense that we do not consider part of ongoing operations when assessing financial performance. We believe 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. For the three and six months ended June 30, 2018, the amortization of acquired intangible assets was $0.8 million and $1.6 million, respectively. For the three and six months ended June 30, 2017, the amortization of acquired intangible assets was $0.8 million and $1.6 million, respectively. 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. We believe 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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Transaction costs related to business combinations. In accordance with GAAP, operating expenses include transaction costs for third-party professional services received in connection with business combinations. As we do not acquire or dispose of businesses on a predictable basis, the terms of each business combination are unique and can vary significantly from other business combinations. Significant expenses can be incurred in connection with a business combination that we would not have otherwise incurred in the periods presented as part of our continuing operations. For both the three and six months ended June 30, 2018, the transactions costs incurred related to business combinations was $1.1 million. There were no transaction costs incurred related to business combinations for the three and six months ended June 30, 2017. Transaction costs related to business combinations are excluded from Ultimate's non-GAAP financial measures because it is an 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 business combination histories.

The following table reconciles GAAP operating income with non-GAAP operating income (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2018			2017			2018			2017
Non-GAAP operating income reconciliation:
Operating income	$	20,109		$	6,954		$	42,198		$	10,023
Operating income, as a % of total revenues	7.4		%	3.1		%	7.7		%	2.2		%
Add back:
Non-cash stock-based compensation expense	34,157			39,278			67,353			73,144
Non-cash amortization of acquired intangible assets	783			776			1,569			1,556
Transaction costs related to business combinations (1)	1,120			—			1,120			—
Non-GAAP operating income	$	56,169		$	47,008		$	112,241		$	84,723
Non-GAAP operating income, as a % of total revenues	20.7		%	20.9		%	20.5		%	18.7		%

(1) See Note 13. Subsequent Events in our Notes to Unaudited Condensed Consolidated Financial Statements for further discussion.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of Ultimate’s operations, we are exposed to certain market risks, primarily interest rate risk and foreign currency risk. Risks that are either non-financial or non-quantifiable, such as political, economic, tax, or regulatory risks, are not included in the following assessment of our market risks.

Interest Rate Risk. Ultimate is subject to financial market risks, including changes in interest rates which influence the valuations of our fixed income investment portfolio. Changes in interest rates could also impact Ultimate’s anticipated interest income from interest-bearing cash accounts, or cash equivalents and investments in marketable securities. We manage financial market risks, including interest rate risks, in accordance with our investment guideline objectives, including:

• Maximum safety of principal;

• Maintenance of appropriate liquidity for regular cash needs;

• Maximum yields in relationship to guidelines and market conditions;

• Diversification of risks; and

• Fiduciary control of all investments.

Ultimate targets its fixed income investment portfolio to have maturities of 24 months or less. Investments are held to enhance the preservation of capital and not for trading purposes.

Cash equivalents consist of money market accounts with original maturities of less than three months. Short-term investments include obligations of U.S. government agencies, asset-backed securities and corporate debt securities. Corporate debt securities include commercial paper which, according to Ultimate’s investment guidelines, must carry minimum short-term ratings of P-1 by Moody’s Investor Service, Inc. (“Moody’s”) and A-1 by Standard & Poor’s Ratings Service, a Division of The McGraw-Hill Companies, Inc. (“S&P”). Other corporate debt obligations must carry a minimum rating of A-2 by Moody’s or A by S&P. Asset-backed securities must carry a minimum AAA rating by Moody’s and S&P with a maximum average life of two years at the time of purchase.

As of June 30, 2018, total corporate investments in available-for-sale marketable securities were $3.3 million. As of June 30, 2018, total investments with customer funds in available-for-sale marketable securities were $283.6 million.

As of June 30, 2018, virtually all of the investments in Ultimate’s corporate portfolio, and portfolio of investments with customer funds, were at fixed rates (with a weighted average interest rate of 2.4% and 2.2% per annum, respectively).

To illustrate the potential impact of changes in interest rates, Ultimate has performed an analysis based on its June 30, 2018 unaudited condensed consolidated balance sheet and assuming no changes in its investments.  Under this analysis, an immediate and sustained 100 basis point increase in the various base rates would result in a decrease in the fair value of Ultimate’s corporate portfolio of approximately $17 thousand over the next 12 months and a decrease in the fair value of Ultimate's portfolio of investments with customer funds of approximately $2.0 million over the next 12 months. An immediate and sustained 100 basis point decrease in the various base rates would result in an increase in the fair value of Ultimate’s corporate portfolio of approximately $17 thousand over the next 12 months and an increase in the fair value of Ultimate's portfolio of investments with customer funds of approximately $2.0 million over the next 12 months.

Foreign Currency Risk. Ultimate has foreign currency risks related to its revenue and operating expenses denominated in currencies other than the U.S. dollar. Management does not believe movements in the foreign currencies in which Ultimate transacts business will significantly affect future net income.

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ITEM 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Ultimate carried out an evaluation, under the supervision and with the participation of Ultimate’s management, including the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), of the effectiveness of the design and operation of Ultimate’s disclosure controls and procedures as of the end of the period covered by this Form 10-Q pursuant to Rule 13a-15(b) under the Exchange Act. Based on that evaluation, Ultimate’s management, including the CEO and CFO, concluded that, as of June 30, 2018, Ultimate’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in Ultimate’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Ultimate’s disclosure controls and procedures were designed to provide reasonable assurance as to the achievement of these objectives. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and thus has inherent limitations. Therefore, even those systems determined to be effective can only provide reasonable assurance as to the achievement of their objectives.

(b) Changes in internal control over financial reporting. There have been no changes during the quarter ended June 30, 2018 in Ultimate’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Ultimate’s internal control over financial reporting. Effective January 1, 2018, we adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (“Topic 606”). Although Topic 606 is expected to have an immaterial impact on our revenues, we did implement changes to our processes related to revenue recognition, deferred contract costs and the control activities within them. These included the development of new policies based on the five-step model provided in Topic 606, ongoing contract review requirements, and gathering of information provided for disclosures.

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PART II – OTHER INFORMATION

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchases.

The number of shares of Common Stock repurchased by us during the three months ended June 30, 2018 are indicated below:

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 1 - 30, 2018	—	$	—	4,657,995	1,342,005
May 1 - 31, 2018	5,374 (1)	$	254.53	4,657,995	1,342,005
June 1 - 30, 2018	231 (1)	$	257.31	4,657,995	1,342,005
__________________
(1) Represents shares of Common Stock that were acquired by us at the fair market value of the Common Stock as of the period stated, in connection with the satisfaction of our employees' tax withholding liability resulting from the vesting of restricted stock holdings.
(2) Under a stock repurchase plan originally announced on October 30, 2000, and subsequently amended from time to time, Ultimate is authorized to purchase up to 6,000,000 shares of its Common Stock. As of June 30, 2018, Ultimate had purchased 4,657,995 shares of Common Stock under our stock repurchase plan, with 1,342,005 shares being available for repurchase in the future. There were no purchases of Common Stock under the stock repurchase plan for the three months ended June 30, 2018.

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ITEM 6. Exhibits

Number	Description
10.1	French Addendum to the Ultimate Software Group, Inc. Amended and Restated 2005 Equity and Incentive Plan for Restricted Stock Unit Awards Adopted on May 14, 2018 and to the Form of Restricted Stock Unit Award Agreement
10.2	Restricted Stock Unit Award Agreement
31.1	Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended*
31.2	Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended*
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended*
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended*
101.1	Interactive Data Files pursuant to Rule 405 of Regulation S-T: (i) Unaudited Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017, (ii) Unaudited Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2018 and June 30, 2017, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2018 and June 30, 2017, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and June 30, 2017 and (v) Notes to Unaudited Condensed Consolidated Financial Statements.*

____________________

* Filed herewith

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		The Ultimate Software Group, Inc.
Date:	August 8, 2018	By:	/s/ Felicia Alvaro
			Executive Vice President, Chief Financial Officer and Treasurer (Authorized Signatory and Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

FRENCH ADDENDUM

TO THE ULTIMATE SOFTWARE GROUP, INC. AMENDED AND RESTATED

2005 EQUITY AND INCENTIVE PLAN FOR RESTRICTED STOCK UNIT

AWARDS ADOPTED ON MAY 14, 2018 AND TO THE FORM OF

RESTRICTED STOCK UNIT AWARD AGREEMENTOR

1. Purpose

This Addendum (this “French Addendum”) modifies the terms and conditions of the 2005 Equity and Incentive Plan of The Ultimate Software Group, Inc. (the “Company”) as amended and restated as of May 14, 2018, together with the form of Ultimate Software Restricted Stock Unit Award Agreement (together the “Plan”), for the benefit of employees of the Company’s French subsidiaries with respect to Awards which are intended to be Qualified Restricted Stock Unit Awards.

Other Awards are not governed by the present document. Therefore all the provisions of the Plan which refer to Stock Options, Stock Appreciation Rights or Restricted Stock Awards are not applicable to Awards governed by the French Addendum. For the avoidance of doubt, this French Addendum does not modify, amend or supplement the Plan (or any of its terms and conditions) in any way, with respect to (1) any person, other than a French Participant, and (2) any Award other than any Qualified Restricted Stock Unit Award granted to a French Participant.

The terms and conditions of this Addendum are identical to the Plan except as provided below. They have to be read in conjunction with the Plan rules and the Award Agreement. In the event of any conflict between the terms and conditions of this Addendum and the Plan or the Restricted Stock Unit Award Agreement, the provisions of this Addendum shall prevail for the Awards made hereunder.

The purpose of this French Addendum is to ensure that Awards are in conformity with applicable legislation, with the meaning of:

• Articles L.225-197-1 to L.225-197-6 of the French Commercial Code for legal purposes;

• Article 80 quaterdecies of the French General Tax Code for tax purposes; and,

• Articles L.241-1, L.137-13 and L.137-14 of the French Social Security Code for social security purposes.

2. Modifications of the Ultimate Software Group, Inc. Amended and Restated 2005 Equity and Incentive Plan solely with respect to Qualified Restricted Stock Unit Awards granted to French Participants

• In Section 2 (a) of the Plan, the definition of “Award” is deleted and replaced by the following:

“Award” means a conditional right to receive Restricted Stock Units representing a number of Stock Unit Awards, as defined in Section 2 of the Restricted Stock Unit Award Agreement, at no cost for the Participant. Restricted Stock Units to be awarded under the French Addendum, shall exclusively be settled in Shares.

• In Section 2 (l) of the Plan, the definition of “Eligible Person” is amended as follows:

Persons who are eligible to be awarded Qualified Restricted Stock Units under French Law shall consist exclusively of (i) employees of the French Affiliate(s) with a valid employment contract (“contrat de travail”) at Date of Grant, and/or (ii) corporate officers with or without an employment contract, listed below, of the French Affiliate(s) (“Corporate Officers”):

• “Président du Conseil d’Administration” (Chairman of the Board);

• “Directeur Général” (Managing Director) ;

• “Directeurs Généraux Délégués“ (Delegated Managing Directors) ;

• Members of the “Directoire” (Executive Directors);

• “Gérant” of a “Société par Actions” (“Manager of a Joint Stock Company”);

• “Président" (if a private individual) d’une Société par Actions Simplifiée”.

For the avoidance of doubt, officers and directors of French Affiliate(s), are Eligible Persons, for purposes of the French Addendum, if they have a valid employment contract with one of these entities, or if they are one of the Corporate Officers listed above. No Award can be granted under this Addendum to non-employee members of the “Conseil d’Administration” (the Board), consultants and advisors.

An Award may not be made to employees and/or Corporate Officers holding more that 10% of the issued share capital in the Company or who, after having received Shares under an Award granted hereunder, would hold more than 10% of the issued share capital in the Company.

Qualified Restricted Stock Unit Awards can be awarded to Corporate Officers, only if the Company respects one of the following conditions during the Company tax year in which such Restricted Stock Unit Awards are granted:

1° The Company grants Restricted Stock Unit Awards to all of its employees and at least 90% of employees of its subsidiaries (defined by articles L.233-1 and L.210-3 of the French Commercial Code); or

2° The Company grants options to all of its employees and at least 90% of employees of its subsidiaries (defined by articles L.233-1 and L.210-3 of the French Commercial Code); or

3° A compulsory profit-sharing agreement, a derogatory profit-sharing agreement or a voluntary profit sharing agreement is in effect in the Company and to the benefit of at least 90% of employees of its subsidiaries. If, in the Company or its subsidiaries, such an agreement is in effect or was in effect during the previous company tax year, the first award authorized by an extraordinary general meeting held as from the date the law is enacted cannot intervene unless the companies concerned modify the way of calculation of each agreement or pay a collective supplement of voluntary profit sharing or a supplement of compulsory profit sharing.

• In Section 2 (l) of the Plan, a paragraph (ii) “French Participant” is added as follows:

French Participant means an Eligible Person who is an employee or Corporate Officer of any Subsidiary organized under French law and who is French tax resident and subject to the mandatory French social security scheme, except as otherwise decided by the Board of Directors and the Compensation Committee of the Board of Directors.

• In Section 2 (aa) of the Plan, Stock Unit Award is amended as follows:

Stock Unit Award or Restricted Stock Unit means a conditional right to receive Shares as defined in Section 2 of the Restricted Stock Unit Award Agreement, that are subject to restrictions on following the Vesting Date during the Share Sale Restriction Period, as described in Section 9.2 (b) of this Addendum, as determined by the Committee.

• In Section 2 (aa) of the Plan, a paragraph (ii) “Qualified Restricted Stock Unit Awards” is added as follows:

Qualified Restricted Stock Unit Awards mean the Awards granted to French Participants in accordance with Articles L. 225-197-1 to L. 225-197-6 of the French Commercial Code.

• In Section 2 of the Plan, the term “French Affiliate” is added as follows:

“French Affiliate” means the following for the purpose of determining the Subsidiary in which a French Participant may be retained for the Award of Restricted Stock Units:

- Those Subsidiaries in which the Company holds, directly or indirectly, at least 10% (ten) of the voting rights and / or equity;

- Those Subsidiaries which hold, directly or indirectly, at least 10% (ten) of the voting rights and / or equity in the Company;

- Those Subsidiaries which at least 50% (fifty) of the equity or voting rights are held, directly or indirectly, by a company which itself holds at least 50% (fifty) of the Company.

• Section 3.4 “Grants to Committee Members” does not apply to Awards made under this Addendum.

• A new Section 3.5 “Modification of the French Addendum” is added in the Plan rules:

Notwithstanding the above, the Board, upon proposal of the Committee, can modify the provisions of this French Addendum with the exception of the provisions within the exclusive competence of the General Meeting, in compliance with provisions of Articles L. 225-197-1 to L. 225-197-6 of the French Commercial Code. Unless expressly provided in this Plan, such modifications shall not affect the rights and conditions of the Restricted Stock Unit Awards allocated prior to said modifications, unless these modifications are accepted in advance by the applicable Participants.

The terms of this Addendum shall be interpreted in accordance with the relevant provisions set forth by French tax and social laws, as well as the regulations issued by the French tax and social administrations.

• In Section 4.1 “Share Limitation”, the following provision is added:

Notwithstanding the provisions of the Plan, the total number of Shares that may be awarded to the French Participants under this Addendum shall not exceed 10% of the Company’s share capital at Date of Grant. Outstanding unvested Awards shall be treated as Shares in order to determine the threshold of 10% of the granting Company’s share capital.

Qualified Restricted Stock Unit Awards will be settled only by delivery of Shares to the French Participants. Shares of the Company to be delivered under the Plan may be market repurchased shares (already existing shares) or newly issued shares.

For Awards granted over already existing shares, corresponding shares shall be repurchased by the Company at least one day before the applicable Vesting Date.

Shares acquired by French Participants as a result of the vesting of the Award shall be registered in the name of each French Participant or be identifiable. The French Participants shall have the voting and dividends rights attached to the shares as of the date he/she becomes the holder of record of such common stock.

• Section 4.2 “Adjustments” is completed as follows:

Upon deciding to proceed to such adjustment, the Committee shall take all the necessary steps to determine the impact of such adjustment on the income tax and social security treatment of Qualified Restricted Stock Unit Awards made to French Participants under this Addendum and whenever possible, to maintain the tax neutrality of the operation for the treatment of the Award. The Committee shall accordingly inform the Participant concerned.

• Section 5. “Eligibility and Awards” is completed as follows:

As provided by the Restricted Stock Unit Award Agreement, Qualified Restricted Stock Unit Awards granted to French Participants shall vest in three equal annual installments of 33-1/3% of the number of Restricted Stock Unit Awards on each of the first three anniversaries of the Date of Grant thereof.

Concerning the first tranche (1/3) that vests one year after the Date of Grant, Shares acquired shall be subject to a minimum of one (1) year share sale restriction starting as from the Vesting Date (the “Share Sale Restriction Period”).

Second and third tranches will vest two years and three years after the Date of Grant; Shares acquired shall not be subject to any share sale restriction period.

Notwithstanding any provisions to the contrary, accelerated vesting of Qualified Restricted Stock Unit Awards, except upon a French Participant Death or Disability of second (2nd) or third (3rd) category as defined as per Article L. 341-4 of the French Social Security Code1 results in the disqualification of such Awards.

• Section 6. “Stock Options”, Section 7. “Stock Appreciation Rights” and Section 8. “Restricted Stock Awards” of the Plan do not apply to Awards made under this Addendum.

• Section 9.1 “Grant of Stock Unit Awards” is amended as follows:

The reference to any dividend equivalent is deleted concerning Qualified Restricted Stock Unit Awards granted to French Participants.

1 For information purposes, please note that :

- Second category stands for a disabled person unable to perform any professional activity;

- Third category stands for a disabled person unable to perform any professional activity and requiring third party assistance in order to perform everyday life tasks.

• Section 9.2 (a) “Vesting of Stock Unit Awards” is amended as follows:

With respect to Qualified Restricted Stock Unit Awards granted to French Participants, the original vesting schedule determined by the Committee, as mentioned in the Award Agreement, is applicable to the Awards governed by the present Addendum.

However, since for the first tranche (1/3), the Vesting occurs after one year from Date of Grant, a mandatory Share Sale Restriction Period shall apply to these Awards, as defined in Section 3 of the Restricted Stock Unit Award Agreement.

Concerning tranches 2 and 3, unless the Committee decides otherwise, the Vesting Period shall respect/ exceed the two-year de minimis vesting condition defined in Section L.225-197-1 of the French Commercial Code. Nevertheless, in case original vesting schedule or accelerated vesting schedule would lead to application of a shortened Vesting Period, a complementary mandatory Share Sale Restriction Period shall apply to these Awards in order to meet the two (2) year de minimis criteria.

Notwithstanding any provisions of the Plan and this Addendum to the contrary, in case of French Participant’s death, the personal representative determined in accordance with the laws of descent and distribution shall be entitled to request the acquisition of the unvested Restricted Stock Units within (6) months following this event.

• A new Section 9.2 (b) “Share Sale Restriction imposed on Shares transferred to Participants” is added:

If the Vesting Date as determined in the Award Agreement occurs one year after the Date of Grant, Shares acquired pursuant to the Award by French Participants shall be subject to a minimum of one (1) year share sale restriction starting as from the Vesting Date (the “Share Sale Restriction Period”) as described in Section 3 of the Restricted Stock Unit Award Agreement, during which the Shares may not be sold other than in the circumstances set out at paragraphs (ii) and (iii) below. If applicable, the Share Sale Restriction Period will be indicated on the Award agreement.

In case of an event accelerating the initial vesting schedule defined in 9.2 (a) to a less of two (2) year period, a complementary mandatory Share Sale Restriction Period shall apply in order to meet the two (2) year minimis criteria defined in Article L. 225-197-1 of the French Commercial Code.

If the French Participant ceases his employment with the Company, or any Affiliate(s), at any time after the Vesting Date, the Shares acquired shall not be freely transferable before the expiration of the Share Sale Restriction Period.

(i) In addition to the above Share Sale Restriction Period and notwithstanding any provision of the Plan to the contrary, the Shares shall not be sold during the following periods:

• Within ten (10) trading days preceding and three (3) trading days following the publication by the Company of its annual financial results;

• Within ten (10) trading days preceding and ten (10) trading days following the publication by the Company of its quarterly financial results; and

• During any “black-out period” or other similar trading restricted period implemented by the Company to conform with any rules and regulations intended to prevent insider trading provided for by the Securities and Exchange Commission (SEC), the “Autorité des Marchés Financiers” (AMF), or any relevant securities law.

(ii) In case of French Participant’s death

Notwithstanding any provision of the Plan and the present Addendum to the contrary, in the event of the French Participant’s death, the personal representative determined in accordance with the laws of descent shall not be subject to the Share Sale Restriction Period, the shares being freely transferable upon the Participant’s death.

(iii) In case of French Participant’s disability of second (2nd) or third (3rd) category

By exception to the provisions of the Plan, if the French Participant ceases his employment within the Company or any Affiliate(s) due to his disability within the 2nd and 3rd categories as defined as per Article L.341-4 of the French Social Security Code, the Share Sale Restriction Period as defined in the herein Section shall be accelerated and deemed to have lapsed. The French Participant shall be entitled to sell the Shares immediately except during the three periods referred to in clause (i) of this Section. Such dispositions shall not constitute a disqualified provision.

• Section 9.3 “Payment” of Stock Unit Awards” is amended by adding the following two sentences to the end of such section:

Qualified Restricted Stock Unit Awards will be settled only by delivery of Shares to the French Participants. No payment in cash can be made at the discretion of the Committee.

• Section 9.4 “No Rights as Stockholder” of the Plan is amended by adding the following to the end of such section:

Notwithstanding any provisions to the contrary, the French Participant to whom is granted a Qualified Restricted Stock Unit Award shall have no shareholder rights, including the right to vote or to receive dividends, until the Restricted Stock Units Award is duly vested and the legal ownership of shares is transferred to the Participant.

Once transferred, the Shares may be subject to a Share Sale Restriction Period, notably when vesting period does not exceed twelve months (please refer to Section 9.2 (b) of the Plan).

Qualified Restricted Stock Unit Awards may be awarded to Eligible Persons, listed in Section 2 (l) of the Plan, selected by the Committee.

• A new Section 9.5 “Restrictions for Corporate Officers” is added to the Plan rules:

Upon Date of Grant, the Committee may either decide that Corporate Officers shall not sell Shares acquired through a Qualified Restricted Stock Unit Award prior to their removal from office (“révocation en qualité de mandataire social”) or determine the number of Shares which have to be held by Corporate Officers until their removal from office (“révocation en qualité de mandataire social”). The renewal of mandate does not constitute a “removal from office”. A removal from office must be valid pursuant to French laws and regulation.

• Section 10. “Stock Awards”, Section 11. “Performance Awards”, Section 12. “Section 162(m) Awards” and Section 13. “Director Fee Options” do not apply to Awards made under this Addendum

• In Section 14. “Change in Control”, the following provision is added:

In accordance with article L. 225-197-1, III of the Commercial Code, in the event of an exchange of shares without balance resulting from a merger or a demerger realized according to current regulation during the Vesting or Share sale restriction Period provided by the Plan / the French Addendum, the conditions set forth in the Plan remain applicable to the Qualified Restricted Stock Unit Awards granted to French Participants and to the shares received in exchange, including the Vesting and Share Sale Restriction Periods, for their remaining duration on the exchange date.

The same shall apply in the event of an exchange of shares without balance resulting from a public offer, split or reverse stock split realized according to current regulation during the share sale restriction period provided by the Plan.

In the event of another transformation, reorganization or any other changes occurring occur at any time after the Qualified Restricted Stock Unit Awards, the Board or the Committee shall take all necessary actions, while the operation is being realized, in order to determine the impact of this operation on the Awards and, as far as possible, in order to maintain the neutrality of the operation, if needed by reducing the duration of the Vesting Period.

• In Section 15.8 “Tax Withholding” , the following provision is added:

Concerning Qualified Restricted Stock Units granted to French Participants, notwithstanding any provision to the contrary, no Shares may be sold prior to the lapse of the Share Sale Restriction Period to satisfy any social security or tax withholding due for Awards granted further to this French Addendum.

The Company or its Affiliates shall have the right to require payment from a Participant to cover any applicable withholding or other employment taxes due with respect to Awards granted hereunder or shall have the right to deduct any applicable withholding or other employment taxes due from other compensation income paid to the Participant.

The employer is responsible for withholding employees’ social security charges in the event that they are due. However, the Participants remain responsible for bearing the costs of employees’ social security charges.

• Section 16. “Effective Date, amendment and Termination”

This French Addendum does not amend this Section.

EX-10.2

EXHIBIT 10.2

RESTRICTED STOCK UNIT AWARD AGREEMENT

The Ultimate Software Group, Inc.

This RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) made as of this _____ day of _______________, 20___, between The Ultimate Software Group, Inc., a Delaware corporation (the “Company”), and ____________________ (the “Participant”), is made pursuant to the terms of The Ultimate Software Group, Inc. Amended and Restated 2005 Equity and Incentive Plan (the “Plan”) and the French Addendum.

Section 1.Definitions. Capitalized terms used herein but not defined shall have the meanings set forth in the Plan.

Section 2.Stock Unit Award. The Company has granted to the Participant a Stock Unit Award representing a number of Stock Units of the Company (“Restricted Stock Units”), identified in a written communication (an “Award Notice”) delivered to the Participant by or on behalf of the Company, pursuant to the terms and conditions set forth in this Agreement and subject to the terms and conditions set forth in the Plan, a copy of which the Participant acknowledges having received. Each Restricted Stock Unit represents rights in respect of one share of the Company’s Common Stock. Additional Award Notices shall be delivered to the Participant in the event that the Company grants to the Participant additional Stock Unit Awards in the future. All such Award Notices shall indicate the number of Restricted Stock Units granted and the applicable Date of Grant. Unless the Committee should determine otherwise, any Awards of Restricted Stock Units granted on or after the date of this Agreement shall be subject to the terms and conditions provided in this Agreement and the Plan, as well as the French Addendum.

Section 3.Vesting Requirements.

(a)Vesting of Award. Subject to Section 3(c) hereof, the Restricted Stock Units shall vest in three equal annual installments of 33-1/3% of the number of Restricted Stock Units on each of the first three anniversaries of the Date of Grant thereof, subject to the Participant’s continued employment with the Company or any of its Subsidiaries on each such vesting date, and shall be deliverable in accordance with Section 5 hereof.

However, concerning the first vesting of 33-1/3% RSUs after one (1) year, a mandatory one (1) year share sale restriction period shall apply for French Participants.

If any such anniversary is not a date on which the Company’s Common Stock is traded on NASDAQ, then the vesting date shall be the next trading day immediately following such day on which the Company’s Common Stock is traded on NASDAQ; and provided further, however, that if the Chief Financial Officer of the Company should determine that any such

1

anniversary falls within a period during which the Participant is prohibited from trading the Company’s Common Stock under the Company’s Stock Trading Policy, the Chief Financial Officer shall so advise the Participant in writing and the vesting date shall be the date as of which the Chief Financial Officer has determined that such period has ended.

(b)Full Accelerated Vesting. Notwithstanding the provisions of Section 3(a) hereof, upon (i) the Participant’s termination of employment as a result of the Participant’s death or Disability, or (ii) the occurrence of a Change in Control of the Company while the Participant is employed by the Company or a Subsidiary, all of the Restricted Stock Units shall become fully and immediately vested, and shall be deliverable in accordance with Section 5 hereof, to the extent that they have not previously been forfeited in accordance with Section 4 hereof.

Nevertheless, except in case of death and Disability, in case original vesting or accelerated vesting schedule would not respect the two (2) year de minimis condition of Article L. 225-197-1 of the French Commercial Code, a complementary mandatory Share Sale Restriction Period shall apply to these Awards in order to meet the two (2) year de minimis criteria.

(c)Fractional Units. In the event that the calculation of the three equal installments of Restricted Stock Units pursuant to Section 3(a) hereof would result in a number of Restricted Stock Units that includes a fractional Restricted Stock Unit, the fractional Restricted Stock Unit shall not vest until and unless the third installment of Restricted Stock Units vests.

Section 4.Termination of Employment. In the event of the Participant’s termination of employment for any reason other than as a result of the Participant’s death or Disability, any portion of the Award that has not previously become vested hereunder shall be forfeited and automatically cancelled.

Section 5.Distribution with Respect to Award.

(a)Timing of Distribution. Distribution with respect to the Restricted Stock Units shall be made upon the date such Restricted Stock Units become vested as provided in this Agreement.

However,concerning the first vesting of 33-1/3% RSUs after one (1) year, a mandatory one (1) year share sale restriction period shall apply for French Participants.

In case of death of the French Participant during this one (1) year share sale restriction period, the legal heirs of the French Participant are entitled to receive the vested Shares, and can sell them without such restriction;

In case of Disability of the French Participant corresponding to the 2^nd and 3^rd categories as defined as per Article L. 341-4 of the French Social Security Code, the share sale restriction period shall be accelerated and deemed to have lapsed without such restriction.

2

Amount and Methods of Distributions. Unless otherwise provided by the Committee and subject to the provisions of Section 5(c) hereof, distributions with respect to the Restricted Stock Units shall be made in a number of shares of the Company’s Common Stock equal to the number of Restricted Stock Units becoming vested.

(b)Withholding. Distributions with respect to the Restricted Stock Units shall be made to the Participant after deduction of applicable withholding taxes (the “Withholding Taxes”), which shall be withheld at the applicable supplemental wage withholding rate, provided that such amount shall not exceed the Participant’s estimated Federal, state and local tax obligation with respect to payment of the Award. Subject to the limitations of applicable law, to the extent the payment of an Award is made in shares of the Company’s Common Stock, the Participant hereby consents to the collection of the Withholding Taxes by the Company retaining, and not issuing to the Participant, a number of such shares of Common Stock (the “Withholding Shares”) having a Fair Market Value on the vesting date equal to the amount of the Withholding Taxes. If and to the extent that the Committee determines not to have the Company retain Withholding Shares pursuant to the preceding sentence, the Company will notify the Participant at least 10 days prior to the applicable vesting date. Subject to the limitations of applicable law, the Participant hereby consents and agrees that in such event, the Company shall instruct a broker designated by the Company to sell in the public market, on behalf of the Participant, the Withholding Shares and remit the proceeds thereof to the Company unless the Participant has made a lump sum cash payment to the Company, at or prior to the time of vesting, equal to the Company’s estimate of the Withholding Taxes as provided in the Company’s notice. If the amount of the cash payment that the Participant delivers to the Company exceeds the actual Withholding Taxes, the excess will be repaid to the Participant promptly by the Company. If such amount is less than the actual Withholding Taxes, the Company will collect the balance from the Participant immediately or instruct a broker designated by the Company to sell shares of the Company’s Common Stock in the public market, on behalf of the Participant, in an amount sufficient to cover the shortfall.

(c)Fractional Withholding Shares. No fraction of a Withholding Share shall be withheld or sold to satisfy tax withholding obligations pursuant to the foregoing provisions of Section 5(c). In the event that the calculation of the number of Withholding Shares required to satisfy such withholding obligations would result in a number of Withholding Shares that includes a fractional Withholding Share, such number shall be rounded up to the next whole number of Withholding Shares and such whole number of Withholding Shares shall be withheld or sold as the case may be. The excess amount withheld or realized in a sale of Withholding Shares as a result of such rounding shall be paid in cash by the Company to the Participant or included in the Withholding Tax paid by the Company to the tax authorities on the Participant’s behalf.

Section 6.Restrictions on Transfer. No portion of the Award hereunder may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the Award as provided herein, unless and until the payment of the Award in accordance with Section 5 hereof and subject to the share sale restriction period as described in Section 3 hereof.

3

Section 7.Limitation of Rights. The Participant shall not have any privileges of a stockholder of the Company with respect to the shares of Common Stock payable hereunder, including without limitation any right to vote such shares or to receive dividends or other distributions in respect thereof, until the date of the issuance to the Participant of a stock certificate evidencing such Common Stock.

Section 8.Adjustments. All Awards hereunder shall be subject to the provisions of Section 4.2 of the Plan relating to adjustments for recapitalizations, reclassifications and other changes in the Company’s corporate structure.

Section 9.No Right of Continued Employment; Rights as a Shareholder. Nothing in this Agreement shall confer upon the Participant any right to continue as an employee of the Company or any Subsidiary or to interfere in any way with any right of the Company to terminate the Participant’s employment at any time. The participant will not have any rights of a shareholder of the Company with respect to the Restricted Stock Units unless and until the delivery of any shares underlying the Restricted Stock Units in accordance with Section 5.

Section 10.Notices. Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Secretary of the Company. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.

Section 11.Construction. This Agreement and the Award hereunder are granted by the Company pursuant to the Plan and are in all respects subject to the terms and conditions of the Plan. The Participant hereby acknowledges that a copy of the Plan has been delivered to the Participant and accepts the Restricted Stock Units hereunder subject to all terms and provisions of the Plan, which is incorporated herein by reference. In the event of a conflict or ambiguity between any term or provision contained herein and a term or provision of the Plan, the Plan will govern and prevail. The construction of and decisions under the Plan and this Agreement are vested in the Committee, whose determinations shall be final, conclusive and binding upon the Participant.

Section 12.Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, excluding the choice of law rules thereof.

Section 13.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

Section 14.Binding Effect. This Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Participant and the successors of the Company.

4

Section 15.Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties with respect to the subject matter hereof and thereof, merging any and all prior agreements.

Section 16.Section 409A. The Awards are intend to either be exempt from or structured to avoid taxation under Section 409A of the Code and the rules and regulations thereunder (“Section 409A”). Any ambiguity in this Agreement or the Plan will be interpreted to either fall within an exemption to or comply with Section 409A. Notwithstanding the foregoing, by signing this Agreement, the Participant acknowledges that the Company has made no representations as the treatment of the compensation provided hereunder and the Participant has been advised to obtain his own tax advice. For purposes of Section 409A, each payment under this Agreement will be deemed a separate payment.

[SIGNATURES ON FOLLOWING PAGE]

5

IN WITNESS WHEREOF, the Company and the Participant have executed this Award Agreement effective as of the date first above written.

THE ULTIMATE SOFTWARE GROUP, INC.

By:     

Name:

Title:

PARTICIPANT

By:     ____________________________________

Name:

6

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Scott Scherr, certify that:

1. I have reviewed this Form 10-Q of The Ultimate Software Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 8, 2018

/s/  Scott Scherr

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Felicia Alvaro, certify that:

1. I have reviewed this Form 10-Q of The Ultimate Software Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 8, 2018

/s/  Felicia Alvaro

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott Scherr, Chief Executive Officer of The Ultimate Software Group, Inc., hereby certify to the best of my knowledge and belief that this Quarterly Report on Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) and that the information contained in this Quarterly Report on Form 10-Q fairly represents, in all material respects, the financial condition and results of operations of The Ultimate Software Group, Inc.

/s/ Scott Scherr

Chief Executive Officer

August 8, 2018

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Felicia Alvaro, Chief Financial Officer of The Ultimate Software Group, Inc., hereby certify to the best of my knowledge and belief that this Quarterly Report on Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) and that the information contained in this Quarterly Report on Form 10-Q fairly represents, in all material respects, the financial condition and results of operations of The Ultimate Software Group, Inc.

/s/ Felicia Alvaro

Chief Financial Officer

August 8, 2018

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 02, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	Ultimate Software Group Inc
Entity Central Index Key	0001016125
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		31,199,901
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current Assets:
Cash and cash equivalents	$ 184,855	$ 155,685
Investments in marketable securities	3,274	9,434
Accounts receivable, net of allowance for doubtful accounts of $1,300 for 2018 and $900 for 2017	195,247	190,989
Deferred contract costs, prepaid expenses and other current assets	78,116	71,602
Total current assets before funds held for customers	461,492	427,710
Funds held for customers	624,110	563,062
Total current assets	1,085,602	990,772
Property and equipment, net	274,841	243,664
Goodwill	35,484	35,808
Intangible assets, net	19,227	20,862
Deferred contract costs and other assets, net	114,623	53,409
Deferred tax assets, net	30,242	32,696
Total assets	1,560,019	1,377,211
Current liabilities:
Accounts payable	14,125	16,099
Accrued expenses and other liabilities	93,990	60,394
Deferred revenue	212,997	197,088
Capital lease obligations	6,511	5,474
Total current liabilities before customer funds obligations	327,623	279,055
Customer funds obligations	625,511	564,031
Total current liabilities	953,134	843,086
Deferred revenue	1,431	1,773
Deferred rent	8,695	5,349
Capital lease obligations	6,346	4,477
Other long-term liabilities	2,375	4,250
Deferred income tax liability	380	251
Total liabilities	972,361	859,186
Stockholders’ equity:
Preferred Stock	0	0
Common Stock, $.01 par value, 50,000,000 shares authorized, 35,287,303 and 34,787,986 shares issued as of June 30, 2018 and December 31, 2017, respectively	353	348
Additional paid-in capital	629,156	609,160
Accumulated other comprehensive loss	(7,013)	(5,912)
Accumulated earnings	176,521	125,788
Stockholders' equity before treasury stock	799,017	729,384
Treasury stock, 4,657,995 shares, at cost, for 2018 and 2017	(211,359)	(211,359)
Total stockholders’ equity	587,658	518,025
Total liabilities and stockholders’ equity	1,560,019	1,377,211
Series A Junior Preferred Stock
Stockholders’ equity:
Preferred Stock	$ 0	$ 0

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current Assets:
Allowance for doubtful accounts	$ 1,300	$ 900
Stockholders’ equity:
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred Stock, shares issued (in shares)	0	0
Preferred Stock, shares outstanding (in shares)	0	0
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized (in shares)	50,000,000	50,000,000
Common Stock, shares issued (in shares)	35,287,303	34,787,986
Treasury Stock, shares (in shares)	4,657,995	4,657,995
Series A Junior Preferred Stock
Stockholders’ equity:
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, shares authorized (in shares)	500,000	500,000
Preferred Stock, shares issued (in shares)	0	0
Preferred Stock, shares outstanding (in shares)	0	0

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues:
Recurring	$ 239,458	$ 195,147	$ 476,045	$ 385,128
Services	31,704	29,545	71,872	68,055
Total revenues	271,162	224,692	547,917	453,183
Cost of revenues:
Recurring	66,623	52,539	129,488	102,608
Services	35,949	31,715	77,857	71,346
Total cost of revenues	102,572	84,254	207,345	173,954
Gross profit	168,590	140,438	340,572	279,229
Operating expenses:
Sales and marketing	66,207	67,015	137,404	136,375
Research and development	50,004	34,997	96,978	71,155
General and administrative	32,270	31,472	63,992	61,676
Total operating expenses	148,481	133,484	298,374	269,206
Operating income	20,109	6,954	42,198	10,023
Other income (expense):
Interest and other expense	(100)	(165)	(297)	(445)
Other income, net	794	81	1,179	307
Total other income (expense), net	694	(84)	882	(138)
Income before income taxes	20,803	6,870	43,080	9,885
(Provision) benefit for income taxes	(7,123)	(2,341)	(8,406)	1,884
Net income	$ 13,680	$ 4,529	$ 34,674	$ 11,769
Net income per share:
Basic (in dollars per share)	$ 0.45	$ 0.15	$ 1.14	$ 0.40
Diluted (in dollars per share)	$ 0.44	$ 0.15	$ 1.11	$ 0.38
Weighted average shares outstanding:
Basic (in shares)	30,619	29,751	30,512	29,645
Diluted (in shares)	31,113	30,623	31,164	30,639

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net Income	$ 13,680	$ 4,529	$ 34,674	$ 11,769
Other comprehensive (loss) income:
Unrealized gain (loss) on investments in marketable available-for-sale securities	90	(94)	(232)	(324)
Unrealized (loss) gain on foreign currency translation adjustments	(501)	445	(962)	607
Other comprehensive (loss) income, before tax	(411)	351	(1,194)	283
Income tax benefit related to items of other comprehensive income	2	37	92	129
Other comprehensive (loss) income, net of tax	(409)	388	(1,102)	412
Comprehensive income	$ 13,271	$ 4,917	$ 33,572	$ 12,181

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net income	$ 34,674	$ 11,769
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,068	16,551
Provision for doubtful accounts	4,836	3,364
Non-cash stock-based compensation expense	67,353	73,144
Income taxes	7,618	(2,394)
Net amortization of premiums and accretion of discounts on available-for-sale securities	(269)	262
Changes in operating assets and liabilities:
Accounts receivable	(9,094)	(10,044)
Deferred contract costs, prepaid expenses and other current assets	(28,831)	(10,557)
Deferred contract costs and other assets	(13,956)	(3,563)
Accounts payable	(1,974)	316
Accrued expenses, other liabilities and deferred rent	24,997	(2,333)
Deferred revenue	13,657	12,979
Net cash provided by operating activities	118,079	89,494
Cash flows from investing activities:
Purchases of property and equipment	(41,062)	(43,540)
Purchases of marketable securities	(168,199)	(122,625)
Proceeds from sales and maturities of marketable securities	99,553	73,069
Net change in money market securities and other cash equivalents held to satisfy customer funds obligations	13,795	35,684
Net cash used in investing activities	(95,913)	(57,412)
Cash flows from financing activities:
Net proceeds from issuances of Common Stock	2,923	4,541
Shares acquired to settle employee tax withholding liabilities	(51,766)	(34,745)
Principal payments on capital lease obligations	(3,217)	(3,148)
Payments of other long-term liabilities	(1,875)	0
Net change in customer funds obligations	61,480	25,238
Net cash provided by (used in) financing activities	7,545	(8,114)
Effect of exchange rate changes on cash	(541)	298
Net increase in cash and cash equivalents	29,170	24,266
Cash and cash equivalents, beginning of period	155,685	73,773
Cash and cash equivalents, end of period	184,855	98,039
Supplemental disclosure of cash flow information:
Cash paid for interest	270	238
Cash paid for taxes	3,617	1,048
Non-cash investing and financing activities:
Capital lease obligations to acquire new equipment	6,123	4,119
Stock based compensation for capitalized software	1,782	2,021
Software agreement	$ 0	$ 6,500

XML

Nature of Operations

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

The Ultimate Software Group, Inc. and subsidiaries (“Ultimate,” “we,” “us” or “our”) is a leading provider of cloud-based human capital management solutions, often referred to as human capital management (“HCM”). Ultimate's UltiPro product suite (“UltiPro”) is a comprehensive, engaging solution that has human resources ("HR"), payroll, and benefits management at its core and includes global people management, available in 14 languages with more than 37 country-specific localizations. The solution is delivered via software-as-a-service ("SaaS"), now more commonly known as the cloud computing model, to organizations based in the United States and Canada, including those with global workforces. UltiPro is designed to deliver the functionality businesses need to manage the complete employment life cycle from recruitment to retirement. We market our UltiPro solutions primarily to enterprise companies, which we define as organizations with 2,501 or more employees, including those with 10,000 or more employees; mid-market companies, which we define as those having 501-2,500 employees; and strategic market companies, which we define as those having 100-500 employees. UltiPro is marketed primarily through our enterprise, mid-market and strategic direct sales teams.

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Basis of Presentation, Consolidation and the Use of Estimates

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation, Consolidation and the Use of Estimates

Basis of Presentation, Consolidation and the Use of Estimates

The accompanying unaudited condensed consolidated financial statements of Ultimate have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The information in this quarterly report should be read in conjunction with Ultimate’s audited consolidated financial statements and notes thereto included in Ultimate’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC on February 26, 2018 (the “Form 10-K”).

The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting only of normal, recurring adjustments) which are, in the opinion of Ultimate’s management, necessary for a fair presentation of the information for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Interim results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of operating results for the full fiscal year or for any future periods.

The unaudited condensed consolidated financial statements reflect the financial position and operating results of Ultimate and include its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Accounting Standards and Significant Accounting Policies

Recently Adopted Accounting Standards

In April 2018, we adopted Accounting Standards Update ("ASU") No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," ("ASU 2018-02"). ASU 2018-02 allows companies to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income to retained earnings. The unaudited condensed consolidated balance sheets reflect the reclassification out of accumulated other comprehensive income. The Company's policy for releasing disproportionate income tax effects from accumulated other comprehensive income utilizes the aggregate approach. The adoption of ASU 2018-02 did not have an impact on the our unaudited condensed consolidated statements of income or cash flows.

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Topic 606”).Topic 606 supersedes the revenue requirements in ASU Topic 605, Revenue Recognition ("Topic 605") and requires the recognition of revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services and includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which discusses the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. Collectively, we refer to Topic 606 and Subtopic 340-40 as the "new standard."

Effective January 1, 2018, we adopted the requirements of the new standard, utilizing the modified retrospective method of transition with the new standard applied to all customer contracts that were not completed on the effective date of the new standard. Adoption of the new standard resulted in changes to our accounting policies for revenue recognition, as detailed below.

The impact of adopting the new standard on our revenues resulted in an immaterial increase to deferred revenue and had a material impact on our unaudited condensed consolidated balance sheet, as a result of the amortization period over which deferred contract costs to obtain related subscription contracts are recognized. Under Topic 605, we deferred incremental commission costs to obtain a contract and amortized those costs over the initial term of the related subscription contract, which is generally 2-3 years. During our assessment of the new standard, we did not identify any incremental contract costs from what was capitalized under Topic 605. We analyzed our customer contract term periods and our customer life, taking into consideration technological changes for our UltiPro product offering, and based on our assessment of the new standard, we amortize the deferred contract costs over 7 years on a systematic basis, consistent with the pattern of transfer of the goods or services to which the asset relates.

The cumulative effect of the changes made to our January 1, 2018 balance sheet for the adoption of the new standard were as follows (in thousands):

	Balance as of December 31, 2017		Adjustments Due to Adoption of Topic 606			Balance as of January 1, 2018
Assets
Deferred contract costs, prepaid expenses and other current assets	$	71,602	$	(22,318	)	$	49,284
Total current assets	990,772		(22,318		)	968,454
Deferred contract costs and other assets, net	53,409		47,259			100,668
Deferred tax assets, net	32,696		(6,803		)	25,893
Total assets	$	1,377,211	$	18,138		$	1,395,349
Liabilities
Deferred revenue	$	197,088	$	1,909		$	198,997
Total current liabilities	843,086		1,909			844,995
Deferred income tax liability	251		170			422
Total liabilities	859,186		2,079			861,265
Stockholders' Equity
Accumulated earnings	125,788		16,059			141,847
Total stockholders' equity	518,025		16,059			534,084
Total liabilities and stockholders' equity	$	1,377,211	$	18,138		$	1,395,349

In accordance with the requirements of the new standard, the disclosure for the quantitative effect and the significant changes between the reported results under the new standard and those that would have been reported under legacy GAAP (i.e., Topic 605) on our unaudited consolidated condensed income statement and balance sheet was as follows (in thousands):

	For the Three Months Ended June 30, 2018							For the Six Months Ended June 30, 2018
	As Reported - Topic 606		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)			As Reported - Topic 606		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)
Income Statement
Revenues
Recurring revenues	$	239,458	$	239,776	$	(318	)	$	476,045	$	476,806	$	(761	)
Operating Expenses
Sales and marketing	66,207		71,325		(5,118		)	137,404		148,479		(11,075		)
Net income	$	13,680	$	8,879	$	4,801		$	34,674	$	24,359	$	10,315

	As of June 30, 2018
	As Reported - Topic 606		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)
Balance Sheet
Assets
Deferred contract costs, prepaid expenses and other current assets	$	78,116	$	99,189	$	(21,073	)
Deferred contract costs and other assets, net	114,623		57,365		57,258
Liabilities
Deferred revenue	212,997		210,212		2,785
Stockholders' Equity
Accumulated earnings	176,521		143,121		33,400

In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118,” ("SAB 118"). The ASU amends Topic 740 to incorporate SEC guidance issued in its Staff Bulletin SAB 118. SAB 118 addressed the application of generally accepted accounting principles in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act. The amendments in this update were effective upon issuance, at which time the Company adopted the standard. Adoption of this standard did not have a material impact on the Company’s financial condition or results of operations.

Summary of Significant Accounting Policies

Except for the accounting policy for revenue recognition that was updated as a result of adopting Topic 606, there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 26, 2018, that have had a material impact on our unaudited condensed consolidated financial statements and related notes.

Revenue Recognition

Effective January 1, 2018, we recognize revenues in accordance with Topic 606. The core principle of Topic 606 is that revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. To achieve the core principle of Topic 606, we perform the following steps:

1)    Identify the contract(s) with a customer;

2)    Identify the performance obligations in the contract;

3)    Determine the transaction price;

4)    Allocate the transaction price to the performance obligations in the contract; and

5)    Recognize revenue when (or as) we satisfy a performance obligation.

The significant majority of our two major revenue sources-recurring and services is derived from contracts with customers. Recurring revenues are primarily related to our subscription-based SaaS performance obligations. Services revenues are primarily related to implementation services for our SaaS customers (including activation services as well as post-live work typically billed on a time and materials basis) and, to a much lesser extent, fees for other services, including the provision of payroll-related forms, sales of time clocks and the printing of W-2 and Affordable Care Act ("ACA") forms for certain customers, as well as certain client reimbursable out-of-pocket expenses. Fees charged to subscription-based SaaS performance obligations are each priced on a per-employee-per-month (“PEPM”) basis for a given calendar month based on usage and fees charged for implementation services and are typically priced on a fixed fee basis for activating the product offering. A majority of our SaaS subscription revenues are satisfied over time, because they are simultaneously received and consumed by the customer, with certain SaaS performance obligations satisfied at a point in time. Our activation services revenues are satisfied over time because they are simultaneously received and consumed by the customer.

Our SaaS performance obligations are each priced based on the number of active customer employees, as of the signing of the contract, at the contract PEPM rate over the initial contract term. Our activation services are based on a fixed fee charged to our customers. There is typically no variable consideration related to our SaaS performance obligations or our activation services, nor do they include a significant financing component, non-cash consideration, or consideration payable to a customer. Our SaaS performance obligations are typically billed quarterly in advance while our activation services are billed over the implementation period.

Our SaaS arrangements include multiple performance obligations and transaction price allocations are based on the stand-alone selling price ("SSP") for each performance obligation. There is an observable input for SSP for each of the SaaS performance obligations. Since activation services do not have directly observable pricing, the SSP is estimated using market conditions and observable inputs, which is calculated based on historical average discounts off our standard price list.

For our performance obligations, the consideration allocated to cloud subscription revenues is recognized as recurring revenues, typically using the output method, over the initial contract period, as those subscription-based services are consumed, typically commencing with the date the customer processes their first live payroll using UltiPro (referred to as going "Live"). The consideration allocated to activation services is recognized as services revenues based on the proportion performed, using reasonably dependable estimates (in relation to progression through activation phases), by product.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for Ultimate on January 1, 2019 and early adoption is permitted. The standard requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are evaluating the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures. We have not yet determined the effect the standard will have on our ongoing financial reporting.

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Funds held for Customers, Corporate Investments in Marketable Securities and Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2018

Investments in Marketable Securities and Fair Value of Financial Instruments [Abstract]

Funds held for Customers, Corporate Investments in Marketable Securities and Fair Value of Financial Instruments

Funds held for Customers, Corporate Investments in Marketable Securities and Fair Value of Financial Instruments

We classify our investments in marketable securities with readily determinable fair values as available-for-sale. Available-for-sale securities consist of debt and equity securities not classified as trading securities or as securities to be held to maturity. Unrealized gains and losses, net of tax, on available-for-sale securities are reported as a net amount in accumulated other comprehensive income in stockholders’ equity until realized. Realized gains and losses resulting from available-for-sale securities are included in other income, net, in the unaudited condensed consolidated statements of income. There were no significant reclassifications of realized gains and losses on available-for-sale securities to the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2018 and June 30, 2017.

Gains and losses on the sale of available-for-sale securities are determined using the specific identification method.   There was $844 thousand and $704 thousand of net unrealized loss on available-for-sale securities as of June 30, 2018 and December 31, 2017, respectively.

The amortized cost, net unrealized loss and fair value of our funds held for customers and corporate investments in marketable available-for-sale securities as of June 30, 2018 and December 31, 2017 are shown below (in thousands):

	As of June 30, 2018							As of December 31, 2017
	Amortized Cost		Net Unrealized Gain/(Loss)			Fair Value (1)		Amortized Cost		Net Unrealized (Loss)/Gain			Fair Value (1)
Type of issue:
Funds held for customers – money market securities and other cash equivalents	$	340,517	$	—		$	340,517	$	354,312	$	—		$	354,312
Available-for-sale securities:
Corporate debentures – bonds	—		—			—		2,848		(4		)	2,844
Commercial paper	1,338		—			1,338		—		—			—
U.S. Agency bonds	284,437		(844		)	283,593		209,443		(693		)	208,750
U.S. Treasury bills	1,487		—			1,487		5,876		(6		)	5,870
Asset-Backed securities	449		—			449		721		(1		)	720
Total corporate investments and funds held for customers	$	628,228	$	(844	)	$	627,384	$	573,200	$	(704	)	$	572,496

_________________

(1) Included within available-for-sale securities as of June 30, 2018 and December 31, 2017 are corporate investments with fair values of $3.3 million and $9.4 million, respectively. Included within available-for-sale securities as of June 30, 2018 and December 31, 2017 are funds held for customers with fair values of $283.6 million and $208.8 million, respectively. All available-for-sale securities were included in Level 2 of the fair value hierarchy.

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of June 30, 2018 are as follows (in thousands):

	Securities in unrealized loss position less than 12 months				Securities in unrealized loss position greater than 12 months					Total
	Gross unrealized losses		Fair market value		Gross unrealized losses			Fair market value		Gross unrealized losses			Fair market value
Corporate debentures – bonds	$	—	$	—	$	—		$	—	$	—		$	—
Commercial paper	—		—		—			—		—			—
U.S. Agency bonds	—		—		(883		)	244,625		(883		)	244,625
U.S. Treasury bills	—		—		—			—		—			—
Asset-Backed securities	—		449		—			—		—			449
Total	$	—	$	449	$	(883	)	$	244,625	$	(883	)	$	245,074

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2017 are as follows (in thousands):

	Securities in unrealized loss position less than 12 months					Securities in unrealized loss position greater than 12 months					Total
	Gross unrealized losses			Fair market value		Gross unrealized losses			Fair market value		Gross unrealized losses			Fair market value
Corporate debentures – bonds	$	(1	)	$	699	$	—		$	—	$	(1	)	$	699
Commercial paper	—			—		—			—		—			—
U.S. Agency bonds	(408		)	74,940		(285		)	133,811		(693		)	208,751
U.S. Treasury bills	—			—		(6		)	5,869		(6		)	5,869
Asset-Backed securities	—			—		—			—		—			—
Total	$	(409	)	$	75,639	$	(291	)	$	139,680	$	(700	)	$	215,319

The amortized cost and fair value of the marketable available-for-sale securities, by contractual maturity, as of June 30, 2018, are shown below (in thousands):

	Corporate Investments				Investments with Funds Held for Customers				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,274	$	3,274	$	208,610	$	208,039	$	211,884	$	211,313
Due after one year	—		—		75,827		75,554		75,827		75,554
Total	$	3,274	$	3,274	$	284,437	$	283,593	$	287,711	$	286,867

The amortized cost and fair value of the marketable available-for-sale securities, by contractual maturity, as of December 31, 2017, are shown below (in thousands):

	Corporate Investments				Investments with Funds Held for Customers				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	9,445	$	9,434	$	164,072	$	163,641	$	173,517	$	173,075
Due after one year	—				45,371		45,109		45,371		45,109
Total	$	9,445	$	9,434	$	209,443	$	208,750	$	218,888	$	218,184

We classify and disclose fair value measurements in one of the following three categories of fair value hierarchy:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities.

Level 2 - Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Our assets that are measured by management at fair value on a recurring basis are generally classified within Level 1 or Level 2 of the fair value hierarchy. We have had assets in the past, and may have assets in the future, classified within Level 1 of the fair value hierarchy. No assets or investments were classified within Level 1 of the fair value hierarchy as of June 30, 2018 or as of December 31, 2017. We did not have any transfers into and out of Level 1 or Level 2 during the three and six months ended June 30, 2018 or the twelve months ended December 31, 2017. No assets or investments were classified as Level 3 as of June 30, 2018 or as of December 31, 2017.

The types of instruments valued by management, based on quoted prices in less active markets, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency, include corporate debentures and bonds, commercial paper, U.S. agency bonds and U.S. Treasury bills and asset-backed securities owned by Ultimate. Such instruments are generally classified within Level 2 of the fair value hierarchy. Ultimate uses consensus pricing, which is based on multiple pricing sources, to value its fixed income investments. The following table sets forth, by level within the fair value hierarchy, financial assets accounted for at fair value as of June 30, 2018 and December 31, 2017 (in thousands):

	As of June 30, 2018								As of December 31, 2017
	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
Corporate debentures – bonds	$	—	$	—	$	—	$	—	$	2,844	$	—	$	2,844	$	—
Commercial paper	1,338		—		1,338		—		—		—		—		—
U.S. Agency bonds	283,593		—		283,593		—		208,750		—		208,750		—
U.S. Treasury bills	1,487		—		1,487		—		5,870		—		5,870		—
Asset-Backed securities	449		—		449		—		720		—		720		—
Total	$	286,867	$	—	$	286,867	$	—	$	218,184	$	—	$	218,184	$	—

Assets measured at fair value on a recurring basis were presented in the unaudited condensed consolidated balance sheet as of June 30, 2018 and the audited consolidated balance sheet as of December 31, 2017 as short-term and long-term investments in marketable securities. There were no financial liabilities accounted for at fair value as of June 30, 2018 and December 31, 2017.

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Property and Equipment

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, which range from 2 to 15 years. Leasehold improvements and assets under capital leases are amortized over the shorter of the estimated useful life of the asset or the term of the lease, which range from 3 to 15 years. Maintenance and repairs are charged to expense when incurred; betterments are capitalized. Upon the sale or retirement of assets, the cost, accumulated depreciation and amortization are removed from the accounts and any gain or loss is recognized.

Property and equipment as of June 30, 2018 and December 31, 2017 consist of the following (in thousands):

	As of June 30, 2018		As of December 31, 2017
Computer equipment	$	198,262	$	185,034
Internal-use software	206,493		178,093
Leasehold improvements	48,087		43,556
Other property and equipment	24,446		22,572
Property and equipment	477,288		429,255
Less: accumulated depreciation and amortization	202,447		185,591
Property and equipment, net	$	274,841	$	243,664

We capitalize computer software development costs related to software developed for internal use in accordance with Accounting Standards Codification ("ASC") Topic 350-40, Intangibles Goodwill and Other-Internal Use Software. During the three and six months ended June 30, 2018, we capitalized $12.8 million and $27.4 million, respectively, of computer software development costs related to a development project to be sold in the future as a cloud product only (the "Development Project"). There were $13.6 million and $26.2 million of software development costs related to the Development Project which were capitalized in the three and six months ended June 30, 2017, respectively. For the three and six months ended June 30, 2018 and June 30, 2017, these capitalized costs were primarily direct labor costs. As a component of these direct labor costs we capitalized $0.8 million and $1.8 million of stock-based compensation costs during the three and six months ended June 30, 2018, respectively. During the three and six months ended June 30, 2017, we capitalized $1.0 million and $2.0 million, respectively, of stock-based compensation costs. These capitalized costs are included with internal-use software in property and equipment in the unaudited condensed consolidated balance sheets and purchases of property and equipment in the unaudited condensed consolidated statements of cash flows. Internal-use software is amortized on a straight-line basis over its estimated useful life, commencing after the software development is substantially complete and the software is ready for its intended use. At each balance sheet date, we evaluate the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. During the three and six months ended June 30, 2018 there were $2.1 million and $3.9 million, respectively, of amortization associated with certain product modules of the Development Project which were ready for their intended use. During the three and six months ended June 30, 2017 there were $1.0 million and $2.0 million, respectively, of amortization associated with certain product modules of the Development Project which were ready for their intended use. The amortization of capitalized software is included in cost of recurring revenues.

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Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2018

Prepaid Expense and Other Assets, Current [Abstract]

Prepaid Expenses and Other Current Assets

Deferred Contract Costs, Prepaid Expenses and Other Current Assets

Deferred contract costs, prepaid expenses and other current assets as of June 30, 2018 and December 31, 2017 consist of the following (in thousands):

	As of June 30, 2018		As of December 31, 2017
Deferred contract costs	$	34,985	$	38,519
Prepaid expenses	31,763		20,088
Other current assets	11,368		12,995
Total deferred contract costs, prepaid expenses and other current assets	$	78,116	$	71,602

Deferred contract costs, which are primarily deferred sales commissions earned by our sales force and are considered incremental and recoverable costs of obtaining a contract with a customer, were $35.0 million as of June 30, 2018 and $38.5 million as of December 31, 2017. Amortization expense for the deferred contract costs was $5.5 million and $10.9 million for the three and six months ended June 30, 2018, respectively. Amortization expense for the deferred contract costs was $9.8 million and $18.3 million for the three and six months ended June 30, 2017, respectively. There was no impairment loss in relation to the costs capitalized for the periods presented.

Included in deferred contract costs and other assets, net are deferred contract costs of $102.2 million as of June 30, 2018 and $45.5 million as of December 31, 2017. Deferred contract costs are primarily deferred sales commissions earned by our sales force and are considered incremental and recoverable costs of obtaining a contract with a customer. The amortization of these deferred contract costs are expected to start after one year.

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Goodwill & Intangible Assets

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

Goodwill represents the excess of cost over the net tangible and identifiable intangible assets of acquired businesses. Goodwill amounts are not amortized, but rather tested for impairment at least annually. Identifiable intangible assets acquired in business combinations are recorded based upon fair value at the date of acquisition and amortized over their estimated useful lives.

The changes in the carrying value of goodwill since December 31, 2017 were as follows (in thousands):

Goodwill, December 31, 2017	$	35,808
Translation adjustment for the six months ended June 30, 2018 (1)	(324		)
Goodwill, June 30, 2018	$	35,484

__________________________

(1) Represents the impact of the foreign currency translation of the portion of goodwill that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such goodwill is translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income (loss).

Intangible Assets

The following tables present our acquired intangible assets as of the dates specified below (in thousands):

	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Cumulative Translation Adjustment (1)			Net Carrying Amount		Weighted Average Remaining Useful Life
Developed technology	$	23,300	$	(5,521	)	$	(959	)	$	16,820	5.7
Customer relationships	4,700		(2,409		)	—			2,291		4.3
Non-compete agreements	300		(300		)	—			—		0.0
	$	28,300	$	(8,230	)	$	(959	)	$	19,111	5.6
	December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Cumulative Translation Adjustment (1)			Net Carrying Amount		Weighted Average Remaining Useful Life
Developed technology	$	23,300	$	(4,355	)	$	(895	)	$	18,050	6.0
Customer relationships	4,700		(2,004		)	—			2,696		4.5
Non-compete agreements	300		(300		)	—			—		0.0
	$	28,300	$	(6,659	)	$	(895	)	$	20,746	5.9

____________________________

(1) Represents the impact of the foreign currency translation of the portion of acquired intangible assets that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such intangible assets are translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive (loss) income.

Acquired intangible assets are amortized over their estimated useful life, generally three to ten years, in a manner that reflects the pattern in which the economic benefits are consumed. Included in acquired intangible assets as of June 30, 2018 and December 31, 2017 were $0.1 million of assets with indefinite lives. Amortization expense for acquired intangible assets was $0.8 million and 1.6 million for the three and six months ended June 30, 2018, respectively, and 0.8 million and 1.6 million for the three and six months ended June 30, 2017, respectively.

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Earnings Per Share

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted average number of common shares outstanding (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

The following table is a reconciliation of the shares of Ultimate's issued and outstanding $0.01 par value common stock ("Common Stock") used in the computation of basic and diluted net income per share for the three and six months ended June 30, 2018 and 2017 (in thousands):

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2018	2017	2018	2017
Basic weighted average shares outstanding	30,619	29,751	30,512	29,645
Effect of dilutive equity instruments	494	872	652	994
Diluted weighted average shares outstanding	31,113	30,623	31,164	30,639
Options to purchase shares of Common Stock and other stock-based awards outstanding which are not included in the calculation of diluted income per share because their impact is anti-dilutive	—	1	1	5

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Foreign Currency

6 Months Ended

Jun. 30, 2018

Foreign Currency [Abstract]

Foreign Currency

Foreign Currency

The financial statements of Ultimate’s foreign subsidiaries, The Ultimate Software Group of Canada, Inc. (“Ultimate Canada”) and The Ultimate Software Group of Asia, PTE. LTD. ("Ultimate Asia"), have been translated into U.S. dollars. The functional currency of Ultimate Canada is the Canadian dollar. Assets and liabilities are translated into U.S. dollars at period-end exchange rates. Income and expenses are translated at the average exchange rate for the reporting period. The resulting translation adjustments, representing unrealized gains or losses, are included in accumulated other comprehensive (loss) income, a component of stockholders’ equity. Realized gains and losses resulting from foreign exchange transactions are included in total operating expenses in the unaudited condensed consolidated statements of income. There were no significant realized gains and losses resulting from foreign exchange transactions to the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2018 and June 30, 2017.

For the three and six months ended June 30, 2018, Ultimate had unrealized translation losses of $0.5 million and $1.0 million, respectively. For the three and six months ended June 30, 2017, Ultimate had unrealized translation gains of $0.4 million and $0.6 million, respectively. Included in accumulated other comprehensive loss, as presented in the accompanying unaudited condensed consolidated balance sheets, are cumulative unrealized translation losses of $6.4 million as of June 30, 2018 and $5.4 million as of December 31, 2017.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Summary of Plans

Our Amended and Restated 2005 Equity and Incentive Plan (the “Plan”) authorizes the grant of options (“Options”) to non-employee directors, officers and employees of Ultimate to purchase shares of Common Stock.  The Plan also authorizes the grant to such persons of restricted and non-restricted shares of Common Stock, stock appreciation rights, stock units and cash performance awards (collectively, together with the Options, the “Awards”).

As of June 30, 2018, the aggregate number of shares of Common Stock that were available to be issued under all Awards granted under the Plan was 1,815,862 shares.

The following table sets forth the non-cash stock-based compensation expense resulting from stock-based arrangements that were recorded in our unaudited condensed consolidated statements of income for the periods indicated (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Non-cash stock-based compensation expense:
Cost of recurring revenues	$	3,994	$	2,981	$	7,426	$	5,797
Cost of services revenues	2,362		1,935		4,735		3,924
Sales and marketing	17,074		19,785		33,411		37,196
Research and development	4,241		3,134		7,550		5,911
General and administrative	6,486		11,443		14,231		20,316
Total non-cash stock-based compensation expense	$	34,157	$	39,278	$	67,353	$	73,144

Stock-based compensation for the three and six months ended June 30, 2018 was $34.2 million and $67.4 million, respectively, as compared with stock-based compensation of $39.3 million and $73.1 million for the three and six months ended June 30, 2017, respectively. The decreases of $5.1 million and $5.7 million in stock-based compensation for the three and six month periods, respectively, included decreases of $6.5 million and $7.4 million, respectively, associated with modifications and terminations made to the Company’s change in control plans in March 2015, February 2016, and February 2017.  These changes were made to better align management's incentives with long-term value creation for our shareholders. As part of the modifications in connection with the terminations of the change in control plans, time-based restricted stock awards (vesting over three years) were granted to certain senior officers in March 2015, February 2016, and February 2017.

Stock-based compensation expense associated with modifications and terminations made to the Company’s change-in-control plans in March 2015, February 2016, and February 2017, is shown in the table below (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Stock-based compensation expense:
Stock-based compensation expense	$	23,857	$	22,433	$	43,845	42,245
Stock-based compensation expense related to change in control plans	10,300		16,845		23,508		30,899
Total non-cash stock-based compensation expense	$	34,157	$	39,278	$	67,353	$	73,144

Net cash proceeds from the exercise of Options were $0.4 million and $2.9 million for the three and six months ended June 30, 2018, respectively, and $3.0 million and $4.5 million for the three and six months ended June 30, 2017, respectively.

Stock Option, Restricted Stock and Restricted Stock Unit Activity

There were no Options granted during the three and six months ended June 30, 2018. The following table summarizes stock option activity (for previously granted Options) for the six months ended June 30, 2018 (in thousands, except per share amounts):

Stock Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2017	114		$	29.24	0.4	$	21,476
Granted	—		—		0	—
Exercised	(99	)	29.54		0	—
Forfeited or expired	—		—		0	—
Outstanding at June 30, 2018	15		$	27.24	0.2	$	3,377
Exercisable at June 30, 2018	15		$	27.24	0.2	$	3,377

The aggregate intrinsic value of Options in the table above represents total pretax intrinsic value (i.e., the difference between the closing price of Common Stock on the last trading day of the reporting period and the exercise price times the number of shares) that would have been received by the option holders had all option holders exercised their Options on June 30, 2018. The amount of the aggregate intrinsic value changes, based on the fair value of Common Stock. Total intrinsic value of Options exercised was $3.4 million and $20.2 million for the three and six months ended June 30, 2018, respectively, and $18.2 million and $28.1 million for the three and six months ended June 30, 2017, respectively. All previously granted Options were fully vested as of December 31, 2011 and, therefore, no Options vested during the three and six months ended June 30, 2018 and June 30, 2017, respectively.

As of June 30, 2018, there were no unrecognized compensation costs related to non-vested Options expected to be recognized as all previously granted Options were fully vested as of December 31, 2011.

The following table summarizes restricted stock awards and restricted stock unit awards granted during the three months ended June 30, 2018 and June 30, 2017 (in thousands):

	For the Three Months Ended June 30,
	2018	2017
Restricted Stock Awards:
Non-Employee Directors	2	4
Senior Officers	25	—
Total Restricted Stock Awards Granted	27	4
Restricted Stock Unit Awards:
Non-Senior Officers and Other Employees	27	13
Total Restricted Stock Unit Awards Granted	27	13

The following table summarizes the activity pertaining to Common Stock previously issued under restricted stock awards and restricted stock unit awards which vested during the three months ended June 30, 2018 and June 30, 2017 (in thousands):

	For the Six Months Ended June 30,
	2018				2017
	Shares Vested	Shares Retained (1)	Amount Retained (in millions) (1)	Shares Issued	Shares Vested	Shares Retained (1)	Amount Retained (in millions) (1)	Shares Issued
Restricted Stock Awards:
Non-Employee Directors	3	—	$0.0	3	29	—	$0.0	29
Senior Officers	396	150	34.0	246	278	109	21.2	169
Non-Senior Officers and Other Employees	5	2	0.3	3	2	1	0.1	1
Total Restricted Stock Awards	404	152	$34.3	252	309	110	$21.3	199
Restricted Stock Unit Awards:
Non-Senior Officers and Other Employees	224	76	$17.5	148	187	69	$13.4	118
Total Restricted Stock Unit Awards	224	76	$17.5	148	187	69	$13.4	118

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(1) During the six months ended June 30, 2018 and June 30, 2017, of the shares released, 228,098 and 178,564 shares, respectively, were retained by Ultimate and not issued, in satisfaction of withholding payroll tax requirements applicable to the payment of such awards.

The following table summarizes restricted stock award and restricted stock unit activity for the six months ended June 30, 2018 (in thousands, except per share values):

	Restricted Stock Awards				Restricted Stock Unit Awards
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017	882		$	179.95	630		$	170.73
Granted	230		231.65		322		230.79
Vested and released	(405	)	170.23		(224	)	175.06
Forfeited or expired	—		—		(20	)	203.34
Outstanding at June 30, 2018	707		$	202.33	708		$	208.62

As of June 30, 2018, $109.6 million of total unrecognized compensation costs related to non-vested restricted stock awards were expected to be recognized over a weighted average period of 1.71 years. As of June 30, 2018, $113.0 million of total unrecognized compensation costs related to non-vested restricted stock unit awards were expected to be recognized over a weighted average period of 1.93 years.

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Deferred Revenue and Performance Obligations

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Deferred Revenue and Performance Obligations

Deferred Revenue and Performance Obligations

During the three months ended June 30, 2018 and 2017, $150.5 million and $124.7 million, respectively, of recurring revenues recognized, were included in the deferred revenue balances at the beginning of the respective periods. During the six months ended June 30, 2018 and 2017, $159.0 million and $132.3 million, respectively, of recurring revenues recognized, were included in the deferred revenue balances at the beginning of the respective periods. Services revenues recognized in the same periods from deferred revenue balances at the beginning of the respective periods were not material.

Transaction Price Allocated to the Remaining Performance Obligations

As of June 30, 2018, approximately $1.7 billion of revenue is expected to be recognized from remaining SaaS performance obligations which includes the remaining period of their initial contract term as well as the remaining renewal periods under contract as of June 30, 2018. We expect to recognize revenue on approximately 47 percent of these remaining performance obligations over the next 12 months, with the balance recognized thereafter. Revenue from remaining performance obligations for services as of June 30, 2018 was not material.

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Immaterial Correction of Prior Period Financial Statements

6 Months Ended

Jun. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Immaterial Correction of Prior Period Financial Statements

Immaterial Correction of Prior Period Financial Statements

As described in Note 17 in our Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 26, 2018, we revalued our net deferred tax assets to implement the federal Tax Cuts and Jobs Act (the "Tax Act") which the federal government passed on December 22, 2017. During the year ended December 31, 2017, immaterial errors were discovered in prior periods in the reporting of the GAAP income tax expense associated with the stock-based compensation for certain of our executive officers. While we have concluded that the impact of these errors on our previously-issued unaudited condensed consolidated statements of income and unaudited condensed consolidated statements of comprehensive income was not material, we have revised our previously-reported unaudited condensed consolidated statements of income and unaudited condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2017. The revisions include a decrease to GAAP net income for the three months ended June 30, 2017 of $0.5 million, as a result of the increase to our GAAP income tax expense for the second quarter of 2017, and a decrease to GAAP net income for the six months ended June 30, 2017 of $0.6 million. For the second quarter of 2017, there was no impact on previously reported cash flows, pre-tax income and non-GAAP results. The revisions to our unaudited condensed consolidated statements of income and unaudited condensed consolidated statements of comprehensiveincome for the three and six months ended June 30, 2017 are as follows (in thousands, except per share amounts):

Unaudited Condensed Consolidated Statements of Income	For the Three Months Ended						For the Six Months Ended
	June 30, 2017						June 30, 2017
	As Reported			As Revised			As Reported		As Revised
Income before income taxes	$	6,870		$	6,870		$	9,885	$	9,885
(Provision) benefit for income taxes	(1,868		)	(2,341		)	2,451		1,884
Net income	$	5,002		$	4,529		$	12,336	$	11,769
Net income per share:
Basic	$	0.17		$	0.15		$	0.42	$	0.40
Diluted	$	0.16		$	0.15		$	0.40	$	0.38
Unaudited Condensed Consolidated Statement of Comprehensive Income
Net income	$	5,002		$	4,529		$	12,336	$	11,769
Other comprehensive income, net of tax	388			388			412		412
Comprehensive income	$	5,390		$	4,917		$	12,748	$	12,181

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Subsequent Event

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On July 27, 2018, Ultimate acquired PeopleDoc SAS, a simplified joint-stock company (société par actions simplifiée) organized under the laws of France ("PeopleDoc"). Ultimate Software acquired PeopleDoc for approximately $300 million, using a combination of cash and shares of Ultimate Software common stock, with approximately $75 million of cash paid at the closing, 560,150 shares of Common Stock delivered at the closing, 43,522 restricted stock awards granted at the closing, 35,295 shares of Common Stock to be delivered at future dates and approximately $50 million of cash to be paid 12 months after the closing date. On August 5, 2018, our Board of Directors approved an Addendum to our Plan and a form of Restricted Stock Unit Award Agreement to allow the granting of Awards to French employees of PeopleDoc.

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Revenue Recognition

Revenue Recognition

Effective January 1, 2018, we recognize revenues in accordance with Topic 606. The core principle of Topic 606 is that revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. To achieve the core principle of Topic 606, we perform the following steps:

1)    Identify the contract(s) with a customer;

2)    Identify the performance obligations in the contract;

3)    Determine the transaction price;

4)    Allocate the transaction price to the performance obligations in the contract; and

5)    Recognize revenue when (or as) we satisfy a performance obligation.

The significant majority of our two major revenue sources-recurring and services is derived from contracts with customers. Recurring revenues are primarily related to our subscription-based SaaS performance obligations. Services revenues are primarily related to implementation services for our SaaS customers (including activation services as well as post-live work typically billed on a time and materials basis) and, to a much lesser extent, fees for other services, including the provision of payroll-related forms, sales of time clocks and the printing of W-2 and Affordable Care Act ("ACA") forms for certain customers, as well as certain client reimbursable out-of-pocket expenses. Fees charged to subscription-based SaaS performance obligations are each priced on a per-employee-per-month (“PEPM”) basis for a given calendar month based on usage and fees charged for implementation services and are typically priced on a fixed fee basis for activating the product offering. A majority of our SaaS subscription revenues are satisfied over time, because they are simultaneously received and consumed by the customer, with certain SaaS performance obligations satisfied at a point in time. Our activation services revenues are satisfied over time because they are simultaneously received and consumed by the customer.

Our SaaS performance obligations are each priced based on the number of active customer employees, as of the signing of the contract, at the contract PEPM rate over the initial contract term. Our activation services are based on a fixed fee charged to our customers. There is typically no variable consideration related to our SaaS performance obligations or our activation services, nor do they include a significant financing component, non-cash consideration, or consideration payable to a customer. Our SaaS performance obligations are typically billed quarterly in advance while our activation services are billed over the implementation period.

Our SaaS arrangements include multiple performance obligations and transaction price allocations are based on the stand-alone selling price ("SSP") for each performance obligation. There is an observable input for SSP for each of the SaaS performance obligations. Since activation services do not have directly observable pricing, the SSP is estimated using market conditions and observable inputs, which is calculated based on historical average discounts off our standard price list.

For our performance obligations, the consideration allocated to cloud subscription revenues is recognized as recurring revenues, typically using the output method, over the initial contract period, as those subscription-based services are consumed, typically commencing with the date the customer processes their first live payroll using UltiPro (referred to as going "Live"). The consideration allocated to activation services is recognized as services revenues based on the proportion performed, using reasonably dependable estimates (in relation to progression through activation phases), by product.

Recently Issued and Adopted Accounting Standards

Recently Adopted Accounting Standards

In April 2018, we adopted Accounting Standards Update ("ASU") No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," ("ASU 2018-02"). ASU 2018-02 allows companies to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income to retained earnings. The unaudited condensed consolidated balance sheets reflect the reclassification out of accumulated other comprehensive income. The Company's policy for releasing disproportionate income tax effects from accumulated other comprehensive income utilizes the aggregate approach. The adoption of ASU 2018-02 did not have an impact on the our unaudited condensed consolidated statements of income or cash flows.

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Topic 606”).Topic 606 supersedes the revenue requirements in ASU Topic 605, Revenue Recognition ("Topic 605") and requires the recognition of revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services and includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which discusses the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. Collectively, we refer to Topic 606 and Subtopic 340-40 as the "new standard."

Effective January 1, 2018, we adopted the requirements of the new standard, utilizing the modified retrospective method of transition with the new standard applied to all customer contracts that were not completed on the effective date of the new standard. Adoption of the new standard resulted in changes to our accounting policies for revenue recognition, as detailed below.

The impact of adopting the new standard on our revenues resulted in an immaterial increase to deferred revenue and had a material impact on our unaudited condensed consolidated balance sheet, as a result of the amortization period over which deferred contract costs to obtain related subscription contracts are recognized. Under Topic 605, we deferred incremental commission costs to obtain a contract and amortized those costs over the initial term of the related subscription contract, which is generally 2-3 years. During our assessment of the new standard, we did not identify any incremental contract costs from what was capitalized under Topic 605. We analyzed our customer contract term periods and our customer life, taking into consideration technological changes for our UltiPro product offering, and based on our assessment of the new standard, we amortize the deferred contract costs over 7 years on a systematic basis, consistent with the pattern of transfer of the goods or services to which the asset relates.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for Ultimate on January 1, 2019 and early adoption is permitted. The standard requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are evaluating the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures. We have not yet determined the effect the standard will have on our ongoing financial reporting.

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The cumulative effect of the changes made to our January 1, 2018 balance sheet for the adoption of the new standard were as follows (in thousands):

	Balance as of December 31, 2017		Adjustments Due to Adoption of Topic 606			Balance as of January 1, 2018
Assets
Deferred contract costs, prepaid expenses and other current assets	$	71,602	$	(22,318	)	$	49,284
Total current assets	990,772		(22,318		)	968,454
Deferred contract costs and other assets, net	53,409		47,259			100,668
Deferred tax assets, net	32,696		(6,803		)	25,893
Total assets	$	1,377,211	$	18,138		$	1,395,349
Liabilities
Deferred revenue	$	197,088	$	1,909		$	198,997
Total current liabilities	843,086		1,909			844,995
Deferred income tax liability	251		170			422
Total liabilities	859,186		2,079			861,265
Stockholders' Equity
Accumulated earnings	125,788		16,059			141,847
Total stockholders' equity	518,025		16,059			534,084
Total liabilities and stockholders' equity	$	1,377,211	$	18,138		$	1,395,349

In accordance with the requirements of the new standard, the disclosure for the quantitative effect and the significant changes between the reported results under the new standard and those that would have been reported under legacy GAAP (i.e., Topic 605) on our unaudited consolidated condensed income statement and balance sheet was as follows (in thousands):

	For the Three Months Ended June 30, 2018							For the Six Months Ended June 30, 2018
	As Reported - Topic 606		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)			As Reported - Topic 606		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)
Income Statement
Revenues
Recurring revenues	$	239,458	$	239,776	$	(318	)	$	476,045	$	476,806	$	(761	)
Operating Expenses
Sales and marketing	66,207		71,325		(5,118		)	137,404		148,479		(11,075		)
Net income	$	13,680	$	8,879	$	4,801		$	34,674	$	24,359	$	10,315

	As of June 30, 2018
	As Reported - Topic 606		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)
Balance Sheet
Assets
Deferred contract costs, prepaid expenses and other current assets	$	78,116	$	99,189	$	(21,073	)
Deferred contract costs and other assets, net	114,623		57,365		57,258
Liabilities
Deferred revenue	212,997		210,212		2,785
Stockholders' Equity
Accumulated earnings	176,521		143,121		33,400

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Investments in Marketable Securities and Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Investments in Marketable Securities and Fair Value of Financial Instruments [Abstract]

Amortized cost, net unrealized gain and fair value of investments in marketable available-for-sale securities

The amortized cost, net unrealized loss and fair value of our funds held for customers and corporate investments in marketable available-for-sale securities as of June 30, 2018 and December 31, 2017 are shown below (in thousands):

	As of June 30, 2018							As of December 31, 2017
	Amortized Cost		Net Unrealized Gain/(Loss)			Fair Value (1)		Amortized Cost		Net Unrealized (Loss)/Gain			Fair Value (1)
Type of issue:
Funds held for customers – money market securities and other cash equivalents	$	340,517	$	—		$	340,517	$	354,312	$	—		$	354,312
Available-for-sale securities:
Corporate debentures – bonds	—		—			—		2,848		(4		)	2,844
Commercial paper	1,338		—			1,338		—		—			—
U.S. Agency bonds	284,437		(844		)	283,593		209,443		(693		)	208,750
U.S. Treasury bills	1,487		—			1,487		5,876		(6		)	5,870
Asset-Backed securities	449		—			449		721		(1		)	720
Total corporate investments and funds held for customers	$	628,228	$	(844	)	$	627,384	$	573,200	$	(704	)	$	572,496

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(1) Included within available-for-sale securities as of June 30, 2018 and December 31, 2017 are corporate investments with fair values of $3.3 million and $9.4 million, respectively. Included within available-for-sale securities as of June 30, 2018 and December 31, 2017 are funds held for customers with fair values of $283.6 million and $208.8 million, respectively. All available-for-sale securities were included in Level 2 of the fair value hierarchy.

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Table Text Block]

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of June 30, 2018 are as follows (in thousands):

	Securities in unrealized loss position less than 12 months				Securities in unrealized loss position greater than 12 months					Total
	Gross unrealized losses		Fair market value		Gross unrealized losses			Fair market value		Gross unrealized losses			Fair market value
Corporate debentures – bonds	$	—	$	—	$	—		$	—	$	—		$	—
Commercial paper	—		—		—			—		—			—
U.S. Agency bonds	—		—		(883		)	244,625		(883		)	244,625
U.S. Treasury bills	—		—		—			—		—			—
Asset-Backed securities	—		449		—			—		—			449
Total	$	—	$	449	$	(883	)	$	244,625	$	(883	)	$	245,074

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2017 are as follows (in thousands):

	Securities in unrealized loss position less than 12 months					Securities in unrealized loss position greater than 12 months					Total
	Gross unrealized losses			Fair market value		Gross unrealized losses			Fair market value		Gross unrealized losses			Fair market value
Corporate debentures – bonds	$	(1	)	$	699	$	—		$	—	$	(1	)	$	699
Commercial paper	—			—		—			—		—			—
U.S. Agency bonds	(408		)	74,940		(285		)	133,811		(693		)	208,751
U.S. Treasury bills	—			—		(6		)	5,869		(6		)	5,869
Asset-Backed securities	—			—		—			—		—			—
Total	$	(409	)	$	75,639	$	(291	)	$	139,680	$	(700	)	$	215,319

Amortized costs and fair value of marketable available-for-sale securities by contractual maturity

The amortized cost and fair value of the marketable available-for-sale securities, by contractual maturity, as of June 30, 2018, are shown below (in thousands):

	Corporate Investments				Investments with Funds Held for Customers				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,274	$	3,274	$	208,610	$	208,039	$	211,884	$	211,313
Due after one year	—		—		75,827		75,554		75,827		75,554
Total	$	3,274	$	3,274	$	284,437	$	283,593	$	287,711	$	286,867

The amortized cost and fair value of the marketable available-for-sale securities, by contractual maturity, as of December 31, 2017, are shown below (in thousands):

	Corporate Investments				Investments with Funds Held for Customers				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	9,445	$	9,434	$	164,072	$	163,641	$	173,517	$	173,075
Due after one year	—				45,371		45,109		45,371		45,109
Total	$	9,445	$	9,434	$	209,443	$	208,750	$	218,888	$	218,184

Fair value of financial assets and liabilities, by level within the fair value hierarchy

The following table sets forth, by level within the fair value hierarchy, financial assets accounted for at fair value as of June 30, 2018 and December 31, 2017 (in thousands):

	As of June 30, 2018								As of December 31, 2017
	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
Corporate debentures – bonds	$	—	$	—	$	—	$	—	$	2,844	$	—	$	2,844	$	—
Commercial paper	1,338		—		1,338		—		—		—		—		—
U.S. Agency bonds	283,593		—		283,593		—		208,750		—		208,750		—
U.S. Treasury bills	1,487		—		1,487		—		5,870		—		5,870		—
Asset-Backed securities	449		—		449		—		720		—		720		—
Total	$	286,867	$	—	$	286,867	$	—	$	218,184	$	—	$	218,184	$	—

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Property and equipment

Property and equipment as of June 30, 2018 and December 31, 2017 consist of the following (in thousands):

	As of June 30, 2018		As of December 31, 2017
Computer equipment	$	198,262	$	185,034
Internal-use software	206,493		178,093
Leasehold improvements	48,087		43,556
Other property and equipment	24,446		22,572
Property and equipment	477,288		429,255
Less: accumulated depreciation and amortization	202,447		185,591
Property and equipment, net	$	274,841	$	243,664

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Prepaid Expenses and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2018

Prepaid Expense and Other Assets, Current [Abstract]

Prepaid expenses and other current assets

Deferred contract costs, prepaid expenses and other current assets as of June 30, 2018 and December 31, 2017 consist of the following (in thousands):

	As of June 30, 2018		As of December 31, 2017
Deferred contract costs	$	34,985	$	38,519
Prepaid expenses	31,763		20,088
Other current assets	11,368		12,995
Total deferred contract costs, prepaid expenses and other current assets	$	78,116	$	71,602

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Goodwill & Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the carrying value of goodwill since December 31, 2017 were as follows (in thousands):

Goodwill, December 31, 2017	$	35,808
Translation adjustment for the six months ended June 30, 2018 (1)	(324		)
Goodwill, June 30, 2018	$	35,484

__________________________

(1) Represents the impact of the foreign currency translation of the portion of goodwill that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such goodwill is translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income (loss).

Schedule of Finite-Lived Intangible Assets

The following tables present our acquired intangible assets as of the dates specified below (in thousands):

	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Cumulative Translation Adjustment (1)			Net Carrying Amount		Weighted Average Remaining Useful Life
Developed technology	$	23,300	$	(5,521	)	$	(959	)	$	16,820	5.7
Customer relationships	4,700		(2,409		)	—			2,291		4.3
Non-compete agreements	300		(300		)	—			—		0.0
	$	28,300	$	(8,230	)	$	(959	)	$	19,111	5.6
	December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Cumulative Translation Adjustment (1)			Net Carrying Amount		Weighted Average Remaining Useful Life
Developed technology	$	23,300	$	(4,355	)	$	(895	)	$	18,050	6.0
Customer relationships	4,700		(2,004		)	—			2,696		4.5
Non-compete agreements	300		(300		)	—			—		0.0
	$	28,300	$	(6,659	)	$	(895	)	$	20,746	5.9

____________________________

(1) Represents the impact of the foreign currency translation of the portion of acquired intangible assets that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such intangible assets are translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive (loss) income.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Reconciliation of shares used in the computation of basic and diluted net income per share

The following table is a reconciliation of the shares of Ultimate's issued and outstanding $0.01 par value common stock ("Common Stock") used in the computation of basic and diluted net income per share for the three and six months ended June 30, 2018 and 2017 (in thousands):

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2018	2017	2018	2017
Basic weighted average shares outstanding	30,619	29,751	30,512	29,645
Effect of dilutive equity instruments	494	872	652	994
Diluted weighted average shares outstanding	31,113	30,623	31,164	30,639
Options to purchase shares of Common Stock and other stock-based awards outstanding which are not included in the calculation of diluted income per share because their impact is anti-dilutive	—	1	1	5

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Non-cash stock-based compensation expense

The following table sets forth the non-cash stock-based compensation expense resulting from stock-based arrangements that were recorded in our unaudited condensed consolidated statements of income for the periods indicated (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Non-cash stock-based compensation expense:
Cost of recurring revenues	$	3,994	$	2,981	$	7,426	$	5,797
Cost of services revenues	2,362		1,935		4,735		3,924
Sales and marketing	17,074		19,785		33,411		37,196
Research and development	4,241		3,134		7,550		5,911
General and administrative	6,486		11,443		14,231		20,316
Total non-cash stock-based compensation expense	$	34,157	$	39,278	$	67,353	$	73,144

Allocation of share-based compensation costs by plan

Stock-based compensation expense associated with modifications and terminations made to the Company’s change-in-control plans in March 2015, February 2016, and February 2017, is shown in the table below (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Stock-based compensation expense:
Stock-based compensation expense	$	23,857	$	22,433	$	43,845	42,245
Stock-based compensation expense related to change in control plans	10,300		16,845		23,508		30,899
Total non-cash stock-based compensation expense	$	34,157	$	39,278	$	67,353	$	73,144

Summary of stock option activity

The following table summarizes stock option activity (for previously granted Options) for the six months ended June 30, 2018 (in thousands, except per share amounts):

Stock Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2017	114		$	29.24	0.4	$	21,476
Granted	—		—		0	—
Exercised	(99	)	29.54		0	—
Forfeited or expired	—		—		0	—
Outstanding at June 30, 2018	15		$	27.24	0.2	$	3,377
Exercisable at June 30, 2018	15		$	27.24	0.2	$	3,377

Schedule of restricted stock awards and restricted stock unit awards granted

The following table summarizes restricted stock awards and restricted stock unit awards granted during the three months ended June 30, 2018 and June 30, 2017 (in thousands):

	For the Three Months Ended June 30,
	2018	2017
Restricted Stock Awards:
Non-Employee Directors	2	4
Senior Officers	25	—
Total Restricted Stock Awards Granted	27	4
Restricted Stock Unit Awards:
Non-Senior Officers and Other Employees	27	13
Total Restricted Stock Unit Awards Granted	27	13

Schedule of activity pertaining to restricted awards vested

The following table summarizes the activity pertaining to Common Stock previously issued under restricted stock awards and restricted stock unit awards which vested during the three months ended June 30, 2018 and June 30, 2017 (in thousands):

	For the Six Months Ended June 30,
	2018				2017
	Shares Vested	Shares Retained (1)	Amount Retained (in millions) (1)	Shares Issued	Shares Vested	Shares Retained (1)	Amount Retained (in millions) (1)	Shares Issued
Restricted Stock Awards:
Non-Employee Directors	3	—	$0.0	3	29	—	$0.0	29
Senior Officers	396	150	34.0	246	278	109	21.2	169
Non-Senior Officers and Other Employees	5	2	0.3	3	2	1	0.1	1
Total Restricted Stock Awards	404	152	$34.3	252	309	110	$21.3	199
Restricted Stock Unit Awards:
Non-Senior Officers and Other Employees	224	76	$17.5	148	187	69	$13.4	118
Total Restricted Stock Unit Awards	224	76	$17.5	148	187	69	$13.4	118

______________________________

(1) During the six months ended June 30, 2018 and June 30, 2017, of the shares released, 228,098 and 178,564 shares, respectively, were retained by Ultimate and not issued, in satisfaction of withholding payroll tax requirements applicable to the payment of such awards.

Summary of restricted stock award and restricted stock unit activity

The following table summarizes restricted stock award and restricted stock unit activity for the six months ended June 30, 2018 (in thousands, except per share values):

	Restricted Stock Awards				Restricted Stock Unit Awards
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017	882		$	179.95	630		$	170.73
Granted	230		231.65		322		230.79
Vested and released	(405	)	170.23		(224	)	175.06
Forfeited or expired	—		—		(20	)	203.34
Outstanding at June 30, 2018	707		$	202.33	708		$	208.62

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Immaterial Correction of Prior Period Financial Statements (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

The revisions to our unaudited condensed consolidated statements of income and unaudited condensed consolidated statements of comprehensiveincome for the three and six months ended June 30, 2017 are as follows (in thousands, except per share amounts):

Unaudited Condensed Consolidated Statements of Income	For the Three Months Ended						For the Six Months Ended
	June 30, 2017						June 30, 2017
	As Reported			As Revised			As Reported		As Revised
Income before income taxes	$	6,870		$	6,870		$	9,885	$	9,885
(Provision) benefit for income taxes	(1,868		)	(2,341		)	2,451		1,884
Net income	$	5,002		$	4,529		$	12,336	$	11,769
Net income per share:
Basic	$	0.17		$	0.15		$	0.42	$	0.40
Diluted	$	0.16		$	0.15		$	0.40	$	0.38
Unaudited Condensed Consolidated Statement of Comprehensive Income
Net income	$	5,002		$	4,529		$	12,336	$	11,769
Other comprehensive income, net of tax	388			388			412		412
Comprehensive income	$	5,390		$	4,917		$	12,748	$	12,181

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Nature of Operations (Details)	Jun. 30, 2018 employee country language
Nature of Operations [Line Items]
Number of languages in which product solution available | language	14
Number of country-specific localizations (more than 35) | country	37
UltiPro Enterprise solution suite, minimum number of employees	2,501
UltiPro Enterprise solution suite, company size, number of employees (10,000 or more)	10,000
Minimum
Nature of Operations [Line Items]
UltiPro enterprise solution suite, number of employees in mid-market companies	501
Number Of employees in companies as a strategic market	100
Maximum
Nature of Operations [Line Items]
UltiPro enterprise solution suite, number of employees in mid-market companies	2,500
Number Of employees in companies as a strategic market	500

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Details)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	5 years 7 months 5 days	5 years 10 months 21 days
Minimum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	3 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	10 years
Subscription Contracts | Minimum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	2 years
Subscription Contracts | Maximum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	3 years

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jan. 01, 2018	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Deferred contract costs, prepaid expenses and other current assets	$ 78,116		$ 78,116		$ 49,284	$ 71,602
Total current assets	1,085,602		1,085,602		968,454	990,772
Deferred contract costs and other assets, net	114,623		114,623		100,668	53,409
Deferred tax assets, net	30,242		30,242		25,893	32,696
Total assets	1,560,019		1,560,019		1,395,349	1,377,211
Deferred revenue	212,997		212,997		198,997	197,088
Total current liabilities	953,134		953,134		844,995	843,086
Deferred income tax liability	380		380		422	251
Total liabilities	972,361		972,361		861,265	859,186
Accumulated earnings	176,521		176,521		141,847	125,788
Total stockholders’ equity	587,658		587,658		534,084	518,025
Total liabilities and stockholders’ equity	1,560,019		1,560,019		1,395,349	1,377,211
Recurring revenues	239,458	$ 195,147	476,045	$ 385,128
Sales and marketing	66,207	67,015	137,404	136,375
Net income	13,680	$ 4,529	34,674	$ 11,769
Calculated under Revenue Guidance in Effect before Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Deferred contract costs, prepaid expenses and other current assets	99,189		99,189			71,602
Total current assets						990,772
Deferred contract costs and other assets, net	57,365		57,365			53,409
Deferred tax assets, net						32,696
Total assets						1,377,211
Deferred revenue	210,212		210,212			197,088
Total current liabilities						843,086
Deferred income tax liability						251
Total liabilities						859,186
Accumulated earnings	143,121		143,121			125,788
Total stockholders’ equity						518,025
Total liabilities and stockholders’ equity						$ 1,377,211
Recurring revenues	239,776		476,806
Sales and marketing	71,325		148,479
Net income	8,879		24,359
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Deferred contract costs, prepaid expenses and other current assets	(21,073)		(21,073)		(22,318)
Total current assets					(22,318)
Deferred contract costs and other assets, net	57,258		57,258		47,259
Deferred tax assets, net					(6,803)
Total assets					18,138
Deferred revenue	2,785		2,785		1,909
Total current liabilities					1,909
Deferred income tax liability					170
Total liabilities					2,079
Accumulated earnings	33,400		33,400		16,059
Total stockholders’ equity					16,059
Total liabilities and stockholders’ equity					$ 18,138
Recurring revenues	(318)		(761)
Sales and marketing	(5,118)		(11,075)
Net income	$ 4,801		$ 10,315

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Investments in Marketable Securities and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Funds held for customers – money market securities and other cash equivalents	$ 340,517	$ 354,312
Net Unrealized Gain/(Loss)	(844)	(704)
Fair Value	286,867	218,184
Total corporate investments and funds held for clients - amortized cost basis	628,228	573,200
Total corporate investments and funds held for clients - fair value	627,384	572,496
Amortized Cost Basis
Due in one year or less	211,884	173,517
Due after one year	75,827	45,371
Total	287,711	218,888
Fair Value
Due in one year or less	211,313	173,075
Due after one year	75,554	45,109
Total	286,867	218,184
Corporate debentures and bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	0	2,848
Net Unrealized Gain/(Loss)	0	(4)
Fair Value	0	2,844
Fair Value
Total	0	2,844
Commercial paper
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,338	0
Net Unrealized Gain/(Loss)	0	0
Fair Value	1,338	0
Fair Value
Total	1,338	0
U.S. Agency bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	284,437	209,443
Net Unrealized Gain/(Loss)	(844)	(693)
Fair Value	283,593	208,750
Fair Value
Total	283,593	208,750
U.S. Treasury bills
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,487	5,876
Net Unrealized Gain/(Loss)	0	(6)
Fair Value	1,487	5,870
Fair Value
Total	1,487	5,870
Asset-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	449	721
Net Unrealized Gain/(Loss)	0	(1)
Fair Value	449	720
Fair Value
Total	449	720
Corporate Investments
Schedule of Available-for-sale Securities [Line Items]
Fair Value	3,274	9,434
Amortized Cost Basis
Due in one year or less	3,274	9,445
Due after one year	0	0
Total	3,274	9,445
Fair Value
Due in one year or less	3,274	9,434
Due after one year	0
Total	3,274	9,434
Investments with Funds Held for Customers
Schedule of Available-for-sale Securities [Line Items]
Fair Value	283,593	208,750
Amortized Cost Basis
Due in one year or less	208,610	164,072
Due after one year	75,827	45,371
Total	284,437	209,443
Fair Value
Due in one year or less	208,039	163,641
Due after one year	75,554	45,109
Total	$ 283,593	$ 208,750

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Funds held for Customers, Corporate Investments in Marketable Securities and Fair Value of Financial Instruments Investments in Marketable Securities and Fair Value of Financial Instruments (Details 1) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gross unrealized losses	$ 0	$ (409)
Fair market value	449	75,639
Gross unrealized losses	(883)	(291)
Fair market value	244,625	139,680
Gross unrealized losses	(883)	(700)
Fair market value	245,074	215,319
Corporate debentures – bonds	0	2,844
Commercial paper	1,338	0
U.S. Agency bonds	283,593	208,750
U.S. Treasury bills	1,487	5,870
Asset-Backed securities	449
Total	286,867	218,184
(Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debentures – bonds	0	0
Commercial paper	0	0
U.S. Agency bonds	0	0
U.S. Treasury bills	0	0
Asset-Backed securities	0	0
Total	0	0
(Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debentures – bonds	0	2,844
Commercial paper	1,338	0
U.S. Agency bonds	283,593	208,750
U.S. Treasury bills	1,487	5,870
Asset-Backed securities	449	720
Total	286,867	218,184
(Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debentures – bonds	0	0
Commercial paper	0	0
U.S. Agency bonds	0	0
U.S. Treasury bills	0	0
Asset-Backed securities	0	0
Total	0	0
Corporate debentures and bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gross unrealized losses	0	(1)
Fair market value	0	699
Gross unrealized losses	0	0
Fair market value	0	0
Gross unrealized losses	0	(1)
Fair market value	0	699
Total	0	2,844
Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gross unrealized losses	0	0
Fair market value	0	0
Gross unrealized losses	0	0
Fair market value	0	0
Gross unrealized losses	0	0
Fair market value	0	0
U.S. Agency bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gross unrealized losses	0	(408)
Fair market value	0	74,940
Gross unrealized losses	(883)	(285)
Fair market value	244,625	133,811
Gross unrealized losses	(883)	(693)
Fair market value	244,625	208,751
Total	283,593	208,750
U.S. Treasury bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gross unrealized losses	0	0
Fair market value	0	0
Gross unrealized losses	0	(6)
Fair market value	0	5,869
Gross unrealized losses	0	(6)
Fair market value	0	5,869
Total	1,487	5,870
Asset-Backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gross unrealized losses	0	0
Fair market value	449	0
Gross unrealized losses	0	0
Fair market value	0	0
Gross unrealized losses	0	0
Fair market value	449	0
Total	$ 449	$ 720

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Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Capital Leased Assets [Line Items]
Property and equipment	$ 477,288		$ 477,288		$ 429,255
Less: accumulated depreciation and amortization	202,447		202,447		185,591
Property and equipment, net	274,841		274,841		243,664
Capitalized Computer Software, Additions	12,800	$ 13,600	27,400	$ 26,200
Stock-based compensation costs capitalized	800	1,000	1,800	2,000
Computer equipment
Capital Leased Assets [Line Items]
Property and equipment	198,262		198,262		185,034
Internal-use software
Capital Leased Assets [Line Items]
Property and equipment	206,493		206,493		178,093
Leasehold Improvements
Capital Leased Assets [Line Items]
Property and equipment	48,087		48,087		43,556
Other property and equipment
Capital Leased Assets [Line Items]
Property and equipment	24,446		$ 24,446		$ 22,572
Minimum | Property and equipment
Capital Leased Assets [Line Items]
Estimated useful life (in years)			2 years
Minimum | Leasehold Improvements
Capital Leased Assets [Line Items]
Estimated useful life (in years)			3 years
Maximum | Property and equipment
Capital Leased Assets [Line Items]
Estimated useful life (in years)			15 years
Maximum | Leasehold Improvements
Capital Leased Assets [Line Items]
Estimated useful life (in years)			15 years
Development Project | Internal-use software
Capital Leased Assets [Line Items]
Amortization	$ 2,100	$ 1,000	$ 3,900	$ 2,000

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Prepaid Expenses and Other Current Assets (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jan. 01, 2018	Dec. 31, 2017
Prepaid Expense and Other Assets, Current [Abstract]
Prepaid commissions	$ 34,985,000		$ 34,985,000			$ 38,519,000
Other Prepaid Expense	31,763,000		31,763,000			20,088,000
Other Assets	11,368,000		11,368,000			12,995,000
Total prepaid expenses and other current assets	78,116,000		78,116,000		$ 49,284,000	71,602,000
Deferred contract costs	35,000,000		35,000,000			38,500,000
Amortization expense	5,500,000	$ 9,800,000	10,900,000	$ 18,300,000
Impairment loss			0	$ 0
Deferred contract costs, net	$ 102,200,000		$ 102,200,000			$ 45,500,000

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Goodwill & Intangible Assets Goodwill and Intangible Assets (Goodwill) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Goodwill [Roll Forward]
Goodwill, December 31, 2017	$ 35,808
Translation adjustment	(324)
Goodwill, June 30, 2018	$ 35,484

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Goodwill & Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 28,300		$ 28,300		$ 28,300
Accumulated Amortization	(8,230)		(8,230)		(6,659)
Cumulative Translation Adjustment			(959)	$ (895)
Net Carrying Amount	19,111		$ 19,111		20,746
Estimated Useful Lives			5 years 7 months 5 days	5 years 10 months 21 days
Intangible assets with indefinite lives	100		$ 100		100
Amortization of intangible assets	800	$ 800	1,600	$ 1,600
Developed technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	23,300		23,300		23,300
Accumulated Amortization	(5,521)		(5,521)		(4,355)
Cumulative Translation Adjustment			(959)	$ (895)
Net Carrying Amount	16,820		$ 16,820		18,050
Estimated Useful Lives			5 years 8 months	6 years 7 days
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,700		$ 4,700		4,700
Accumulated Amortization	(2,409)		(2,409)		(2,004)
Cumulative Translation Adjustment			0	$ 0
Net Carrying Amount	2,291		$ 2,291		2,696
Estimated Useful Lives			4 years 4 months 4 days	4 years 6 months 4 days
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	300		$ 300		300
Accumulated Amortization	(300)		(300)		(300)
Cumulative Translation Adjustment			0	$ 0
Net Carrying Amount	$ 0		$ 0		$ 0
Estimated Useful Lives			0 days	0 days
Minimum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives			3 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives			10 years

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Earnings Per Share (Details) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Earnings Per Share [Abstract]
Common Stock, par value (in dollars per share)	$ 0.01		$ 0.01		$ 0.01
Basic weighted average shares outstanding (in shares)	30,619	29,751	30,512	29,645
Effect of dilutive equity instruments (in shares)	494	872	652	994
Diluted weighted average shares outstanding (in shares)	31,113	30,623	31,164	30,639
Options to purchase shares of Common Stock and other stock-based awards outstanding which are not included in the calculation of diluted income per share because their impact is anti-dilutive (in shares)	0	1	1	5

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Foreign Currency (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Foreign Currency [Abstract]
Cumulative unrealized translation losses	$ 0.5	$ 0.4	$ 1.0	$ 0.6
Unrealized translation loss included in accumulated other comprehensive income	$ 6.4		$ 6.4		$ 5.4

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Stock-Based Compensation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	$ 34,157,000	$ 39,278,000	$ 67,353,000	$ 73,144,000
Net cash proceeds from the exercise of stock options			2,923,000	4,541,000
Total non-cash stock-based compensation expense	34,157,000	39,278,000	67,353,000	73,144,000
Cost of recurring revenues
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	3,994,000	2,981,000	7,426,000	5,797,000
Cost of services revenues
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	2,362,000	1,935,000	4,735,000	3,924,000
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	17,074,000	19,785,000	33,411,000	37,196,000
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	4,241,000	3,134,000	7,550,000	5,911,000
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	6,486,000	11,443,000	$ 14,231,000	20,316,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Vesting period			3 years
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Options vested	0	0	$ 0	0
Net cash proceeds from the exercise of stock options	400,000	3,000,000	2,900,000	4,500,000
Change In Control Plan
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total non-cash stock-based compensation expense	23,857,000	22,433,000	43,845,000	42,245,000
March 2015, February 2016, And February 2017 Control Plans Change
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Increase in share-based compensation	5,100,000	5,700,000	(6,500,000)	(7,400,000)
Total non-cash stock-based compensation expense	$ 10,300,000	$ 16,845,000	$ 23,508,000	$ 30,899,000
Amended and Restated 2005 Equity and Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Aggregate number of shares of Common Stock available for issuance (in shares)	1,815,862		1,815,862

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Stock-Based Compensation Stock-Based Compensation (Details 1) - USD ($) $ / shares in Units, shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Document Fiscal Year Focus			2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of period (in shares)			114
Granted (in shares)	0		0
Exercised (in shares)			(99)
Forfeited or expired (in shares)			0
Outstanding at end of period (in shares)	15		15
Exercisable at end of period (in shares)	15		15
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Outstanding at beginning of period (in dollars per share)			$ 29.24
Granted (in dollars per share)			0.00
Exercised (in dollars per share)			29.54
Forfeited or expired (in dollars per share)			0.00
Outstanding at end of period (in dollars per share)	$ 27.24		27.24
Exercisable at end of period (in dollars per share)	$ 27.24		$ 27.24
Weighted Average Remaining Contractual Term [Abstract]
Outstanding at beginning of period (in years)			2 months 22 days	4 months 24 days
Granted (in years)			0 years
Exercised (in years)			0 years
Forfeited or expired (in years)			0 years
Outstanding at end of period (in years)			2 months 22 days	4 months 24 days
Exercisable at end of period (in years)			2 months 22 days
Aggregate Intrinsic Value [Abstract]
Outstanding at beginning of period			$ 21,476,000
Granted			0
Exercised			0
Forfeited or expired			0
Outstanding at end of period	$ 3,377,000		3,377,000
Exercisable at end of period	3,377,000		3,377,000
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Total intrinsic value of options exercised	3,400,000	$ 18,200,000	20,200,000	$ 28,100,000
Options vested	0	$ 0	0	$ 0
Total unrecognized compensation costs	$ 0		$ 0
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at beginning of period (in shares)			882
Granted (in shares)	27	4	230
Vested and Released (in shares)	(404)	(309)	(405)
Forfeited or expired (in shares)			0
Outstanding at end of period (in shares)	707		707
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Outstanding at beginning of period (in dollars per share)			$ 179.95
Granted (in dollars per share)			231.65
Vested and Released (in dollars per share)			170.23
Forfeited or expired (in dollars per share)			0.00
Outstanding at end of period (in dollars per share)	$ 202.33		$ 202.33
Total unrecognized compensation costs	$ 109,600,000		$ 109,600,000
Non-vested restricted stock weighted average recognition period			1 year 8 months 15 days
Restricted Stock | Non-Employee Directors
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Granted (in shares)	2	4
Vested and Released (in shares)	(3)	(29)
Restricted Stock | Non-Senior Officers and Other Employees
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Granted (in shares)			25	0
Vested and Released (in shares)	(5)	(2)
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at beginning of period (in shares)			630
Granted (in shares)	27	13	322
Vested and Released (in shares)	(224)	(187)	(224)
Forfeited or expired (in shares)			(20)
Outstanding at end of period (in shares)	708		708
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Outstanding at beginning of period (in dollars per share)			$ 170.73
Granted (in dollars per share)			230.79
Vested and Released (in dollars per share)			175.06
Forfeited or expired (in dollars per share)			203.34
Outstanding at end of period (in dollars per share)	$ 208.62		$ 208.62
Total unrecognized compensation costs	$ 113,000,000		$ 113,000,000
Non-vested restricted stock weighted average recognition period			1 year 11 months 6 days
Restricted Stock Units (RSUs) | Non-Senior Officers and Other Employees
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Granted (in shares)	27	13
Vested and Released (in shares)	(224)	(187)

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Stock-Based Compensation - Restricted Awards Vested (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares retained by company an not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)			228,098	178,564
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested (in shares)	404,000	309,000	405,000
Shares retained by company an not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	152,000	110,000
Aggregate amount of shares retained by company and not issued	$ 34.3	$ 21.3
Shares retained by company and not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	252,000	199,000
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested (in shares)	224,000	187,000	224,000
Shares retained by company an not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	76,000	69,000
Aggregate amount of shares retained by company and not issued	$ 17.5	$ 13.4
Shares retained by company and not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	148,000	118,000
Non-Employee Directors | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested (in shares)	3,000	29,000
Shares retained by company an not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	0	0
Aggregate amount of shares retained by company and not issued	$ 0.0	$ 0.0
Shares retained by company and not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	3,000	29,000
Senior Officers | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested (in shares)	396,000	278,000
Shares retained by company an not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	150,000	109,000
Aggregate amount of shares retained by company and not issued	$ 34.0	$ 21.2
Shares retained by company and not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	246,000	169,000
Non-Senior Officers and Other Employees | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested (in shares)	5,000	2,000
Shares retained by company an not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	2,000	1,000
Aggregate amount of shares retained by company and not issued	$ 0.3	$ 0.1
Shares retained by company and not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	3,000	1,000
Non-Senior Officers and Other Employees | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested (in shares)	224,000	187,000
Shares retained by company an not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	76,000	69,000
Aggregate amount of shares retained by company and not issued	$ 17.5	$ 13.4
Shares retained by company and not issued, in satisfaction of employee withholding tax requirements applicable to payment of awards (in shares)	148,000	118,000

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Deferred Revenue and Performance Obligations - Revenue recognized (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue from Contract with Customer [Abstract]
Revenue recognized	$ 150.5	$ 124.7	$ 159.0	$ 132.3

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Deferred Revenue and Performance Obligations (Details) $ in Billions	6 Months Ended
	Jun. 30, 2018 USD ($)
Revenue from Contract with Customer [Abstract]
Performance obligation expected to be satisfied	$ 1.7
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, percent	47.00%
Performance obligations expected to be satisfied, expected timing	1 year

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Immaterial Correction of Prior Period Financial Statements (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Income before income taxes	$ 20,803	$ 6,870	$ 43,080	$ 9,885
Provision for income taxes	(7,123)	(2,341)	(8,406)	1,884
Net income	$ 13,680	$ 4,529	$ 34,674	$ 11,769
Basic (in dollars per share)	$ 0.45	$ 0.15	$ 1.14	$ 0.40
Diluted (in dollars per share)	$ 0.44	$ 0.15	$ 1.11	$ 0.38
Other comprehensive income (loss), net of tax	$ (409)	$ 388	$ (1,102)	$ 412
Comprehensive income	$ 13,271	4,917	$ 33,572	12,181
As Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Income before income taxes		6,870		9,885
Provision for income taxes		(1,868)		2,451
Net income		$ 5,002		$ 12,336
Basic (in dollars per share)		$ 0.17		$ 0.42
Diluted (in dollars per share)		$ 0.16		$ 0.40
Other comprehensive income (loss), net of tax		$ 388		$ 412
Comprehensive income		5,390		12,748
Tax Cuts And Jobs Act
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net income		$ 500		$ 600

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Subsequent Event (Details) - PeopleDoc SAS - Subsequent Event $ in Millions	Jul. 27, 2018 USD ($) shares
Subsequent Event [Line Items]
Acquisition price | $	$ 300
Cash paid at closing | $	75
Cash payment to be paid 12 months after closing date | $	$ 50
Common Stock
Subsequent Event [Line Items]
Shares issued in business combination (in shares) | shares	560,150
Shares to be issued in business combination, future period (in shares) | shares	35,295
Restricted Stock
Subsequent Event [Line Items]
Shares issued in business combination (in shares) | shares	43,522