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Ultimate Software Ups Ante in HCM With Slack App for UltiPro

Zacks

The Ultimate Software Group, Inc. ULTI recently unveiled Slack app for UltiPro in a bid to enable enterprises accelerate Human Resources or HR processes and workplace interactions. The latest integrated solution enables UltiPro users utilize the robust collaborative capabilities of Slack platform.

The new solution makes UltiPro more interactive by making information seamlessly accessible. For instance, the Slack interface allows employees to enter notes, provide performance reviews, scan through time-off balances and give feedback on formal reports, among others.

Further, in order to ensure privacy UltiPro commands integrated into Slack can be viewed only by the specific user assigned to a particular task.

These collaborative features bolster employee engagement and productivity, consequently reinforcing Ultimate Software’s “people-centric” focus.

The UltiPro users can complete critical tasks in real time within Slack once it is installed, without any log in elsewhere. Per data on Slack website, the app is expected to launch in Dec 18.

Initiatives to Boost Presence in HCM Market Bode Well

Ultimate Software is benefiting from the robust adoption of its flagship solution, UltiPro HCM product suite. The slack-based integration enhances employee engagement and is anticipated to bolster adoption of UltiPro solutions, in turn aiding the top line.

The Ultimate Software Group, Revenue (TTM)

 

The Ultimate Software Group, Inc. Revenue (TTM) | The Ultimate Software Group, Inc. Quote

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Moreover, the company is leaving no stone unturned to fortify presence in the HRM market. In fact, the new innovation is anticipated to aid the company in strengthening its foothold in the human capital management (“HCM”) market.

Per research firm MarketsandMarkets, the HCM market size is anticipated to grow from $14.5 billion in 2017 to $22.5 billion by 2022 at a CAGR of 9.2%.

Additionally, the company acquired PeopleDoc in July 2018 in a bid to gain HR service delivery capabilities and bolster presence in Europe.

Notably, in third-quarter 2018, International Sales team (formerly PeopleDoc unit) delivered a robust performance with notable customer wins from northern Europe, Central Europe, and Germany.

We believe that the augmentation of UltiPro’s features will not only improve customer retention rate but also attract new customers on a regular basis. This will eventually boost recurring revenue growth. Management anticipates recurring revenues to increase 24% year over year in fiscal 2018.

Risks Remain

However, intensifying competition in the HCM market could lead to pricing pressure and affect Ultimate Software’s margins in the near term.

Further, higher operating expenses primarily owing to an increase in headcount and marketing spending is a major concern.

This apart, the ongoing trend of significant investments in cloud solutions exposes Ultimate Software to the risk of losing existing enterprise customers, which in turn can adversely impact its top-line performance, especially in the near term.

Zacks Rank & Key Picks

Ultimate Software carries a Zacks Rank #5 (Strong Sell).

Twitter, Inc. TWTR, Upland Software UPLD and Intel INTC are some stocks worth considering in the broader technology sector. All the three stocks flaunt a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Twitter, Upland Software and Intel is currently pegged at 22.1%, 22% and 8.4%, respectively.

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