UKG (Ultimate Kronos Group), a leading global provider of HCM, payroll, HR service delivery, and workforce management solutions, today announced financial results, company highlights, and customer successes for Fiscal 2020, which includes the first six months of the Kronos Incorporated and Ultimate Software merger. Total revenue for the combined organization grew 9%, approaching $3 billion1, with earnings before interest, tax, depreciation, and amortization (EBITDA) up 10% to nearly $770 million1.
“The story of UKG has only just begun, and what an extraordinary first chapter we’ve written,” said Aron Ain, UKG chairman and CEO. “As COVID-19 took hold immediately after we announced our intent to merge, our team rallied around three principles core to who we are: protect our people, meet our customer commitments, and protect the financial health of UKG. I’m proud to say we’ve done all three with no job losses or furloughs—exceeding our own expectations. Propelled by the strength and ingenuity of our people worldwide, the diversity of our business, and the heightened need for modern and versatile solutions, our future looks so bright. As we work with our customers to manage this changing world, I marvel at the scope of innovation and expertise we have as UKG. I am a grateful CEO who is confident we will continue to persevere while taking care of each other along the way.”
Record R&D Investment Brings HCM and Workforce Management to New Heights
Combined research and development (R&D) spend exceeded $2 billion over the past five years—including more than half a billion dollars in Fiscal 2020—across newly branded UKG Dimensions (formerly called Workforce Dimensions from Kronos), UKG Pro (formerly called UltiPro), UKG Ready (formerly called Kronos Workforce Ready), and all other specialty and verticalized products. This marks one of the industry’s largest single commitments to HCM and workforce management platform innovation.
These investments enabled UKG customers to evolve in response to changing market conditions and workforce needs with enhancements across all products, including features to manage the COVID-19 workplace response; evolving user experiences with a strong focus on accessibility across all devices; and providing practical AI and people-first intelligence that keeps employees at the center of decisions.
Additionally, with availability starting in August 2020, customers are experiencing the benefits of bringing world-class HCM, workforce management, and HR service delivery together through a combination of UKG Pro with UKG Ready or UKG Dimensions that harmonizes the user experience, seamlessly shares critical people, payroll, and accruals data, and simplifies navigation so managers and employees can quickly complete tasks and drive exceptional business outcomes across domains.
Partners for Life: Customers Reap Benefits of UKG Together as One
Since the merger closed, hundreds of orders have been signed with new and existing customers that include a combination of legacy Ultimate and Kronos solutions, as organizations worldwide benefit from UKG’s industry-leading HR, global payroll, and workforce management together as one.
Driven by a mix of strong UKG customer retention, opportunities for existing customers to leverage workforce management or HCM solutions, and tremendous growth with hundreds of new customers added in the fourth quarter, annual recurring revenue bookings grew significantly year over year in the quarter as subscription revenue grew 17% for the year1. UKG also closed the largest SaaS order ever in the company’s combined 70-year history with a major U.S. grocery chain. Other significant customer sales in the first six months since the merger closed include:
- A major chain of walk-in clinics and urgent care centers located in Northeastern U.S.;
- An operator of movie theaters with 24,000+ employees in the U.S., U.K., and Latin America;
- A global doughnut and coffee retailer with 5,000+ employees;
- An American supermarket chain with 100+ locations;
- One of the largest food banks in the U.S. providing more than 60 million free meals each year;
- An organic energy and nutrition bar maker;
- A North American beverage company with 25,000+ employees;
- One of the largest civil rights organizations in the U.S.; and
- An owner and operator of dozens of gaming and racing facilities employing 14,000+ workers.
UKG also announced Global Delivery Services, a team of more than 2,000 services professionals around the world with deep technical and industry expertise to provide dedicated professional services, support, and resources throughout the entire customer lifecycle. With Global Delivery Services working in close collaboration with the UKG Customer Success and Executive Relationship Management teams, UKG brought nearly 500 customers live in the fourth quarter.
When You Put People First, Inspired Work Follows: 100+ Accolades in Fiscal 2020
Collectively, UKG received more than 100 industry awards for its customer experience, innovation, and culture practices—including marking the first time in history that two companies named to the Fortune 100 Best Companies to Work For® list merged in the same year.
With more than 12,500 employees worldwide aligning under a singular mission with a new name and tagline, Our Purpose Is People, UKG validated this promise in various ways, including:
- Announcing new UKG benefits—representing a $35 million increase in combined spend—to care for employees and families in various stages of life, including 100% company-paid healthcare premiums for all families, a 45% match on all 401(k) contributions, unlimited PTO for full- and part-time employees, fully paid parental leave for birth and adoptive parents, and student loan repayment assistance.
- Raising more than $1.5 million through an Employee Relief Fund to support UKG employees and family members impacted by the COVID-19 pandemic, and then establishing the PeopleInspired Giving Foundation, a 501(c)(3) dedicated to providing financial assistance to employees physically, economically, emotionally, or otherwise adversely impacted by any tragedy.
- Donating more than $645,000 to the Center for Disaster Philanthropy (CDP), a nonprofit organization committed to bringing fast and effective worldwide aid, to support global communities impacted by COVID-19.
- Providing 100% matching for employee donations to any U.S.-based 501(c)(3) nonprofit directly working to end racial injustice, including the Equal Justice Initiative and NAACP Legal Defense & Education Fund.
- Earning a perfect 100% on the 2020 Disability Equality Index and launching the Equity at Work Council by UKG, an interdisciplinary group of innovators and academic, nonprofit, and business leaders working to understand and develop the science underpinning diversity, equity, inclusion, and belonging (DEI&B).
Additionally, the combined organization secured several prestigious culture-related award accolades since the merger closed, including being named the #2 Best Workplace for Women by Fortune magazine, ranking #13 on PEOPLE magazine’s 50 Companies That Care, landing at #3 on Fortune’s Best Workplaces for Millennials list, and winning Great Place to Work accolades in every country where there is a significant employee presence.
- This announcement was made from UKG Works, the world’s largest workforce information exchange. UKG Works is taking place virtually this week. See live updates and join the conversation by using #UKGWorks across all social media channels.
- As part of the UKG “Get Social. Give Back.” campaign, for every social media post with #UKGWorks, $5 will be donated to Action Against Hunger—up to $20,000 total.
- Follow UKG on Facebook, Instagram, LinkedIn, Twitter, and YouTube.
- Learn more about UKG and why Our Purpose is People.
- UKG CEO Aron Ain shares how to transform employee engagement into a growth strategy in his book, “WorkInspired: How to Build an Organization Where Everyone Loves to Work.”
At UKG (Ultimate Kronos Group), Our Purpose Is People. Built from a merger that created one of the largest cloud companies in the world, UKG believes organizations succeed when they focus on their people. As a leading global provider of HCM, payroll, HR service delivery, and workforce management solutions, UKG’s award-winning Pro, Dimensions, and Ready solutions help tens of thousands of organizations across geographies and in every industry drive better business outcomes, improve HR effectiveness, streamline the payroll process, and help make work a better, more connected experience for everyone. UKG has more than 12,000 employees around the globe and is known for its inclusive workplace culture. The company has earned numerous awards for its culture, products, and services, including consecutive years on Fortune’s 100 Best Companies to Work For list. To learn more, visit www.ukg.com.
© 2020 UKG Inc. All rights reserved. For a full list of UKG trademarks, please visit www.ukg.com/trademarks. All other trademarks, if any, are property of their respective owners. All specifications are subject to change.
Footnote 1: UKG fiscal results are pro forma as though the Kronos Incorporated and Ultimate Software were combined for all periods presented. Ultimate Software’s results have also been pro forma to align with UKG’s fiscal year calendar, which closes September 30th. All financial information within this press release is presented using non-GAAP financial measures. UKG believes that non-GAAP measures of financial results provide useful information regarding certain financial and business trends relating to UKG’s results of operations. Non-GAAP revenue consists of GAAP revenue excluding the effect of the write-down of deferred revenue associated with purchase accounting for certain mergers and acquisitions. EBITDA consists of EBITDA per the definition under the Company’s credit agreement which excludes items such as: (1) share-based compensation expense for stock options and stock awards in accordance with ASC 718 and compensation expenses related to ordinary dividends; (2) depreciation of property, plant, and equipment; (3) amortization of intangible assets; (4) acquisition-related deferred revenue and prepaid commissions write-downs and expenses including advisory, legal, accounting, acquired employee-related costs, and integration costs and (5) unusual costs or one-time expenses. For purposes of calculating growth rates, prior years have been restated for acquisitions, dispositions, and pro forma for the combination of Kronos Incorporated and Ultimate Software.