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LETTER TO OUR SHAREHOLDERS

Fellow Shareholders,

We closed our 25th year in business with the most outstanding overall performance since our inception. From a revenue perspective, we posted a record $618 million in total revenues, a 22% increase over 2014, and a record $516 million in recurring revenues, a 23% increase over 2014. In Sales, our teams produced the best quarter in our history in the fourth quarter of 2015. Our Services and Development teams did the work that increased our year-over-year customer retention rate to greater than 97% for 2015, and we now have more than 25 million people records in our cloud environment. We hired more than 700 new UltiPeeps in 2015, and we raised our annual retention rate for UltiPeeps to 94%.

Our Enterprise, Mid-Market, and Strategic1 sales teams are confident and prepared to capitalize on our momentum in 2016, and beyond. Many of our sales people are long-term veterans, highly skilled in building relationships and communicating the value proposition of our HCM (human capital management) solutions. We also have quite a few new sales people who have joined us recently, and they have begun to create some impressive results. We will end the first quarter of 2016 with 120 quota carriers, up from 92 quota carriers at the beginning of 2015. We continue to expand our infrastructure to support our growth initiatives.

Our Marketing metrics reinforce our confidence. In 2015, we had the highest number ever in a year of responders to our campaigns indicating that they are looking to buy an HCM solution within 12 months—a 48% increase over 2014, and it was the largest year-over-year increase we have had historically. We also had a 77% expansion over 2014 for looking-to-buy registrants to our sales seminars. In addition, the number of unique visitors to our website was up 53% compared with 2014, and up 75% for the fourth quarter of 2015, the largest fourth-quarter, year-over-year gain in our history.

In January 2016, Fortune magazine named Ultimate #1 on its list of "10 Best Large Workplaces in Technology." For the last 25 years, we have focused on creating a culture of trust, based upon our belief in the incomparable value of putting employees first. Today, the products and services we provide our customers are the best in our industry, we believe, because of the passion and commitment of our people.

G2 Crowd, an independent website that has collected and analyzed more than 50,000 software reviews from end-users, produces a real-time performance grid for "Best HR Management Software Suites in 2016," and the grid shows UltiPro to be the highest ranked of all solutions overall, and in customer satisfaction, in particular. UltiPro also has the highest G2 Score for "Best Core HR in 2016," with a score significantly higher than the vendors tied for second place, and the highest G2 Score for "Best Payroll Software in 2016" as well. Also in January 2016, G2 Crowd produced a number of "Best of 2015 User's Choice" lists that are based upon user reviews submitted for the twelve months ended December 31, 2015. In the Enterprise category, where award winners were selected based upon reviews from companies with more than 1,000 employees, G2 Crowd named UltiPro "Shortest Time to Return on Investment" for its market space. G2 Crowd also recognized UltiPro as "Best of 2015 Highest Rated Satisfaction" for both Performance Management and Core HR.2

A number of other business publications and industry research analysts recognized Ultimate in 2015 and early 2016. Forbes magazine ranked Ultimate #7 on its 2015 list of the "Most Innovative Growth Companies," and Nucleus Research identified Ultimate as a "Leader" in its "HCM Technology Value Matrix, Second Half of 2015." In addition to Fortune naming Ultimate the top Large Workplace in Technology and #21 on its 2015 "100 Best Companies to Work For" list, Fortune also ranked Ultimate #6 on its "2015 100 Best Workplaces for Millennials," #1 Workplace for Hispanics and Latinos, #3 for African Americans, #4 for Diversity, #2 for Camaraderie, and #23 for Women.3

Our total customer count has risen to approximately 3,200 organizations, and Ultimate has, we believe, the industry's largest customer base using a cloud-based HCM solution that unifies human resources, benefits, payroll, talent acquisition, talent management, compensation management, and time and labor management. According to our new buyer surveys over the last 18 months, the top three reasons new customers gave for buying from Ultimate over our competitors were all product-related, with "Unified HCM" as the #1 reason, "Strength of Functionality" #2, and "Improved Reporting" #3.

The continuing demand we see in our Enterprise, Mid-Market, and Strategic markets, as well as our strong culture, long-tenured leadership, and highly talented workforce, all give us the confidence we will achieve our 2016 goals and our longer-range goal of breaking through $1 billion in total revenue in 2018. We have the people, the culture of trust, and the products and services to execute our vision. We also have many long-tenured customers who advocate for us, supporting us proactively in our growth and development objectives. Our strategic approach remains the same as it has always been: focus on "people first," care for them like family, and trust in them to take care of our customers by delivering the highest quality products and services.

We thank you, our shareholders, customers, employees, and partners for your continuing support.

ULTIMATE SOFTWARE // 2015 ANNUAL REPORT