The Ultimate Software Group, Inc. (ULTI), a provider of cloud-based human capital management solutions, is seeing consistent 25% growth as well as profits from its best-in-class product, says Alex Zukin, Research Analyst at Stephens Inc.
“You’ve seen [ULTI] trade up significantly over the last six months. I upgraded it in July based on the fact — I truly believe that they have a product that is best-in-class, they have a moat that is very wide, and they have chosen to grow at 25% consistently and only invest 20% to 25% of sales and marketing, and I think that model works,” Zukin said.
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While historically Ultimate Software has not been looked at as a growth company, Zukin believes that ULTI is in fact on a steady growth path and has been profitable due to its differentiated technology.
“Growth investors are rewarding them for being able to grow sustainably and be profitable. I think that historically the knock on them has been this is not a growth company, and I don’t think that’s accurate in my view. I think that they are a steady growth company that has the luxury of being able to grow at its current pace and be profitable because of the competitive differentiation they’ve developed in their technology,” Zukin said.