Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based
tools for digital transformation, today announced financial and
operating results for the first quarter 2024 and issued guidance
for its second quarter and full year of 2024.
First Quarter 2024 Financial Highlights
- Total revenue was $70.7 million, a decrease of 8% from $77.1
million in the first quarter of 2023.
- Subscription and support revenue was $67.1 million, a decrease
of 8% from $72.9 million in the first quarter of 2023.
- GAAP net loss was $96.1 million compared to a GAAP net loss of
$140.0 million in the first quarter of 2023. GAAP net loss
attributable to common stockholders was $97.5 million compared to
GAAP net loss attributable to common stockholders of $141.4 million
in the first quarter of 2023. GAAP net loss per share attributable
to common stockholders was $3.37 per share, compared to a GAAP net
loss per share attributable to common stockholders of $4.38 per
share in the first quarter of 2023. This quarter over quarter
change in GAAP net loss is primarily attributable to goodwill
impairments of $87.2 million in the first quarter of 2024 compared
to $128.8 million in the first quarter of 2023.
- Adjusted EBITDA was $13.1 million, or 19% of total revenue,
compared to $17.6 million, or 23% of total revenue, in the first
quarter of 2023.
- GAAP operating cash flow was $5.1 million, compared to GAAP
operating cash flow of $15.8 million in the first quarter of 2023.
Free cash flow was $4.9 million, compared to free cash flow of
$15.6 million in the first quarter of 2023.
- Cash on hand as of the end of the first quarter of 2024 was
$231.6 million, after buying back $7.9 million in outstanding
Common Stock in the quarter.
"In Q1, we beat our revenue and Adjusted EBITDA guidance
midpoints," said Jack McDonald, Upland's chairman and chief
executive officer. "We continued to drive innovation with 10 key AI
initiatives throughout our product portfolio. We are proud of our
products' ongoing industry recognition and excited to welcome 21
new major customers this quarter."
First Quarter Business Highlights
- We expanded relationships with 256 existing customers, 29 of
which were major expansions. We also welcomed 134 new customers to
Upland in the first quarter, including 21 new major customers.
- We earned 44 badges in G2’s Spring 2024 market reports across
our products. Upland Altify, our sales optimization software, and
Upland InterFAX, our cloud-based fax service, are new to receiving
badges. The Company’s knowledge management solutions, Upland
RightAnswers and Upland Panviva, continue to garner various
recognitions, while Upland Qvidian, our proposal management and
response software, increased its number of Leader badges earned
quarter-over-quarter.
- Upland Software was included as a Notable Vendor in Forrester's
Customer Solutions Landscape Report for our knowledge management
solutions, Panviva and RightAnswers. With the continuous
advancements of AI technology, Upland remains committed to
enhancing its solutions and guiding organizations through the
transformative AI revolution, helping them embrace the future of
knowledge management.
- Our product development teams worked diligently to implement 10
AI initiatives across our portfolio. We continue to drive
innovation for our customers, including Upland Qvidian's AI-guided
proposal automation integrated with IBM watsonx, to Upland Altify's
integration with Salesforce for various data extraction,
summarization, and auto-generated form response capabilities.
Business Outlook
For the quarter ending June 30, 2024, Upland expects reported
total revenue to be between $64.4 and $70.4 million, including
subscription and support revenue between $61.5 and $66.5 million,
for a decline in total revenue of 10% at the mid-point from the
quarter-ended June 30, 2023. Second quarter 2024 Adjusted EBITDA is
expected to be between $11.8 and $14.8 million, for an Adjusted
EBITDA margin of 20% at the mid-point. This Adjusted EBITDA guide
at the mid-point is a decrease of 20% from the quarter-ended June
30, 2023.
For the full year ending December 31, 2024, Upland expects
reported total revenue to be between $264.7 and $282.7 million,
including subscription and support revenue between $251.6 and
$266.6 million, for a decline in total revenue of 8% at the
mid-point from the year ended December 31, 2023. Full year 2024
Adjusted EBITDA is expected to be between $50.8 and $59.8 million,
for an Adjusted EBITDA margin of 20% at the mid-point. This
Adjusted EBITDA guide at the midpoint is a decline of 14% from the
year ended December 31, 2023.
Conference Call Details
Upland's executive team will host a live conference call and
webcast at 4:00 p.m. Central Time, 5:00 p.m. Eastern Time today to
review Upland’s financial results and outlook for the business. The
call can be accessed via a webcast on investor.uplandsoftware.com,
or by dialing 1-800-715-9871 in North America or 1-646-307-1963 if
outside North America, international rates apply. Attendees will
need to use access code 8422976 to join the call. This webcast will
contain forward-looking statements and other material information
regarding Upland’s financial and operating results.
Following the completion of the conference call, a recording of
the webcast will be made available at investor.uplandsoftware.com
for twelve months.
About Upland Software
Upland Software, Inc. enables global businesses to work smarter
with over 25 proven cloud software products that increase revenue,
reduce costs, and deliver immediate value. Our solutions cover
digital marketing, knowledge management, contact center service,
sales productivity, content lifecycle automation, and more.
Upland's powerful cloud products are trusted by more than 10,000
global customers. Learn how Upland helps businesses achieve
outcomes that matter at www.uplandsoftware.com.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use the
following non-GAAP financial measures: Adjusted EBITDA, non-GAAP
net income (loss), non-GAAP net income (loss) per share and free
cash flow.
We use these non-GAAP financial measures for financial and
operational decision-making and as a means to evaluate
period-to-period comparisons. Our management believes that these
non-GAAP financial measures provide meaningful supplemental
information regarding our performance and liquidity by excluding
certain expenses and expenditures that may not be indicative of our
recurring core business operating results, such as our revenues
excluding the impact for foreign currency fluctuations or our
operating performance excluding not only non-cash charges, but also
discrete cash charges that are infrequent in nature. We believe
that both management and investors benefit from referring to these
non-GAAP financial measures in assessing our performance and when
planning, forecasting, and analyzing future periods. These non-GAAP
financial measures also facilitate management's internal
comparisons to our historical performance and liquidity as well as
comparisons to our competitors' operating results. We believe these
non-GAAP financial measures are useful to investors both because
they allow for greater transparency with respect to key metrics
used by management in its financial and operational decision-making
and they are used by our institutional investors and the analyst
community to help them analyze the health of our business. For a
reconciliation of these non-GAAP financial measures to the most
directly comparable GAAP financial measures, see the tables
provided below in this release.
We are unable to reconcile any forward-looking non-GAAP
financial measures to their directly comparable GAAP financial
measures because the information which is needed to complete a
reconciliation is unavailable at this time without unreasonable
effort. Additionally, we are unable to quantify the impact of
foreign currency exchange fluctuations on components of our income
statement beyond revenues because the information which is needed
to do so is unavailable at this time without unreasonable
effort.
Upland defines Adjusted EBITDA as net income (loss), calculated
in accordance with GAAP, plus depreciation and amortization
expense, interest expense, net, other expense (income), net,
provision (benefit) for income taxes, stock-based compensation
expense, acquisition-related expenses, non-recurring litigation
costs, purchase accounting adjustments for deferred revenue and
impairment of goodwill.
Upland defines non-GAAP net income (loss) as net income (loss),
calculated in accordance with GAAP, plus, amortization of purchased
intangible assets, amortization of debt discount, loss on debt
extinguishment, stock-based compensation expenses,
acquisition-related expenses, non-recurring litigation expenses,
purchase accounting adjustments for deferred revenue, non-recurring
provision for income tax, impairment of goodwill and the related
tax effect of the adjustments above.
Upland defines free cash flow as GAAP operating cash flow less
purchases of property and equipment.
Upland defines major accounts as accounts with greater than or
equal to $25,000 in annual recurring revenue.
Upland defines major expansions as existing customers who
expanded the amount of annual recurring revenue under their
contract by at least $25,000.
Upland defines cash gross margin as product revenue less
subscription and support cost of sales, excluding depreciation
& amortization.
In connection with periodic reviews of our business, we have
decided to discontinue the availability of certain non-strategic
product offerings and a limited number of non-strategic customer
contracts (collectively referred to as “Sunset Assets”).
Overage Charges are subscription and support revenues earned in
addition to contractual minimum customer commitments as a result of
the usage volume of services including text and e-mail messaging
and third-party pass-through costs that exceed the levels
stipulated in contracts with the Company.
Upland defines Core Organic Growth Rate as the percentage change
between two reported periods in subscription and support revenue,
excluding subscription and support revenue from Sunset Assets and
Overage Charges. We calculate our year-over-year Core Organic
Growth Rate as though all acquisitions or dispositions closed as of
the end of the latest period were closed as of the first day of the
prior year period presented. Core Organic Growth Rate does not
represent actual organic revenue generated by our business as it
stood at the beginning of the respective period.
Forward-looking Statements
This release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act, and Section 21E of
the Securities Exchange Act of 1934, as amended. Forward-looking
statements generally relate to future events or our future
financial or operating performance, including our guidance related
to future performance, and are subject to substantial risks,
uncertainties and assumptions. We may not actually achieve the
plans, intentions, or expectations disclosed in our forward-looking
statements. Our forward-looking statements do not reflect the
potential impact of any future acquisitions, mergers, dispositions,
joint ventures, or investments we may make. Accordingly, you should
not place undue reliance on these forward-looking statements.
Forward-looking statements include any statement that does not
directly relate to any historical or current fact and often include
words such as “anticipate,” “believe,” “may,” “will,” “continue,”
“seek,” “estimate,” “intend,” “hope,” “predict,” “could,” “should,”
“would,” “project,” “plan,” “expect” or the negative or plural of
these words or similar expressions, although not all
forward-looking statements contain these words.
Actual results may differ materially from those indicated by
such forward-looking statements as a result of various important
factors, including, but are not limited to: our financial
performance and our ability to achieve or sustain profitability or
predict future results; our plans regarding future acquisitions,
acquisition expense timing and our ability to consummate and
integrate acquisitions; our ability to expand our go to market
operations, including our marketing and sales organization and
cross selling opportunities, and successfully increase sales of our
products; our ability to obtain financing in the future on
acceptable terms or at all; our expectations with respect to
revenue, cost of revenue, average annual spend, margin expense and
operating expenses in future periods; our expectations with regard
to revenue from perpetual licenses and professional services; our
ability to adapt to macroeconomic factors impacting the global
economy, including foreign currency exchange risk, inflation and
supply chain constraints; our ability to attract and retain
customers; our ability to successfully enter new markets and manage
our international expansion; our ability to comply with privacy
laws and regulations; our ability to deliver high-quality customer
service; our plans regarding, and our ability to effectively
manage, our growth, including organic growth; maintaining our
senior management team and key personnel; the performance of our
resellers; our ability to adapt to changing market conditions and
competition; our ability to adapt to technological change and
continue to innovate; global economic and financial market
conditions and uncertainties; the growth of demand for cloud-based,
digital transformation applications; our ability to integrate our
applications with other software applications; maintaining and
expanding our relationships with third parties; costs associated
with defending intellectual property infringement and other claims;
our ability to maintain, protect and enhance our brand and
intellectual property; our expectations with regard to trends, such
as seasonality, which affect our business; impairments to goodwill
and other intangible assets; our beliefs regarding how our
applications benefit customers and what our competitive strengths
are; the operation, reliability and security of our third-party
data centers; our expectations as to the payment of dividends; our
Share Repurchase Plan, including expectations regarding the timing
and manner of repurchases made under the Share Repurchase Plan; our
current level of indebtedness, including our exposure to variable
interest rate risk; the potential elimination or limitation of tax
incentives or tax losses and/or reductions of U.S. federal net
operating losses; the risk that we did not consider another
contingency included in this list; and factors that could affect
our business and financial results identified in Upland's filings
with the Securities and Exchange Commission (the "SEC"), including
Upland's most recent 10-K filed with the SEC. Additional
information will also be set forth in Upland's future quarterly
reports on Form 10-Q, annual reports on Form 10-K and other filings
that Upland makes with the SEC.
The forward-looking statements herein represent Upland's views
as of the date of this press release, and these views could change.
However, while Upland may elect to update these forward-looking
statements at some point in the future, Upland specifically
disclaims any obligation to do so, except as required by law. These
forward-looking statements should not be relied upon as
representing the views of Upland as of any date subsequent to the
date of this press release.
Upland Software, Inc.
Condensed Consolidated Statements
of Operations
(in thousands, except per share
data)
Three Months Ended March
31,
2024
2023
(unaudited)
(unaudited)
Revenue:
Subscription and support
$
67,078
$
72,914
Perpetual license
1,470
1,571
Total product revenue
68,548
74,485
Professional services
2,188
2,571
Total revenue
70,736
77,056
Cost of revenue:
Subscription and support
19,829
23,485
Professional services and other
1,220
2,051
Total cost of revenue
21,049
25,536
Gross profit
49,687
51,520
Operating expenses:
Sales and marketing
17,018
14,289
Research and development
12,455
12,530
General and administrative
13,232
17,189
Depreciation and amortization
11,396
15,094
Acquisition-related expenses
—
1,094
Impairment of goodwill
87,227
128,755
Total operating expenses
141,328
188,951
Loss from operations
(91,641
)
(137,431
)
Other expense:
Interest expense, net
(4,958
)
(5,461
)
Other income (expense), net
(78
)
1,425
Total other expense
(5,036
)
(4,036
)
Loss before benefit from income taxes
(96,677
)
(141,467
)
Benefit from income taxes
547
1,422
Net loss
$
(96,130
)
$
(140,045
)
Preferred stock dividends
(1,375
)
(1,315
)
Net loss attributable to common
stockholders
$
(97,505
)
$
(141,360
)
Net income (loss) per common share:
Net loss per common share, basic and
diluted
$
(3.37
)
$
(4.38
)
Weighted-average common shares
outstanding, basic and diluted
28,917,897
32,259,110
Upland Software, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
March 31,
December 31,
2024
2023
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
231,614
$
236,559
Accounts receivable, net of allowance
29,253
38,765
Deferred commissions, current
9,678
10,429
Unbilled receivables
3,213
2,701
Income tax receivable, current
5,221
3,775
Prepaid expenses and other current
assets
10,215
8,004
Total current assets
289,194
300,233
Tax credits receivable
1,553
1,657
Property and equipment, net
1,803
1,932
Operating lease right-of-use asset
2,480
2,929
Intangible assets, net
166,988
182,349
Goodwill
264,012
353,778
Deferred commissions, noncurrent
12,593
12,568
Interest rate swap assets
15,889
14,270
Other assets
434
308
Total assets
$
754,946
$
870,024
LIABILITIES, CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
4,642
$
8,137
Accrued compensation
7,083
7,174
Accrued expenses and other current
liabilities
6,770
7,050
Deferred revenue
99,550
102,763
Operating lease liabilities, current
2,073
2,351
Current maturities of notes payable
3,257
3,172
Total current liabilities
123,375
130,647
Notes payable, less current maturities
472,642
473,502
Deferred revenue, noncurrent
3,428
3,860
Operating lease liabilities,
noncurrent
1,224
1,597
Noncurrent deferred tax liability, net
14,696
16,025
Other long-term liabilities
447
461
Total liabilities
615,812
626,092
Series A Convertible Preferred stock
119,013
117,638
Stockholders’ equity:
Common stock
3
3
Additional paid-in capital
602,813
608,995
Accumulated other comprehensive loss
2,307
6,168
Accumulated deficit
(585,002
)
(488,872
)
Total stockholders’ equity
20,121
126,294
Total liabilities, convertible preferred
stock and stockholders’ equity
$
754,946
$
870,024
Upland Software, Inc.
Condensed Consolidated Statements
of Cash Flows
(in thousands)
Three Months Ended March
31,
2024
2023
(unaudited)
(unaudited)
Operating activities
Net loss
$
(96,130
)
$
(140,045
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
13,802
18,500
Deferred income taxes
(1,057
)
(1,975
)
Amortization of deferred costs
3,047
3,352
Foreign currency re-measurement loss
(164
)
(859
)
Non-cash interest, net and other income,
net
(882
)
573
Non-cash stock-based compensation
expense
3,522
6,462
Non-cash loss on impairment of
goodwill
87,227
128,755
Changes in operating assets and
liabilities, net of purchase business combinations:
Accounts receivable
9,361
6,991
Prepaid expenses and other current
assets
(4,117
)
(2,362
)
Other assets
(2,608
)
(2,483
)
Accounts payable
(3,459
)
(184
)
Accrued expenses and other liabilities
(389
)
(859
)
Deferred revenue
(3,032
)
(41
)
Net cash provided by operating
activities
5,121
15,825
Investing activities
Purchase of property and equipment
(183
)
(215
)
Net cash used in investing activities
(183
)
(215
)
Financing activities
Payments of debt costs
—
(130
)
Payments on notes payable
(1,350
)
(1,350
)
Stock repurchases and retirement
(7,918
)
—
Taxes paid related to net share settlement
of equity awards
(331
)
(235
)
Additional consideration paid to sellers
of businesses
—
(5,066
)
Net cash used in financing activities
(9,599
)
(6,781
)
Effect of exchange rate fluctuations on
cash
(284
)
238
Change in cash and cash equivalents
(4,945
)
9,067
Cash and cash equivalents, beginning of
period
236,559
248,653
Cash and cash equivalents, end of
period
$
231,614
$
257,720
Supplemental disclosures of cash flow
information:
Cash paid for interest, net of interest
rate swaps
$
8,720
$
7,134
Cash paid for taxes
$
2,114
$
2,507
Upland Software, Inc.
Reconciliation of Adjusted
EBITDA
(in thousands, unaudited)
Three Months Ended March
31,
2024
2023
Reconciliation of Net Loss to Adjusted
EBITDA:
Net loss
$
(96,130
)
$
(140,045
)
Add:
Depreciation and amortization expense
13,802
18,500
Interest expense, net
4,958
5,461
Other expense (income), net
78
(1,425
)
Benefit from income taxes
(547
)
(1,422
)
Stock-based compensation expense
3,522
6,462
Acquisition-related expense
—
1,086
Non-recurring litigation costs
118
—
Purchase accounting deferred revenue
discount
75
228
Impairment of goodwill
87,227
128,755
Adjusted EBITDA
$
13,103
$
17,600
Upland Software, Inc.
Reconciliation of Non-GAAP Net
Loss and Non-GAAP EPS
(in thousands, except share and
per share data, unaudited)
Three Months Ended March
31,
2024
2023
Reconciliation of net loss to non-GAAP
net income:
Net loss
$
(96,130
)
$
(140,045
)
Add:
Stock-based compensation expense
3,522
6,462
Amortization of purchased intangibles
13,510
18,170
Amortization of debt discount
575
573
Acquisition-related expense
—
1,086
Nonrecurring litigation expense
118
—
Purchase accounting deferred revenue
discount
75
228
Impairment of goodwill
87,227
128,755
Tax effect of adjustments above
(2,049
)
(4,253
)
Non-GAAP net income
$
6,848
$
10,976
Weighted average common shares
outstanding, basic
28,917,897
32,259,110
Weighted average common shares
outstanding, diluted
35,956,683
38,979,587
Non-GAAP earnings per share, basic
$
0.24
$
0.34
Non-GAAP earnings per share, diluted
$
0.19
$
0.28
Upland Software, Inc.
Reconciliation of Operating Cash
Flow to Free Cash Flow
(in thousands, unaudited)
Three Months Ended March
31,
2024
2023
Reconciliation of operating cash flow
to Free Cash Flow:
Net cash provided by operating
activities
$
5,121
$
15,825
Less: Purchase of property and
equipment
(183
)
(215
)
Free Cash Flow
$
4,938
$
15,610
Upland Software, Inc.
Supplemental Financial
Information
(in thousands, unaudited)
Three Months Ended March
31,
2024
2023
Stock-based compensation:
Cost of revenue
$
186
$
302
Research and development
606
655
Sales and marketing
397
576
General and administrative
2,333
4,929
Total
$
3,522
$
6,462
Three Months Ended March
31,
2024
2023
Depreciation:
Cost of revenue
$
—
$
2
Operating expense
292
328
Total
$
292
$
330
Amortization:
Cost of revenue
$
2,406
$
3,404
Operating expense
11,104
14,766
Total
$
13,510
$
18,170
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502538253/en/
Investor Relations Contact: Michael D. Hill
investor-relations@uplandsoftware.com 512-960-1031
Media Contact: Lloyd Berry media@uplandsoftware.com
512-960-1010
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