Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based
tools for digital transformation, today announced financial and
operating results for the second quarter 2023 and issued guidance
for its third quarter and full year of 2023.
Second Quarter 2023 Financial Highlights
- Total revenue was $74.5 million, a decrease of 7% from $80.2
million in the second quarter of 2022.
- Subscription and support revenue was $70.5 million, a decrease
of 6% from $75.0 million in the second quarter of 2022.
- GAAP net loss was $15.1 million compared to a GAAP net loss of
$16.4 million in the second quarter of 2022. GAAP net loss
attributable to common stockholders was $16.5 million compared to
GAAP net loss attributable to common stockholders of $16.4 million
in the second quarter of 2022. GAAP net loss per share attributable
to common stockholders was $0.51 per share, compared to a GAAP net
loss per share attributable to common stockholders of $0.52 per
share in the second quarter of 2022.
- Adjusted EBITDA was $16.6 million, or 22% of total revenue,
compared to $24.5 million, or 31% of total revenue, in the second
quarter of 2022.
- GAAP operating cash flow was $7.0 million, compared to GAAP
operating cash flow of $14.0 million in the second quarter of 2022.
Free cash flow was $6.7 million, compared to free cash flow of
$13.9 million in the second quarter of 2022.
- Cash on hand as of the end of the second quarter of 2023 was
$262.6 million.
"In Q2, we beat our revenue and Adjusted EBITDA guidance
midpoints and free cash flow came in as expected," said Jack
McDonald, Upland's chairman and chief executive officer. "We also
added another 20 new major customers and announced a host of new
product innovations," he added. "It's still early, but as noted, we
are making progress on our new growth plan and remain focused on
building shareholder value over time.”
Second Quarter Business Highlights
- We expanded relationships with 313 existing customers, 32 of
which were major expansions. We also welcomed 155 new customers to
Upland in the second quarter, including 20 new major
customers.
- This quarter was busy for our sales enablement product, Altify.
Starting with a webinar that featured Forrester, which covered best
practices for B2B enterprise sales. Followed by the launch of the
new Altify book, Not Just Another Vendor, which is a collection of
real experiences and best practices from outstanding sales leaders
who have used account planning to multiply pipeline and grow
revenue.
- Two of Upland’s products were listed among notable vendors in
recent Forrester landscape reports. Upland Altify was included in
The Account-Based Selling Technologies Landscape, Q2 2023 report,
and Upland Kapost was also included in The Content Engagement
Solutions Landscape, Q2 2023 report.
- Qvidian announced its latest release, which focused on
optimizing the user experience with a revamped content library that
aims to help customers increase productivity, shorten sales cycles,
and accelerate win rates.
- In June, Upland was awarded HP’s Global Partner Excellence
Award for our continued efforts in providing HP customers with
flexible, dynamic product solutions that enable modern document
lifecycles for their businesses and that align with their unique
requirements.
Business Outlook
The revised guidance below reflects the significant incremental
sales, marketing and product investments that Upland is making as
part of its comprehensive growth plan.
For the quarter ending September 30, 2023, Upland expects
reported total revenue to be between $70.4 and $76.4 million,
including subscription and support revenue between $65.5 and $70.5
million, for a decline in total revenue of 8% at the mid-point over
the quarter-ended September 30, 2022. Third quarter 2023 Adjusted
EBITDA is expected to be between $14.5 and $17.5 million, for an
Adjusted EBITDA margin of 22% at the mid-point. This Adjusted
EBITDA guide at the mid-point is a decrease of 36% from the
quarter-ended September 30, 2022.
For the full year ending December 31, 2023, Upland expects
reported total revenue to be between $292.1 and $304.1 million,
including subscription and support revenue between $274.0 and
$284.0 million, for a decline in total revenue of 6% at the
mid-point over the year ended December 31, 2022. Full year 2023
Adjusted EBITDA is expected to be between $63.2 and $69.2 million,
for an Adjusted EBITDA margin of 22% at the mid-point. This
Adjusted EBITDA guide at the midpoint is a decrease of 32% over the
year ended December 31, 2022.
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 1-888-800-8770 in North America or +1-646-307-1953 if
outside North America, international rates apply. Attendees will
need to use access code 6485253 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 helps global businesses accelerate digital transformation
with a powerful cloud software library that provides choice,
flexibility, and value. Our growing library of products delivers
the "last mile" plug-in processes, reporting, and job specific
workflows that major cloud platforms and homegrown systems don’t
provide. We focus on specific business challenges and support every
corner of the organization, operating at scale and delivering quick
time to value for our ~1,800 enterprise customers. To learn more,
visit 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 net income (loss) from discontinued
operations, depreciation and amortization expense, interest
expense, net, other expense (income), net, provision 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.
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 and our ability to consummate
and integrate acquisitions; our ability to expand our go to market
operations, including our marketing and sales organization, 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 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; 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; the risk
that we did not consider another contingency included in this list;
our expectations as to the payment of dividends; the potential
elimination or limitation of tax incentives or tax losses and/or
reductions of U.S. federal net operating losses; 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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenue:
Subscription and support
$
70,494
$
75,017
$
143,408
$
148,644
Perpetual license
1,252
1,858
2,823
3,636
Total product revenue
71,746
76,875
146,231
152,280
Professional services
2,751
3,352
5,322
6,663
Total revenue
74,497
80,227
151,553
158,943
Cost of revenue:
Subscription and support
22,073
24,125
45,558
46,194
Professional services and other
2,105
2,428
4,156
5,114
Total cost of revenue
24,178
26,553
49,714
51,308
Gross profit
50,319
53,674
101,839
107,635
Operating expenses:
Sales and marketing
15,755
15,331
30,044
30,924
Research and development
12,443
11,676
24,973
23,743
General and administrative
15,583
21,828
32,772
41,442
Depreciation and amortization
14,853
10,802
29,947
21,853
Acquisition-related expenses
1,072
4,925
2,166
15,338
Impairment of goodwill
—
—
128,755
—
Total operating expenses
59,706
64,562
248,657
133,300
Loss from operations
(9,387
)
(10,888
)
(146,818
)
(25,665
)
Other expense:
Interest expense, net
(5,376
)
(7,754
)
(10,837
)
(15,516
)
Other income (expense), net
(617
)
1,777
808
1,359
Total other expense
(5,993
)
(5,977
)
(10,029
)
(14,157
)
Loss before benefit from income taxes
(15,380
)
(16,865
)
(156,847
)
(39,822
)
Benefit from income taxes
233
472
1,655
598
Net loss
$
(15,147
)
$
(16,393
)
$
(155,192
)
$
(39,224
)
Preferred stock dividends
(1,329
)
—
(2,644
)
—
Net loss attributable to common
stockholders
$
(16,476
)
$
(16,393
)
$
(157,836
)
$
(39,224
)
Net income (loss) per common share:
Net loss per common share, basic and
diluted
$
(0.51
)
$
(0.52
)
$
(4.88
)
$
(1.25
)
Weighted-average common shares
outstanding, basic and diluted
32,473,872
31,380,505
32,367,084
31,272,489
Upland Software, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
June 30,
December 31,
2023
2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
262,556
$
248,653
Accounts receivable, net of allowance
34,434
47,594
Deferred commissions, current
10,697
10,961
Unbilled receivables
3,615
5,313
Prepaid expenses and other current
assets
12,167
8,774
Total current assets
323,469
321,295
Tax credits receivable
1,977
2,411
Property and equipment, net
1,674
1,830
Operating lease right-of-use asset
3,676
5,719
Intangible assets, net
215,946
248,851
Goodwill
352,571
477,043
Deferred commissions, noncurrent
13,611
13,794
Interest rate swap assets
40,919
41,168
Other assets
2,135
1,348
Total assets
$
955,978
$
1,113,459
LIABILITIES, CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
13,797
$
14,939
Accrued compensation
7,535
7,393
Accrued expenses and other current
liabilities
7,395
10,644
Deferred revenue
102,291
106,465
Liabilities due to sellers of
businesses
—
5,429
Operating lease liabilities, current
2,243
3,205
Current maturities of notes payable
3,094
3,136
Total current liabilities
136,355
151,211
Notes payable, less current maturities
510,163
511,847
Deferred revenue, noncurrent
3,637
4,707
Operating lease liabilities,
noncurrent
3,213
4,947
Noncurrent deferred tax liability, net
18,610
18,416
Other long-term liabilities
1,281
1,170
Total liabilities
673,259
692,298
Series A Convertible Preferred Stock
114,935
112,291
Stockholders’ equity:
Common stock
3
3
Additional paid-in capital
616,556
606,755
Accumulated other comprehensive loss
15,415
11,110
Accumulated deficit
(464,190
)
(308,998
)
Total stockholders’ equity
167,784
308,870
Total liabilities, convertible preferred
stock and stockholders’ equity
$
955,978
$
1,113,459
Upland Software, Inc.
Condensed Consolidated Statements
of Cash Flows
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Operating activities
Net loss
$
(15,147
)
$
(16,393
)
$
(155,192
)
$
(39,224
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
18,283
13,931
36,784
28,193
Change in fair value of liabilities due to
sellers of businesses
—
—
—
(75
)
Deferred income taxes
(699
)
(1,066
)
(2,674
)
(2,407
)
Amortization of deferred costs
3,315
2,987
6,667
5,883
Foreign currency re-measurement loss
(23
)
3
(882
)
3
Non-cash interest and other expense
579
560
1,152
1,115
Non-cash stock compensation expense
6,370
14,877
12,832
26,496
Non-cash loss on impairment of
goodwill
—
—
128,755
—
Non-cash loss on retirement of fixed
assets
34
—
34
—
Changes in operating assets and
liabilities, net of purchase business combinations:
Accounts receivable
6,222
12,905
13,212
22,087
Prepaid expenses and other current
assets
(1,679
)
(6,384
)
(6,524
)
(4,597
)
Accounts payable
(1,033
)
3,247
(1,217
)
(898
)
Accrued expenses and other liabilities
(3,247
)
(364
)
(4,106
)
(5,154
)
Deferred revenue
(5,953
)
(10,265
)
(5,994
)
(9,162
)
Net cash provided by operating
activities
7,022
14,038
22,847
22,260
Investing activities
Purchase of property and equipment
(289
)
(121
)
(504
)
(297
)
Purchase business combinations, net of
cash acquired
—
(23
)
—
(62,356
)
Net cash used in investing activities
(289
)
(144
)
(504
)
(62,653
)
Financing activities
Payments of debt costs
(47
)
(17
)
(177
)
(20
)
Payments on notes payable
(1,350
)
(1,350
)
(2,700
)
(2,700
)
Taxes paid related to net share settlement
of equity awards
(153
)
(435
)
(388
)
(982
)
Issuance of common stock, net of issuance
costs
1
—
1
182
Additional consideration paid to sellers
of businesses
(484
)
(595
)
(5,550
)
(3,088
)
Net cash used in financing activities
(2,033
)
(2,397
)
(8,814
)
(6,608
)
Effect of exchange rate fluctuations on
cash
136
(3,656
)
374
(3,873
)
Change in cash and cash equivalents
4,836
7,841
13,903
(50,874
)
Cash and cash equivalents, beginning of
period
257,720
130,443
248,653
189,158
Cash and cash equivalents, end of
period
$
262,556
$
138,284
$
262,556
$
138,284
Supplemental disclosures of cash flow
information:
Cash paid for interest, net of interest
rate swaps
$
7,292
$
7,267
$
14,426
$
14,474
Cash paid for taxes
$
2,465
$
1,644
$
4,972
$
2,416
Non-cash investing and financing
activities:
Business combination consideration
including holdbacks and earnouts
$
—
$
—
$
—
$
7,820
Upland Software, Inc.
Reconciliation of Adjusted
EBITDA
(in thousands, unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Reconciliation of net loss to Adjusted
EBITDA:
Net loss
$
(15,147
)
$
(16,393
)
$
(155,192
)
$
(39,224
)
Add:
Depreciation and amortization expense
18,283
13,931
36,784
28,193
Interest expense, net
5,376
7,754
10,837
15,516
Other expense (income), net
617
(1,777
)
(808
)
(1,359
)
Benefit from income taxes
(233
)
(472
)
(1,655
)
(598
)
Stock-based compensation expense
6,370
14,877
12,832
26,496
Acquisition-related expense
1,072
4,925
2,166
15,338
Non-recurring litigation costs
158
—
158
—
Purchase accounting deferred revenue
discount
131
1,663
351
3,592
Impairment of goodwill
—
—
128,755
—
Adjusted EBITDA
$
16,627
$
24,508
$
34,228
$
47,954
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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Reconciliation of net loss to non-GAAP
net income:
Net loss
$
(15,147
)
$
(16,393
)
$
(155,192
)
$
(39,224
)
Add:
Stock-based compensation expense
6,370
14,877
12,832
26,496
Amortization of purchased intangibles
17,973
13,536
36,143
27,361
Amortization of debt discount
579
560
1,152
1,115
Acquisition-related expense
1,072
4,925
2,166
15,338
Nonrecurring litigation expense
158
—
158
—
Purchase accounting deferred revenue
discount
131
1,663
351
3,592
Impairment of goodwill
—
—
128,755
—
Tax effect of adjustments above
(2,552
)
(1,939
)
(6,805
)
(4,542
)
Non-GAAP net income
$
8,584
$
17,229
$
19,560
$
30,136
Weighted average ordinary shares
outstanding, basic
32,473,872
31,380,505
32,367,084
31,272,489
Weighted average ordinary shares
outstanding, diluted
39,227,072
31,547,552
39,086,906
31,456,240
Non-GAAP earnings per share, basic
$
0.26
$
0.55
$
0.60
$
0.96
Non-GAAP earnings per share, diluted
$
0.22
$
0.55
$
0.50
$
0.96
Upland Software, Inc.
Reconciliation of Operating Cash
Flow to Free Cash Flow
(in thousands, unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Reconciliation of Operating Cash Flow
to Free Cash Flow:
Net cash provided by operating
activities
$
7,022
$
14,038
$
22,847
$
22,260
Less: Purchase of Property and
Equipment
(289
)
(121
)
(504
)
(297
)
Free Cash Flow
$
6,733
$
13,917
$
22,343
$
21,963
Upland Software, Inc.
Supplemental Financial
Information
(in thousands, unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Stock-based compensation:
Cost of revenue
$
301
$
575
$
604
$
977
Research and development
648
658
1,303
1,406
Sales and marketing
558
1,498
1,134
2,972
General and administrative
4,863
12,146
9,791
21,141
Total
$
6,370
$
14,877
$
12,832
$
26,496
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Depreciation:
Cost of revenue
$
2
$
2
$
5
$
4
Operating expense
308
393
636
828
Total
$
310
$
395
$
641
$
832
Amortization:
Cost of revenue
$
3,428
$
3,127
$
6,832
$
6,336
Operating expense
14,545
10,409
29,311
21,025
Total
$
17,973
$
13,536
$
36,143
$
27,361
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802456845/en/
Investor Relations Contact: Mike Hill
investor-relations@uplandsoftware.com 512-960-1031
Media Contact: Kendell Kelton media@uplandsoftware.com
678-575-7428
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