Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based
tools for digital transformation, today announced financial and
operating results for the fourth quarter 2023 and issued guidance
for its first quarter and full year of 2024.
Fourth Quarter 2023 Financial Highlights
- Total revenue was $72.2 million, a decrease of 8% from $78.8
million in the fourth quarter of 2022.
- Subscription and support revenue was $68.2 million, a decrease
of 8% from $74.1 million in the fourth quarter of 2022.
- GAAP net loss was $16.0 million compared to a GAAP net loss of
$22.7 million in the fourth quarter of 2022. GAAP net loss
attributable to common stockholders was $17.4 million compared to
GAAP net loss attributable to common stockholders of $24.0 million
in the fourth quarter of 2022. GAAP net loss per share attributable
to common stockholders was $0.56 per share, compared to a GAAP net
loss per share attributable to common stockholders of $0.75 per
share in the fourth quarter of 2022.
- Adjusted EBITDA was $14.1 million, or 19% of total revenue,
compared to $24.3 million, or 31% of total revenue, in the fourth
quarter of 2022.
- GAAP operating cash flow was $8.8 million, compared to GAAP
operating cash flow of $5.8 million in the fourth quarter of 2022.
Free cash flow was $8.6 million, compared to free cash flow of $5.7
million in the fourth quarter of 2022.
- Cash on hand as of the end of the fourth quarter of 2023 was
$236.6 million, after buying back $10.8 million of the Company's
outstanding common stock in the quarter.
"We continue to make progress on our growth plan and remain
focused on building great software and delivering value for
customers," said Jack McDonald, Upland's chairman and chief
executive officer. "We are proud to see continued and increasing
recognition of our products as evidenced by the 44 badges earned in
G2's Winter 2024 market reports."
Fourth Quarter Business Highlights
- We expanded relationships with 307 existing customers, 33 of
which were major expansions. We also welcomed 154 new customers to
Upland in the fourth quarter, including 15 new major
customers.
- Upland was recognized, for the third year in a row, as a gold
medalist and leader in the 2023 Enterprise Content Management Data
Quadrant report from SoftwareReviews for our document management
and workflow automation product, FileBound. The award is based on
the combined knowledge of real users, and placement is based on
overall satisfaction with product features, vendor experience,
capabilities, and emotional sentiment.
- Upland RO Innovation has launched an all-new Customer Reference
Activity Hub to help sales, marketing, and customer success teams
find and engage with their most influential customer references so
they can boost brand awareness and generate more business.
- In December, we hosted a webinar on content search intelligence
featuring how Azure AI Search, when seamlessly integrated with BA
Insight's cutting-edge technology, revolutionizes how organizations
access, manage, and derive insights from their data.
- Upland earned 44 badges in G2’s Winter 2024 market reports
across a variety of products. These included our knowledge
management solutions, Upland RightAnswers and Upland Panviva, along
with Upland Qvidian, our proposal management software, and digital
marketing products, Upland Adestra and Upland Second Street.
Rankings on G2 reports are based on independent data provided by
real software buyers.
Business Outlook
The following guidance reflects another year of significant
incremental sales, marketing and product investments that Upland is
making as part of its comprehensive growth plan as well as the
effects of decreasing revenue and expenses related to our
previously announced decisions to sunset certain non-strategic
product offerings and a limited number of non-strategic customer
contracts (collectively referred to as our “Sunset Assets”).
For the quarter ending March 31, 2024, Upland expects reported
total revenue to be between $65.0 and $71.0 million, including
subscription and support revenue between $62.5 and $67.5 million,
for a decline in total revenue of 12% at the mid-point from the
quarter-ended March 31, 2023. First quarter 2024 Adjusted EBITDA is
expected to be between $11.3 and $14.3 million, for an Adjusted
EBITDA margin of 19% at the mid-point. This Adjusted EBITDA guide
at the mid-point is a decrease of 27% from the quarter-ended March
31, 2023.
For the full year ending December 31, 2024, Upland expects
reported total revenue to be between $259.0 and $283.0 million,
including subscription and support revenue between $247.0 and
$267.0 million, for a decline in total revenue of 9% at the
mid-point from the year ended December 31, 2023. Full year 2024
Adjusted EBITDA is expected to be between $49.0 and $61.0 million,
for an Adjusted EBITDA margin of 20% at the mid-point. This
Adjusted EBITDA guide at the midpoint is a decrease of 15% 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 December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
(unaudited)
(unaudited)
Revenue:
Subscription and support
$
68,184
$
74,148
$
281,554
$
297,887
Perpetual license
1,760
1,628
6,077
6,948
Total product revenue
69,944
75,776
287,631
304,835
Professional services
2,234
3,035
10,221
12,468
Total revenue
72,178
78,811
297,852
317,303
Cost of revenue:
Subscription and support
22,483
24,201
88,894
93,948
Professional services and other
1,226
2,506
7,467
9,793
Total cost of revenue
23,709
26,707
96,361
103,741
Gross profit
48,469
52,104
201,491
213,562
Operating expenses:
Sales and marketing
17,438
14,131
64,342
59,416
Research and development
11,662
10,799
49,375
46,187
General and administrative
13,895
14,352
61,264
70,462
Depreciation and amortization
14,405
11,699
58,614
43,669
Acquisition-related expenses
451
2,632
3,060
21,556
Impairment of goodwill
—
12,500
128,755
12,500
Total operating expenses
57,851
66,113
365,410
253,790
Loss from operations
(9,382
)
(14,009
)
(163,919
)
(40,228
)
Other expense:
Interest expense, net
(5,322
)
(6,275
)
(18,684
)
(29,145
)
Other income (expense), net
(675
)
(2,479
)
236
(781
)
Total other expense
(5,997
)
(8,754
)
(18,448
)
(29,926
)
Loss before benefit from (provision for)
income taxes
(15,379
)
(22,763
)
(182,367
)
(70,154
)
Benefit from (provision for) income
taxes
(633
)
87
2,493
1,741
Net loss
$
(16,012
)
$
(22,676
)
$
(179,874
)
$
(68,413
)
Preferred stock dividends
(1,359
)
(1,300
)
(5,347
)
(1,846
)
Net loss attributable to common
stockholders
$
(17,371
)
$
(23,976
)
$
(185,221
)
$
(70,259
)
Net income (loss) per common share:
Net loss per common share, basic and
diluted
$
(0.56
)
$
(0.75
)
$
(5.77
)
$
(2.23
)
Weighted-average common shares
outstanding, basic and diluted
30,995,441
31,906,980
32,074,906
31,528,881
Upland Software, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
December 31,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
236,559
$
248,653
Accounts receivable, net of allowance
38,765
47,594
Deferred commissions, current
10,429
10,961
Unbilled receivables
2,701
5,313
Income tax receivable, current
3,775
542
Prepaid expenses and other current
assets
8,004
8,232
Total current assets
300,233
321,295
Tax credits receivable
1,657
2,411
Property and equipment, net
1,932
1,830
Operating lease right-of-use asset
2,929
5,719
Intangible assets, net
182,349
248,851
Goodwill
353,778
477,043
Deferred commissions, noncurrent
12,568
13,794
Interest rate swap assets
14,270
41,168
Other assets
308
1,348
Total assets
$
870,024
$
1,113,459
LIABILITIES, CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
8,137
$
14,939
Accrued compensation
7,174
7,393
Accrued expenses and other current
liabilities
7,050
10,644
Deferred revenue
102,763
106,465
Liabilities due to sellers of
businesses
—
5,429
Operating lease liabilities, current
2,351
3,205
Current maturities of notes payable
3,172
3,136
Total current liabilities
130,647
151,211
Notes payable, less current maturities
473,502
511,847
Deferred revenue, noncurrent
3,860
4,707
Operating lease liabilities,
noncurrent
1,597
4,947
Noncurrent deferred tax liability, net
16,025
18,416
Other long-term liabilities
461
1,170
Total liabilities
626,092
692,298
Series A Convertible Preferred stock
117,638
112,291
Stockholders’ equity:
Common stock
3
3
Additional paid-in capital
608,995
606,755
Accumulated other comprehensive loss
6,168
11,110
Accumulated deficit
(488,872
)
(308,998
)
Total stockholders’ equity
126,294
308,870
Total liabilities, convertible preferred
stock and stockholders’ equity
$
870,024
$
1,113,459
Upland Software, Inc.
Condensed Consolidated Statements
of Cash Flows
(in thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
(unaudited)
(unaudited)
Operating activities
Net loss
$
(16,012
)
$
(22,676
)
$
(179,874
)
$
(68,413
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
17,510
14,813
71,985
56,146
Change in fair value of liabilities due to
sellers of businesses
—
—
—
(75
)
Deferred income taxes
(1,558
)
(3,784
)
(4,209
)
(7,075
)
Amortization of deferred costs
3,261
3,157
13,170
12,198
Foreign currency re-measurement loss
445
(52
)
(538
)
(12
)
Non-cash interest, net and other income,
net
(896
)
569
(2,976
)
2,256
Non-cash stock-based compensation
expense
4,682
7,579
22,874
41,602
Non-cash loss on impairment of
goodwill
—
12,500
128,755
12,500
Non-cash loss on retirement of fixed
assets
1
53
47
79
Changes in operating assets and
liabilities, net of purchase business combinations:
Accounts receivable
(1,252
)
(8,496
)
8,916
9,691
Prepaid expenses and other current
assets
4,934
4,922
(471
)
10,070
Other assets
(1,393
)
(2,608
)
10,866
(12,811
)
Accounts payable
(6,025
)
(5,711
)
(6,896
)
(7,175
)
Accrued expenses and other liabilities
(1,459
)
(2,757
)
(6,188
)
(14,013
)
Deferred revenue
6,551
8,332
(5,518
)
(4,989
)
Net cash provided by operating
activities
8,789
5,841
49,943
29,979
Investing activities
Purchase of property and equipment
(186
)
(148
)
(1,220
)
(866
)
Purchase business combinations, net of
cash acquired
—
—
—
(62,356
)
Net cash used in investing activities
(186
)
(148
)
(1,220
)
(63,222
)
Financing activities
Payments of debt costs
(31
)
(3
)
(221
)
(203
)
Payments on notes payable
(1,350
)
(1,350
)
(40,400
)
(5,400
)
Repurchase of shares
(10,845
)
—
(14,060
)
—
Issuance of Series A Convertible Preferred
stock, net of issuance costs
—
(75
)
—
110,445
Taxes paid related to net share settlement
of equity awards
(349
)
(417
)
(1,091
)
(1,576
)
Issuance of common stock, net of issuance
costs
3
1
5
191
Additional consideration paid to sellers
of businesses
(67
)
(1,132
)
(5,617
)
(9,306
)
Net cash provided by (used in) financing
activities
(12,639
)
(2,976
)
(61,384
)
94,151
Effect of exchange rate fluctuations on
cash
1,004
4,216
567
(1,413
)
Change in cash and cash equivalents
(3,032
)
6,933
(12,094
)
59,495
Cash and cash equivalents, beginning of
period
239,591
241,720
248,653
189,158
Cash and cash equivalents, end of
period
$
236,559
$
248,653
$
236,559
$
248,653
Supplemental disclosures of cash flow
information:
Cash paid for interest, net of interest
rate swaps
$
8,990
$
7,316
$
32,137
$
29,120
Cash paid for taxes
$
879
$
713
$
7,106
$
3,876
Non-cash investing and financing
activities:
Business combination consideration
including holdbacks and earnouts
$
—
$
306
$
—
$
8,126
Upland Software, Inc.
Reconciliation of Adjusted
EBITDA
(in thousands, unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Reconciliation of net loss to Adjusted
EBITDA:
Net loss
$
(16,012
)
$
(22,676
)
$
(179,874
)
$
(68,413
)
Add:
Depreciation and amortization expense
17,510
14,813
71,985
56,146
Interest expense, net
5,322
6,275
18,684
29,145
Other expense (income), net
675
2,479
(236
)
781
Provision for (benefit from) income
taxes
633
(87
)
(2,493
)
(1,741
)
Stock-based compensation expense
4,682
7,579
22,874
41,602
Acquisition-related expense
451
2,632
3,060
21,556
Non-recurring litigation costs
699
18
1,126
33
Purchase accounting deferred revenue
discount
92
730
557
5,496
Impairment of goodwill
—
12,500
128,755
12,500
Adjusted EBITDA
$
14,052
$
24,263
$
64,438
$
97,105
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 December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Reconciliation of net loss to non-GAAP
net income:
Net loss
$
(16,012
)
$
(22,676
)
$
(179,874
)
$
(68,413
)
Add:
Stock-based compensation expense
4,682
7,579
22,874
41,602
Amortization of purchased intangibles
17,184
14,473
70,566
54,609
Amortization of debt discount
581
569
2,313
2,256
Acquisition-related expense
451
2,632
3,060
21,556
Nonrecurring litigation expense
699
18
1,126
33
Purchase accounting deferred revenue
discount
92
730
557
5,496
Impairment of goodwill
—
12,500
128,755
12,500
Tax effect of adjustments above
(2,302
)
(1,560
)
(11,509
)
(7,985
)
Non-GAAP net income
$
5,375
$
14,265
$
37,868
$
61,654
Weighted average ordinary shares
outstanding, basic
30,995,441
31,906,980
32,074,906
31,528,881
Weighted average ordinary shares
outstanding, diluted
37,992,837
38,639,536
38,920,323
34,059,394
Non-GAAP earnings per share, basic
$
0.17
$
0.45
$
1.18
$
1.96
Non-GAAP earnings per share, diluted
$
0.14
$
0.37
$
0.97
$
1.81
Upland Software, Inc.
Reconciliation of Operating Cash
Flow to Free Cash Flow
(in thousands, unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Reconciliation of operating cash flow
to Free Cash Flow:
Net cash provided by operating
activities
$
8,789
$
5,841
$
49,943
$
29,979
Less: Purchase of property and
equipment
(186
)
(148
)
(1,220
)
(866
)
Free Cash Flow
$
8,603
$
5,693
$
48,723
$
29,113
Upland Software, Inc.
Supplemental Financial
Information
(in thousands, unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Stock-based compensation:
Cost of revenue
$
102
$
497
$
952
$
1,984
Research and development
552
626
2,463
2,733
Sales and marketing
495
655
2,059
4,239
General and administrative
3,533
5,801
17,400
32,646
Total
$
4,682
$
7,579
$
22,874
$
41,602
Depreciation:
Cost of revenue
$
—
$
2
$
5
$
8
Operating expense
326
338
1,414
1,529
Total
$
326
$
340
$
1,419
$
1,537
Amortization:
Cost of revenue
$
3,105
$
3,112
$
13,366
$
12,469
Operating expense
14,079
11,361
57,200
42,140
Total
$
17,184
$
14,473
$
70,566
$
54,609
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222570197/en/
Investor Relations Contact: Michael D. Hill
investor-relations@uplandsoftware.com 512-960-1031
Media Contact: Lloyd Berry 512-960-1010
media@uplandsoftware.com
Upland Software (NASDAQ:UPLD)
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Upland Software (NASDAQ:UPLD)
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