Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based
enterprise work management software, today announced financial and
operating results for the first quarter of 2020 and provided
guidance for its second quarter and full year of 2020.
First Quarter 2020 Financial Highlights
- Total revenue was $68.0 million, an increase of 40% from $48.5
million in the first quarter of 2019.
- Subscription and support revenue was $63.9 million, an increase
of 42% from $45.0 million in the first quarter of 2019.
- GAAP net loss was $20.1 million, or a loss of $0.81 cents per
share, compared to a GAAP net loss of $7.8 million, or a loss of
$0.38 cents per share, in the first quarter of 2019.
- Adjusted EBITDA was $24.6 million, or 36% of total revenue, an
increase of 38% from $17.8 million, or 37% of total revenue, in the
first quarter of 2019.
- Cash on hand as of the end of the first quarter was $98.7
million.
"Our Q1 performance and strong, revised guidance demonstrate
Upland’s resilience as we navigate the COVID-19 pandemic," said
Jack McDonald, Chairman and CEO of Upland Software. "Our products
have helped our customers succeed in this new remote working
environment," he added. "Upland’s enterprise customer base, high
recurring revenue, retention and margins, limited exposure to
highly impacted verticals, strong balance sheet, and flexible cost
structure position us well to emerge from this pandemic ready to
capitalize on new growth opportunities." He continued, “We will
pause acquisitions in the short term while nurturing our pipeline
and continuing our go-to-market investments."
“Our balance sheet remains strong with cash on-hand and
available liquidity under our Revolver of over $150 million, and
comfortably positive cash flows expected for the remainder of the
year,” said Mike Hill, CFO of Upland Software. “We are in a strong
position today because of the actions we took in 2019 to fortify
our capital base, raising equity and putting in place a new credit
facility which extended the maturity of our term debt out to August
2026, reduced our annual principal payments to only one percent,
and removed all financial covenants on current borrowings," he
added.
First Quarter Business Highlights
- Expanded 277 existing customer relationships, including 40
major expansions, and added 122 new customer relationships,
including 49 major accounts.
- Continued to invest in customer-driven innovation across our
four clouds with seven major releases and 15 feature packs. For
example, we successfully integrated our Project and IT Management
Cloud with Microsoft Teams, allowing customers improved
collaboration and cooperation within their remote workforce.
- Closed the strategic acquisition of Localytics, a company that
combines push, in-app, inbox, and remarketing with rich audience
segmentation.
- Continued to scale our go-to-market capabilities by expanding
sales team capacity and in February, appointing software industry
veteran Rod Favaron as President and Chief Commercial Officer,
along with a proven team of new executives to lead marketing,
customer success, and global account sales.
Business Outlook
The second quarter 2020 guidance and updated full-year 2020
guidance we are providing today factor in the expected impacts of
COVID-19 based on information available to us today. Our guidance
is also based on the assumption that the most significant headwinds
will occur in the second and third quarters of 2020 and that
economic conditions will begin to open up more broadly by the end
of the year. Significant variation from these assumptions could
cause us to modify our guidance higher or lower. While we have
taken this opportunity to identify additional cost efficiencies in
our already high margin operating model, our guidance assumes a
continuation of our go-to-market investment initiative.
For the quarter ending June 30, 2020, Upland expects reported
total revenue to be between $62.5 and $66.5 million, including
subscription and support revenue between $59.9 and $62.9 million,
for growth in recurring revenue of 26% at the mid-point over the
quarter-ended June 30, 2019. Second quarter 2020 Adjusted EBITDA is
expected to be between $20.5 and $22.5 million, for an Adjusted
EBITDA margin of 33% at the mid-point, representing growth of 13%
at the mid-point over the quarter-ended June 30, 2019.
For the full year ending December 31, 2020, Upland expects
reported total revenue to be between $257.4 and $269.4 million,
including subscription and support revenue between $244.8 and
$253.8 million, for growth in recurring revenue of 22% at the
mid-point over the year ended December 31, 2019. Full year 2020
Adjusted EBITDA is expected to be between $87.2 and $93.2 million,
for an Adjusted EBITDA margin of 34% at the mid-point, representing
growth of 9% at the mid-point over the year ended December 31,
2019.
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 1-833-520-0067 in the United States or
+1-236-714-2220 if outside the United States, using the passcode /
conference call identification number: 2957997. This webcast will
contain forward-looking statements and other material information
regarding Upland’s financial and operating results.
Following the completion of the live call, a recorded replay of
the webcast will be available on Upland's website at
investor.uplandsoftware.com for twelve months.
About Upland Software
Upland Software (Nasdaq: UPLD) is a leader in enterprise work
management software. Upland’s four enterprise clouds enable
thousands of organizations to engage with customers on key digital
channels, optimize sales team performance, manage projects and IT
costs, and automate critical document workflows. All of Upland’s
clouds are backed by a 100% customer success commitment and the
UplandOne platform, which puts customers at the center of
everything we do. 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) and non-GAAP net income (loss) per share.
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.
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, and purchase accounting
adjustments for deferred revenue.
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, and the related tax effect of the
adjustments above.
Upland defines annual net dollar retention rate (NDRR) as of
December 31 as the aggregate annualized recurring revenue value at
December 31 from those customers that were also customers as of
December 31 of the prior fiscal year, divided by the aggregate
annualized recurring revenue value from all customers as of
December 31 of the prior fiscal year. This measure excludes the
revenue value of uncontracted overage fees and on-demand service
fees.
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.
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 "believe," "expect," "anticipate," "intend," "plan,"
"estimate," "seek," "will," "may," "hope," "predict," "could,"
"should," "would," "project," 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,
sustain or increase profitability or predict future results; our
ability to attract and retain customers; our ability to deliver
high-quality customer service; the growth of demand for enterprise
work management applications; our plans regarding, and our ability
to effectively manage, our growth; our plans regarding future
acquisitions and our ability to consummate and integrate
acquisitions; maintaining our senior management and key personnel;
our ability to maintain and expand our direct sales organization;
our ability to obtain financing in the future on acceptable terms
or at all; the performance of our resellers; our ability to adapt
to changing market conditions and competition; our ability to
successfully enter new markets and manage our international
expansion; the operation and reliability of our third-party data
centers and other service providers; our ability to adapt to
technological change and continue to innovate; our ability to
integrate our applications with other software applications; our
ability to comply with privacy laws and regulations; 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 and our recent
Quarterly Report on Form 10-Q 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,
2020
2019
(unaudited)
Revenue:
Subscription and support
$
63,891
$
44,983
Perpetual license
361
657
Total product revenue
64,252
45,640
Professional services
3,780
2,853
Total revenue
68,032
48,493
Cost of revenue:
Subscription and support
19,939
13,274
Professional services
2,262
1,514
Total cost of revenue
22,201
14,788
Gross profit
45,831
33,705
Operating expenses:
Sales and marketing
10,931
6,982
Research and development
9,420
6,398
Refundable Canadian tax credits
(302
)
(86
)
General and administrative
16,676
9,994
Depreciation and amortization
9,271
5,259
Acquisition-related expenses
15,158
7,723
Total operating expenses
61,154
36,270
Loss from operations
(15,323
)
(2,565
)
Other expense:
Interest expense, net
(7,643
)
(5,116
)
Other expense, net
(1,402
)
(761
)
Total other expense
(9,045
)
(5,877
)
Loss before provision for income taxes
(24,368
)
(8,442
)
Benefit from income taxes
4,287
612
Net loss
$
(20,081
)
$
(7,830
)
Net income (loss) per common share:
Basic
$
(0.81
)
$
(0.38
)
Weighted average common shares
outstanding:
Basic
24,906,932
20,442,626
Upland Software, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
March 31,
December 31,
2020
2019
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
98,688
$
175,024
Accounts receivable, net of allowance
55,398
50,938
Deferred commissions, current
3,645
3,059
Unbilled receivables
5,689
5,111
Prepaid and other
7,452
4,748
Total current assets
170,872
238,880
Tax credits receivable
4,219
4,186
Property and equipment, net
4,035
3,917
Operating lease right-of-use asset
12,353
8,056
Intangible assets, net
302,948
282,727
Goodwill
377,745
346,134
Deferred commissions, noncurrent
9,427
8,763
Other assets
1,934
4,165
Total assets
$
883,533
$
896,828
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
4,794
$
5,904
Accrued compensation
5,202
11,559
Accrued expenses and other current
liabilities
15,756
15,344
Deferred revenue
87,785
76,558
Due to sellers
14,731
14,276
Operating lease liabilities, current
3,828
2,533
Current maturities of notes payable
3,191
3,193
Total current liabilities
135,287
129,367
Notes payable, less current maturities
521,013
521,881
Deferred revenue, noncurrent
2,567
496
Operating lease liabilities,
noncurrent
11,515
5,862
Noncurrent deferred tax liability, net
24,472
25,685
Other long-term liabilities
29,587
676
Total liabilities
724,441
683,967
Stockholders’ equity:
Common stock
3
3
Additional paid-in capital
353,720
345,127
Accumulated other comprehensive loss
(43,396
)
(1,223
)
Accumulated deficit
(151,235
)
(131,046
)
Total stockholders’ equity
159,092
212,861
Total liabilities and stockholders’
equity
$
883,533
$
896,828
Upland Software, Inc.
Condensed Consolidated Statements
of Cash Flows
(in thousands)
Three Months Ended March
31,
2020
2019
(unaudited)
Operating activities
Net loss
$
(20,081
)
$
(7,830
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
11,737
7,387
Deferred income taxes
(4,348
)
(2,811
)
Amortization of deferred costs
894
801
Foreign currency re-measurement loss
587
(171
)
Non-cash interest and other expense
552
283
Non-cash stock compensation expense
9,320
4,628
Changes in operating assets and
liabilities, net of purchase business combinations:
Accounts receivable
(1,664
)
5,980
Prepaids and other
(2,778
)
(1,268
)
Accounts payable
(3,439
)
(269
)
Accrued expenses and other liabilities
(5,942
)
(766
)
Deferred revenue
9,853
(1,087
)
Net cash provided by (used in) operating
activities
(5,309
)
4,877
Investing activities
Purchase of property and equipment
(296
)
(173
)
Purchase of customer relationships
(201
)
—
Purchase business combinations, net of
cash acquired
(67,651
)
(2,999
)
Net cash used in investing activities
(68,148
)
(3,172
)
Financing activities
Payments on finance leases
(55
)
(233
)
Proceeds from notes payable, net of
issuance costs
(72
)
(120
)
Payments on notes payable
(1,350
)
(1,781
)
Taxes paid related to net share settlement
of equity awards
(768
)
(1,504
)
Issuance of common stock, net of issuance
costs
41
96
Additional consideration paid to sellers
of businesses
(1,000
)
(1,258
)
Net cash used in financing activities
(3,204
)
(4,800
)
Effect of exchange rate fluctuations on
cash
325
379
Change in cash and cash equivalents
(76,336
)
(2,716
)
Cash and cash equivalents, beginning of
period
175,024
16,738
Cash and cash equivalents, end of
period
$
98,688
$
14,022
Supplemental disclosures of cash flow
information:
Cash paid for interest, net of interest
rate swaps
$
7,435
$
4,854
Cash paid for taxes
$
508
$
758
Sales commissions paid, net of
amortization of deferred commissions
$
1,250
$
1,184
Non-cash investing and financing
activities:
Business combination consideration
including holdbacks and earnouts
$
345
$
—
Equipment acquired pursuant to financing
lease obligations
$
—
$
44
Upland Software, Inc.
Reconciliation of Adjusted
EBITDA
(in thousands, unaudited)
Three Months Ended March
31,
2020
2019
Reconciliation of net loss to Adjusted
EBITDA:
Net loss
$
(20,081
)
$
(7,830
)
Add:
Depreciation and amortization expense
11,737
7,387
Interest expense, net
7,643
5,116
Other expense (income), net
1,402
761
Benefit from income taxes
(4,287
)
(612
)
Stock-based compensation expense
9,320
4,628
Acquisition-related expense
15,158
7,723
Purchase accounting deferred revenue
discount
3,701
597
Adjusted EBITDA
$
24,593
$
17,770
Upland Software, Inc.
Reconciliation of Non-GAAP Net
Income and Non-GAAP EPS
(in thousands, except share and
per share data, unaudited)
Three Months Ended March
31,
2020
2019
Reconciliation of net loss to non-GAAP
net income:
Net income (loss)
$
(20,081
)
$
(7,830
)
Add:
Stock-based compensation expense
9,320
4,628
Amortization of purchased intangibles
11,205
6,837
Amortization of debt discount
552
283
Acquisition-related expense
15,158
7,723
Purchase accounting deferred revenue
discount
3,701
597
Tax effect of adjustments above
(1,723
)
(1,136
)
Non-GAAP net income
$
18,132
$
11,102
Weighted average ordinary shares
outstanding, basic
24,906,932
20,442,626
Weighted average ordinary shares
outstanding, diluted
25,352,702
21,146,073
Non-GAAP earnings per share, basic
$
0.73
$
0.54
Non-GAAP earnings per share, diluted
$
0.72
$
0.53
Upland Software, Inc.
Supplemental Financial
Information
(in thousands, unaudited)
Three Months Ended March
31,
2020
2019
Stock-based compensation:
Cost of revenue
$
318
$
160
Research and development
615
322
Sales and marketing
549
139
General and administrative
7,838
4,007
Total
$
9,320
$
4,628
Three Months Ended March
31,
2020
2019
Depreciation:
Cost of revenue
$
71
$
281
Operating expense
461
269
Total
$
532
$
550
Amortization:
Cost of revenue
$
2,395
$
1,847
Operating expense
8,810
4,990
Total
$
11,205
$
6,837
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507006107/en/
Investor Relations Contact: Mike Hill 512-960-1031
investor-relations@uplandsoftware.com
Media Contact: Kendell Kelton media@uplandsoftware.com
833-875-2631
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