Business automation software provider Upland Software (NASDAQ: UPLD) beat Wall Street’s revenue expectations in Q1 CY2025, but sales fell by 10% year on year to $63.66 million. On the other hand, next quarter’s revenue guidance of $53.3 million was less impressive, coming in 11.7% below analysts’ estimates. Its non-GAAP profit of $0.23 per share was 32.7% above analysts’ consensus estimates.
Is now the time to buy Upland? Find out by accessing our full research report, it’s free.
Upland (UPLD) Q1 CY2025 Highlights:
- Revenue: $63.66 million vs analyst estimates of $61.74 million (10% year-on-year decline, 3.1% beat)
- Adjusted EPS: $0.23 vs analyst estimates of $0.17 (32.7% beat)
- Adjusted EBITDA: $13.08 million vs analyst estimates of $12.41 million (20.6% margin, 5.4% beat)
- The company dropped its revenue guidance for the full year to $218.5 million at the midpoint from $243.5 million, a 10.3% decrease
- EBITDA guidance for the full year is $59.5 million at the midpoint, above analyst estimates of $58.58 million
- Operating Margin: -1.7%, up from -130% in the same quarter last year
- Free Cash Flow Margin: 12.4%, similar to the previous quarter
- Market Capitalization: $67.51 million
"In Q1, we beat our Revenue and Adjusted EBITDA guidance midpoints," said Jack McDonald, Upland's chairman and Chief Executive Officer.
Company Overview
Founder Jack McDonald’s second software rollup, Upland Software (NASDAQ: UPLD) is a one stop shop for sales and marketing software, project management, HR, and contact center services for small and medium sized businesses.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, Upland’s demand was weak and its revenue declined by 4.4% per year. This wasn’t a great result and is a sign of poor business quality.
This quarter, Upland’s revenue fell by 10% year on year to $63.66 million but beat Wall Street’s estimates by 3.1%. Company management is currently guiding for a 23.1% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 10.9% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and indicates its products and services will see some demand headwinds.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Upland’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between Upland’s products and its peers.
Key Takeaways from Upland’s Q1 Results
We enjoyed seeing Upland beat analysts’ revenue, EPS, and EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street’s estimates, but it lowered its full-year revenue guidance. Although, this was a weaker quarter due to the revenue outlook, the stock traded up 5.9% to $2.52 immediately following the results, likely because of the trade deal struck between the U.S. and China over the weekend.
So do we think Upland is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
