Business automation software provider Upland Software (NASDAQ: UPLD) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 23% year on year to $53.38 million. On the other hand, next quarter’s revenue guidance of $49.8 million was less impressive, coming in 0.6% below analysts’ estimates. Its non-GAAP profit of $0.15 per share was 18.2% below analysts’ consensus estimates.
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Upland (UPLD) Q2 CY2025 Highlights:
- Revenue: $53.38 million vs analyst estimates of $53.33 million (23% year-on-year decline, in line)
- Adjusted EPS: $0.15 vs analyst expectations of $0.18 (18.2% miss)
- Adjusted EBITDA: $13.59 million vs analyst estimates of $13.47 million (25.4% margin, 0.8% beat)
- The company reconfirmed its revenue guidance for the full year of $217.8 million at the midpoint
- EBITDA guidance for the full year is $58.8 million at the midpoint, in line with analyst expectations
- Operating Margin: -13.2%, down from -7.7% in the same quarter last year
- Free Cash Flow Margin: 5%, down from 12.4% in the previous quarter
- Market Capitalization: $59.82 million
“With our Q2 results, we are pleased to report a return to positive core organic growth, a 500 basis point year-over-year increase in Adjusted EBITDA margin —from 20% to 25% —and continued strong momentum in AI product wins,” 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.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Upland struggled to consistently generate demand over the last three years as its sales dropped at a 6.8% annual rate. This was below our standards and is a sign of lacking business quality.
This quarter, Upland reported a rather uninspiring 23% year-on-year revenue decline to $53.38 million of revenue, in line with Wall Street’s estimates. Company management is currently guiding for a 25.3% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 17.9% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products and services will face some demand challenges.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Upland is extremely efficient at acquiring new customers, and its CAC payback period checked in at 1 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from Upland’s Q2 Results
It was great to see Upland’s EBITDA guidance for next quarter top analysts’ expectations. We were also glad its full-year EBITDA guidance slightly exceeded Wall Street’s estimates. On the other hand, its revenue guidance for next quarter slightly missed and its full-year revenue guidance was in line with Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $2.13 immediately following the results.
So do we think Upland is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
