Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Upland Software Reports Third Quarter 2024 Financial Results By: Upland Software, Inc. via Business Wire November 07, 2024 at 16:01 PM EST Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based tools for digital transformation, today announced financial and operating results for the third quarter 2024 and issued guidance for its fourth quarter and full year of 2024. Third Quarter 2024 Financial Highlights Total revenue was $66.7 million, a decrease of 10% from $74.1 million in the third quarter of 2023. Subscription and support revenue was $63.8 million, a decrease of 9% from $70.0 million in the third quarter of 2023. GAAP net loss was $1.7 million compared to a GAAP net loss of $8.7 million in the third quarter of 2023. GAAP net loss attributable to common stockholders was $3.1 million compared to GAAP net loss attributable to common stockholders of $10.0 million in the third quarter of 2023. GAAP net loss per share attributable to common stockholders was $0.12 per share, compared to a GAAP net loss per share attributable to common stockholders of $0.31 per share in the third quarter of 2023. Adjusted EBITDA was $14.0 million, or 21% of total revenue, compared to $16.2 million, or 22% of total revenue, in the third quarter of 2023. GAAP operating cash flow was $4.3 million, compared to GAAP operating cash flow of $18.3 million in the third quarter of 2023. Free cash flow was $4.2 million, compared to free cash flow of $17.8 million in the third quarter of 2023. Cash on hand as of the end of the third quarter of 2024 was $59.7 million after making additional paydowns of $177 million on our Term Loans during the quarter. "In Q3, we met our revenue and Adjusted EBITDA guidance midpoints, welcoming new customers across our portfolio, including for our Generative AI solutions," said Jack McDonald, Upland's chairman and chief executive officer. "From customer reviews on G2 to industry awards like the KMWorld AI 100, our products continue to earn strong market validation. In addition, we continue to expand market reach for our AI-enabled solutions, such as the recent availability of Upland BA Insight for Microsoft Azure AI Search in the Microsoft Azure Marketplace." Third Quarter Business Highlights We welcomed 122 new customers to Upland in the third quarter, including 18 new major customers. We also expanded relationships with 312 existing customers, 27 of which were major expansions. These new and expanded relationships were across our portfolio, including our Generative AI solutions. We earned 72 badges in G2’s Fall 2024 market reports across our portfolio of solutions, up from 56 badges in the Summer 2024 reports. Upland RightAnswers, our AI knowledge management solution, garnered an impressive 17 badges, while Upland BA Insight, our AI enterprise search solution, secured several new recognitions. We announced the availability of Upland BA Insight for Microsoft Azure AI Search in the Microsoft Azure Marketplace, an online store providing applications and services for use on Azure. BA Insight customers can now take advantage of the productive and trusted Azure cloud platform, with streamlined deployment and management. Built on Microsoft Azure AI Search, BA Insight for Azure AI Search combines the BA Insight user experience platform, BA Insight SmartHub, with over 90 Connectors. The solution securely brings user data into Azure AI Search and delivers intelligent, actionable content search experiences, without bouncing between multiple systems looking for the right information. For the second year in a row, Upland RightAnswers has been named to the 2024 KMWorld AI 100, recognizing the top knowledge management companies leveraging the power of AI and other innovative software. This achievement supports Upland’s extensive efforts in AI, integrating the technology into products across its portfolio. Business Outlook For the quarter ending December 31, 2024, Upland expects reported total revenue to be between $65.9 and $71.9 million, including subscription and support revenue between $60.2 and $65.2 million, for a decline in total revenue of 5% at the midpoint from the quarter-ended December 31, 2023. Fourth quarter 2024 Adjusted EBITDA is expected to be between $13.4 and $16.4 million, for an Adjusted EBITDA margin of 22% at the midpoint. This Adjusted EBITDA guide at the midpoint is an increase of 6% from the quarter-ended December 31, 2023. For the full year ending December 31, 2024, Upland expects reported total revenue to be between $272.6 and $278.6 million, including subscription and support revenue between $256.6 and $261.6 million, for a decline in total revenue of 7% at the midpoint from the year ended December 31, 2023. Full year 2024 Adjusted EBITDA is expected to be between $54.1 and $57.1 million, for an Adjusted EBITDA margin of 20% at the midpoint. This Adjusted EBITDA guide at the midpoint is a decline of 14% 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 offer many integrated AI capabilities and 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 and 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. Core Bookings and Core Churn exclude bookings and churn from Sunset Assets. 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 incorporate and deliver artificial intelligence (“AI”) functionality into our products and services; our ability to deliver high-quality customer service; our plans regarding, and our ability to effectively manage, our growth, including with respect to our growth investments; 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 timing of the discontinuation of any Sunset Assets, as well as the composition of Sunset Assets; 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, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue: Subscription and support $ 63,771 $ 69,962 $ 196,353 $ 213,370 Perpetual license 1,106 1,494 4,306 4,317 Total product revenue 64,877 71,456 200,659 217,687 Professional services 1,815 2,665 6,108 7,987 Total revenue 66,692 74,121 �� 206,767 225,674 Cost of revenue: Subscription and support 18,449 20,853 57,525 66,411 Professional services and other 1,256 2,085 3,703 6,241 Total cost of revenue 19,705 22,938 61,228 72,652 Gross profit 46,987 51,183 145,539 153,022 Operating expenses: Sales and marketing 16,325 16,860 50,134 46,904 Research and development 11,432 12,740 36,072 37,713 General and administrative 11,051 14,597 38,163 47,369 Depreciation and amortization 11,490 14,262 34,266 44,209 Acquisition-related expenses — 443 — 2,609 Impairment of goodwill — — 87,227 128,755 Total operating expenses 50,298 58,902 245,862 307,559 Loss from operations (3,311 ) (7,719 ) (100,323 ) (154,537 ) Other income (expense): Interest income (expense), net 2,337 (2,525 ) (7,677 ) (13,362 ) Other income (expense), net (229 ) 103 (109 ) 911 Total other income (expense) 2,108 (2,422 ) (7,786 ) (12,451 ) Loss before benefit from (provision for) income taxes (1,203 ) (10,141 ) (108,109 ) (166,988 ) Benefit from (provision for) income taxes (530 ) 1,471 (1,193 ) 3,126 Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Preferred stock dividends (1,406 ) (1,344 ) (4,171 ) (3,988 ) Net loss attributable to common stockholders $ (3,139 ) $ (10,014 ) $ (113,473 ) $ (167,850 ) Net loss per common share: Net loss per common share, basic and diluted $ (0.12 ) $ (0.31 ) $ (4.07 ) $ (5.17 ) Weighted-average common shares outstanding, basic and diluted 27,292,410 32,579,544 27,850,947 32,438,682 Upland Software, Inc. Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2024 2023 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 59,739 $ 236,559 Accounts receivable, net of allowance 31,849 38,765 Deferred commissions, current 9,192 10,429 Unbilled receivables 3,505 2,701 Income tax receivable, current 2,931 3,775 Prepaid expenses and other current assets 10,731 8,004 Total current assets 117,947 300,233 Tax credits receivable 1,319 1,657 Property and equipment, net 1,559 1,932 Operating lease right-of-use asset 1,595 2,929 Intangible assets, net 142,652 182,349 Goodwill 269,010 353,778 Deferred commissions, noncurrent 11,866 12,568 Interest rate swap assets 8,576 14,270 Other assets 414 308 Total assets $ 554,938 $ 870,024 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 8,788 $ 8,137 Accrued compensation 6,707 7,174 Accrued expenses and other current liabilities 6,085 7,050 Deferred revenue 92,740 102,763 Operating lease liabilities, current 1,278 2,351 Current maturities of notes payable 3,378 3,172 Total current liabilities 118,976 130,647 Notes payable, less current maturities 293,912 473,502 Deferred revenue, noncurrent 3,296 3,860 Operating lease liabilities, noncurrent 843 1,597 Noncurrent deferred tax liability, net 14,706 16,025 Other long-term liabilities 489 461 Total liabilities 432,222 626,092 Series A Convertible Preferred stock 121,809 117,638 Stockholders’ equity: Common stock 3 3 Additional paid-in capital 605,353 608,995 Accumulated other comprehensive income (loss) (6,275 ) 6,168 Accumulated deficit (598,174 ) (488,872 ) Total stockholders’ equity 907 126,294 Total liabilities, convertible preferred stock and stockholders’ equity $ 554,938 $ 870,024 Upland Software, Inc. Condensed Consolidated Statements of Cash Flows (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Operating activities Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 13,807 17,692 41,406 54,475 Deferred income taxes (89 ) 23 (1,265 ) (2,651 ) Amortization of deferred costs 3,076 3,242 9,152 9,909 Foreign currency re-measurement gain (65 ) (101 ) (759 ) (983 ) Non-cash interest, net and other income, net (7,492 ) (3,232 ) (9,268 ) (2,080 ) Non-cash stock-based compensation expense 3,423 5,360 12,078 18,192 Non-cash loss on impairment of goodwill — — 87,227 128,755 Non-cash loss on retirement of fixed assets — 12 18 46 Changes in operating assets and liabilities, net of purchase business combinations: Accounts receivable (1,269 ) (3,044 ) 7,093 10,168 Prepaid expenses and other current assets 898 (3,756 ) (2,705 ) (5,405 ) Other assets (2,252 ) 17,134 (7,159 ) 12,259 Accounts payable 1,254 346 641 (871 ) Accrued expenses and other liabilities (2,102 ) (623 ) (1,396 ) (4,729 ) Deferred revenue (3,149 ) (6,075 ) (10,863 ) (12,069 ) Net cash provided by operating activities 4,307 18,308 14,898 41,154 Investing activities Purchase of property and equipment (105 ) (530 ) (562 ) (1,034 ) Net cash used in investing activities (105 ) (530 ) (562 ) (1,034 ) Financing activities Payments of debt costs — (14 ) (77 ) (190 ) Payments on notes payable (178,350 ) (36,350 ) (181,050 ) (39,050 ) Stock repurchases and retirement — (3,215 ) (10,958 ) (3,215 ) Taxes paid related to net share settlement of equity awards (190 ) (354 ) (753 ) (742 ) Issuance of common stock, net of issuance costs — 1 — 2 Additional consideration paid to sellers of businesses — — — (5,550 ) Net cash used in financing activities (178,540 ) (39,932 ) (192,838 ) (48,745 ) Effect of exchange rate fluctuations on cash 1,702 (811 ) 1,682 (437 ) Change in cash and cash equivalents (172,636 ) (22,965 ) (176,820 ) (9,062 ) Cash and cash equivalents, beginning of period 232,375 262,556 236,559 248,653 Cash and cash equivalents, end of period $ 59,739 $ 239,591 $ 59,739 $ 239,591 Supplemental disclosures of cash flow information: Cash paid for interest, net of interest rate swaps $ 6,844 $ 8,721 $ 24,409 $ 23,147 Cash paid (received) for taxes, net of refunds $ (1,360 ) $ 1,255 $ 1,802 $ 6,227 Upland Software, Inc. Reconciliation of Adjusted EBITDA (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Reconciliation of Net Loss to Adjusted EBITDA: Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Add: Depreciation and amortization expense 13,807 17,692 41,406 54,475 Interest expense (income), net (2,337 ) 2,525 7,677 13,362 Other expense (income), net 229 (103 ) 109 (911 ) Provision for (benefit from) income taxes 530 (1,471 ) 1,193 (3,126 ) Stock-based compensation expense 3,423 5,360 12,078 18,192 Acquisition-related expense — 443 — 2,609 Non-recurring litigation costs 24 277 152 427 Purchase accounting deferred revenue discount 57 106 198 465 Impairment of goodwill — — 87,227 128,755 Adjusted EBITDA $ 14,000 $ 16,159 $ 40,738 $ 50,386 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Reconciliation of Net Loss to non-GAAP Net Income: Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Add: Stock-based compensation expense 3,423 5,360 12,078 18,192 Amortization of purchased intangibles 13,475 17,240 40,497 53,382 Amortization of debt discount 578 580 1,744 1,732 Acquisition-related expense — 443 — 2,609 Nonrecurring litigation expense 24 277 152 427 Purchase accounting deferred revenue discount 57 106 198 465 Impairment of goodwill — — 87,227 128,755 Tax effect of adjustments above (1,187 ) (2,402 ) (4,414 ) (9,207 ) Non-GAAP net income $ 14,637 $ 12,934 $ 28,180 $ 32,493 Weighted average common shares outstanding, basic 27,292,410 32,579,544 27,850,947 32,438,682 Weighted average common shares outstanding, diluted 34,812,257 39,423,806 35,029,418 39,217,582 Non-GAAP earnings per share, basic $ 0.54 $ 0.40 $ 1.01 $ 1.00 Non-GAAP earnings per share, diluted $ 0.42 $ 0.33 $ 0.80 $ 0.83 Upland Software, Inc. Reconciliation of Operating Cash Flow to Free Cash Flow (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Reconciliation of operating cash flow to Free Cash Flow: Net cash provided by operating activities $ 4,307 $ 18,308 $ 14,898 $ 41,154 Less: Purchase of property and equipment (105 ) (530 ) (562 ) (1,034 ) Free Cash Flow $ 4,202 $ 17,778 $ 14,336 $ 40,120 Upland Software, Inc. Supplemental Financial Information (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Stock-based compensation: Cost of revenue $ 199 $ 246 $ 584 $ 850 Research and development 470 608 1,714 1,911 Sales and marketing 398 429 1,156 1,563 General and administrative 2,356 4,077 8,624 13,868 Total $ 3,423 $ 5,360 $ 12,078 $ 18,192 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Depreciation: Cost of revenue $ — $ 1 $ — $ 5 Operating expense 332 451 909 1,088 Total $ 332 $ 452 $ 909 $ 1,093 Amortization: Cost of revenue $ 2,317 $ 3,429 $ 7,140 $ 10,261 Operating expense 11,158 13,811 33,357 43,121 Total $ 13,475 $ 17,240 $ 40,497 $ 53,382 View source version on businesswire.com: https://www.businesswire.com/news/home/20241107858589/en/Contacts Investor Relations Contact: Michael D. 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Upland Software Reports Third Quarter 2024 Financial Results By: Upland Software, Inc. via Business Wire November 07, 2024 at 16:01 PM EST Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based tools for digital transformation, today announced financial and operating results for the third quarter 2024 and issued guidance for its fourth quarter and full year of 2024. Third Quarter 2024 Financial Highlights Total revenue was $66.7 million, a decrease of 10% from $74.1 million in the third quarter of 2023. Subscription and support revenue was $63.8 million, a decrease of 9% from $70.0 million in the third quarter of 2023. GAAP net loss was $1.7 million compared to a GAAP net loss of $8.7 million in the third quarter of 2023. GAAP net loss attributable to common stockholders was $3.1 million compared to GAAP net loss attributable to common stockholders of $10.0 million in the third quarter of 2023. GAAP net loss per share attributable to common stockholders was $0.12 per share, compared to a GAAP net loss per share attributable to common stockholders of $0.31 per share in the third quarter of 2023. Adjusted EBITDA was $14.0 million, or 21% of total revenue, compared to $16.2 million, or 22% of total revenue, in the third quarter of 2023. GAAP operating cash flow was $4.3 million, compared to GAAP operating cash flow of $18.3 million in the third quarter of 2023. Free cash flow was $4.2 million, compared to free cash flow of $17.8 million in the third quarter of 2023. Cash on hand as of the end of the third quarter of 2024 was $59.7 million after making additional paydowns of $177 million on our Term Loans during the quarter. "In Q3, we met our revenue and Adjusted EBITDA guidance midpoints, welcoming new customers across our portfolio, including for our Generative AI solutions," said Jack McDonald, Upland's chairman and chief executive officer. "From customer reviews on G2 to industry awards like the KMWorld AI 100, our products continue to earn strong market validation. In addition, we continue to expand market reach for our AI-enabled solutions, such as the recent availability of Upland BA Insight for Microsoft Azure AI Search in the Microsoft Azure Marketplace." Third Quarter Business Highlights We welcomed 122 new customers to Upland in the third quarter, including 18 new major customers. We also expanded relationships with 312 existing customers, 27 of which were major expansions. These new and expanded relationships were across our portfolio, including our Generative AI solutions. We earned 72 badges in G2’s Fall 2024 market reports across our portfolio of solutions, up from 56 badges in the Summer 2024 reports. Upland RightAnswers, our AI knowledge management solution, garnered an impressive 17 badges, while Upland BA Insight, our AI enterprise search solution, secured several new recognitions. We announced the availability of Upland BA Insight for Microsoft Azure AI Search in the Microsoft Azure Marketplace, an online store providing applications and services for use on Azure. BA Insight customers can now take advantage of the productive and trusted Azure cloud platform, with streamlined deployment and management. Built on Microsoft Azure AI Search, BA Insight for Azure AI Search combines the BA Insight user experience platform, BA Insight SmartHub, with over 90 Connectors. The solution securely brings user data into Azure AI Search and delivers intelligent, actionable content search experiences, without bouncing between multiple systems looking for the right information. For the second year in a row, Upland RightAnswers has been named to the 2024 KMWorld AI 100, recognizing the top knowledge management companies leveraging the power of AI and other innovative software. This achievement supports Upland’s extensive efforts in AI, integrating the technology into products across its portfolio. Business Outlook For the quarter ending December 31, 2024, Upland expects reported total revenue to be between $65.9 and $71.9 million, including subscription and support revenue between $60.2 and $65.2 million, for a decline in total revenue of 5% at the midpoint from the quarter-ended December 31, 2023. Fourth quarter 2024 Adjusted EBITDA is expected to be between $13.4 and $16.4 million, for an Adjusted EBITDA margin of 22% at the midpoint. This Adjusted EBITDA guide at the midpoint is an increase of 6% from the quarter-ended December 31, 2023. For the full year ending December 31, 2024, Upland expects reported total revenue to be between $272.6 and $278.6 million, including subscription and support revenue between $256.6 and $261.6 million, for a decline in total revenue of 7% at the midpoint from the year ended December 31, 2023. Full year 2024 Adjusted EBITDA is expected to be between $54.1 and $57.1 million, for an Adjusted EBITDA margin of 20% at the midpoint. This Adjusted EBITDA guide at the midpoint is a decline of 14% 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 offer many integrated AI capabilities and 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 and 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. Core Bookings and Core Churn exclude bookings and churn from Sunset Assets. 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 incorporate and deliver artificial intelligence (“AI”) functionality into our products and services; our ability to deliver high-quality customer service; our plans regarding, and our ability to effectively manage, our growth, including with respect to our growth investments; 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 timing of the discontinuation of any Sunset Assets, as well as the composition of Sunset Assets; 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, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue: Subscription and support $ 63,771 $ 69,962 $ 196,353 $ 213,370 Perpetual license 1,106 1,494 4,306 4,317 Total product revenue 64,877 71,456 200,659 217,687 Professional services 1,815 2,665 6,108 7,987 Total revenue 66,692 74,121 �� 206,767 225,674 Cost of revenue: Subscription and support 18,449 20,853 57,525 66,411 Professional services and other 1,256 2,085 3,703 6,241 Total cost of revenue 19,705 22,938 61,228 72,652 Gross profit 46,987 51,183 145,539 153,022 Operating expenses: Sales and marketing 16,325 16,860 50,134 46,904 Research and development 11,432 12,740 36,072 37,713 General and administrative 11,051 14,597 38,163 47,369 Depreciation and amortization 11,490 14,262 34,266 44,209 Acquisition-related expenses — 443 — 2,609 Impairment of goodwill — — 87,227 128,755 Total operating expenses 50,298 58,902 245,862 307,559 Loss from operations (3,311 ) (7,719 ) (100,323 ) (154,537 ) Other income (expense): Interest income (expense), net 2,337 (2,525 ) (7,677 ) (13,362 ) Other income (expense), net (229 ) 103 (109 ) 911 Total other income (expense) 2,108 (2,422 ) (7,786 ) (12,451 ) Loss before benefit from (provision for) income taxes (1,203 ) (10,141 ) (108,109 ) (166,988 ) Benefit from (provision for) income taxes (530 ) 1,471 (1,193 ) 3,126 Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Preferred stock dividends (1,406 ) (1,344 ) (4,171 ) (3,988 ) Net loss attributable to common stockholders $ (3,139 ) $ (10,014 ) $ (113,473 ) $ (167,850 ) Net loss per common share: Net loss per common share, basic and diluted $ (0.12 ) $ (0.31 ) $ (4.07 ) $ (5.17 ) Weighted-average common shares outstanding, basic and diluted 27,292,410 32,579,544 27,850,947 32,438,682 Upland Software, Inc. Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2024 2023 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 59,739 $ 236,559 Accounts receivable, net of allowance 31,849 38,765 Deferred commissions, current 9,192 10,429 Unbilled receivables 3,505 2,701 Income tax receivable, current 2,931 3,775 Prepaid expenses and other current assets 10,731 8,004 Total current assets 117,947 300,233 Tax credits receivable 1,319 1,657 Property and equipment, net 1,559 1,932 Operating lease right-of-use asset 1,595 2,929 Intangible assets, net 142,652 182,349 Goodwill 269,010 353,778 Deferred commissions, noncurrent 11,866 12,568 Interest rate swap assets 8,576 14,270 Other assets 414 308 Total assets $ 554,938 $ 870,024 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 8,788 $ 8,137 Accrued compensation 6,707 7,174 Accrued expenses and other current liabilities 6,085 7,050 Deferred revenue 92,740 102,763 Operating lease liabilities, current 1,278 2,351 Current maturities of notes payable 3,378 3,172 Total current liabilities 118,976 130,647 Notes payable, less current maturities 293,912 473,502 Deferred revenue, noncurrent 3,296 3,860 Operating lease liabilities, noncurrent 843 1,597 Noncurrent deferred tax liability, net 14,706 16,025 Other long-term liabilities 489 461 Total liabilities 432,222 626,092 Series A Convertible Preferred stock 121,809 117,638 Stockholders’ equity: Common stock 3 3 Additional paid-in capital 605,353 608,995 Accumulated other comprehensive income (loss) (6,275 ) 6,168 Accumulated deficit (598,174 ) (488,872 ) Total stockholders’ equity 907 126,294 Total liabilities, convertible preferred stock and stockholders’ equity $ 554,938 $ 870,024 Upland Software, Inc. Condensed Consolidated Statements of Cash Flows (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Operating activities Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 13,807 17,692 41,406 54,475 Deferred income taxes (89 ) 23 (1,265 ) (2,651 ) Amortization of deferred costs 3,076 3,242 9,152 9,909 Foreign currency re-measurement gain (65 ) (101 ) (759 ) (983 ) Non-cash interest, net and other income, net (7,492 ) (3,232 ) (9,268 ) (2,080 ) Non-cash stock-based compensation expense 3,423 5,360 12,078 18,192 Non-cash loss on impairment of goodwill — — 87,227 128,755 Non-cash loss on retirement of fixed assets — 12 18 46 Changes in operating assets and liabilities, net of purchase business combinations: Accounts receivable (1,269 ) (3,044 ) 7,093 10,168 Prepaid expenses and other current assets 898 (3,756 ) (2,705 ) (5,405 ) Other assets (2,252 ) 17,134 (7,159 ) 12,259 Accounts payable 1,254 346 641 (871 ) Accrued expenses and other liabilities (2,102 ) (623 ) (1,396 ) (4,729 ) Deferred revenue (3,149 ) (6,075 ) (10,863 ) (12,069 ) Net cash provided by operating activities 4,307 18,308 14,898 41,154 Investing activities Purchase of property and equipment (105 ) (530 ) (562 ) (1,034 ) Net cash used in investing activities (105 ) (530 ) (562 ) (1,034 ) Financing activities Payments of debt costs — (14 ) (77 ) (190 ) Payments on notes payable (178,350 ) (36,350 ) (181,050 ) (39,050 ) Stock repurchases and retirement — (3,215 ) (10,958 ) (3,215 ) Taxes paid related to net share settlement of equity awards (190 ) (354 ) (753 ) (742 ) Issuance of common stock, net of issuance costs — 1 — 2 Additional consideration paid to sellers of businesses — — — (5,550 ) Net cash used in financing activities (178,540 ) (39,932 ) (192,838 ) (48,745 ) Effect of exchange rate fluctuations on cash 1,702 (811 ) 1,682 (437 ) Change in cash and cash equivalents (172,636 ) (22,965 ) (176,820 ) (9,062 ) Cash and cash equivalents, beginning of period 232,375 262,556 236,559 248,653 Cash and cash equivalents, end of period $ 59,739 $ 239,591 $ 59,739 $ 239,591 Supplemental disclosures of cash flow information: Cash paid for interest, net of interest rate swaps $ 6,844 $ 8,721 $ 24,409 $ 23,147 Cash paid (received) for taxes, net of refunds $ (1,360 ) $ 1,255 $ 1,802 $ 6,227 Upland Software, Inc. Reconciliation of Adjusted EBITDA (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Reconciliation of Net Loss to Adjusted EBITDA: Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Add: Depreciation and amortization expense 13,807 17,692 41,406 54,475 Interest expense (income), net (2,337 ) 2,525 7,677 13,362 Other expense (income), net 229 (103 ) 109 (911 ) Provision for (benefit from) income taxes 530 (1,471 ) 1,193 (3,126 ) Stock-based compensation expense 3,423 5,360 12,078 18,192 Acquisition-related expense — 443 — 2,609 Non-recurring litigation costs 24 277 152 427 Purchase accounting deferred revenue discount 57 106 198 465 Impairment of goodwill — — 87,227 128,755 Adjusted EBITDA $ 14,000 $ 16,159 $ 40,738 $ 50,386 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Reconciliation of Net Loss to non-GAAP Net Income: Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Add: Stock-based compensation expense 3,423 5,360 12,078 18,192 Amortization of purchased intangibles 13,475 17,240 40,497 53,382 Amortization of debt discount 578 580 1,744 1,732 Acquisition-related expense — 443 — 2,609 Nonrecurring litigation expense 24 277 152 427 Purchase accounting deferred revenue discount 57 106 198 465 Impairment of goodwill — — 87,227 128,755 Tax effect of adjustments above (1,187 ) (2,402 ) (4,414 ) (9,207 ) Non-GAAP net income $ 14,637 $ 12,934 $ 28,180 $ 32,493 Weighted average common shares outstanding, basic 27,292,410 32,579,544 27,850,947 32,438,682 Weighted average common shares outstanding, diluted 34,812,257 39,423,806 35,029,418 39,217,582 Non-GAAP earnings per share, basic $ 0.54 $ 0.40 $ 1.01 $ 1.00 Non-GAAP earnings per share, diluted $ 0.42 $ 0.33 $ 0.80 $ 0.83 Upland Software, Inc. Reconciliation of Operating Cash Flow to Free Cash Flow (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Reconciliation of operating cash flow to Free Cash Flow: Net cash provided by operating activities $ 4,307 $ 18,308 $ 14,898 $ 41,154 Less: Purchase of property and equipment (105 ) (530 ) (562 ) (1,034 ) Free Cash Flow $ 4,202 $ 17,778 $ 14,336 $ 40,120 Upland Software, Inc. Supplemental Financial Information (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Stock-based compensation: Cost of revenue $ 199 $ 246 $ 584 $ 850 Research and development 470 608 1,714 1,911 Sales and marketing 398 429 1,156 1,563 General and administrative 2,356 4,077 8,624 13,868 Total $ 3,423 $ 5,360 $ 12,078 $ 18,192 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Depreciation: Cost of revenue $ — $ 1 $ — $ 5 Operating expense 332 451 909 1,088 Total $ 332 $ 452 $ 909 $ 1,093 Amortization: Cost of revenue $ 2,317 $ 3,429 $ 7,140 $ 10,261 Operating expense 11,158 13,811 33,357 43,121 Total $ 13,475 $ 17,240 $ 40,497 $ 53,382 View source version on businesswire.com: https://www.businesswire.com/news/home/20241107858589/en/Contacts Investor Relations Contact: Michael D. Hill investor-relations@uplandsoftware.com 512-960-1031 Media Contact: Lloyd Berry media@uplandsoftware.com 512-960-1010
Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based tools for digital transformation, today announced financial and operating results for the third quarter 2024 and issued guidance for its fourth quarter and full year of 2024. Third Quarter 2024 Financial Highlights Total revenue was $66.7 million, a decrease of 10% from $74.1 million in the third quarter of 2023. Subscription and support revenue was $63.8 million, a decrease of 9% from $70.0 million in the third quarter of 2023. GAAP net loss was $1.7 million compared to a GAAP net loss of $8.7 million in the third quarter of 2023. GAAP net loss attributable to common stockholders was $3.1 million compared to GAAP net loss attributable to common stockholders of $10.0 million in the third quarter of 2023. GAAP net loss per share attributable to common stockholders was $0.12 per share, compared to a GAAP net loss per share attributable to common stockholders of $0.31 per share in the third quarter of 2023. Adjusted EBITDA was $14.0 million, or 21% of total revenue, compared to $16.2 million, or 22% of total revenue, in the third quarter of 2023. GAAP operating cash flow was $4.3 million, compared to GAAP operating cash flow of $18.3 million in the third quarter of 2023. Free cash flow was $4.2 million, compared to free cash flow of $17.8 million in the third quarter of 2023. Cash on hand as of the end of the third quarter of 2024 was $59.7 million after making additional paydowns of $177 million on our Term Loans during the quarter. "In Q3, we met our revenue and Adjusted EBITDA guidance midpoints, welcoming new customers across our portfolio, including for our Generative AI solutions," said Jack McDonald, Upland's chairman and chief executive officer. "From customer reviews on G2 to industry awards like the KMWorld AI 100, our products continue to earn strong market validation. In addition, we continue to expand market reach for our AI-enabled solutions, such as the recent availability of Upland BA Insight for Microsoft Azure AI Search in the Microsoft Azure Marketplace." Third Quarter Business Highlights We welcomed 122 new customers to Upland in the third quarter, including 18 new major customers. We also expanded relationships with 312 existing customers, 27 of which were major expansions. These new and expanded relationships were across our portfolio, including our Generative AI solutions. We earned 72 badges in G2’s Fall 2024 market reports across our portfolio of solutions, up from 56 badges in the Summer 2024 reports. Upland RightAnswers, our AI knowledge management solution, garnered an impressive 17 badges, while Upland BA Insight, our AI enterprise search solution, secured several new recognitions. We announced the availability of Upland BA Insight for Microsoft Azure AI Search in the Microsoft Azure Marketplace, an online store providing applications and services for use on Azure. BA Insight customers can now take advantage of the productive and trusted Azure cloud platform, with streamlined deployment and management. Built on Microsoft Azure AI Search, BA Insight for Azure AI Search combines the BA Insight user experience platform, BA Insight SmartHub, with over 90 Connectors. The solution securely brings user data into Azure AI Search and delivers intelligent, actionable content search experiences, without bouncing between multiple systems looking for the right information. For the second year in a row, Upland RightAnswers has been named to the 2024 KMWorld AI 100, recognizing the top knowledge management companies leveraging the power of AI and other innovative software. This achievement supports Upland’s extensive efforts in AI, integrating the technology into products across its portfolio. Business Outlook For the quarter ending December 31, 2024, Upland expects reported total revenue to be between $65.9 and $71.9 million, including subscription and support revenue between $60.2 and $65.2 million, for a decline in total revenue of 5% at the midpoint from the quarter-ended December 31, 2023. Fourth quarter 2024 Adjusted EBITDA is expected to be between $13.4 and $16.4 million, for an Adjusted EBITDA margin of 22% at the midpoint. This Adjusted EBITDA guide at the midpoint is an increase of 6% from the quarter-ended December 31, 2023. For the full year ending December 31, 2024, Upland expects reported total revenue to be between $272.6 and $278.6 million, including subscription and support revenue between $256.6 and $261.6 million, for a decline in total revenue of 7% at the midpoint from the year ended December 31, 2023. Full year 2024 Adjusted EBITDA is expected to be between $54.1 and $57.1 million, for an Adjusted EBITDA margin of 20% at the midpoint. This Adjusted EBITDA guide at the midpoint is a decline of 14% 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 offer many integrated AI capabilities and 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 and 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. Core Bookings and Core Churn exclude bookings and churn from Sunset Assets. 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 incorporate and deliver artificial intelligence (“AI”) functionality into our products and services; our ability to deliver high-quality customer service; our plans regarding, and our ability to effectively manage, our growth, including with respect to our growth investments; 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 timing of the discontinuation of any Sunset Assets, as well as the composition of Sunset Assets; 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, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue: Subscription and support $ 63,771 $ 69,962 $ 196,353 $ 213,370 Perpetual license 1,106 1,494 4,306 4,317 Total product revenue 64,877 71,456 200,659 217,687 Professional services 1,815 2,665 6,108 7,987 Total revenue 66,692 74,121 �� 206,767 225,674 Cost of revenue: Subscription and support 18,449 20,853 57,525 66,411 Professional services and other 1,256 2,085 3,703 6,241 Total cost of revenue 19,705 22,938 61,228 72,652 Gross profit 46,987 51,183 145,539 153,022 Operating expenses: Sales and marketing 16,325 16,860 50,134 46,904 Research and development 11,432 12,740 36,072 37,713 General and administrative 11,051 14,597 38,163 47,369 Depreciation and amortization 11,490 14,262 34,266 44,209 Acquisition-related expenses — 443 — 2,609 Impairment of goodwill — — 87,227 128,755 Total operating expenses 50,298 58,902 245,862 307,559 Loss from operations (3,311 ) (7,719 ) (100,323 ) (154,537 ) Other income (expense): Interest income (expense), net 2,337 (2,525 ) (7,677 ) (13,362 ) Other income (expense), net (229 ) 103 (109 ) 911 Total other income (expense) 2,108 (2,422 ) (7,786 ) (12,451 ) Loss before benefit from (provision for) income taxes (1,203 ) (10,141 ) (108,109 ) (166,988 ) Benefit from (provision for) income taxes (530 ) 1,471 (1,193 ) 3,126 Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Preferred stock dividends (1,406 ) (1,344 ) (4,171 ) (3,988 ) Net loss attributable to common stockholders $ (3,139 ) $ (10,014 ) $ (113,473 ) $ (167,850 ) Net loss per common share: Net loss per common share, basic and diluted $ (0.12 ) $ (0.31 ) $ (4.07 ) $ (5.17 ) Weighted-average common shares outstanding, basic and diluted 27,292,410 32,579,544 27,850,947 32,438,682 Upland Software, Inc. Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2024 2023 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 59,739 $ 236,559 Accounts receivable, net of allowance 31,849 38,765 Deferred commissions, current 9,192 10,429 Unbilled receivables 3,505 2,701 Income tax receivable, current 2,931 3,775 Prepaid expenses and other current assets 10,731 8,004 Total current assets 117,947 300,233 Tax credits receivable 1,319 1,657 Property and equipment, net 1,559 1,932 Operating lease right-of-use asset 1,595 2,929 Intangible assets, net 142,652 182,349 Goodwill 269,010 353,778 Deferred commissions, noncurrent 11,866 12,568 Interest rate swap assets 8,576 14,270 Other assets 414 308 Total assets $ 554,938 $ 870,024 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 8,788 $ 8,137 Accrued compensation 6,707 7,174 Accrued expenses and other current liabilities 6,085 7,050 Deferred revenue 92,740 102,763 Operating lease liabilities, current 1,278 2,351 Current maturities of notes payable 3,378 3,172 Total current liabilities 118,976 130,647 Notes payable, less current maturities 293,912 473,502 Deferred revenue, noncurrent 3,296 3,860 Operating lease liabilities, noncurrent 843 1,597 Noncurrent deferred tax liability, net 14,706 16,025 Other long-term liabilities 489 461 Total liabilities 432,222 626,092 Series A Convertible Preferred stock 121,809 117,638 Stockholders’ equity: Common stock 3 3 Additional paid-in capital 605,353 608,995 Accumulated other comprehensive income (loss) (6,275 ) 6,168 Accumulated deficit (598,174 ) (488,872 ) Total stockholders’ equity 907 126,294 Total liabilities, convertible preferred stock and stockholders’ equity $ 554,938 $ 870,024 Upland Software, Inc. Condensed Consolidated Statements of Cash Flows (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Operating activities Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 13,807 17,692 41,406 54,475 Deferred income taxes (89 ) 23 (1,265 ) (2,651 ) Amortization of deferred costs 3,076 3,242 9,152 9,909 Foreign currency re-measurement gain (65 ) (101 ) (759 ) (983 ) Non-cash interest, net and other income, net (7,492 ) (3,232 ) (9,268 ) (2,080 ) Non-cash stock-based compensation expense 3,423 5,360 12,078 18,192 Non-cash loss on impairment of goodwill — — 87,227 128,755 Non-cash loss on retirement of fixed assets — 12 18 46 Changes in operating assets and liabilities, net of purchase business combinations: Accounts receivable (1,269 ) (3,044 ) 7,093 10,168 Prepaid expenses and other current assets 898 (3,756 ) (2,705 ) (5,405 ) Other assets (2,252 ) 17,134 (7,159 ) 12,259 Accounts payable 1,254 346 641 (871 ) Accrued expenses and other liabilities (2,102 ) (623 ) (1,396 ) (4,729 ) Deferred revenue (3,149 ) (6,075 ) (10,863 ) (12,069 ) Net cash provided by operating activities 4,307 18,308 14,898 41,154 Investing activities Purchase of property and equipment (105 ) (530 ) (562 ) (1,034 ) Net cash used in investing activities (105 ) (530 ) (562 ) (1,034 ) Financing activities Payments of debt costs — (14 ) (77 ) (190 ) Payments on notes payable (178,350 ) (36,350 ) (181,050 ) (39,050 ) Stock repurchases and retirement — (3,215 ) (10,958 ) (3,215 ) Taxes paid related to net share settlement of equity awards (190 ) (354 ) (753 ) (742 ) Issuance of common stock, net of issuance costs — 1 — 2 Additional consideration paid to sellers of businesses — — — (5,550 ) Net cash used in financing activities (178,540 ) (39,932 ) (192,838 ) (48,745 ) Effect of exchange rate fluctuations on cash 1,702 (811 ) 1,682 (437 ) Change in cash and cash equivalents (172,636 ) (22,965 ) (176,820 ) (9,062 ) Cash and cash equivalents, beginning of period 232,375 262,556 236,559 248,653 Cash and cash equivalents, end of period $ 59,739 $ 239,591 $ 59,739 $ 239,591 Supplemental disclosures of cash flow information: Cash paid for interest, net of interest rate swaps $ 6,844 $ 8,721 $ 24,409 $ 23,147 Cash paid (received) for taxes, net of refunds $ (1,360 ) $ 1,255 $ 1,802 $ 6,227 Upland Software, Inc. Reconciliation of Adjusted EBITDA (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Reconciliation of Net Loss to Adjusted EBITDA: Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Add: Depreciation and amortization expense 13,807 17,692 41,406 54,475 Interest expense (income), net (2,337 ) 2,525 7,677 13,362 Other expense (income), net 229 (103 ) 109 (911 ) Provision for (benefit from) income taxes 530 (1,471 ) 1,193 (3,126 ) Stock-based compensation expense 3,423 5,360 12,078 18,192 Acquisition-related expense — 443 — 2,609 Non-recurring litigation costs 24 277 152 427 Purchase accounting deferred revenue discount 57 106 198 465 Impairment of goodwill — — 87,227 128,755 Adjusted EBITDA $ 14,000 $ 16,159 $ 40,738 $ 50,386 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Reconciliation of Net Loss to non-GAAP Net Income: Net loss $ (1,733 ) $ (8,670 ) $ (109,302 ) $ (163,862 ) Add: Stock-based compensation expense 3,423 5,360 12,078 18,192 Amortization of purchased intangibles 13,475 17,240 40,497 53,382 Amortization of debt discount 578 580 1,744 1,732 Acquisition-related expense — 443 — 2,609 Nonrecurring litigation expense 24 277 152 427 Purchase accounting deferred revenue discount 57 106 198 465 Impairment of goodwill — — 87,227 128,755 Tax effect of adjustments above (1,187 ) (2,402 ) (4,414 ) (9,207 ) Non-GAAP net income $ 14,637 $ 12,934 $ 28,180 $ 32,493 Weighted average common shares outstanding, basic 27,292,410 32,579,544 27,850,947 32,438,682 Weighted average common shares outstanding, diluted 34,812,257 39,423,806 35,029,418 39,217,582 Non-GAAP earnings per share, basic $ 0.54 $ 0.40 $ 1.01 $ 1.00 Non-GAAP earnings per share, diluted $ 0.42 $ 0.33 $ 0.80 $ 0.83 Upland Software, Inc. Reconciliation of Operating Cash Flow to Free Cash Flow (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Reconciliation of operating cash flow to Free Cash Flow: Net cash provided by operating activities $ 4,307 $ 18,308 $ 14,898 $ 41,154 Less: Purchase of property and equipment (105 ) (530 ) (562 ) (1,034 ) Free Cash Flow $ 4,202 $ 17,778 $ 14,336 $ 40,120 Upland Software, Inc. Supplemental Financial Information (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Stock-based compensation: Cost of revenue $ 199 $ 246 $ 584 $ 850 Research and development 470 608 1,714 1,911 Sales and marketing 398 429 1,156 1,563 General and administrative 2,356 4,077 8,624 13,868 Total $ 3,423 $ 5,360 $ 12,078 $ 18,192 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Depreciation: Cost of revenue $ — $ 1 $ — $ 5 Operating expense 332 451 909 1,088 Total $ 332 $ 452 $ 909 $ 1,093 Amortization: Cost of revenue $ 2,317 $ 3,429 $ 7,140 $ 10,261 Operating expense 11,158 13,811 33,357 43,121 Total $ 13,475 $ 17,240 $ 40,497 $ 53,382 View source version on businesswire.com: https://www.businesswire.com/news/home/20241107858589/en/
Investor Relations Contact: Michael D. Hill investor-relations@uplandsoftware.com 512-960-1031 Media Contact: Lloyd Berry media@uplandsoftware.com 512-960-1010
