Upland Software’s third quarter was marked by a sharp year-on-year revenue decline, reflecting the impact of earlier divestitures, yet the company reported results slightly ahead of Wall Street’s revenue expectations. Management attributed the quarter’s performance to progress in core organic growth, strong adjusted EBITDA margins, and new large-scale customer wins in its AI-powered product suite. CEO Jack McDonald pointed specifically to multimillion-dollar agreements with major technology and pharmaceutical companies and highlighted early signs that Upland’s intensified focus on enterprise AI adoption and product innovation is yielding results.

Is now the time to buy UPLD? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Upland Software’s Q3 Earnings Call

• Scott Berg (Needham): Asked about the sustainability of recent core organic growth trends. CEO Jack McDonald responded that while one quarter is not a trend, growing large-deal momentum and AI product traction are promising indicators for future growth.
• Scott Berg (Needham): Sought clarification on the forecasted decline in perpetual license revenue. CFO Michael Hill explained this was largely due to anticipated deals not closing, mainly impacting non-recurring license revenue rather than core subscription growth.
• Scott Berg (Needham): Inquired about gross revenue retention trends. Hill indicated net dollar retention was 99% at the end of last year and is expected to remain in the upper 90% range this year.
• David Hynes (Canaccord): Questioned the relative importance of customer expansion versus new customer acquisition. McDonald emphasized that both are critical, with installed base retention supporting growth and new large accounts driving upside.
• Jeff Van Rhee (Craig-Hallum): Asked how sales execution and product development are evolving. McDonald noted improved sales talent, targeted marketing, and increased product innovation, particularly through AI integration and partnerships.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) the pace of AI product adoption among large enterprise customers, (2) the impact of further product portfolio streamlining on both growth and margins, and (3) the success of new sales strategies and channel partnerships in driving large-deal momentum. Additionally, the company’s ability to sustain high customer retention and manage the transition away from perpetual license revenue will be critical signposts for ongoing performance.

Upland Software currently trades at $1.77, down from $1.90 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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