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Upland Software Reports Third Quarter 2016 Financial Results

AUSTIN, Texas, Nov. 10, 2016 /PRNewswire/ -- Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based Enterprise Work Management software, today reported its financial results for the third quarter ended September 30, 2016, and provided guidance for its fourth quarter of 2016.

Third Quarter 2016 Financial Highlights

  • Total revenue was $19.2 million, compared to $17.1 million in the third quarter of 2015, or year-over-year growth of 12%.
  • Subscription and support revenue was $17.0 million, compared to $14.1 million in the third quarter of 2015, or year-over-year growth of 21%.
  • Net loss was $2.4 million, compared to a net loss of $2.3 million in the third quarter of 2015.
  • Adjusted EBITDA was $3.6 million, compared to Adjusted EBITDA of $1.1 million in the third quarter of 2015, or year-over-year growth of 225%. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, is provided in the financial tables that accompany this release.
  • Cash on hand as of the end of the third quarter was $17.5 million.

"Q3 was a record top-line quarter and saw strong growth in both recurring revenues and Adjusted EBITDA margins," said Jack McDonald, chairman and CEO of Upland Software. "We have now met or exceeded guidance in each of the nine quarters we've reported since going public, and, as our strong Q4 guidance demonstrates, our quarterly ramp in Adjusted EBITDA continues to gain steam."

Third Quarter 2016 Business Highlights

  • Continued to focus on customer-driven innovation with major feature releases, including:
    • Project and IT Management applications with improved analytics, reporting and usability through enhancements to our reporting wizards and administration platform, and integration via Upland Integration Manager (UIM), which allows both intra-Upland and third-party enhanced integration.
    • Workflow Automation applications with enhanced integration capabilities leveraging UIM, improved training capabilities, and a new supply chain management module to serve specific needs of our manufacturing customers.
    • Digital Engagement applications, with enhancements to the underlying product platform, improved performance, expanded message scheduling features, and enhanced bi-lingual support.
  • Expanded over 125 existing customer relationships, including 8 major expansions, and added 90 new customer relationships, including 9 major accounts.
  • Launched the Upland Premier Success program.  This program, which is available in three levels (Standard, Gold and Platinum), includes communications, support, services, training and tailored options designed to deliver Upland's goal of 100% Customer Success and build long-term, sustainable customer relationships. 

Business Outlook

For the quarter ending December 31, 2016, Upland expects reported total revenue to be in the range of $18.5 million to $19.3 million including subscription and support revenue in the range of $16.6 million to $17.2 million, for growth in recurring revenue of 15% at the mid-point over the quarter ended December 31, 2015. Adjusted EBITDA is expected to be in the range of $3.7 million to $4.3 million, for an Adjusted EBITDA margin of 21% at the mid-point, representing growth of 104% at the mid-point over the quarter-ended December 31, 2015.

For the full year ending December 31, 2016, Upland expects reported total revenue to be in the range of $73.9 million to $74.7 million including subscription and support revenue in the range of $65.1 million to $65.7 million, for growth in recurring revenue of 14% at the mid-point over the year ended December 31, 2015. Adjusted EBITDA is expected to be in the range of $12.1 million to $12.7 million, for an Adjusted EBITDA margin of 17% at the mid-point, representing growth of 181% at the mid-point over the year ended December 31, 2015.

Conference Call Details

Upland's executive team will host a live conference call and webcast at 5:00 p.m. Eastern Time today to review Upland's financial results and outlook for the business. The conference call may be accessed within North America by dialing 1.888.684.7501 and outside of North America by dialing 1.925.418.7884, referencing conference code 49678948. The conference call will be simultaneously webcast on the Company's investor relations website, which can be accessed at investor.uplandsoftware.com. This webcast will contain forward-looking statements and other material information regarding Upland's financial and operating results.

Following completion of the live call, a recorded replay of the webcast will be available on Upland's website at investor.uplandsoftware.com. A replay of the conference call will be available as of 8:30 p.m. Eastern Time on November 10, 2016 through 11:59 p.m. Eastern Time on November 25, 2016 at investor.uplandsoftware.com.

About Upland Software

Upland Software (Nasdaq: UPLD) is a leading provider of cloud-based Enterprise Work Management software. Our family of applications enables users to manage their projects, professional workforce and IT investments, automate document-intensive business processes and effectively engage with their customers, prospects and community via the web and mobile technologies. With more than 2,000 customers and over 235,000 users around the world, Upland Software solutions help customers run their operations smoothly, adapt to change quickly, and achieve better results every day. 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, and constant currency revenue.

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.

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 discontinued operations, plus the impact of amortization of purchased intangible assets, amortization debt discount, stock-based compensation expenses, acquisition-related costs, nonrecurring litigation expenses, purchase accounting adjustments for deferred revenue, nonrecurring provision for income tax, and the related tax effect of the adjustments above.

Upland's earnings press releases containing such non-GAAP reconciliations can be found on the Investor Relations section of Upland's website at investor.uplandsoftware.com.

Forward-looking Statements

This release contains forward-looking statements which are subject to substantial risks, uncertainties and assumptions. 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" or similar expressions. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: our financial performance and our ability to achieve, sustain or increase profitability or predict financial results; our ability to attract and retain customers; our ability to deliver high-quality customer service; lack of demand growth for enterprise work management applications; our ability to effectively manage our growth; our ability to consummate and integrate acquisitions and mergers; maintaining our senior management and key personnel; our ability to maintain and expand our direct sales organization; 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; fluctuations in currency exchange rates; the operation and reliability of our third-party data centers and other service providers; 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. 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.

Investor Relations Contact:
Mike Hill
Upland Software
512.960.1031
investor-relations@uplandsoftware.com

Media Contact:
Kaley Ganino
Upland Software
512.960.1010
media@uplandsoftware.com

 

 

Upland Software, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands except share and per share data)



Three Months Ended September 30,


Nine Months Ended September 30,


2016


2015


2016


2015

Revenue:








Subscription and support

$

17,029



$

14,129



$

48,490



$

42,474


Perpetual license

332



540



1,108



2,197


  Total product revenue

17,361



14,669



49,598



44,671


Professional services

1,880



2,436



5,795



7,640


  Total revenue

19,241



17,105



55,393



52,311


Cost of revenue:








Subscription and support

5,747



4,771



16,607



14,344


Professional services

1,045



1,677



3,775



5,317


  Total cost of revenue

6,792



6,448



20,382



19,661


Gross profit

12,449



10,657



35,011



32,650


Operating expenses:








Sales and marketing

3,097



2,929



9,119



9,907


Research and development

3,737



3,852



11,701



11,930


Refundable Canadian tax credits

(115)



(115)



(340)



(358)


General and administrative

4,670



4,494



13,340



14,327


Depreciation and amortization

1,322



1,130



4,270



3,207


Acquisition-related expenses

1,047



176



4,855



1,081


  Total operating expenses

13,758



12,466



42,945



40,094


Loss from operations

(1,309)



(1,809)



(7,934)



(7,444)


Other expense:








Interest expense, net

(709)



(462)



(1,932)



(1,385)


Other expense, net

(64)



137



(1,105)



(387)


  Total other expense

(773)



(325)



(3,037)



(1,772)


Loss before provision for income taxes

(2,082)



(2,134)



(10,971)



(9,216)


Provision for income taxes

(308)



(190)



(569)



(185)


Loss from operations

(2,390)



(2,324)



(11,540)



(9,401)


Net loss

$

(2,390)



$

(2,324)



$

(11,540)



$

(9,401)


Net loss attributable to common shareholders

$

(2,390)



(2,324)



$

(11,540)



(9,401)


Net loss per common share:








Net loss per common share, basic and diluted

$

(0.14)



$

(0.16)



$

(0.71)



$

(0.63)


Weighted-average common shares outstanding, basic and diluted

16,702,062



14,934,796



16,339,983



14,882,893


 

 

Upland Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)



September 30, 2016


December 31, 2015


(unaudited)


(audited)

Assets




Current assets:




Cash and cash equivalents

$

17,480



$

18,473


Accounts receivable, net of allowance

14,679



13,972


Prepaid and other

2,282



2,603


  Total current assets

34,441



35,048


Canadian tax credits receivable

1,751



2,018


Property and equipment, net

5,588



6,001


Intangible assets, net

31,217



31,526


Goodwill

68,441



47,422


Other assets

440



399


Total assets

$

141,878



$

122,414


Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

2,598



$

2,548


Accrued compensation

2,165



2,441


Accrued expenses and other

4,571



5,173


Deferred revenue

23,134



19,931


Due to sellers

5,728



2,409


Current maturities of notes payable

1,490



1,500


  Total current liabilities

39,686



34,002


Commitments and contingencies (Note 9)




Canadian tax credit liability to sellers

405



368


Notes payable, less current maturities

35,937



22,366


Deferred revenue

139



8


Noncurrent deferred tax liability, net

3,189



2,818


Other long-term liabilities

2,416



2,582


Total liabilities

81,772



62,144


Stockholders' equity:




Common stock

2



2


Additional paid-in capital

123,409



112,447


Accumulated other comprehensive loss

(2,875)



(3,289)


Accumulated deficit

(60,430)



(48,890)


Total stockholders' equity

60,106



60,270


Total liabilities and stockholders' equity

$

141,878



$

122,414


 

 

Upland Software, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Nine Months Ended September 30,


2016


2015

Operating activities




Net loss

$

(11,540)



$

(9,401)


Adjustments to reconcile net loss to net cash provided by operating activities:




Depreciation and amortization

7,499



6,077


Deferred income taxes

251



450


Foreign currency re-measurement (gain) loss

(222)



779


Non-cash interest and other expense

196



312


Non-cash stock compensation expense

2,664



1,990


Loss on disposal of business

686




Changes in operating assets and liabilities, net of purchase business combinations:




  Accounts receivable

310



3,689


  Prepaids and other

820



1,097


  Accounts payable

(126)



40


  Accrued expenses and other liabilities

(828)



(2,069)


  Deferred revenue

1,425



(1,293)


Net cash provided by operating activities

1,135



1,671


Investing activities




Purchase of property and equipment

(886)



(461)


Purchase of customer relationships

(408)



(372)


Purchase business combinations, net of cash acquired

(11,846)



(2,714)


Net cash used in investing activities

(13,140)



(3,547)


Financing activities




Payments on capital leases

(1,320)



(767)


Proceeds from notes payable, net of issuance costs

14,925



24,088


Payments on notes payable

(1,560)



(23,592)


Issuance of common stock, net of issuance costs

197



62


Additional consideration paid to sellers of businesses

(1,484)



(9)


Net cash provided by (used in) financing activities

10,758



(218)


Effect of exchange rate fluctuations on cash

254



(200)


Change in cash and cash equivalents

(993)



(2,294)


Cash and cash equivalents, beginning of period

18,473



30,988


Cash and cash equivalents, end of period

$

17,480



$

28,694


Supplemental disclosures of cash flow information:




Cash paid for interest

$

1,707



$

1,108


Cash paid for taxes

$

518



$

327


Noncash investing and financing activities:




Equipment acquired pursuant to capital lease obligations

$

802



$

1,796


Issuance of common stock in business combination

$

8,100



$


 

 

Upland Software, Inc.

Reconciliation of Net loss to Adjusted EBITDA

(Unaudited, in thousands)



Three Months Ended
September 30,


Nine Months Ended
September 30,


2016


2015


2016


2015

Reconciliation of Net loss to Adjusted EBITDA:








Net Loss

$

(2,390)



$

(2,324)



$

(11,540)



$

(9,401)


Add:








Depreciation and amortization expense

2,424



2,037



7,499



6,077


Interest expense, net

709



462



1,932



1,385


Other expense (income), net

64



(137)



1,105



387


Provision for (benefit from) income taxes

308



190



569



185


Stock-based compensation expense

1,100



655



2,664



1,990


Acquisition-related expense

1,047



176



4,855



1,081


Nonrecurring litigation expense





25



371


Purchase accounting deferred revenue discount

313



41



1,245



238


Adjusted EBITDA

$

3,575



$

1,100



$

8,354



$

2,313


 

 

Upland Software, Inc.

Reconciliation of Net Loss to Non-GAAP net income (loss)

(Unaudited, in thousands except share and per share data)



Three Months Ended
September 30,


Nine Months Ended
September 30,


2016


2015


2016


2015

Reconciliation of Net Loss to Non-GAAP net income (loss):








Net loss

$

(2,390)



$

(2,324)



$

(11,540)



$

(9,401)


Add:








Stock-based compensation expense

1,100



655



2,664



1,990


Amortization of purchased intangibles

1,781



1,535



5,629



4,450


Amortization of debt discount

67



66



196



318


Acquisition-related expense

1,047



176



4,855



1,081


Nonrecurring litigation expense





25



371


Purchase accounting deferred revenue discount

313



41



1,245



238


Tax effect of adjustments above

(81)



(92)



(240)



(444)


Non-GAAP net income (loss)

$

1,837



$

57



$

2,834



$

(1,397)










Weighted average ordinary shares outstanding - basic

16,702,062



14,934,796



16,339,983



14,882,893


Weighted average ordinary shares outstanding - diluted

17,250,700



15,280,666



16,721,515



15,193,196


Non-GAAP earnings (loss) per share - basic

0.11





0.17



$

(0.09)


Non-GAAP earnings (loss) per share - diluted

0.11





0.17



 na


 

 

Upland Software, Inc.

Supplemental Financial Information

(Unaudited, in thousands)



Three Months Ended
September 30,


Nine Months Ended
September 30,


2016


2015


2016


2015

Stock-based compensation:








Cost of revenue

13



18



28



34


Sales and marketing

21



5



66



55


Research and development

38



69



80



189


General and administrative

1,028



563



2,490



1,712


Total

$

1,100



$

655



$

2,664



$

1,990





















Three Months Ended
September 30,


Nine Months Ended
September 30,


2016


2015


2016


2015

Depreciation:








Cost of revenue

$

472



$

386



$

1,383



$

1,295


Operating expense

171



116



487



331


Total

$

643



$

502



$

1,870



$

1,626










Amortization:








Cost of revenue

$

630



$

521



$

1,846



$

1,575


Operating expense

1,151



1,014



3,783



2,876


Total

$

1,781



$

1,535



$

5,629



$

4,451


 

 

Upland Software, Inc. (PRNewsFoto/Upland Software, Inc.)

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SOURCE Upland Software, Inc.