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Upland Software Reports First Quarter 2018 Financial Results

AUSTIN, Texas, May 9, 2018 /PRNewswire/ -- Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based Enterprise Work Management software, today announced financial and operating results for the first quarter of 2018 and provided guidance for its second quarter and full year of 2018.

First Quarter 2018 Financial Highlights

  • Total revenue was $31.6 million, an increase of 52% from $20.8 million in the first quarter of 2017.
  • Subscription and support revenue was $27.7 million, an increase of 53% from $18.1 million in the first quarter of 2017.
  • GAAP net loss was $3.2 million, a decrease of 44% from a GAAP net loss of $5.6 million, in the first quarter of 2017.
  • Adjusted EBITDA was $10.8 million, or 34% of total revenue, an increase of 98% from $5.5 million, or 26% of total revenue, in the first quarter of 2017.
  • Cash on hand as of the end of the first quarter was $32.5 million.

"We began 2018 with a strong Q1, delivering 50%+ growth in total and recurring revenue, record Adjusted EBITDA, a host of product innovations, and the strategic and accretive acquisition of InterFAX, our first in Europe," said Jack McDonald, chairman and CEO of Upland Software. "We have now met or exceeded guidance in each of the 15 quarters we've reported since going public, and our strong guidance shows the momentum continuing in Q2."

First Quarter Business Highlights

  • Expanded 193 existing customer relationships, including 22 major expansions, and added 91 new customer relationships, including 19 major accounts.
  • Released Upland's knowledge-enabled professional services automation (PSA) solution, which integrates Tenrox PSA and RightAnswers Enterprise Knowledge Management solutions.
  • Enhanced the Project & IT Management product family with improvements to resource and project management in our Tenrox PSA solution, as well as significant improvements in dashboards and reporting in our ITFM solution, ComSci, to support our Upland Analytics initiative.
  • Improved the Workflow and Automation product family by enhancing performance and user experience to streamline the RFP approval process for Qvidian; and improved FileBound Workflow Automation interconnectivity with other applications.
  • Continued to transition our computing infrastructure to Amazon Web Services, creating a more scalable, secure, and cost-efficient cloud environment to support our ongoing customer growth.

Business Outlook

For the quarter ending June 30, 2018, Upland expects reported total revenue to be between $33.5 and $34.5 million, including subscription and support revenue between $30.5 and $31.5 million, for growth in recurring revenue of 60% at the mid-point over the quarter-ended June 30, 2017. Second quarter 2018 Adjusted EBITDA is expected to be between $11.7 and $12.3 million, for an Adjusted EBITDA margin of 35% at the mid-point, representing growth of 76% at the mid-point over the quarter-ended June 30, 2017.

For the full year ending December 31, 2018, Upland expects reported total revenue to be between $133.2 and $136.2 million, including subscription and support revenue between $119.9 and $122.9 million, for growth in recurring revenue of 42% at the mid-point over the year ended December 31, 2017. Full year 2018 Adjusted EBITDA is expected to be between $46.8 and $48.8 million, for an Adjusted EBITDA margin of 35% at the mid-point, representing growth of 58% at the mid-point over the year ended December 31, 2017.

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 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 1378268. The conference call will be simultaneously webcast on Upland'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 for twelve months.

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 4,000 customers and over 450,000 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.

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.  Prior to the filing of this Annual Report on Form 10-K, we did not include purchase accounting adjustments for deferred revenue as a component of Adjusted EBITDA, and as such, the prior year Adjusted EBITDA amounts presented herein have been recast to reflect the inclusion of purchase accounting adjustments for deferred revenue.

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, nonrecurring litigation expenses, purchase accounting adjustments for deferred revenue, and the related tax effect of the adjustments above.

Upland defines annual net dollar retention rate as of December 31 as the aggregate annualized recurring revenue value at December 31 from those customers that were also customers as of December 31 of the prior fiscal year, divided by the aggregate annualized recurring revenue value from all customers as of December 31 of the prior fiscal year. This measure excludes the revenue value of uncontracted overage fees and on-demand service fees.

Upland defines major accounts as accounts with greater than or equal to $25,000 in annual recurring revenue.

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" 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 "believe," "expect," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "hope," "predict," "could," "should," "would," "project," 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, sustain or increase profitability or predict future results; our ability to attract and retain customers; our ability to deliver high-quality customer service; the growth of demand for enterprise work management applications; our plans regarding, and our ability to effectively manage, our growth; our plans regarding future acquisitions and our ability to consummate and integrate acquisitions; maintaining our senior management and key personnel; our ability to maintain and expand our direct sales organization; our ability to obtain financing in the future on acceptable terms or at all; 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; the operation and reliability of our third-party data centers and other service providers; our ability to adapt to technological change and continue to innovate; our ability to integrate our applications with other software applications; our ability to comply with privacy laws and regulations; 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, 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.

Investor Relations Contact: 
Mike Hill
Upland Software
512-960-1031
[email protected]

Media Contact: 
Christina Turner
[email protected]  
855-944-7526

 

 

Upland Software, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)



Three Months Ended March 31,


2018


2017


(unaudited)


(unaudited)

Revenue:




Subscription and support

$

27,729



$

18,135


Perpetual license

1,626



694


   Total product revenue

29,355



18,829


Professional services

2,260



1,923


   Total revenue

31,615



20,752


Cost of revenue:




Subscription and support

9,249



5,893


Professional services

1,396



1,135


   Total cost of revenue

10,645



7,028


Gross profit

20,970



13,724


Operating expenses:




Sales and marketing

4,408



3,221


Research and development

4,891



3,477


Refundable Canadian tax credits

(102)



(117)


General and administrative

7,000



5,904


Depreciation and amortization

2,130



1,164


Acquisition-related expenses

3,102



3,691


   Total operating expenses

21,429



17,340


Loss from operations

(459)



(3,616)


Other expense:




Interest expense, net

(2,494)



(935)


Other income (expense), net

303



(112)


   Total other expense

(2,191)



(1,047)


Loss before provision for income taxes

(2,650)



(4,663)


Provision for income taxes

(511)



(951)


Net loss

$

(3,161)



$

(5,614)


Net loss per common share:




Net loss per common share, basic and diluted

$

(0.16)



$

(0.33)


Weighted-average common shares outstanding, basic and diluted

19,759,203



16,971,393


 

 

Upland Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)



March 31,


December 31,


2018


2017


(unaudited)



Assets




Current assets:




Cash and cash equivalents

$

32,505



$

22,326


Accounts receivable, net of allowance

27,578



26,504


Deferred commissions, current

2,062




Prepaid and other

3,892



2,856


   Total current assets

66,037



51,686


Canadian tax credits receivable

1,388



1,196


Property and equipment, net

3,081



2,927


Intangible assets, net

115,199



70,043


Goodwill

148,051



154,607


Deferred commissions, noncurrent

4,676




Other assets

201



800


Total assets

$

338,633



$

281,259


Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

3,446



$

3,887


Accrued compensation

3,379



5,157


Accrued expenses and other

13,503



12,148


Deferred revenue

45,370



43,807


Due to sellers

11,462



7,839


Current maturities of notes payable

3,282



2,301


   Total current liabilities

80,442



75,139


Notes payable, less current maturities

156,584



108,843


Deferred revenue

1,301



1,570


Noncurrent deferred tax liability, net

3,353



3,262


Other long-term liabilities

865



1,030


Total liabilities

242,545



189,844


Stockholders' equity:




Common stock

2



2


Additional paid-in capital

176,939



174,944


Accumulated other comprehensive loss

(2,856)



(2,403)


Accumulated deficit

(77,997)



(81,128)


Total stockholders' equity

96,088



91,415


Total liabilities and stockholders' equity

$

338,633



$

281,259


 

 

Upland Software, Inc.

Condensed Consolidated Statements of Cash Flows
(in thousands)



Three Months Ended March 31,


2018


2017


(unaudited)


(unaudited)

Operating activities




Net loss

$

(3,161)



$

(5,614)


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




Depreciation and amortization

4,172



2,398


Deferred income taxes

132



178


Amortization of deferred costs

539




Foreign currency re-measurement (gain) loss

142



(59)


Non-cash interest and other expense

190



75


Non-cash stock compensation expense

2,577



2,304


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




   Accounts receivable

555



3,935


   Prepaids and other

(1,811)



6


   Accounts payable

(1,124)



460


   Accrued expenses and other liabilities

(3,569)



1,211


   Deferred revenue

883



33


Net cash provided by (used in) operating activities

(475)



4,927


Investing activities




Purchase of property and equipment

(426)



(348)


Purchase of customer relationships



(55)


Purchase business combinations, net of cash acquired

(34,320)



(19,256)


Net cash used in investing activities

(34,746)



(19,659)


Financing activities




Payments on capital leases

(298)



(331)


Proceeds from notes payable, net of issuance costs

49,375



15,927


Payments on notes payable

(844)



(6,755)


Taxes paid related to net share settlement of equity awards

(668)



(73)


Issuance of common stock, net of issuance costs

87



171


Additional consideration paid to sellers of businesses

(1,978)



(3,585)


Net cash provided by financing activities

45,674



5,354


Effect of exchange rate fluctuations on cash

(274)



37


Change in cash and cash equivalents

10,179



(9,341)


Cash and cash equivalents, beginning of period

22,326



28,758


Cash and cash equivalents, end of period

$

32,505



$

19,417


Supplemental disclosures of cash flow information:




Cash paid for interest

$

2,316



$

864


Cash paid for taxes

$

1,044



$

591


Noncash investing and financing activities:




Equipment acquired pursuant to capital lease obligations

$



$

144


 

 

Upland Software, Inc.

Reconciliation of Adjusted EBITDA

(in thousands)



Three Months Ended March 31,


2018


2017


(unaudited)


(unaudited)

Reconciliation of Net loss to Adjusted EBITDA:




Net Loss

$

(3,161)



$

(5,614)


Add:




Depreciation and amortization expense

4,172



2,398


Interest expense, net

2,494



935


Other expense (income), net

(303)



112


Provision for income taxes

511



951


Stock-based compensation expense

2,577



2,304


Acquisition-related expense

3,102



3,691


Purchase accounting deferred revenue discount

1,389



679


Adjusted EBITDA

$

10,781



$

5,456


 

 

Upland Software, Inc.

Reconciliation of Non-GAAP Net Income (Loss) and Non-GAAP Diluted EPS

(in thousands, except share and per share data)



Three Months Ended March 31,


2018


2017


(unaudited)


(unaudited)

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




Net loss

$

(3,161)



$

(5,614)


Add:




Stock-based compensation expense

2,577



2,304


Amortization of purchased intangibles

3,616



1,836


Amortization of debt discount

190



75


Acquisition-related expense

3,102



3,691


Purchase accounting deferred revenue discount

1,389



679


Tax effect of adjustments above

(17)



(80)


Non-GAAP net income (loss)

$

7,696



$

2,891






Weighted average ordinary shares outstanding, basic

19,759,203



16,971,393


Weighted average ordinary shares outstanding, diluted

20,952,589



17,761,803


Non-GAAP earnings per share, basic

$

0.39



$

0.17


Non-GAAP earnings per share, diluted

$

0.37



$

0.16


 

 

Upland Software, Inc.

Supplemental Financial Information

(in thousands, unaudited)



Three Months Ended March 31,


2018


2017

Stock-based compensation:




Cost of revenue

$

77



$

18


Research and development

113



60


Sales and marketing

46



23


General and administrative

2,341



2,203


Total

$

2,577



$

2,304







Three Months Ended March 31,


2018


2017

Depreciation:




Cost of revenue

$

436



$

449


Operating expense

120



113


Total

$

556



$

562






Amortization:




Cost of revenue

$

1,606



$

785


Operating expense

2,010



1,051


Total

$

3,616



$

1,836


 

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

 

SOURCE Upland Software, Inc.