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Upland Software Reports First Quarter 2022 Financial Results

05/04/2022

Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based tools for digital transformation, today announced financial and operating results for the first quarter 2022 and issued guidance for its second quarter and full year of 2022.

First Quarter 2022 Financial Highlights

  • Total revenue was $78.7 million, an increase of 6% from $74.0 million in the first quarter of 2021.
  • Subscription and support revenue was $73.6 million, an increase of 4% from $70.7 million in the first quarter of 2021.
  • GAAP net loss was $22.8 million, or a loss of $0.73 cents per share, compared to a GAAP net loss of $20.7 million, or a loss of $0.69 cents per share, in the first quarter of 2021.
  • Adjusted EBITDA was $23.4 million, or 30% of total revenue, compared to $22.8 million, or 31% of total revenue, in the first quarter of 2021.
  • GAAP operating cash flow was $8.2 million, compared to GAAP operating cash flow of $12.5 million in the first quarter of 2021. Free cash flow was $8.0 million, compared to free cash flow of $12.2 million in the first quarter of 2021.
  • Cash on hand as of the end of the first quarter of 2022 was $130.4 million.

"We had a strong Q1, beating our guidance midpoints on revenue and Adjusted EBITDA, and outperforming our targets on operating and free cash flow," said Jack McDonald, Upland's chairman and chief executive officer. “In addition, we announced two strategic and accretive acquisitions in our Document Workflow product family, BA Insight and Objectif Lune,” he added. “Finally, we announced major new releases for a host of products and opened our new Center of Excellence development operation in India, providing a cornerstone for our multi-market global product development capability.”

First Quarter Business Highlights

  • We expanded relationships with 280 existing customers, 49 of which were major expansions. We also welcomed 120 new customers to Upland in the first quarter, including 25 new major customers.
  • Kapost announced new functionality to support dynamic content creation processes, cross-functional collaboration, and revenue team enablement for the most complex B2B marketing organizations.
  • We delivered a major new release for Upland Mobile Messaging as we moved the product onto the Snowflake database, dramatically improving product performance and scalability.
  • AccuRoute further cemented its position as a bridge between customers' on-premise applications and cloud solutions with expanded integrations to popular MFP and EMR offerings, and launched new Machine Learning capabilities to improve data collection and the overall user experience.
  • Altify was included in Forrester’s New Tech: Account-Based Sales Technologies, Q1 2022 report which provides an overview of account-based selling technologies.
  • FileBound was recognized as a gold medalist and leader in the 2021 Enterprise Content Management Data Quadrant Report from SoftwareReviews for its document management and workflow automation capabilities.
  • Upland announced the opening of our first Center of Excellence located in India, which further leverages our offshore operating model. This operation will serve as Upland's global R&D cornerstone.

Business Outlook

For the quarter ending June 30, 2022, Upland expects reported total revenue to be between $77.5 and $81.5 million, including subscription and support revenue between $72.7 and $76.3 million, for growth in total revenue of 4% at the mid-point over the quarter-ended June 30, 2021. Second quarter 2022 Adjusted EBITDA is expected to be between $23.4 and $25.4 million, for an Adjusted EBITDA margin of 31% at the mid-point. This Adjusted EBITDA guide at the mid-point is an increase of 3% from the quarter-ended June 30, 2021.

For the full year ending December 31, 2022, Upland expects reported total revenue to be between $313.0 and $329.0 million, including subscription and support revenue between $293.1 and $307.5 million, for growth in total revenue of 6% at the mid-point over the year ended December 31, 2021. Full year 2022 Adjusted EBITDA is expected to be between $95.0 and $103.0 million, for an Adjusted EBITDA margin of 31% at the mid-point. This Adjusted EBITDA guide at the midpoint is an increase of 2% over the year ended December 31, 2021.

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 1-844-200-6205 in the United States or +1-929-526-1599 if outside the United States. Attendees will need to use access code 439403 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 helps global businesses accelerate digital transformation with a powerful cloud software library that provides choice, flexibility, and value. Our growing library of products delivers the "last mile" plug-in processes, reporting, and job specific workflows that major cloud platforms and homegrown systems don’t provide. We focus on specific business challenges and support every corner of the organization, operating at scale and delivering quick time to value for our 1,800+ enterprise customers. 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), 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.

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, 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, 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 & amortization.

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 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)

 

 

 

Three Months Ended March 31,

 

2022

 

2021

 

(unaudited)

 

(unaudited)

Revenue:

 

 

 

Subscription and support

$

73,627

 

 

$

70,653

 

Perpetual license

 

1,778

 

 

 

352

 

Total product revenue

 

75,405

 

 

 

71,005

 

Professional services

 

3,311

 

 

 

2,964

 

Total revenue

 

78,716

 

 

 

73,969

 

Cost of revenue:

 

 

 

Subscription and support

 

22,069

 

 

 

22,682

 

Professional services and other

 

2,686

 

 

 

1,745

 

Total cost of revenue

 

24,755

 

 

 

24,427

 

Gross profit

 

53,961

 

 

 

49,542

 

Operating expenses:

 

 

 

Sales and marketing

 

15,593

 

 

 

12,432

 

Research and development

 

12,067

 

 

 

10,940

 

General and administrative

 

19,614

 

 

 

24,369

 

Depreciation and amortization

 

11,051

 

 

 

9,743

 

Acquisition-related expenses

 

10,413

 

 

 

9,586

 

Total operating expenses

 

68,738

 

 

 

67,070

 

Income (loss) from operations

 

(14,777

)

 

 

(17,528

)

Other expense:

 

 

 

Interest expense, net

 

(7,762

)

 

 

(7,787

)

Other income (expense), net

 

(418

)

 

 

237

 

Total other expense

 

(8,180

)

 

 

(7,550

)

Loss before benefit from income taxes

 

(22,957

)

 

 

(25,078

)

Benefit from income taxes

 

126

 

 

 

4,394

 

Net loss

$

(22,831

)

 

$

(20,684

)

Net loss per common share, basic and diluted

$

(0.73

)

 

$

(0.69

)

Weighted-average common shares outstanding, basic and diluted

 

31,163,273

 

 

 

29,970,050

 

Upland Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

 

 

March 31,

 

December 31,

 

2022

 

2021

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

130,443

 

 

$

189,158

 

Accounts receivable, net of allowance

 

48,725

 

 

 

50,499

 

Deferred commissions, current

 

10,169

 

 

 

9,824

 

Unbilled receivables

 

5,356

 

 

 

4,801

 

Prepaid expenses and other current assets

 

15,017

 

 

 

8,709

 

Total current assets

 

209,710

 

 

 

262,991

 

Tax credits receivable

 

3,388

 

 

 

3,345

 

Property and equipment, net

 

2,544

 

 

 

2,667

 

Operating lease right-of-use asset

 

6,932

 

 

 

6,454

 

Intangible assets, net

 

300,436

 

 

 

279,920

 

Goodwill

 

505,246

 

 

 

457,472

 

Deferred commissions, noncurrent

 

15,418

 

 

 

14,808

 

Interest rate swap assets

 

17,803

 

 

 

 

Other assets

 

1,284

 

 

 

1,350

 

Total assets

$

1,062,761

 

 

$

1,029,007

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

18,478

 

 

$

20,362

 

Accrued compensation

 

11,664

 

 

 

9,829

 

Accrued expenses and other current liabilities

 

15,612

 

 

 

9,086

 

Deferred revenue

 

114,498

 

 

 

102,847

 

Liabilities due to sellers of businesses

 

12,342

 

 

 

7,607

 

Operating lease liabilities, current

 

4,021

 

 

 

3,546

 

Current maturities of notes payable

 

3,166

 

 

 

3,167

 

Total current liabilities

 

179,781

 

 

 

156,444

 

Notes payable, less current maturities

 

514,366

 

 

 

515,163

 

Deferred revenue, noncurrent

 

4,514

 

 

 

2,058

 

Operating lease liabilities, noncurrent

 

7,331

 

 

 

6,773

 

Noncurrent deferred tax liability, net

 

27,133

 

 

 

22,793

 

Interest rate swap liabilities

 

 

 

 

8,409

 

Other long-term liabilities

 

1,052

 

 

 

1,079

 

Total liabilities

 

734,177

 

 

 

712,719

 

Stockholders’ equity:

 

 

 

Common stock

 

3

 

 

 

3

 

Additional paid-in capital

 

579,638

 

 

 

568,384

 

Accumulated other comprehensive income (loss)

 

12,359

 

 

 

(11,514

)

Accumulated deficit

 

(263,416

)

 

 

(240,585

)

Total stockholders’ equity

 

328,584

 

 

 

316,288

 

Total liabilities and stockholders’ equity

$

1,062,761

 

 

$

1,029,007

 

Upland Software, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

 

 

Three Months Ended March 31,

 

2022

 

2021

 

(unaudited)

 

(unaudited)

Operating activities

 

 

 

Net loss

$

(22,831

)

 

$

(20,684

)

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

 

 

 

Depreciation and amortization

 

14,262

 

 

 

12,468

 

Change in fair value of liabilities due to sellers of businesses

 

(75

)

 

 

 

Deferred income taxes

 

(1,341

)

 

 

(5,340

)

Amortization of deferred costs

 

2,896

 

 

 

1,767

 

Foreign currency re-measurement loss

 

 

 

 

14

 

Non-cash interest and other expense

 

555

 

 

 

554

 

Non-cash stock compensation expense

 

11,619

 

 

 

17,824

 

Non-cash loss on retirement of fixed assets

 

 

 

 

 

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

 

 

 

Accounts receivable

 

9,182

 

 

 

3,575

 

Prepaid expenses and other current assets

 

1,787

 

 

 

(1,015

)

Accounts payable

 

(4,145

)

 

 

4,540

 

Accrued expenses and other liabilities

 

(4,790

)

 

 

(1,776

)

Deferred revenue

 

1,103

 

 

 

576

 

Net cash provided by operating activities

 

8,222

 

 

 

12,503

 

Investing activities

 

 

 

Purchase of property and equipment

 

(176

)

 

 

(282

)

Purchase business combinations, net of cash acquired

 

(62,333

)

 

 

(72,618

)

Net cash used in investing activities

 

(62,509

)

 

 

(72,900

)

Financing activities

 

 

 

Payments on finance leases

 

 

 

 

(4

)

Proceeds from notes payable, net of issuance costs

 

(3

)

 

 

 

Payments on notes payable

 

(1,350

)

 

 

(1,350

)

Taxes paid related to net share settlement of equity awards

 

(547

)

 

 

 

Issuance of common stock, net of issuance costs

 

182

 

 

 

1

 

Additional consideration paid to sellers of businesses

 

(2,493

)

 

 

(742

)

Net cash used in financing activities

 

(4,211

)

 

 

(2,095

)

Effect of exchange rate fluctuations on cash

 

(217

)

 

 

(865

)

Change in cash and cash equivalents

 

(58,715

)

 

 

(63,357

)

Cash and cash equivalents, beginning of period

 

189,158

 

 

 

250,029

 

Cash and cash equivalents, end of period

$

130,443

 

 

$

186,672

 

Upland Software, Inc.

Reconciliation of Adjusted EBITDA

(in thousands, unaudited)

 

 

Three Months Ended March 31,

 

2022

 

2021

Reconciliation of net loss to Adjusted EBITDA:

 

 

 

Net loss

$

(22,831

)

 

$

(20,684

)

Add:

 

 

 

Depreciation and amortization expense

 

14,262

 

 

 

12,468

 

Interest expense, net

 

7,762

 

 

 

7,787

 

Other expense (income), net

 

418

 

 

 

(237

)

Benefit from income taxes

 

(126

)

 

 

(4,394

)

Stock-based compensation expense

 

11,619

 

 

 

17,824

 

Acquisition-related expense

 

10,413

 

 

 

9,586

 

Purchase accounting deferred revenue discount

 

1,929

 

 

 

494

 

Adjusted EBITDA

$

23,446

 

 

$

22,844

 

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 March 31,

 

2022

 

2021

Reconciliation of net loss to non-GAAP net income:

 

 

 

Net loss

$

(22,831

)

 

$

(20,684

)

Add:

 

 

 

Stock-based compensation expense

 

11,619

 

 

 

17,824

 

Amortization of purchased intangibles

 

13,825

 

 

 

12,013

 

Amortization of debt discount

 

555

 

 

 

554

 

Acquisition-related expense

 

10,413

 

 

 

9,586

 

Purchase accounting deferred revenue discount

 

1,929

 

 

 

494

 

Tax effect of adjustments above

 

(2,603

)

 

 

(1,314

)

Non-GAAP net income

$

12,907

 

 

$

18,473

 

 

 

 

 

Weighted average ordinary shares outstanding, basic

 

31,163,273

 

 

 

29,970,050

 

Weighted average ordinary shares outstanding, diluted

 

31,324,492

 

 

 

30,589,272

 

Non-GAAP earnings per share, basic

$

0.41

 

 

$

0.62

 

Non-GAAP earnings per share, diluted

$

0.41

 

 

$

0.60

 

Upland Software, Inc.

Reconciliation of Operating Cash Flow to Free Cash Flow

(in thousands, unaudited)

 

 

Three Months Ended March 31,

 

2022

 

2021

Reconciliation of Operating Cash Flow to Free Cash Flow:

 

 

 

Net cash provided by operating activities

$

8,222

 

 

$

12,503

 

Less: Purchase of Property and Equipment

 

(176

)

 

 

(282

)

Free Cash Flow

$

8,046

 

 

$

12,221

 

Upland Software, Inc.

Supplemental Financial Information

(in thousands)

 

 

Three Months Ended March 31,

 

2022

 

2021

 

(unaudited)

 

(unaudited)

Stock-based compensation:

 

 

 

Cost of revenue

$

402

 

$

442

Research and development

 

748

 

 

714

Sales and marketing

 

1,474

 

 

1,137

General and administrative

 

8,995

 

 

15,531

Total

$

11,619

 

$

17,824

 

Three Months Ended March 31,

 

2022

 

2021

 

(unaudited)

 

(unaudited)

Depreciation:

 

 

 

Cost of revenue

$

2

 

$

11

Operating expense

 

435

 

 

444

Total

$

437

 

$

455

 

 

 

 

Amortization:

 

 

 

Cost of revenue

$

3,209

 

$

2,714

Operating expense

 

10,616

 

 

9,299

Total

$

13,825

 

$

12,013

 

Investor Relations Contact:
Mike Hill
investor-relations@uplandsoftware.com
512-960-1031

Media Contact:
Kendell Kelton
media@uplandsoftware.com
678-575-7428

Source: Upland Software Inc.

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