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Upland Software Inc (UPLD) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges ...

GuruFocus Research
·4-min read

  • Total Revenue: $70.7 million, down 8% year-over-year.

  • Recurring Revenue: $67.1 million from subscription and support, down 8% year-over-year.

  • Perpetual License Revenue: $1.5 million, down from $1.6 million year-over-year.

  • Professional Services Revenue: $2.2 million, a 15% decline year-over-year.

  • Gross Margin: Overall 70%, product gross margin 71%, cash gross margin 75%.

  • Operating Expenses: $39.4 million, 56% of total revenue.

  • Adjusted EBITDA: $13.1 million, 19% of total revenue, down from $17.6 million or 23% year-over-year.

  • Free Cash Flow: $4.9 million, in line with expectations.

  • Cash on Balance Sheet: Approximately $232 million as of March 31, 2024.

  • Net Debt: Approximately $249 million as of March 31, 2024.

  • Gross Debt: Approximately $481 million, with $258 million hedged at a 5.4% interest rate.

  • Stock Repurchase: $7.9 million used to buy back 2.2 million shares during the quarter.

  • Q2 Revenue Guidance: Expected between $64.4 million and $70.4 million.

  • Q2 Adjusted EBITDA Guidance: Expected between $11.8 million and $14.8 million.

  • Full Year Revenue Guidance: Expected between $264.7 million and $282.7 million.

  • Full Year Adjusted EBITDA Guidance: Expected between $50.8 million and $59.8 million.

Release Date: May 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Upland Software Inc (NASDAQ:UPLD) exceeded Q1 revenue and adjusted EBITDA guidance midpoints.

  • The company saw core bookings exceed core churn in Q1, aligning with its growth plan to drive positive core organic growth.

  • Upland Software Inc (NASDAQ:UPLD) welcomed 134 new customers and expanded relationships with over 250 existing customers in Q1.

  • The company earned 44 badges in G2 spring 2024 market reports, indicating strong product recognition and performance.

  • Upland Software Inc (NASDAQ:UPLD) is actively engaging in AI initiatives, including partnerships with IBM and Salesforce, enhancing its product offerings and customer value.

Negative Points

  • Total revenue for Q1 was $70.7 million, representing an 8% year-over-year decrease.

  • Recurring revenue from subscription and support declined 8% year-over-year to $67.1 million.

  • Professional services revenue saw a 15% year-over-year decline.

  • Upland Software Inc (NASDAQ:UPLD) incurred a noncash goodwill impairment charge of $87.2 million due to a decline in stock price.

  • Guidance for Q2 and full year 2024 reflects a decline in total revenue and adjusted EBITDA, indicating ongoing challenges despite growth efforts.

Q & A Highlights

Q: Can you provide insights into the sequential and year-over-year weakness in customer expansions and new customer additions? Are there macro impacts to consider? A: John McDonald, CEO of Upland Software, clarified that while the raw counts of renewals, expansions, and bookings might appear weak, the actual deal sizes were substantial, indicating a stronger performance than the numbers alone suggest.

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Q: Last quarter, there was mention of a new focus on potential acquisitions for 2024. Can you update us on any progress in this area? A: John McDonald, CEO, mentioned that the company is actively exploring opportunities in the market and is hopeful about finalizing acquisitions this year, although nothing specific could be announced at the time of the call.

Q: Could you update us on the pricing and packaging initiatives that have been mentioned in previous discussions? A: John McDonald, CEO, stated that the company had fully implemented a price increase program last year to align with market realities and the value delivered to customers, which has positively impacted ARR generation.

Q: Can you provide an update on the timeline for the sunsetting of assets? Has there been any change to the timeline? A: Michael Hill, CFO of Upland Software, confirmed that the timeline for sunsetting assets remains unchanged, with a gradual phase-out expected over three years.

Q: Regarding the financial results for Q1 2024, can you elaborate on the reported revenue and EBITDA figures? A: Michael Hill, CFO, reported that total revenue for Q1 was $70.7 million, a decrease of 8% year-over-year. Adjusted EBITDA for the quarter was $13.1 million, or 19% of total revenue, reflecting the ongoing investments and decisions regarding sunset assets.

Q: What are the expectations for Upland Software's performance in the upcoming quarter and the full year of 2024? A: Michael Hill, CFO, provided guidance for Q2 2024 with expected total revenue between $64.4 million and $70.4 million and adjusted EBITDA between $11.8 million and $14.8 million. For the full year, the company anticipates total revenue between $264.7 million and $282.7 million, with adjusted EBITDA between $50.8 million and $59.8 million.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.