Upland Software Reports Second Quarter 2018 Financial Results

Upland Software Reports Second Quarter 2018 Financial Results

PR Newswire

AUSTIN, Texas, Aug. 8, 2018 /PRNewswire/ -- Upland Software, Inc. UPLD, a leader in cloud-based Enterprise Work Management software, today announced financial and operating results for the second quarter of 2018 and provided guidance for its third quarter and full year of 2018.

Second Quarter 2018 Financial Highlights

  • Total revenue was $35.9 million, an increase of 54% from $23.3 million in the second quarter of 2017.
  • Subscription and support revenue was $33.2 million, an increase of 71% from $19.4 million in the second quarter of 2017.
  • GAAP net loss was $5.2 million, a decrease of 10% from a GAAP net loss of $5.8 million, in the second quarter of 2017.
  • Adjusted EBITDA was $12.5 million, or 35% of total revenue, an increase of 85% from $6.8 million, or 29% of total revenue, in the second quarter of 2017.
  • Cash on hand as of the end of the second quarter was $19.0 million.

"Q2 was another record quarter with strong revenue growth, record Adjusted EBITDA, and an accretive and strategic acquisition, RO Innovation," said Jack McDonald, chairman and CEO of Upland Software. "Our Q3 and full-year guidance is strong, and our M&A pipeline is robust."

Second Quarter Business Highlights

  • Expanded 217 existing customer relationships, including 20 major expansions, and added 127 new customer relationships, including 17 major accounts.
  • Delivered a major release for Qvidian, a leading automated bids and proposals solution, that expanded integrations with both Microsoft Office and Salesforce.com to better support requests for proposals.
  • Enhanced our Workflow Automation product family by acquiring RO Innovation, a leading cloud-based customer reference solution for creating, deploying, managing, and measuring customer reference and sales enablement content.
  • Launched Upland Analytics, a new reporting platform powered by Upland's ComSci IT Financial and Business Management application, integrated with Tenrox, our professional services automation solution. Other Upland products will leverage Upland Analytics as well.

Business Outlook

For the quarter ending September 30, 2018, Upland expects reported total revenue to be between $36.0 and $37.0 million, including subscription and support revenue between $33.0 and $33.8 million, for growth in recurring revenue of 44% at the mid-point over the quarter-ended September 30, 2017. Third quarter 2018 Adjusted EBITDA is expected to be between $12.5 and $13.1 million, for an Adjusted EBITDA margin of 35% at the mid-point, representing growth of 54% at the mid-point over the quarter-ended September 30, 2017.

For the full year ending December 31, 2018, Upland expects reported total revenue to be between $139.6 and $142.6 million, including subscription and support revenue between $127.0 and $129.0 million, for growth in recurring revenue of 50% at the mid-point over the year ended December 31, 2017. Full year 2018 Adjusted EBITDA is expected to be between $48.8 and $50.2 million, for an Adjusted EBITDA margin of 35% at the mid-point, representing growth of 63% 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 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.

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, 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.

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

investor-relations@uplandsoftware.com

Media Contact:

Christina Turner

Media@uplandsoftware.com

855-944-7526

 

 

Upland Software, Inc.

Condensed Consolidated Statements of Operations

(in thousands, unaudited, except per share data)





Three Months Ended June 30,



Six Months Ended June 30,



2018



2017



2018



2017

Revenue:















 Subscription and support

$

33,154





$

19,407





$

60,883





$

37,542



 Perpetual license

683





1,746





2,309





2,440



  Total product revenue

33,837





21,153





63,192





39,982



 Professional services

2,109





2,128





4,369





4,051



  Total revenue

35,946





23,281





67,561





44,033



Cost of revenue:















 Subscription and support

9,580





6,676





18,829





12,569



 Professional services

1,269





1,327





2,665





2,462



  Total cost of revenue

10,849





8,003





21,494





15,031



 Gross profit

25,097





15,278





46,067





29,002



Operating expenses:















 Sales and marketing

5,248





4,037





9,656





7,258



 Research and development

5,286





4,003





10,177





7,480



 Refundable Canadian tax credits

(203)





(112)





(305)





(229)



 General and administrative

8,464





6,576





15,464





12,480



 Depreciation and amortization

3,853





1,299





5,983





2,463



 Acquisition-related expenses

3,140





2,278





6,242





5,969



  Total operating expenses

25,788





18,081





47,217





35,421



 Loss from operations

(691)





(2,803)





(1,150)





(6,419)



Other expense:















 Interest expense, net

(3,143)





(1,160)





(5,637)





(2,095)



 Loss on debt extinguishment





(1,634)









(1,634)



 Other income (expense), net

(524)





(18)





(221)





(130)



  Total other expense

(3,667)





(2,812)





(5,858)





(3,859)



Loss before provision for income taxes

(4,358)





(5,615)





(7,008)





(10,278)



Provision for income taxes

(872)





(196)





(1,383)





(1,147)



Net loss

$

(5,230)





$

(5,811)





$

(8,391)





$

(11,425)



Net loss per common share:















Net loss per common share, basic and diluted

$

(0.26)





$

(0.33)





$

(0.42)





$

(0.66)



Weighted-average common shares outstanding, basic and 

     diluted

19,901,599





17,778,184





19,830,401





17,374,789



 

 

Upland Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)





June 30,



December 31,



2018



2017



(unaudited)





Assets







Current assets:







Cash and cash equivalents

$

19,037





$

22,326



Accounts receivable, net of allowance

26,831





26,504



Deferred commissions, current

2,185







Prepaid and other

3,369





2,856



  Total current assets

51,422





51,686



Canadian tax credits receivable

1,478





1,196



Property and equipment, net

2,641





2,927



Intangible assets, net

114,777





70,043



Goodwill

157,389





154,607



Deferred commissions, noncurrent

5,023







Other assets

167





800



Total assets

$

332,897





$

281,259



Liabilities and stockholders' equity







Current liabilities:







Accounts payable

$

4,339





$

3,887



Accrued compensation

4,085





5,157



Accrued expenses and other

12,709





12,148



Deferred revenue

44,388





43,807



Due to sellers

10,362





7,839



Current maturities of notes payable

3,290





2,301



  Total current liabilities

79,173





75,139



Notes payable, less current maturities

155,757





108,843



Deferred revenue

894





1,570



Noncurrent deferred tax liability, net

6,358





3,262



Other long-term liabilities

961





1,030



Total liabilities

243,143





189,844



Stockholders' equity:







Common stock

2





2



Additional paid-in capital

178,062





174,944



Accumulated other comprehensive loss

(5,083)





(2,403)



Accumulated deficit

(83,227)





(81,128)



Total stockholders' equity

89,754





91,415



Total liabilities and stockholders' equity

$

332,897





$

281,259



 

 

Upland Software, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)





Six Months Ended June 30,



2018



2017

Operating activities







Net loss

$

(8,391)





$

(11,425)



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







Depreciation and amortization

9,217





5,046



Deferred income taxes

275





392



Amortization of deferred commissions

1,115







Foreign currency re-measurement (gain) loss

269





(182)



Non-cash interest and other expense

404





120



Non-cash stock compensation expense

6,599





5,920



Non-cash loss on retirement of fixed assets





(18)



Non-cash loss on debt extinguishment





1,634



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







  Accounts receivable

2,963





4,038



  Prepaids and other

(2,545)





846



  Accounts payable

(476)





857



  Accrued expenses and other liabilities

(3,898)





(462)



  Deferred revenue

(1,792)





(1,024)



Net cash provided by operating activities

3,740





5,742



Investing activities







Purchase of property and equipment

(515)





(375)



Purchase business combinations, net of cash acquired

(45,362)





(37,096)



Net cash used in investing activities

(45,877)





(37,471)



Financing activities







Payments on capital leases

(505)





(745)



Proceeds from notes payable, net of issuance costs

49,375





33,308



Payments on notes payable

(1,876)





(10,725)



Taxes paid related to net share settlement of equity awards

(3,862)





(372)



Issuance of common stock, net of issuance costs

382





43,073



Additional consideration paid to sellers of businesses

(4,294)





(4,338)



Net cash provided by financing activities

39,220





60,201



Effect of exchange rate fluctuations on cash

(372)





190



Change in cash and cash equivalents

(3,289)





28,662



Cash and cash equivalents, beginning of period

22,326





28,758



Cash and cash equivalents, end of period

$

19,037





$

57,420



Supplemental disclosures of cash flow information:







Cash paid for interest

$

5,260





$

1,984



Cash paid for taxes

$

1,856





$

1,172



Noncash investing and financing activities:







Equipment acquired pursuant to capital lease obligations

$





$

165



 

 

Upland Software, Inc.

Reconciliation of Adjusted EBITDA

(in thousands, unaudited)





Three Months Ended June 30,



Six Months Ended June 30,



2018



2017



2018



2017

Reconciliation of Net loss to Adjusted EBITDA:















Net Loss

$

(5,230)





$

(5,811)





$

(8,391)





$

(11,425)



Add:















Depreciation and amortization expense

5,045





2,648





9,217





5,046



Interest expense, net

3,143





1,160





5,637





2,095



Other expense (income), net

524





18





221





130



Loss on debt extinguishment





1,634









1,634



Provision for income taxes

872





196





1,383





1,147



Stock-based compensation expense

4,022





3,616





6,599





5,920



Acquisition-related expense

3,140





2,278





6,242





5,969



Purchase accounting deferred revenue discount

1,029





1,059





2,418





1,738



Adjusted EBITDA

$

12,545





$

6,798





$

23,326





$

12,254



 

 

Upland Software, Inc.

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

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





Three Months Ended June 30,



Six Months Ended June 30,



2018



2017



2018



2017

Reconciliation of Net Loss to Non-GAAP net income

(loss):















Net loss

$

(5,230)





$

(5,811)





$

(8,391)





$

(11,425)



Add:















Stock-based compensation expense

4,022





3,616





6,599





5,920



Amortization of purchased intangibles

4,485





1,956





8,101





3,792



Amortization of debt discount

214





45





404





120



Acquisition-related expense

3,140





2,278





6,242





5,969



Loss on debt extinguishment





1,634









1,634



Purchase accounting deferred revenue discount

1,029





1,059





2,418





1,738



Tax effect of adjustments above

(59)





(78)





(76)





(158)



Non-GAAP net income (loss)

$

7,601





$

4,699





$

15,297





$

7,590



















Weighted average ordinary shares outstanding, basic

19,901,599





17,778,184





19,830,401





17,374,789



Weighted average ordinary shares outstanding, diluted

20,983,208





19,072,485





20,831,769





18,414,616



Non-GAAP earnings per share, basic

$

0.38





$

0.26





$

0.77





$

0.44



Non-GAAP earnings per share, diluted

$

0.36





$

0.25





$

0.73





$

0.41



 

 

Upland Software, Inc.

Supplemental Financial Information

(in thousands, unaudited)





Three Months Ended June 30,



Six Months Ended June 30,



2018



2017



2018



2017

Stock-based compensation:















Cost of revenue

$

190





$

113





$

268





$

131



Research and development

375





282





488





341



Sales and marketing

154





54





199





77



General and administrative

3,303





3,167





5,644





5,371



Total

$

4,022





$

3,616





$

6,599





$

5,920





















Three Months Ended June 30,



Six Months Ended June 30,



2018



2017



2018



2017

Depreciation:















Cost of revenue

$

427





$

570





$

863





$

1,019



Operating expense

133





122





253





235



Total

$

560





$

692





$

1,116





$

1,254



















Amortization:















Cost of revenue

$

765





$

779





$

2,370





$

1,564



Operating expense

3,720





1,177





5,731





2,228



Total

$

4,485





$

1,956





$

8,101





$

3,792



 

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

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/upland-software-reports-second-quarter-2018-financial-results-300694307.html

SOURCE Upland Software, Inc.

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