Le Lézard
Classified in: Science and technology, Business
Subjects: EARNINGS, Conference Call, Webcast

Upland Software Reports Fourth Quarter and Full Year 2019 Financial Results


Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based enterprise work management software, today announced financial and operating results for the fourth quarter and full year of 2019 and reaffirmed guidance for its first quarter and full year of 2020.

Fourth Quarter 2019 Financial Highlights

Full Year 2019 Financial Highlights

"Q4 was an impressive finish to a transformational year marked by strong revenue growth, expanding margins, market leading product innovation, and record acquisition activity," said Jack McDonald, chairman and CEO of Upland Software. "As our strong guidance indicates, we are positioned for a great 2020 with four compelling enterprise clouds, proven new go-to-market leadership, and a robust acquisition pipeline," he added.

Fourth Quarter Business Highlights

Business Outlook

For the quarter ending March 31, 2020, Upland expects reported total revenue to be between $62.8 and $65.8 million, including subscription and support revenue between $58.8 and $61.2 million, for growth in recurring revenue of 33% at the mid-point over the quarter-ended March 31, 2019. First quarter 2020 Adjusted EBITDA is expected to be between $23.1 and $24.5 million, for an Adjusted EBITDA margin of 37% at the mid-point, representing growth of 34% at the mid-point over the quarter-ended March 31, 2019.

For the full year ending December 31, 2020, Upland expects reported total revenue to be between $269.5 and $281.5 million, including subscription and support revenue between $252.6 and $262.2 million, for growth in recurring revenue of 26% at the mid-point over the year ended December 31, 2019. Full year 2020 Adjusted EBITDA is expected to be between $99.2 and $104.8 million, for an Adjusted EBITDA margin of 37% at the mid-point, representing growth of 24% at the mid-point over the year ended December 31, 2019.

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 6696654. 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 leader in enterprise work management software. Upland provides four enterprise clouds that enable more than one million worldwide users across 9,000 organizations to orchestrate digital customer experiences, optimize sales team performance, manage projects and IT costs, and automate critical document workflows. All of Upland's clouds are backed by a 100% customer success commitment and the UplandOne platform, which puts customers at the center of everything we do. 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, 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 annual net dollar retention rate (NDRR) 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 defines major expansions as existing customers who expanded the amount of annual recurring revenue under their contract by at least $25,000.

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.

 

Upland Software, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

(unaudited)

 

(unaudited)

 

 

Revenue:

 

 

 

 

 

 

 

Subscription and support

$

59,109

 

 

$

41,776

 

 

$

203,866

 

 

$

136,578

 

Perpetual license

 

3,531

 

 

 

678

 

 

 

5,738

 

 

 

3,902

 

Total product revenue

 

62,640

 

 

 

42,454

 

 

 

209,604

 

 

 

140,480

 

Professional services

 

3,426

 

 

 

2,726

 

 

 

13,033

 

 

 

9,405

 

Total revenue

 

66,066

 

 

 

45,180

 

 

 

222,637

 

 

 

149,885

 

Cost of revenue:

 

 

 

 

 

 

 

Subscription and support

 

18,891

 

 

 

13,486

 

 

 

61,465

 

 

 

42,881

 

Professional services

 

2,182

 

 

 

1,526

 

 

 

7,652

 

 

 

5,708

 

Total cost of revenue

 

21,073

 

 

 

15,012

 

 

 

69,117

 

 

 

48,589

 

Gross profit

 

44,993

 

 

 

30,168

 

 

 

153,520

 

 

 

101,296

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

 

11,490

 

 

 

5,980

 

 

 

35,170

 

 

 

20,935

 

Research and development

 

8,548

 

 

 

5,743

 

 

 

29,388

 

 

 

21,320

 

Refundable Canadian tax credits

 

(47

)

 

 

(2

)

 

 

(351

)

 

 

(406

)

General and administrative

 

13,845

 

 

 

8,566

 

 

 

48,077

 

 

 

32,041

 

Depreciation and amortization

 

8,455

 

 

 

4,683

 

 

 

25,885

 

 

 

14,272

 

Acquisition-related expenses

 

15,213

 

 

 

9,989

 

 

 

39,657

 

 

 

18,728

 

Total operating expenses

 

57,504

 

 

 

34,959

 

 

 

177,826

 

 

 

106,890

 

Loss from operations

 

(12,511

)

 

 

(4,791

)

 

 

(24,306

)

 

 

(5,594

)

Other expense:

 

 

 

 

 

 

 

Interest expense, net

 

(6,434

)

 

 

(4,518

)

 

 

(22,313

)

 

 

(13,273

)

Loss on debt extinguishment

?

 

?

 

 

(2,317

)

 

?

Other expense, net

 

(1,559

)

 

 

(816

)

 

 

(3,240

)

 

 

(1,781

)

Total other expense

 

(7,993

)

 

 

(5,334

)

 

 

(27,870

)

 

 

(15,054

)

Loss before provision for income taxes

 

(20,504

)

 

 

(10,125

)

 

 

(52,176

)

 

 

(20,648

)

Benefit from (provision for) income taxes

 

639

 

 

 

11,927

 

 

 

6,805

 

 

 

9,809

 

Net loss

$

(19,865

)

 

$

1,802

 

 

$

(45,371

)

 

$

(10,839

)

Net income (loss) per common share:

 

 

 

 

 

 

 

Basic

$

(0.80

)

 

$

0.09

 

 

$

(1.96

)

 

$

(0.54

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

24,726,132

 

 

 

20,191,390

 

 

 

23,099,549

 

 

 

19,985,528

 

 

Upland Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

December 31,

 

December 31,

 

 

2019

 

 

 

2018

 

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

175,024

 

 

$

16,738

 

Accounts receivable, net of allowance

 

50,938

 

 

 

40,841

 

Deferred commissions, current

 

3,059

 

 

 

2,633

 

Unbilled receivables

 

5,111

 

 

 

3,694

 

Prepaid and other

 

5,121

 

 

 

3,382

 

Total current assets

 

239,253

 

 

 

67,288

 

Canadian tax credits receivable

 

5,052

 

 

 

1,573

 

Property and equipment, net

 

3,917

 

 

 

2,827

 

Operating lease right-of-use asset

 

8,056

 

 

?

Intangible assets, net

 

282,727

 

 

 

179,572

 

Goodwill

 

346,134

 

 

 

225,322

 

Deferred commissions, noncurrent

 

8,763

 

 

 

6,292

 

Other assets

 

4,165

 

 

 

324

 

Total assets

$

898,067

 

 

$

483,198

 

Liabilities and stockholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

5,904

 

 

$

3,494

 

Accrued compensation

 

11,559

 

 

 

6,581

 

Accrued expenses and other current liabilities

 

15,717

 

 

 

16,666

 

Deferred revenue

 

76,558

 

 

 

57,626

 

Due to sellers

 

14,276

 

 

 

17,267

 

Operating lease liabilities, current

 

2,533

 

 

?

Current maturities of notes payable

 

3,193

 

 

 

6,015

 

Total current liabilities

 

129,740

 

 

 

107,649

 

Notes payable, less current maturities

 

521,881

 

 

 

273,713

 

Deferred revenue, noncurrent

 

496

 

 

 

578

 

Operating lease liabilities, noncurrent

 

5,862

 

 

?

Noncurrent deferred tax liability, net

 

26,551

 

 

 

13,311

 

Other long-term liabilities

 

676

 

 

 

640

 

Total liabilities

 

685,206

 

 

 

395,891

 

Stockholders' equity:

 

 

 

Common stock

 

3

 

 

 

2

 

Additional paid-in capital

 

345,127

 

 

 

180,481

 

Accumulated other comprehensive loss

 

(1,223

)

 

 

(7,501

)

Accumulated deficit

 

(131,046

)

 

 

(85,675

)

Total stockholders' equity

 

212,861

 

 

 

87,307

 

Total liabilities and stockholders' equity

$

898,067

 

 

$

483,198

 

Upland Software, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

Twelve Months Ended December 31,

 

 

2019

 

 

 

2018

 

 

(unaudited)

 

 

Operating activities

 

 

 

Net loss

$

(45,371

)

 

$

(10,839

)

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

 

 

 

Depreciation and amortization

 

34,621

 

 

 

21,347

 

Deferred income taxes

 

(9,432

)

 

 

268

 

Amortization of deferred costs

 

3,476

 

 

 

2,367

 

Foreign currency re-measurement loss

 

58

 

 

 

305

 

Non-cash interest and other expense

 

1,398

 

 

 

874

 

Non-cash stock compensation expense

 

25,754

 

 

 

14,130

 

Non-cash loss on divestiture of assets

 

1,988

 

 

 

?

 

Non-cash loss on debt extinguishment

 

2,317

 

 

 

?

 

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

 

 

 

Accounts receivable

 

3,160

 

 

 

(5,212

)

Prepaids and other

 

(5,532

)

 

 

(2,798

)

Accounts payable

 

(73

)

 

 

(3,399

)

Accrued expenses and other liabilities

 

(4,153

)

 

 

(17,615

)

Deferred revenue

 

3,865

 

 

 

7,919

 

Net cash provided by operating activities

 

12,076

 

 

 

7,347

 

Investing activities

 

 

 

Purchase of property and equipment

 

(1,040

)

 

 

(935

)

Purchase of customer relationships

 

(696

)

 

 

?

 

Purchase business combinations, net of cash acquired

 

(216,025

)

 

 

(160,751

)

Net cash used in investing activities

 

(217,761

)

 

 

(161,686

)

Financing activities

 

 

 

Payments on finance leases

 

(529

)

 

 

(1,136

)

Proceeds from notes payable, net of issuance costs

 

625,666

 

 

 

172,397

 

Payments on notes payable

 

(383,568

)

 

 

(4,689

)

Taxes paid related to net share settlement of equity awards

 

(12,659

)

 

 

(9,400

)

Issuance of common stock, net of issuance costs

 

151,551

 

 

 

807

 

Additional consideration paid to sellers of businesses

 

(16,693

)

 

 

(8,056

)

Net cash provided by financing activities

 

363,768

 

 

 

149,923

 

Effect of exchange rate fluctuations on cash

 

203

 

 

 

(1,172

)

Change in cash and cash equivalents

 

158,286

 

 

 

(5,588

)

Cash and cash equivalents, beginning of period

 

16,738

 

 

 

22,326

 

Cash and cash equivalents, end of period

$

175,024

 

 

$

16,738

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for interest, net of interest rate swaps

$

23,862

 

 

$

12,429

 

Cash paid for taxes

$

3,557

 

 

$

3,348

 

Sales commissions paid, net of amortization of deferred commissions

$

5,119

 

 

$

2,408

 

Noncash investing and financing activities:

 

 

 

Business combination consideration including holdbacks and earnouts

$

16,108

 

 

$

17,713

 

Equipment acquired pursuant to financing lease obligations

$

44

 

 

$

?

 

Upland Software, Inc.

Reconciliation of Adjusted EBITDA

(in thousands, unaudited)

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

Reconciliation of net income (loss) to Adjusted EBITDA:

 

 

 

 

 

 

 

Net loss

$

(19,865

)

 

$

1,802

 

 

$

(45,371

)

 

$

(10,839

)

Add:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

10,899

 

 

 

6,743

 

 

 

34,621

 

 

 

21,347

 

Interest expense, net

 

6,434

 

 

 

4,518

 

 

 

22,313

 

 

 

13,273

 

Other expense (income), net

 

1,559

 

 

 

816

 

 

 

3,240

 

 

 

1,781

 

Loss on debt extinguishment

 

?

 

 

 

?

 

 

 

2,317

 

 

 

?

 

Provision for income taxes

 

(639

)

 

 

(11,927

)

 

 

(6,805

)

 

 

(9,809

)

Stock-based compensation expense

 

7,038

 

 

 

3,750

 

 

 

25,754

 

 

 

14,130

 

Acquisition-related expense

 

15,213

 

 

 

9,989

 

 

 

39,657

 

 

 

18,728

 

Purchase accounting deferred revenue discount

 

4,336

 

 

 

1,024

 

 

 

6,794

 

 

 

4,494

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

24,975

 

 

$

16,715

 

 

$

82,520

 

 

$

53,105

 

Upland Software, Inc.

Reconciliation of Non-GAAP Net Income and Non-GAAP EPS

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

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Reconciliation of net income (loss) to non-GAAP net income:

 

 

 

 

 

 

 

Net income (loss)

$

(19,865

)

 

$

1,802

 

 

$

(45,371

)

 

$

(10,839

)

Add:

 

 

 

 

 

 

 

Net income (loss) from discontinued operations

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

Stock-based compensation expense

 

7,038

 

 

 

3,750

 

 

 

25,754

 

 

 

14,130

 

Amortization of purchased intangibles

 

10,342

 

 

 

6,151

 

 

 

32,395

 

 

 

19,096

 

Amortization of debt discount

 

421

 

 

 

258

 

 

 

1,400

 

 

 

874

 

Non-cash loss on divestiture of assets

 

1,988

 

 

 

?

 

 

 

1,988

 

 

 

?

 

Acquisition-related expense

 

15,213

 

 

 

9,989

 

 

 

39,657

 

 

 

18,728

 

Loss on debt extinguishment

 

?

 

 

 

?

 

 

 

2,317

 

 

 

?

 

Purchase accounting deferred revenue discount

 

4,336

 

 

 

1,024

 

 

 

6,794

 

 

 

4,494

 

Provision for Income Tax - nonrecurring

 

?

 

 

 

(10,100

)

 

 

?

 

 

 

(10,100

)

Tax effect of adjustments above

 

(2,409

)

 

 

(545

)

 

 

(6,213

)

 

 

(723

)

Non-GAAP net income

$

17,064

 

 

$

12,329

 

 

$

58,721

 

 

$

35,660

 

 

 

 

 

 

 

 

 

Weighted average ordinary shares outstanding, basic

 

24,726,132

 

 

 

20,191,390

 

 

 

23,099,549

 

 

 

19,985,528

 

Weighted average ordinary shares outstanding, diluted

 

25,465,083

 

 

 

21,099,723

 

 

 

23,906,301

 

 

 

20,975,713

 

Non-GAAP earnings per share, basic

$

0.69

 

 

$

0.61

 

 

$

2.54

 

 

$

1.78

 

Non-GAAP earnings per share, diluted

$

0.67

 

 

$

0.58

 

 

$

2.46

 

 

$

1.70

 

Upland Software, Inc.

Supplemental Financial Information

(in thousands, unaudited)

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

Stock-based compensation:

 

 

 

 

 

 

 

Cost of revenue

$

237

 

$

190

 

$

1,000

 

$

654

Research and development

 

673

 

 

380

 

 

2,310

 

 

1,250

Sales and marketing

 

531

 

 

165

 

 

1,543

 

 

533

General and administrative

 

5,597

 

 

3,015

 

 

20,901

 

 

11,693

Total

$

7,038

 

$

3,750

 

$

25,754

 

$

14,130

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

Depreciation:

 

 

 

 

 

 

 

Cost of revenue

$

118

 

$

376

 

$

834

 

$

1,644

Operating expense

 

439

 

 

216

 

 

1,392

 

 

607

Total

$

557

 

$

592

 

$

2,226

 

$

2,251

 

 

 

 

 

 

 

 

Amortization:

 

 

 

 

 

 

 

Cost of revenue

$

2,325

 

$

1,684

 

$

7,903

 

$

5,431

Operating expense

 

8,017

 

 

4,467

 

 

24,492

 

 

13,665

Total

$

10,342

 

$

6,151

 

$

32,395

 

$

19,096

 


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