EX-99.1 2 q423991earningsrelease.htm EX-99.1 Document

EXHIBIT 99.1

Upland Software Reports Fourth Quarter 2023 Financial Results

February 22, 2024, 04:01 PM Eastern Standard Time
AUSTIN, Texas--(BUSINESS WIRE)-- Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based tools for digital transformation, today announced financial and operating results for the fourth quarter 2023 and issued guidance for its first quarter and full year of 2024.

Fourth Quarter 2023 Financial Highlights
•Total revenue was $72.2 million, a decrease of 8% from $78.8 million in the fourth quarter of 2022.
•Subscription and support revenue was $68.2 million, a decrease of 8% from $74.1 million in the fourth quarter of 2022.
•GAAP net loss was $16.0 million compared to a GAAP net loss of $22.7 million in the fourth quarter of 2022. GAAP net loss attributable to common stockholders was $17.4 million compared to GAAP net loss attributable to common stockholders of $24.0 million in the fourth quarter of 2022. GAAP net loss per share attributable to common stockholders was $0.56 per share, compared to a GAAP net loss per share attributable to common stockholders of $0.75 per share in the fourth quarter of 2022.
•Adjusted EBITDA was $14.1 million, or 19% of total revenue, compared to $24.3 million, or 31% of total revenue, in the fourth quarter of 2022.
•GAAP operating cash flow was $8.8 million, compared to GAAP operating cash flow of $5.8 million in the fourth quarter of 2022. Free cash flow was $8.6 million, compared to free cash flow of $5.7 million in the fourth quarter of 2022.
•Cash on hand as of the end of the fourth quarter of 2023 was $236.6 million, after buying back $10.8 million of the Company's outstanding common stock in the quarter.
"We continue to make progress on our growth plan and remain focused on building great software and delivering value for customers," said Jack McDonald, Upland's chairman and chief executive officer. "We are proud to see continued and increasing recognition of our products as evidenced by the 44 badges earned in G2's Winter 2024 market reports."

Fourth Quarter Business Highlights
•We expanded relationships with 307 existing customers, 33 of which were major expansions. We also welcomed 154 new customers to Upland in the fourth quarter, including 15 new major customers.
•Upland was recognized, for the third year in a row, as a gold medalist and leader in the 2023 Enterprise Content Management Data Quadrant report from SoftwareReviews for our document management and workflow automation product, FileBound. The award is based on the combined knowledge of real users, and placement is based on overall satisfaction with product features, vendor experience, capabilities, and emotional sentiment.


•Upland RO Innovation has launched an all-new Customer Reference Activity Hub to help sales, marketing, and customer success teams find and engage with their most influential customer references so they can boost brand awareness and generate more business.
•In December, we hosted a webinar on content search intelligence featuring how Azure AI Search, when seamlessly integrated with BA Insight's cutting-edge technology, revolutionizes how organizations access, manage, and derive insights from their data.
•Upland earned 44 badges in G2’s Winter 2024 market reports across a variety of products. These included our knowledge management solutions, Upland RightAnswers and Upland Panviva, along with Upland Qvidian, our proposal management software, and digital marketing products, Upland Adestra and Upland Second Street. Rankings on G2 reports are based on independent data provided by real software buyers.

Business Outlook
The following guidance reflects another year of significant incremental sales, marketing and product investments that Upland is making as part of its comprehensive growth plan as well as the effects of decreasing revenue and expenses related to our previously announced decisions to sunset certain non-strategic product offerings and a limited number of non-strategic customer contracts (collectively referred to as our “Sunset Assets”).
For the quarter ending March 31, 2024, Upland expects reported total revenue to be between $65.0 and $71.0 million, including subscription and support revenue between $62.5 and $67.5 million, for a decline in total revenue of 12% at the mid-point from the quarter-ended March 31, 2023. First quarter 2024 Adjusted EBITDA is expected to be between $11.3 and $14.3 million, for an Adjusted EBITDA margin of 19% at the mid-point. This Adjusted EBITDA guide at the mid-point is a decrease of 27% from the quarter-ended March 31, 2023.
For the full year ending December 31, 2024, Upland expects reported total revenue to be between $259.0 and $283.0 million, including subscription and support revenue between $247.0 and $267.0 million, for a decline in total revenue of 9% at the mid-point from the year ended December 31, 2023. Full year 2024 Adjusted EBITDA is expected to be between $49.0 and $61.0 million, for an Adjusted EBITDA margin of 20% at the mid-point. This Adjusted EBITDA guide at the midpoint is a decrease of 15% from the year ended December 31, 2023.

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 1-800-715-9871 in North America or 1-646-307-1963 if outside North America, international rates apply. Attendees will need to use access code 8422976 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 Software, Inc. enables global businesses to work smarter with over 25 proven cloud software products that increase revenue, reduce costs, and deliver immediate value. Our solutions cover digital marketing, knowledge management, contact center service, sales productivity, content lifecycle automation, and more. Upland's powerful cloud products are trusted by more than 10,000 global customers. Learn how Upland helps businesses achieve outcomes that matter at 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. Additionally, we are unable to quantify the impact of foreign currency exchange fluctuations on components of our income statement beyond revenues because the information which is needed to do so is unavailable at this time without unreasonable effort.
Upland defines Adjusted EBITDA as net income (loss), calculated in accordance with GAAP, plus depreciation and amortization expense, interest expense, net, other expense (income), net, provision (benefit) for income taxes, stock-based compensation expense, acquisition-related expenses, non-recurring litigation costs, purchase accounting adjustments for deferred revenue and impairment of goodwill.
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, impairment of goodwill 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.
In connection with periodic reviews of our business, we have decided to discontinue the availability of certain non-strategic product offerings and a limited number of non-strategic customer contracts (collectively referred to as “Sunset Assets”).
Overage Charges are subscription and support revenues earned in addition to contractual minimum customer commitments as a result of the usage volume of services including text and e-mail messaging and third-party pass-through costs that exceed the levels stipulated in contracts with the Company.
Upland defines Core Organic Growth Rate as the percentage change between two reported periods in subscription and support revenue, excluding subscription and support revenue from Sunset Assets and Overage Charges. We calculate our year-over-year Core Organic Growth Rate as though all acquisitions or dispositions closed as of the end of the latest period were closed as of the first day of the prior year period presented. Core Organic Growth Rate does not represent actual organic revenue generated by our business as it stood at the beginning of the respective period.

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 “anticipate,” “believe,” “may,” “will,” “continue,” “seek,” “estimate,” “intend,” “hope,” “predict,” “could,” “should,” “would,” “project,” “plan,” “expect” 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 or sustain profitability or predict future results; our plans regarding future acquisitions, acquisition expense timing and our ability to consummate and integrate acquisitions; our ability to expand our go to market operations, including our marketing and sales organization and cross selling opportunities, and successfully increase sales of our products; our ability to obtain financing in the future on acceptable terms or at all; our expectations with respect to revenue, cost of revenue, average annual spend, margin expense and operating expenses in future periods; our expectations with regard to revenue from perpetual licenses and professional services; our ability to adapt to macroeconomic factors impacting the global economy, including foreign currency exchange risk, inflation and supply chain constraints; our ability to attract and retain customers; our ability to successfully enter new markets and manage our international expansion; our ability to comply with privacy laws and regulations; our ability to deliver high-quality customer service; our plans regarding,


and our ability to effectively manage, our growth, including organic growth; maintaining our senior management team and key personnel; the performance of our resellers; our ability to adapt to changing market conditions and competition; our ability to adapt to technological change and continue to innovate; global economic and financial market conditions and uncertainties; the growth of demand for cloud-based, digital transformation applications; our ability to integrate our applications with other software applications; maintaining and expanding our relationships with third parties; costs associated with defending intellectual property infringement and other claims; our ability to maintain, protect and enhance our brand and intellectual property; our expectations with regard to trends, such as seasonality, which affect our business; impairments to goodwill and other intangible assets; our beliefs regarding how our applications benefit customers and what our competitive strengths are; the operation, reliability and security of our third-party data centers; our expectations as to the payment of dividends; our Share Repurchase Plan, including expectations regarding the timing and manner of repurchases made under the Share Repurchase Plan; our current level of indebtedness, including our exposure to variable interest rate risk; the potential elimination or limitation of tax incentives or tax losses and/or reductions of U.S. federal net operating losses; the risk that we did not consider another contingency included in this list; 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.

###

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

Media Contact:
Lloyd Berry
512-960-1010
media@uplandsoftware.com




Upland Software, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)

 Three Months Ended December 31,Twelve Months Ended December 31,
 2023202220232022
(unaudited)(unaudited)
Revenue:
Subscription and support$68,184 $74,148 $281,554 $297,887 
Perpetual license1,760 1,628 6,077 6,948 
Total product revenue69,944 75,776 287,631 304,835 
Professional services2,234 3,035 10,221 12,468 
Total revenue72,178 78,811 297,852 317,303 
Cost of revenue:
Subscription and support22,483 24,201 88,894 93,948 
Professional services and other1,226 2,506 7,467 9,793 
Total cost of revenue23,709 26,707 96,361 103,741 
Gross profit48,469 52,104 201,491 213,562 
Operating expenses:
Sales and marketing17,438 14,131 64,342 59,416 
Research and development11,662 10,799 49,375 46,187 
General and administrative13,895 14,352 61,264 70,462 
Depreciation and amortization14,405 11,699 58,614 43,669 
Acquisition-related expenses451 2,632 3,060 21,556 
Impairment of goodwill— 12,500 128,755 12,500 
Total operating expenses57,851 66,113 365,410 253,790 
Loss from operations(9,382)(14,009)(163,919)(40,228)
Other expense:
Interest expense, net(5,322)(6,275)(18,684)(29,145)
Other income (expense), net(675)(2,479)236 (781)
Total other expense (5,997)(8,754)(18,448)(29,926)
Loss before benefit from (provision for) income taxes(15,379)(22,763)(182,367)(70,154)
Benefit from (provision for) income taxes(633)87 2,493 1,741 
Net loss$(16,012)$(22,676)$(179,874)$(68,413)
Preferred stock dividends (1,359)(1,300)(5,347)(1,846)
Net loss attributable to common stockholders$(17,371)$(23,976)$(185,221)$(70,259)
Net income (loss) per common share:
Net loss per common share, basic and diluted$(0.56)$(0.75)$(5.77)$(2.23)
Weighted-average common shares outstanding, basic and diluted30,995,441 31,906,980 32,074,906 31,528,881 



Upland Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
December 31,December 31,
20232022
 
ASSETS
Current assets:
Cash and cash equivalents$236,559 $248,653 
Accounts receivable, net of allowance38,765 47,594 
Deferred commissions, current10,429 10,961 
Unbilled receivables2,701 5,313 
Income tax receivable, current3,775 542 
Prepaid expenses and other current assets8,004 8,232 
Total current assets300,233 321,295 
Tax credits receivable1,657 2,411 
Property and equipment, net1,932 1,830 
Operating lease right-of-use asset2,929 5,719 
Intangible assets, net182,349 248,851 
Goodwill353,778 477,043 
Deferred commissions, noncurrent12,568 13,794 
Interest rate swap assets14,270 41,168 
Other assets308 1,348 
Total assets$870,024 $1,113,459 
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$8,137 $14,939 
Accrued compensation7,174 7,393 
Accrued expenses and other current liabilities7,050 10,644 
Deferred revenue102,763 106,465 
Liabilities due to sellers of businesses— 5,429 
Operating lease liabilities, current2,351 3,205 
Current maturities of notes payable3,172 3,136 
Total current liabilities130,647 151,211 
Notes payable, less current maturities473,502 511,847 
Deferred revenue, noncurrent3,860 4,707 
Operating lease liabilities, noncurrent1,597 4,947 
Noncurrent deferred tax liability, net16,025 18,416 
Other long-term liabilities461 1,170 
Total liabilities626,092 692,298 
Series A Convertible Preferred stock117,638 112,291 
Stockholders’ equity:
Common stock
3 3 
Additional paid-in capital608,995 606,755 
Accumulated other comprehensive loss6,168 11,110 
Accumulated deficit(488,872)(308,998)
Total stockholders’ equity126,294 308,870 
Total liabilities, convertible preferred stock and stockholders’ equity$870,024 $1,113,459 


Upland Software, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
 Three Months Ended December 31,Twelve Months Ended December 31,
 2023202220232022
 (unaudited)(unaudited)
Operating activities
Net loss$(16,012)$(22,676)$(179,874)$(68,413)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization17,510 14,813 71,985 56,146 
Change in fair value of liabilities due to sellers of businesses— — — (75)
Deferred income taxes(1,558)(3,784)(4,209)(7,075)
Amortization of deferred costs3,261 3,157 13,170 12,198 
Foreign currency re-measurement loss445 (52)(538)(12)
Non-cash interest, net and other income, net(896)569 (2,976)2,256 
Non-cash stock-based compensation expense4,682 7,579 22,874 41,602 
Non-cash loss on impairment of goodwill— 12,500 128,755 12,500 
Non-cash loss on retirement of fixed assets1 53 47 79 
Changes in operating assets and liabilities, net of purchase business combinations:
Accounts receivable(1,252)(8,496)8,916 9,691 
Prepaid expenses and other current assets4,934 4,922 (471)10,070 
Other assets(1,393)(2,608)10,866 (12,811)
Accounts payable(6,025)(5,711)(6,896)(7,175)
Accrued expenses and other liabilities(1,459)(2,757)(6,188)(14,013)
Deferred revenue6,551 8,332 (5,518)(4,989)
Net cash provided by operating activities8,789 5,841 49,943 29,979 
Investing activities
Purchase of property and equipment(186)(148)(1,220)(866)
Purchase business combinations, net of cash acquired— — — (62,356)
Net cash used in investing activities(186)(148)(1,220)(63,222)
Financing activities
Payments of debt costs(31)(3)(221)(203)
Payments on notes payable(1,350)(1,350)(40,400)(5,400)
Repurchase of shares(10,845)— (14,060)— 
Issuance of Series A Convertible Preferred stock, net of issuance costs— (75)— 110,445 
Taxes paid related to net share settlement of equity awards(349)(417)(1,091)(1,576)
Issuance of common stock, net of issuance costs3 1 5 191 
Additional consideration paid to sellers of businesses(67)(1,132)(5,617)(9,306)
Net cash provided by (used in) financing activities(12,639)(2,976)(61,384)94,151 
Effect of exchange rate fluctuations on cash1,004 4,216 567 (1,413)
Change in cash and cash equivalents(3,032)6,933 (12,094)59,495 
Cash and cash equivalents, beginning of period239,591 241,720 248,653 189,158 
Cash and cash equivalents, end of period$236,559 $248,653 $236,559 $248,653 
Supplemental disclosures of cash flow information:
Cash paid for interest, net of interest rate swaps$8,990 $7,316 $32,137 $29,120 
Cash paid for taxes$879 $713 $7,106 $3,876 
Non-cash investing and financing activities:
Business combination consideration including holdbacks and earnouts$— $306 $— $8,126 




Upland Software, Inc.
Reconciliation of Adjusted EBITDA
(in thousands, unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
2023202220232022
Reconciliation of net loss to Adjusted EBITDA:
Net loss$(16,012)$(22,676)$(179,874)$(68,413)
Add:
Depreciation and amortization expense17,510 14,813 71,985 56,146 
Interest expense, net5,322 6,275 18,684 29,145 
Other expense (income), net675 2,479 (236)781 
Provision for (benefit from) income taxes633 (87)(2,493)(1,741)
Stock-based compensation expense4,682 7,579 22,874 41,602 
Acquisition-related expense451 2,632 3,060 21,556 
Non-recurring litigation costs699 18 1,126 33 
Purchase accounting deferred revenue discount92 730 557 5,496 
Impairment of goodwill— 12,500 128,755 12,500 
Adjusted EBITDA$14,052 $24,263 $64,438 $97,105 


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 December 31,Twelve Months Ended December 31,
2023202220232022
Reconciliation of net loss to non-GAAP net income:
Net loss$(16,012)$(22,676)$(179,874)$(68,413)
Add:
Stock-based compensation expense4,682 7,579 22,874 41,602 
Amortization of purchased intangibles17,184 14,473 70,566 54,609 
Amortization of debt discount581 569 2,313 2,256 
Acquisition-related expense451 2,632 3,060 21,556 
Nonrecurring litigation expense699 18 1,126 33 
Purchase accounting deferred revenue discount92 730 557 5,496 
Impairment of goodwill— 12,500 128,755 12,500 
Tax effect of adjustments above(2,302)(1,560)(11,509)(7,985)
Non-GAAP net income$5,375 $14,265 $37,868 $61,654 
Weighted average ordinary shares outstanding, basic30,995,441 31,906,980 32,074,906 31,528,881 
Weighted average ordinary shares outstanding, diluted37,992,837 38,639,536 38,920,323 34,059,394 
Non-GAAP earnings per share, basic$0.17 $0.45 $1.18 $1.96 
Non-GAAP earnings per share, diluted$0.14 $0.37 $0.97 $1.81 






Upland Software, Inc.
Reconciliation of Operating Cash Flow to Free Cash Flow
(in thousands, unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
2023202220232022
Reconciliation of operating cash flow to Free Cash Flow:
Net cash provided by operating activities$8,789 $5,841 $49,943 $29,979 
Less: Purchase of property and equipment(186)(148)(1,220)(866)
Free Cash Flow$8,603 $5,693 $48,723 $29,113 

Upland Software, Inc.
Supplemental Financial Information
(in thousands, unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
2023202220232022
Stock-based compensation:
Cost of revenue$102 $497 $952 $1,984 
Research and development552 626 2,463 2,733 
Sales and marketing495 655 2,059 4,239 
General and administrative3,533 5,801 17,400 32,646 
Total$4,682 $7,579 $22,874 $41,602 
Depreciation:
Cost of revenue$— $2 $5 $8 
Operating expense326 338 1,414 1,529 
Total$326 $340 $1,419 $1,537 
Amortization:
Cost of revenue$3,105 $3,112 $13,366 $12,469 
Operating expense14,079 11,361 57,200 42,140 
Total$17,184 $14,473 $70,566 $54,609