Upland Software Reports Fourth Quarter and Full Year 2020 Financial Results

AUSTIN, Texas–(BUSINESS WIRE)–Feb 24, 2021–
Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based tools for digital transformation, today announced financial and operating results for the fourth quarter and full year of 2020 and issued guidance for its first quarter and full year of 2021.
Fourth Quarter 2020 Financial Highlights

  • Total revenue was $78.2 million, an increase of 18% from $66.1 million in the fourth quarter of 2019.
  • Subscription and support revenue was $74.9 million, an increase of 27% from $59.1 million in the fourth quarter of 2019.
  • GAAP net loss was $5.7 million, or a loss of $0.19 cents per share, compared to a GAAP net loss of $19.9 million, or a loss of $0.80 cents per share, in the fourth quarter of 2019.
  • Adjusted EBITDA was $26.6 million, or 34% of total revenue, an increase of 7% from $25.0 million, or 38% of total revenue, in the fourth quarter of 2019.
  • GAAP operating cash flow was $21.5 million, an increase from $7.0 million of GAAP operating cash flow in the fourth quarter of 2019. Free cash flow was $21.2 million, an increase from $6.7 million of free cash flow in the fourth quarter of 2019.
  • Cash on hand as of the end of the fourth quarter of 2020 was $250.0 million.

Full Year 2020 Financial Highlights

  • Total revenue was $291.8 million, an increase of 31% from $222.6 million in 2019.
  • Subscription and support revenue was $277.5 million, an increase of 36% from $203.9 million in 2019.
  • GAAP net loss was $51.2 million, or a loss of $1.92 cents per share, compared to a GAAP net loss of $45.4 million, or a loss of $1.96 cents per share, in 2019.
  • Adjusted EBITDA was $99.9 million, or 34% of total revenue, an increase of 21% from $82.5 million, or 37% of total revenue, in 2019.
  • GAAP operating cash flow was $35.6 million, an increase from $12.1 million of GAAP operating cash flow in 2019. Free cash flow was $34.5 million, an increase from $11.0 million of free cash flow in 2019.

"Q4 was a strong close to a year that demonstrated the strength and resilience of Upland’s business,” said Jack McDonald, Upland’s chairman and chief executive officer. “We posted record organic growth and free cash flow, and after the end of the quarter, we announced the acquisition of Second Street, restarting our M&A engine,” he added. “Our acquisition pipeline is robust, and our acquisition program is self-sustaining as our free cash flow and financial resources mean we are no longer dependent on the equity capital markets.”
Fourth Quarter Business Highlights

  • Posted a strong 94% net dollar retention rate.
  • Expanded relationships with 242 existing customers, 55 of which were major expansions. We also welcomed 111 new customers to Upland in Q4, including 38 new major customers.
  • Focused on enhanced security features and customer collaboration, with five major releases and 11 feature packs across Upland’s product portfolio. For example: in our Project & IT Management product suite, we expanded our Microsoft Teams integration to accelerate cross-team collaboration and communication for our users; and in our Document Workflow product suite, we announced new capabilities and integrations focused on in-demand security features, such as single sign-on.
  • After the close of the quarter, closed the acquisition of Second Street, expanding our audience engagement platform within our CXM Cloud.
  • Continued investment in go-to-market initiatives, including establishing the Global Account sales team focused on our top 175 customers in key industries like Financial Services, Healthcare, CPG, and High Tech, building a new, centralized lead generation Sales Development team, and, after the close of the quarter, launching a refreshed brand and streamlined website.

Business Outlook
For the quarter ending March 31, 2021, Upland expects reported total revenue to be between $70.6 and $74.6 million, including subscription and support revenue between $67.6 and $70.6 million, for growth in recurring revenue of 8% at the mid-point over the quarter-ended March 31, 2020. First quarter 2021 Adjusted EBITDA is expected to be between $21.6 and $23.6 million, for an Adjusted EBITDA margin of 31% at the mid-point, representing a reduction of 8% at the mid-point over the quarter-ended March 31, 2020, reflecting our incremental investment in our sales headcount and related lead generation activities.
For the full year ending December 31, 2021, Upland expects reported total revenue to be between $288.6 and $300.6 million, including subscription and support revenue between $276.3 and $286.3 million, for growth in recurring revenue of 1% at the mid-point over the year ended December 31, 2020. Full year 2021 Adjusted EBITDA is expected to be between $90.8 and $96.8 million, for an Adjusted EBITDA margin of 32% at the mid-point, representing a reduction of 6% at the mid-point over the year ended December 31, 2020, reflecting our incremental investment in our sales headcount and related lead generation activities.
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 1-866-270-1533 in the United States or +1-412-317-0797 if outside the United States, using the conference identification number: 10151107. 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 (Nasdaq: UPLD) is a leader in cloud-based tools for digital transformation. The Upland Cloud enables thousands of organizations to engage with customers on key digital channels, optimize sales team performance, manage projects and IT costs, and automate critical document workflows. The Upland Cloud is 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), 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.
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 December 31,   Twelve Months Ended December 31,
  2020   2019   2020   2019
  (unaudited)   (unaudited)   (unaudited)    
Revenue:              
Subscription and support $ 74,922     $ 59,109     $ 277,504     $ 203,866  
Perpetual license 621     3,531     1,884     5,738  
Total product revenue 75,543     62,640     279,388     209,604  
Professional services 2,704     3,426     12,390     13,033  
Total revenue 78,247     66,066     291,778     222,637  
Cost of revenue:              
Subscription and support 25,179     18,891     89,880     61,465  
Professional services 1,811     2,182     8,566     7,652  
Total cost of revenue 26,990     21,073     98,446     69,117  
Gross profit 51,257     44,993     193,332     153,520  
Operating expenses:              
Sales and marketing 11,566     11,490     46,077     35,170  
Research and development 9,623     8,501     39,002     29,037  
General and administrative 16,877     13,845     68,072     48,077  
Depreciation and amortization 9,494     8,455     36,919     25,885  
Acquisition-related expenses 2,562     15,213     27,075     39,657  
Total operating expenses 50,122     57,504     217,145     177,826  
Income (loss) from operations 1,135     (12,511 )   (23,813 )   (24,306 )
Other expense:              
Interest expense, net (7,935 )   (6,434 )   (31,529 )   (22,313 )
Loss on debt extinguishment             (2,317 )
Other income (expense), net 708     (1,559 )   (111 )   (3,240 )
Total other expense (7,227 )   (7,993 )   (31,640 )   (27,870 )
Loss before benefit from income taxes (6,092 )   (20,504 )   (55,453 )   (52,176 )
Benefit from income taxes 423     639     4,234     6,805  
Net loss $ (5,669 )   $ (19,865 )   $ (51,219 )   $ (45,371 )
Net loss per common share, basic and diluted $ (0.19 )   $ (0.80 )   $ (1.92 )   $ (1.96 )
Weighted-average common shares outstanding, basic and diluted 29,403,603     24,726,132     26,632,116     23,099,549  
 
Upland Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
 
  December 31,
  2020   2019
  (unaudited)    
Assets      
Current assets:      
Cash and cash equivalents $ 250,029     $ 175,024  
Accounts receivable, net of allowance 44,472     50,938  
Deferred commissions, current 5,784     3,059  
Unbilled receivables 4,561     5,111  
Prepaid and other 12,694     4,748  
Total current assets 317,540     238,880  
Tax credits receivable 2,427     4,186  
Property and equipment, net 2,778     3,917  
Operating lease right-of-use asset 10,124     8,056  
Intangible assets, net 279,975     282,727  
Goodwill 383,598     346,134  
Deferred commissions, noncurrent 12,962     8,763  
Other assets 1,816     4,165  
Total assets $ 1,011,220     $ 896,828  
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $ 5,395     $ 5,904  
Accrued compensation 8,138     11,559  
Accrued expenses and other current liabilities 13,438     15,344  
Deferred revenue 87,552     76,558  
Due to sellers 416     14,276  
Operating lease liabilities, current 3,315     2,533  
Current maturities of notes payable 3,166     3,193  
Total current liabilities 121,420     129,367  
Notes payable, less current maturities 518,437     521,881  
Deferred revenue, noncurrent 1,587     496  
Operating lease liabilities, noncurrent 8,387     5,862  
Noncurrent deferred tax liability, net 24,092     25,685  
Interest rate swap liabilities 30,032      
Other long-term liabilities 650     676  
Total liabilities 704,605     683,967  
Stockholders’ equity:      
Common stock 3     3  
Additional paid-in capital 515,219     345,127  
Accumulated other comprehensive loss (26,234 )   (1,223 )
Accumulated deficit (182,373 )   (131,046 )
Total stockholders’ equity 306,615     212,861  
Total liabilities and stockholders’ equity $ 1,011,220     $ 896,828  
 
Upland Software, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
               
  Three Months Ended December 31,   Twelve Months Ended December 31,
  2020   2019   2020   2019
  (unaudited)   (unaudited)   (unaudited)    
Operating activities              
Net loss $ (5,669 )   $ (19,865 )   $ (51,219 )   $ (45,371 )
Adjustments to reconcile net loss to net cash provided by operating activities:              
Depreciation and amortization 12,073     10,899     47,164     34,621  
Deferred income taxes (4,187 )   1,744     (7,533 )   (9,432 )
Amortization of deferred costs 1,512     921     4,684     3,476  
Foreign currency re-measurement loss (39 )   (97 )   272     58  
Non-cash interest and other expense 564     419     2,233     1,398  
Non-cash stock compensation expense 10,429     7,038     41,692     25,754  
Non-cash loss on divestiture of assets     1,988         1,988  
Non-cash loss on retirement of fixed assets 162         635      
Non-cash loss on debt extinguishment             2,317  
Changes in operating assets and liabilities, net of purchase business combinations:              
Accounts receivable (2,785 )   (3,245 )   10,355     3,160  
Prepaids and other 1,511     (1,252 )   (8,582 )   (5,532 )
Accounts payable (1,299 )   830     (3,081 )   (73 )
Accrued expenses and other liabilities 964     884     (7,825 )   (4,153 )
Deferred revenue 8,232     6,758     6,825     3,865  
Net cash provided by operating activities 21,468     7,022     35,620     12,076  
Investing activities              
Purchase of property and equipment (281 )   (317 )   (1,114 )   (1,040 )
Purchase of customer relationships     (258 )   (201 )   (696 )
Purchase business combinations, net of cash acquired (4 )   (110,254 )   (67,655 )   (216,025 )
Net cash used in investing activities (285 )   (110,829 )   (68,970 )   (217,761 )
Financing activities              
Payments on finance leases (2 )   (30 )   (88 )   (529 )
Proceeds from notes payable, net of issuance costs (134 )   243,360     (303 )   625,666  
Payments on notes payable (1,350 )   (60,350 )   (5,400 )   (383,568 )
Taxes paid related to net share settlement of equity awards 1     (6,551 )   (2,139 )   (12,659 )
Issuance of common stock, net of issuance costs 365     2     130,539     151,551  
Additional consideration paid to sellers of businesses (3,058 )   (10,807 )   (14,710 )   (16,693 )
Net cash provided by financing activities (4,178 )   165,624     107,899     363,768  
Effect of exchange rate fluctuations on cash 52     (99 )   456     203  
Change in cash and cash equivalents 17,057     61,718     75,005     158,286  
Cash and cash equivalents, beginning of period 232,972     113,306     175,024     16,738  
Cash and cash equivalents, end of period $ 250,029     $ 175,024     $ 250,029     $ 175,024  
 
Upland Software, Inc.
Reconciliation of Adjusted EBITDA
(in thousands, unaudited)
 
  Three Months Ended December 31,   Twelve Months Ended December 31,
  2020   2019   2020   2019
Reconciliation of net loss to Adjusted EBITDA:              
Net loss $ (5,669 )   $ (19,865 )   $ (51,219 )   $ (45,371 )
Add:              
Depreciation and amortization expense 12,073     10,899     47,164     34,621  
Interest expense, net 7,935     6,434     31,529     22,313  
Other expense (income), net (708 )   1,559     111     3,240  
Loss on debt extinguishment             2,317  
Benefit from income taxes (423 )   (639 )   (4,234 )   (6,805 )
Stock-based compensation expense 10,429     7,038     41,692     25,754  
Acquisition-related expense 2,562     15,213     27,075     39,657  
Purchase accounting deferred revenue discount 404     4,336     7,785     6,794  
Adjusted EBITDA $ 26,603     $ 24,975     $ 99,903     $ 82,520  
 
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,
  2020   2019   2020   2019
Reconciliation of net loss to non-GAAP net income:              
Net loss $ (5,669 )   $ (19,865 )   $ (51,219 )   $ (45,371 )
Add:              
Stock-based compensation expense 10,429     7,038     41,692     25,754  
Amortization of purchased intangibles 11,350     10,342     44,937     32,395  
Amortization of debt discount 563     421     2,232     1,400  
Non-cash loss on divestiture of assets     1,988         1,988  
Acquisition-related expense 2,562     15,213     27,075     39,657  
Loss on debt extinguishment             2,317  
Purchase accounting deferred revenue discount 404     4,336     7,785     6,794  
Tax effect of adjustments above (1,233 )   (2,409 )   (5,671 )   (6,213 )
Non-GAAP net income $ 18,406     $ 17,064     $ 66,831     $ 58,721  
               
Weighted average ordinary shares outstanding, basic 29,403,603     24,726,132     26,632,116     23,099,549  
Weighted average ordinary shares outstanding, diluted 30,275,963     25,465,083     27,159,114     23,906,901  
Non-GAAP earnings per share, basic $ 0.63     $ 0.69     $ 2.51     $ 2.54  
Non-GAAP earnings per share, diluted $ 0.61     $ 0.67     $ 2.46     $ 2.46  
 
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,
  2020   2019   2020   2019
Reconciliation of Operating Cash Flow to Free Cash Flow:              
Net cash provided by operating activities $ 21,468     $ 7,022     $ 35,620     $ 12,076  
Less: Purchase of Property and Equipment (281 )   (317 )   (1,114 )   (1,040 )
Free Cash Flow $ 21,187     $ 6,705     $ 34,506     $ 11,036  
 
Upland Software, Inc.
Supplemental Financial Information
(in thousands)
 
  Three Months Ended December 31,   Twelve Months Ended December 31,
  2020   2019   2020   2019
  (unaudited)   (unaudited)   (unaudited)    
Stock-based compensation:              
Cost of revenue $ 439     $ 237     $ 1,951     $ 1,000  
Research and development 752     673     3,391     2,310  
Sales and marketing 1,035     531     3,450     1,543  
General and administrative 8,203     5,597     32,900     20,901  
Total $ 10,429     $ 7,038     $ 41,692     $ 25,754  
  Three Months Ended December 31,   Twelve Months Ended December 31,
  2020   2019   2020   2019
  (unaudited)   (unaudited)   (unaudited)    
Depreciation:              
Cost of revenue $ 17     $ 118     $ 170     $ 834  
Operating expense 706     439     2,057     1,392  
Total $ 723     $ 557     $ 2,227     $ 2,226  
               
Amortization:              
Cost of revenue $ 2,562     $ 2,325     $ 10,075     $ 7,903  
Operating expense 8,788     8,017     34,862     24,492  
Total $ 11,350     $ 10,342     $ 44,937     $ 32,395  

 
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CONTACT: Investor Relations Contact:
Mike Hill
investor-relations@uplandsoftware.com
512-960-1031
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SOURCE: Upland Software Inc.
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PUB: 02/24/2021 04:02 PM/DISC: 02/24/2021 04:02 PM
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