Upland Software, Inc. · NASDAQ:UPLD

Upland Software — Debt Investor Presentation (June 2019)

41 slides from Upland Software's debt investor presentation, Jun 12, 2019

  1. Slide 1: Lenders' Presentation June 2019

    Lenders’ Presentation June 2019

  2. Slide 2: Safe Harbor Statement

    Safe Harbor Statement This presentation includes “forward-looking statements,” which are subject to substantial risks, uncertainties and assumptions, subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Accordingly, you should not place undue reliance on the

  3. Slide 3: Transaction Overview

    Transaction Overview + Upland Software, Inc. is a leading SaaS-based provider of enterprise work management software delivered via the cloud enabling organizations to automate workflows across customer experience / sales enablement, document lifecycle management and project / IT management + $220MM

  4. Slide 4: Sources & Uses and Pro Forma Capitalization

    Sources & Uses and Pro Forma Capitalization Sources ($ in millions) Uses New Revolving Credit Facility – Repay Term Loan A $311 New Term Loan B $350 Financing fees, expenses and OID 7 Cash to balance sheet 32 Total sources $350 Total uses $350 As of Equity Offering ($ in millions) 3/31/2019 + Acquis

  5. Slide 5: Senior Management Attendees

    Senior Management Attendees Jack McDonald Mike Hill Founder, Chairman, and CEO CFO + Serial entrepreneur, winner of E&Y Entrepreneur of The YearTM Award + Member of Upland founding team + Led two successful NASDAQ IPOs (UPLD + PRFT) + CFO of Perficient (NASDAQ: PRFT) (2004-2007) from $30MM to + Crea

  6. Slide 6: Company Overview

    Company Overview 6 | Company Confidential © 2019 Upland Software, Inc.

  7. Slide 7: Upland Software at a Glance

    Upland Software at a Glance (3) EWM 9,000+ 1,300+ $220MM HQ Austin,TX $25B Major Accounts(2) Annual Revenue Customers (>$100K Avg. ARR) Started 2012 TAM(1) Run-Rate (4) (5) (6) 92% 37% 98% 22 $135MM Recurring Adjusted Net Dollar Acquisitions Revenue via Acquisitions Revenue EBITDA Retention Rate to

  8. Slide 8: Upland's Enterprise Work Management Cloud

    Upland’s Enterprise Work Management Cloud Value Delivered Enterprise Cloud Solution Suites Sales & Marketing DRIVE REVENUE Customer Enterprise by delivering outstanding customer Experience Sales experiences and sales productivity Management Enablement Document Lifecycle REDUCE COSTS by streamlining

  9. Slide 9: 3 Key Drivers of the Upland Model

    3 Key Drivers of the Upland Model Operating ü Acquire thematic, proven cloud products with Platform: blue chip customers at highly accretive multiples UplandOne Product Singular Focus on Platform: ü Integrate and transform businesses with a proven Enterprise Cloud playbook, driving both increased ma

  10. Slide 10: Operating Platform: UplandOne

    Operating Platform: UplandOne A Better Way to Run a Software Business 1 100% Customer Success Culture Proven, programmatic, efficient customer outreach and account management 2 Enterprise Grade Delivery Global 24/7 customer support + PSO + AWS Satisfied Customers Analytics and Automation 98% Net Dol

  11. Slide 11: Product Platform: A Unified Experience Across Suites

    Product Platform: A Unified Experience Across Suites üIntegrated Platform üSeamless Experience üDeep Functionality ü Enterprise-Grade Common UI/UX 7 Enterprise Solution Suites Single Sign On Customer Sales Professional Project and Document Secure Content Enterprise (SSO) Experience Enablement Servic

  12. Slide 12: M&A Platform: Accretive Transformation of Targets

    M&A Platform: Accretive Transformation of Targets 1 2 100% Customer Success Operational Best-Practices Efficiencies Move products to AWS Eliminate wasteful spend 5-10% Organic 10-15% Common UI/UX + PSO margins from negative Growth Target Organic Growth SSO to 40% Target 24/7 global Global outsourcin

  13. Slide 13: Stages of Upland's Evolution

    Stages of Upland’s Evolution 4 3 2 1 Continued Margin Accretive M&A Expansion Growth Standardized UplandOne M&A for + Operating Critical Mass Platform Organic Growth 13 | Company Confidential © 2019 Upland Software, Inc.

  14. Slide 14: Key Credit Highlights

    Key Credit Highlights 14 | Company Confidential © 2019 Upland Software, Inc.

  15. Slide 15: Key Credit Highlights

    1 Attractive market opportunity driven by cloud, digital transformation, and VC investment 2 Platform with proven ability to expand in key accounts 3 Diversified customer base with no concentration 4 Highly accretive M&A expanding capabilities and customer base Key Credit Highlights 5 Sticky custome

  16. Slide 16: Attractive $25B+ Market Driven by Secular Tailwinds

    1 Attractive $25B+ Market Driven by Secular Tailwinds Knowledge Management Need for automated solutions $1.2B CXM $5.9B 1 Digital Transformation that are scalable and integrated, versus siloed and manual PSA $6.7B Still early innings in the digital 2 Transition to Cloud transformation of the enterpr

  17. Slide 17: Large Opportunity for Cloud M&A Targets

    1 Large Opportunity for Cloud M&A Targets Massive and Growing VC Investment Targeting “Orphaned” VC Investments 3,000 in Software and Cloud $40 2,500 Amount Invested ($bn) # of Deals $30 CXM 2,000 Sales Enablement 1,500 $20 Document Automation 1,000 IPO or Strategic $10 Exit 500 Investment “orphans”

  18. Slide 18: Proven ability to drive strategic relationships

    2 Proven ability to drive strategic relationships Suite Customer & Solution What We Deliver Results Key Metrics Key Metrics Large European IT Standardized sales proposals: n Reduced proposal response times and + Grew from ~100 users in EMEA Marketing Services improved win-rates Sales & n Automate wo

  19. Slide 19: Diversified Base of Customers

    3 Diversified Base of Customers Financial Services Manufacturing, Industrial 9,000+ Customers with no concentration Government, Nonprofit, Education Corporate Services 1,300+ Major Accounts(1) Healthcare (>$100K Avg. ARR) Technology Consumer, Restaurant, Retail 80%+ Revenue from Major Media Accounts

  20. Slide 20: Track Record of Highly Accretive M&A

    4 Track Record of Highly Accretive M&A Goals and Strategic Financial Track Record Fit Fit + $5-25MM Revenue + Add $25-$50MM revenue + Cloud-native run-rate per year + Average ARR per Major + Complements solution suites Account > $25K + Strong reputation / pipeline + Targets informed by customer + 10

  21. Slide 21: Expanding Both Suite Capabilities and Customer Base

    4 Expanding Both Suite Capabilities and Customer Base Recent acquisitions: October 2018 December 2018 April 2019 May 2019 Provider of cloud-based Provider of enterprise-grade Provider of email and audience Leading content operations customer engagement email marketing, transaction development soluti

  22. Slide 22: High Degree of Revenue Stability and Visibility

    5 High Degree of Revenue Stability and Visibility ($ in millions) Recurring Revenue $211 + 92% recurring revenue Non-Recurring Revenue $167 $150 + Diverse suite of products – no concentration in any product or $98 $70 $75 end market + No customer larger than 3% of 2019E (1) total revenue; top 20 cus

  23. Slide 23: Expanding Adjusted EBITDA margins

    6 Expanding Adjusted EBITDA margins Adjusted EBITDA(1) and Margin ($ in millions) + Unique ability to execute and scale driven by Approaching long-term model at scale UplandOne operating platform Adj. EBITDA 36% 37% 35% % Margin + Track record of strong and consistent 31% Adjusted EBITDA(1) growth $

  24. Slide 24: Strong Free Cash Flow Conversion

    6 Strong Free Cash Flow Conversion Adjusted Free Cash Flow(2) and Conversion(3) (Unlevered) + 37% Adjusted EBITDA(1) margins driving ($ in millions) strong Adjusted Free Cash Flow(2) 92% 91% (unlevered) + Minimal CapEx requirements + Tax efficient with ~$135MM of usable NOLs Cash Commissions Cash Ta

  25. Slide 25: Experienced Management Team with Track Record of Successful Execution

    7 Experienced Management Team with Track Record of Successful Execution Jack McDonald Tim Mattox Mike Hill Founder, Chairman & CEO President & COO CFO + Leads overall strategic direction, + Leads sales, marketing, + Leads Upland’s finance & acquisition, integration, and growth development, operation

  26. Slide 26: Financial Overview

    Financial Overview 26 | Company Confidential © 2019 Upland Software, Inc.

  27. Slide 27: Financial Highlights

    Financial Highlights ü 32% revenue growth CAGR (‘15A–’19E)(1) with $220MM scale ü >92% recurring revenue, growing 62% last year ü 98% Net Dollar Retention Rate(2) Capital Stewardship + ü 37% Adjusted EBITDA(3) margin and growing (target 40% at scale) Value Creation ü High Adjusted FCF conversion: ca

  28. Slide 28: Consistent and Strong Revenue Growth

    To be discussed: • Mike asked if we should show 2016-19 only? • Mike asked quarterly or annually? Consistent and Strong Annual AnnualRevenue Revenue($ in millions) • Added bullet about diverse product rev Revenue Growth ($Total in millions) Prof. Serv. Recurring (3) & License Recurring(3) $211 $197

  29. Slide 29: Adjusted EBITDA Growth Trend

    Adjusted EBITDA Annual Adjusted EBITDA(2) Growth Trend ($ in millions) Consistent Margin Expansion 36% 37% 35% + Driven by UplandOne operating 31% platform and scale efficiencies + Adjusted EBITDA(2) expansion from 17% 3% at IPO to 37% today $78 $60 $53 + Increased Adj. EBITDA(2) margins by 6% 744 b

  30. Slide 30: Consistent Improvement in Profitability

    Consistent Improvement in Profitability ($ in millions) Gross Profit Gross Margin $109 $122 $70 + Consistent expansion in gross margin Non-GAAP $47 $52 73% driven by scale and planned operating Gross Profit 68% 69% 72% 73% efficiencies 2015A 2016A 2017A 2018A LTM 3/31/2019A ($ in millions) Sales & M

  31. Slide 31: Financial Policy

    1 Disciplined, value-oriented M&A strategy driving profitable growth 2 Re-invest all excess free cash flow back into the business to drive growth and delever 3 Comfortable with reasonable net leverage up to 4.0x—long-term target of 3.0x and declining Financial Policy 4 Maintain liquidity and debt ca

  32. Slide 32: Syndication Overview

    Syndication Overview 32 | Company Confidential © 2019 Upland Software, Inc.

  33. Slide 33: Summary Terms: Senior Secured Credit Facility

    Summary Terms: Senior Secured Credit Facility Borrower: Upland Software, Inc. (the “Company” or the “Borrower’) Use of proceeds: Repay existing credit facility and for general corporate purposes including continued acquisitive growth Facilities: First Lien Term Loan B (“TLB”) Revolving Credit Facili

  34. Slide 34: Anticipated Transaction Timeline

    Anticipated Transaction Timeline June 2019 July 2019 August 2019 S M T W T F S S M T W T F S S M T W T F S 1 1 2 3 4 5 6 1 2 3 2 3 4 5 6 7 8 7 8 9 10 11 12 13 4 5 6 7 8 9 10 9 10 11 12 13 14 15 14 15 16 17 18 19 20 11 12 13 14 15 16 17 16 17 18 19 20 21 22 21 22 23 24 25 26 27 18 19 20 21 22 23 24 2

  35. Slide 35: Appendix

    Appendix 35 | Company Confidential © 2019 Upland Software, Inc.

  36. Slide 36: Adjusted EBITDA Reconciliation to Net Income (Loss)

    Adjusted EBITDA Reconciliation to Net Income (Loss) ($ in millions) 3/31/19 1 TTM Acquisition-related expense consists of one-time costs in connection with acquisitions, including legal fees, accounting fees, financing fees, Net Income (Loss) $(15.4) transformation costs, integration costs, and othe

  37. Slide 37: 3/31/19 TTM Pro Forma Adjusted EBITDA Reconciliation

    3/31/19 TTM Pro Forma Adjusted EBITDA Reconciliation ($ in millions) $7.0 $83.2 $5.0 $5.7 $4.8 $60.1 $0.6 $3.8 $23.3 $16.2 $2.8 $15.8 $24.5 ($10.9) ($15.4) Net Income Depr. & Amort. Interest Other Benefit Inc. Tax Stock-Based Acq.-Related Purch. Acctg. Adjusted RO Innovation Rant & Rave Adestra Post

  38. Slide 38: Prototype Acquisition and Integration

    Prototype Acquisition and Integration ($ in millions) Adj. EBITDA Acq. Costs Target Cash Flow (1) Cumulative Target Cash Flow $4.875 $3.750 $2.625 $1.500 $0.375 ($1.375) ($0.750) ($1.500) $0.125 $0.625 $1.125 $1.125 $1.125 $1.125 $1.125 $1.125 $1.125 $1.125 $1.125 $1.125 $1.125 $1.125 ($0.500) ($1.0

  39. Slide 39: Upland's History

    Upland’s History Achieved Achieved Founded by Company ~$46MM IPO >$100MM ~$220MM Jack evolution McDonald in Nov 2014 annual run- annual run- rate revenue rate revenue AccuRoute (Jan 2017) (Mar 2018) Acquisitions (Feb 2012) (May 2013) (Jan 2016) (Apr 2017) (Jun 2018) Eclipse PPM (Feb 2012) (Nov 2013)

  40. Slide 40: Acquisitions To Date

    Acquisitions To Date JUL Waterfall FEB PowerSteering DEC Mobile Commons 2017 Enterprise Mobile Messaging & SMS 2012 Project Portfolio Management 2014 Enterprise Mobile Messaging & SMS NOV Qvidian Tenrox Ultriva 2017 RFP & Sales Proposal Automation FEB NOV 2012 Professional Services Automation 2015 S

  41. Slide 41: Thank You

    Thank You 41 | Company Confidential © 2019 Upland Software, Inc.

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