Upland Software Reports Third Quarter 2020 Financial Results

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 third quarter of 2020 and raised guidance for its fourth quarter and full year of 2020.

Third Quarter 2020 Financial Highlights

• Total revenue was $74.2 million, an increase of 35% from $55.1 million in the third quarter of 2019.
• Subscription and support revenue was $71.0 million, an increase of 39% from $51.1 million in the third quarter of 2019.
• GAAP net loss was $11.3 million, or a loss of $0.42 cents per share, compared to a GAAP net loss of $12.3 million, or a loss of $0.50 cents per share, in the third quarter of 2019.
• Adjusted EBITDA was $25.0 million, or 34% of total revenue, an increase of 21% from $20.7 million, or 38% of total revenue, in the third quarter of 2019.
• GAAP operating cash flow was $18.7 million, an increase from negative $0.3 million of GAAP operating cash flow in the third quarter of 2019. Free cash flow was $18.5 million, an increase from negative $0.7 million of free cash flow in the third quarter of 2019.
• Completed follow-on equity offering raising $136.9 million ($130.1 million, net).
• Cash on hand as of the end of the third quarter of 2020 was $233.0 million.

"In Q3, we posted record organic growth and free cash flow,” said Jack McDonald, Upland’s chairman and chief executive officer. “We also completed a transformational equity raise - and are now capitalized well enough to be able to grow double digits through a combination of organic growth and acquisitions and are no longer dependent on the equity capital markets due to our free cash flow generation,” he said. “In particular, our goal in 2021 is to achieve our acquisition targets while also generating substantial free cash flow,” he added. “Finally, based on strength we are seeing in our business, we have raised our revenue and Adjusted EBITDA guidance for Q4 and the full year."

Third Quarter Business Highlights

• Expanded 247 existing customer relationships, including 37 major expansions, and added 108 new customer relationships, including 34 major accounts.
• Focused on accelerating customer productivity, with six major releases and 15 feature packs across Upland's cloud solutions. For example: in our Project & IT Management Cloud, we introduced a new resource request workflow to help users streamline resource allocation requests, resulting in greater utilization and profitability; and in our Enterprise Sales & Marketing Cloud, we added key Microsoft integrations that enable users to access their RFP and proposal library directly from within Word and Excel.
• Announced a new offering that will bring Upland's end-to-end cloud-based workflow solution for document capture, image processing, and data extraction onto HP Workpath. This new offering is intended to meet the urgent market demand to rapidly digitize the document lifecycle process as companies work through the challenges of balancing remote and in-office teams.
• Continued to invest in our go-to-market initiatives across sales, marketing, and customer success.

Business Outlook

For the quarter ending December 31, 2020, Upland expects reported total revenue to be between $70.0 and $74.0 million, including subscription and support revenue between $67.0 and $70.0 million, for growth in recurring revenue of 16% at the mid-point over the quarter-ended December 31, 2019. Fourth quarter 2020 Adjusted EBITDA is expected to be between $23.2 and $25.2 million, for an Adjusted EBITDA margin of 34% at the mid-point, representing a reduction of 3% at the mid-point over the quarter-ended December 31, 2019.

For the full year ending December 31, 2020, Upland expects reported total revenue to be between $283.5 and $287.5 million, including subscription and support revenue between $269.6 and $272.6 million, for growth in recurring revenue of 33% at the mid-point over the year ended December 31, 2019. Full year 2020 Adjusted EBITDA is expected to be between $96.5 and $98.5 million, for an Adjusted EBITDA margin of 34% at the mid-point, representing growth of 18% 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 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. 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 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.

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

Media Contact: Kendell Kelton media@uplandsoftware.com 833-875-2631

Source: Upland Software Inc.