UPLD - Earnings call transcript Q3 2021

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Operator

Thank you for standing by and welcome to the Upland Software Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. The conference call will be recorded and simultaneously webcast at investor.uplandsoftware.com and a replay will be available there for 12 months. have was the P.M. distributed should earnings quarter everyone which release, today now, access third to XXXX By at X:XX Time. Eastern

If sir. turn release, I'd the CEO of Jack you've on Please and not website. go Software. Upland's ahead McDonald it's Chairman now call the available to Upland over to like received

Jack McDonald

opening QX our today Favaron, our some President; Thank you QX our start product Rod that, our on customers provide some our Rod to comments color around provide today's on XXXX and insights results, will earnings I'll developments. guidance. Mike by Hill, then CFO. sales and welcome call. some the On call, I'm numbers joined and Mike and and QX with following And will

the get up before safe call But the read open started will statement. Q&A. we harbor for will We Mike then

Mike Hill

Thank you, Jack.

or could undertake which today's based assumptions duty comparable in to The considered we tools to reconciliations and These measures XXXX are results Upland in in reports quarter press are filed Form our reconcile to and quarterly its XX-Q Upland to today With unavailable to we're any subject publicly as non-GAAP announcing During of with forward-looking measures turn to to revisions securities on is management to dates contained of uncertainties the to and any management these not Upland and are financial measures or I'll website. at most refer detailed to the forward-looking to XX-K statements with do back our risks reconciliation release our discussion annual any section GAAP needed within views over that on GAAP provided measures measures intend Form Please our of financial include information made Upland effort. available statements. available SEC. On on forward-looking Jack. currently that assumptions information laws. unable will We used updated GAAP on Investor without note their any meanings our analytical Relations this today. third a release of that differ provide in directly non-GAAP the the unreasonable materially. that periodically has forward-looking statements cause which are combination call, risks our complete understand as A results, our the actual results statements the financial operations. to that time additional comparable non-GAAP is of with call call when this will because is uncertainties

Jack McDonald

Mike. Thanks

headlines, on EBITDA of within messaging volumes, quarter. but terms but our midpoint. range, in had cash adjusted We which So, our this track, flow free our revenue is lower a than mixed had the guidance was below in we a being expected resulted and strong

dollar of now grow will into fully retention through and rate as through quarter. The our we move from We QX we uptick rate by net and QX signs that the next to on the guidance reflect COVID the outlook new and last rate are revenue guidance quarterly see expected as revenue fact that messaging improvement XX move reflected third because volumes real are dollar million on in in of $X.X also business run year. had rate our XXXX the we didn't lowering million $XX for that bookings we we see reduced retention reflect we months run outlook in logo and the in impacts our net to

now and XXXX. the remains million Finally, and revenues our M&A million outlook of we are of acquired targeting $XX unchanged $XX to end between

biggest of little a factor our in below the third at and $X.X Revenue quarter came third me So, on midpoint million the quarter. in the now messaging dig the let bit than change guidance in e-mail organization but the volumes These reduced variable our not this from their quarter. and was churned, in driving accounts they expected have advocacy lower customers. volumes messaging progressive third text range

X%. revenue full giving the flow flow the going their to could growth outlook. the back to bounce million, guidance midpoint us flat. expect $X.X in be in be And we means EBITDA volumes was to $XX for cash conservative, million above associated they in our year-to-date. we're ex-political time, XXXX, not up range. the that cash million but $XX GAAP Now, flow any third recurring quarter, in Organic roughly revenues million of assume cash free the third quarter. at was came it do adjust quarter, message our and that was at third and $X.X in Adjusted the Free operating in year

path are free million flow on as is about we million on to $XX track So and $XX to cash hit expenses. and year our acquisition talked that full we've for of after XXXX

declined we the While in but logo where that QX, UplandOne QX mid-XXs. year Today not Rod to we is our from is the solid in in is way are expected. our rate throughout new low news XXXX. about on and drove contracted QX to net we On in outlook uptick to bookings. our note to XXXX, renewals we multiyear recall you'll year all is had that, of it our sustained expansions we're the in notwithstanding dollar good seeing, bookings year. The to going bookings good that more through the it's focus new want to adjust reflect and revenue improvement improvement that net renewals of this the to we're the a frankly, our bookings in additional using of first be. in talk conservatism retention this net early pace percentage But customer XXXX, the securing to bookings XX% higher through XX%. see rate next what now means in retention we I'll our add some our retention In up XX% that pandemic, expansions, and we didn't of better dollar going detail XXXX and expansion see playbook, dollar rate expected terms indicators logo that until slower than

move XXXX add product we're ago to saw ago. million in the months our million even to to $XX by in between we're going Rod acquired say, us And So top structurally stronger noted XX run next of as in reflected months structural next of complexities middle I the signs a key go-to-market XXXX. the another build revenues. should the Look support year the of this fully now retention grow course this XXXX. I to on rate, the see year through face the additions targeting rate net to outlook the earlier, end last of of And for rate. dollar of hire that $XX real are of of and And from new was we because by impacts real as now QX joined product net and organization. run to he year. million XX revenue that opportunity team in that complete end of retention we the as Again, out the able rates quarterly of go-to-market $XX to improvement improved and we and two-plus dollar lockdown, years team

executing opportunity two today, the years in I as still the but of ago. mission about early are I remain stages excited was We this as

five we business this growth to value about excited through the and move we and look out the over years, continue and be next creation. opportunity As our for

financial a compounder enterprise powerful platform, model. We customers equity a proven a have over of cloud and library, an XXXX software operating strong base

XX% next generate as per the the a run Over I'm that five-year target that, a with to this flow rate, from to growth Rod. year over the current and turn it reasonably on period, free acquisitions. organic cash call importantly, go. can plus revenue going positive basis is we sustainable of And business self-funded, total And do

Rod Favaron

Good Thank you, Jack. afternoon, everyone.

in were to this sales model. year XXXX sales new go-to-market expansion Cross-sell full our but good. continues to as well first improve, to And reminder, new As is Jack ramped expectations. year adjusted shared has haven't team this model. The a logo the

The created side the year. said bit of new Let's customers. with those half the a closed XX major of being new was new to business. logo for during due of talk sales last XXX the logo primarily That softness customers in in we challenge QX pipeline a about QX second new

from of event marketing team If development historical in during second recall We marketing, in of marketing our while you were the lot of lot world changing to our presence, and will process our changes. we consolidating in-person half was blend of digital We a digital sales simultaneously of the a obviously last lockdown. were hired shifting we our were motion. making year, pipeline

the 'XX through result the last XX% did then in As January development this shift us we sales. anticipate have not quicker year. to generation happen that to we did conversion team started second would of is XXXX overcome the second pipeline coming the second the enable But this a we the move pipeline but digital QX. to quarterly out energy into lift thought sales as We of off frankly levels, half in that of in half and we XXXX, pipeline XXX% half compared pandemic year improvement new new a impacting completed

to -- retention. revenue outlook gears and Our switching

XXs. begin 'XX to as net Throughout the outlook high up should back shows mentioned Our dollar into marching Jack it improving. retention as mid

large securing has team and XXXX a Our of multiyear had success renewals bunch expansions. during

long-term X-figure As expansions renewals major an secured and with financial firms. multiple services example, we global

global financial the knowledge and help to evolving more there's services Within product knowledge, industry the effective library management to drive sharing in due growing facilitate interest our compliance-led ever-increasing regulations. a

we Another long-term great customers example in where year. 'XX. renewing are from X- contracts to revenue this Altify product of success a X-figure is Altify the committed difference XXXX is line having example on our and on

its base year 'XX. compares about of X/X next renewing nearly its X/X renewing XXXX this has which of to customer Altify example For year customers in in

long-term would next credit I more to retention see as of teams. customer this in new of as and net ARR this just to structural on our will test contracted positively and team and and focus 'XX that. a improve compared efficient has higher our product impact we be marketing our a benefits to total leads. driving team to R&D sales gen marketing, support for programs continue In want our is effect our progress from successes through plans our these contracts lead success We to which and individual on year year the percentage

produced adjusted top team new year-to-date also we of times which has have a good preserve And metrics. momentum. conversion new We mentioned of couple acquisitions our we've to with and onboard funnel how history of our pipeline XX% SCR better

RO progress product new brand-new Along Reference Manager Sales our both product innovation our a Salesforce about managing These with into from that natively challenge of Altify built It's is our team. the two introduced but This the a different Altify Switching next-generation new we normal release products excited product. to references, to the of cadence cases. and customer appeal on product suite. So integrated to a front. sales use Upland. product complement solve

RO a it sales the in This unlocks Salesforce. product sales reference centralized example new revenue our new built model Our have we hub opportunity. innovating an is great older modern supports on while deep reference and of decentralized product where peer-to-peer a category Upland domain Altify manager and natively is a adjacent wheelhouse model knowledge

within available In taking exchange cloud investment, for their ingenious one Salesforce investment the will the partner integrator to product infrastructure telecom while Mike. With over existing turn environment app first is on maintain service voice customers addition call helping advantage new to product I on that voice of to let service that the our of became and Salesforce. the club the

Mike Hill

I'll year cover for third the and for quarter XXXX. outlook our quarter Rod. full highlights you the the fourth financial Thank and

expected during gross XX% back growth for to the margin third product on our representing quarter and depreciation Recurring $X.X gross million quarter the income and increase. or when $X be expenses remained were or depreciation which was XX% strong total expenses, amortization quarter First after for acquisition-related subscription for Overall and XX% $X.X this XX% $XX.X million in takes. gross we third a support $XX as to acquisition-related around quarter, quarter. stock statement. year-over-year $XX.X million expenses puts approximately the XX%, million. were expenses; Without we margin refer were estimate additional adding as expected. third services third the quarter, revenue Also, of the about comp; at all amortization, revenue was of year, margin. X% the year-over-year some the million as to currently and Professional fourth and from generally Total grew Operating revenue acquisition-related million was acquisitions cash revenue, for which excluding X%.

first rate run generally are XX% acquisition-related annual varies acquisition, and depending such acquired expenses as XX% of anniversary. and uncontrollable total incurred complete rapidly to of Generally, acquisition's within to size and for acquisition, each by acquisition the XX% location. are on from three For until revenue transformation and each to acquisition factors expenses each then is the down months transaction tapered these transformation XX% first

total XXXX XX% third Our adjusted of XXXX. quarter with third for revenue, total quarter of was EBITDA revenue or XX% consistent million $XX of or million the $XX

expected, was our to increased to last at about ago expect XXXX our lower as this whole still XX%, quarter As to investments EBITDA we as and implied quarter with for by guidance. around the due XX% XXXX compared adjusted a midpoint margin year. margin expect adjusted QX EBITDA exit for year of go-to-market to the be We than

to Now, flow. on cash

the well and $X.X million in our temporary in some For flow upon $XX the free cash with quarter. and temporarily With closer $XX quarter $XX full some million of cash $X XXXX differences pulling in XXXX, million, was of working size flow accounts, year-to-date was cash cash we operating $X.X and or operating depending $X.X so expenses. acquisition-related down flow and expenses even million flow free the free quarter over negative capital year timing million approximately by acquisition-related timing to possibly third GAAP million and free flow anticipate future the million, continue through to QX, of cash

and acquisition-related even So we free expenses. cash substantial are GAAP generating flow operating after

of $XX cash sheet, cash existing approximately flow existing balance ongoing approximately cash revolver. On sheet XX, our of liquidity the debt our up and million guide. September XXXX million undrawn X XXXX, net addition This should net to this maximum at generation, our our our of $XXX million balance credit comprised expanding of growth free around on generation I on our markets. in on equity currently liquidity as $XXX available ongoing flow the should the based dependency allow is for adjusted of maintaining around a that EBITDA while debt of leverage without to note facility, X.X, leverage capital self-sustained times, midpoint and

we outstanding note sheet. of at cash level. X% our payments at XX, million principal term are had $X.X approximately net $XX on remaining balance making in on on the payments of outstanding factoring September our XXXX, X.X%, about I after approximately our balance year, our cash will per million year maturing debt is that As in debt the our per interest XXXX. The or of annual rate August with debt interest locked debt million term $XXX current

we point to currently around Additionally, no regard utilization will I approximately covenants and $X that to I will out has per With tax that financial borrowings. be that million available cash on taxes, Upland carryforwards of has $XXX taxes. our term total NOL million income for $XXX expect of note debt approximately current million expiration. estimate these year prior we still will of

revenue reported over $XX.X XXXX. comparison between of million, expected QX, EBITDA ended $XX.X revenue, and in the which For million $XX.X decline revenue XXXX. is $X.X support at between Upland ended at And XXXX, million and of December way adjusted political decline an quarter guidance, be subscription the million recurring a the repeat midpoint the margin million expects in XX, not This be to X% QX from million of $XX.X by is quarter the total adjusted $XX.X December for of of between ending revenue a for XXXX. for the EBITDA of and X% guide adjusted midpoint messaging XXXX, midpoint. $XX.X XX, at quarter EBITDA XX, had Fourth will XX% quarter including XXXX December and to million

-- December million, $XXX.X and between reported and for midpoint recurring million $XXX.X subscription be to revenue growth $XXX.X over XXXX, the between and XX, full at total support million revenue year year Upland including XXXX. $XXX.X the ending X% in revenue million expects For of over the

not guide This that, XXXX. is XXXX had in year million X% By we repeat year margin comparison of midpoint reduction EBITDA, an the over of of messaging the back million $XX had XX% adjusted and the with December the XX, XXXX. to And which -- $XX call adjusted EBITDA we revenue, midpoint. between $XX.X will ended For EBITDA expect Jack. political for at way pass adjusted I'll of a at million XXXX

Jack McDonald

Thank you Mike.

the are for open up now to ready questions. call We

Operator

question with Instructions] [Operator proceed. you. Please Suri Blair. Thank William The is Bhavan first with

Bhavan Suri

can hear gents, me you Hey okay?

Jack McDonald

Yes.

Bhavan Suri

Great.

So, obviously, a mixed quarter here.

Let's us visibility. walk think through things off level. high of understand couple Help I a things guess, played maybe start how a just to at out. through let's

QX, XX% in wasn't growth. of confidence Help said, and visibility help Rod didn't pipeline XX XXXX. about us through last different ago. pipeline last talking Just think year, now I in versus has of Rod ago? we're given that early the months think which in convert And type since built QX through what's past? a think there like year pipeline is the us been

changed just robbing there visibility help those understanding think into more together us that control pieces or more And more that robbing so months there from or the confidence you through have and might have over versus months XX in pipeline? six

Jack McDonald

Yeah.

new and let amidst We is we're on Rod last doing it that the was had that, we So half start right? me generate to year up. of that lockdown. Rod and the pipeline pipeline in second point so in creation putting The that can processes some place were making ramp-up then pick in

to effort lead to So move on lead from a top of digital else efforts. everything in-person digital a totally and gen had we hybrid gen

this our going to the So knew potentially that we half sales in second was generated softness year. of given impact cycles, bookings that

pipeline happen about the huge we're of off little us with if And not in signs QX higher. in improvement outlook a coming enable right of positive sustained pandemic bit now higher we're talking However, that conservative, see a execute numbers to in to our uptick would a down out new we assumption the conversion And bit you some our a lift that until order we see will QX. to be will, but here expected be QX. energy that was that energy But conversion in didn't the percentage take going in we little bookings.

piece that was of it. one So

And piece cohort of in saw Those it we e-mail text haven't we other customers the saw The a on variable business side Bhavan among -- and in specific messaging where QX. customers. lower messaging volumes was of the it of churned. those

But our back bounce revenues revenues In fact customers we've conservative of fourth variable we're those on forecast and renewals down be among for point. the cohort taking had that order could any at to those in quarter.

Bhavan Suri

you. and got side mean you, on even rate we've Got political And seen that messaging growth I the messing the Twilio's side decelerated.

I think that understandable. is

and balance revenue the played organic a Do X% out? not it it a you've I you've grow think let's a but that you as out? let's better business play XX, wise strategically of do many talked you should the should the out never is. to we not think what feel that Do guidance conversions it's played expectations, ago still sales the on organic you not which this is question think the spend or -- X% us on chose Is you maybe off strategy that's do the a more change XX% feel should either you you that like the driver. been Do made we on you and through Rod EBITDA different going back you managing scenario to this growth months, amazingly And organic strategy that guess XX%. still is talking -- last happening refocus think old help and are I that we should in focused years obviously a accelerating strategy? about Help bit think and maybe you have is you sales very XX organic little if in maybe the put us saw right or seen think and the that strategy? that that and out? growth it how you uptick we're but a really about move have about Jack in growth, was really strategy? you maybe you business, our I strategy -- going is a the whatever And we're take has and is just just you approach, and feel is you How smart and in old vis-a-vis well. say marketing do that have team that? earlier, something about growth pedal focused and still in bringing team well, do it to foot and Has that drive which should executed big through how think confident executed

Jack McDonald

And this That a seen at And and I've Perficient with share financial it last nothing to familiar transition strong that the at before in was was we look the is very a decade, the turned that business, in of grow global first consulting. were of Well, management similar $XXX it essentially movie in that. taken early million to used has solutions business XX last stock Upland. and with here in company my that kind team you see years the that a from into $XXX business today acquisitions one revenue. and In $X.XX I leaders of XXXXs.

build go-to-market saw that kind and of out product And bring for couple organizations to a our could years growth. of of position leadership Upland in and that opportunity next so the sales decade ago that and

about spending from And so point, to I'm XX% To keep of we've opportunity and as to in revenue. been. of marketing ever on things and that I've sales as mission taken XX% revenue your excited perspective,

I got to XX% and on So, spend I've we've like that spend, more of think we've more engine. repeatable, not that level scalable marketing. been a growth will X% at it's some value-building support and some of In to it higher. And The saying will believe I it going year. sales a gone as organic revenue is In XX% part X%. target be between of a that can a be years, that lower. rate total be years, somewhere of

target XX% rate timing through above at steam. on size moving margins factors low a But low course, XXs that XX% significantly own EBITDA individual can to general, growth that of X%, the target a there. are it's some here in with organic of years, go time roughly with today. we we that it we twice in under toward fact see It the call up do right? in range And our depends scale mid-single-digit In could

dependence We generated markets. capital from the million finance of on our our equity facilities a M&A and and on $XX We can have no million $XX hand. cash flow internally to debt year cash

value. about So, The we're Perficient, to right time. I thing with I building We're in committed value same think to bringing to decisions we happen is has long-term were think made happened create and Rod and through the the team going the ones going here.

off big of this. no So, pivot

the in we are We ago. years staying plan the against two course place put

Bhavan Suri

That's let's to difference pipes, hearing helpful. environment you but of seen of get especially for anything months, you really any Are love each offerings helpful. Are that get or others there you. that. or be any that plenty me competitors Rod. getting or changes I'd to even point if steel sense different sense, Love environment? but in competitive there's you're or the changes if XX of see because for and some some in not or competitively of love pick maybe to Thank in for in last you solutions, you've our in freemium, One one a impactful may some aggressive the for XX, COVID say, field? is on Really, seeing one pricing XX, more the

Rod Favaron

Yes.

Yes, So a great so question. that. that's I'll take

set set obviously products you mean pretty of know, – I think competitors. each have small those as products I and of of a that has maybe diverse we a

as mentioned the the connections our On forward. closer about this we of So as I XXXX gotten we pays call, of or the and don't material think HP, had meaningful our positive any of players platform change, across side, with some dividends a XXXX we products a of couple look Salesforce, one with set we is And look I'll didn't the we've lot products. partners. which competitive what I which we've earlier big to call a really think which in talk on with biggest

more the focus in place was this put the which their Mike there's the and minor would things there I spite that been to the the on the we will reading digital have organization today couldn't business. So of having which I confidence to and add that sort months a marketing, people but just necessitated we're and look way the In the and named go games lot asking account at business, of impact that go have model. forward-looking – in doing I questions confidence is and place this Jack way a of in I we don't I competitively, structure, high. think of way changes changes some a a we the level, the the motion, we to right? marketing motions organize, material have the fact what XX nothing put by material the of you're to market, way, we you're this over way design of old very and So today, in think way the think we here having made and last level we say place to and the in do full we the

think I earlier this this to run So on that the absolutely course staying Jack's point look. forward as mission structure business right on is go we to the this

Jack McDonald

enterprise platform here strong of base. now built has real a – revenue, to I that's customer an library strong million incredibly got a It's mean products. that a of we've scaled Yes. $XXX

higher. about this talking be total go. grower. become said, there's as target organic. I to value. never I've that they're core rate And optionality generating a low as is XX% in locking it real a which We're I So said, know think to growth. love with time organic investment the about we've an around this We're in underwrite low some But it's I could of through mid-single-digit XX% expectations, within and you set Again, made mid-single-digits. a total XX% we've this in of terms that going talking company, changes the business, sober is off And we to going realistic to pay

Bhavan Suri

long frankness that's over Yes. a to say No the you I candor,. think I I'll honesty. appreciate from having this time. the the fair. and

growth said organic never I You've XX% appreciate and that.

let's I out Thanks, candor the Appreciate again, Thank for for frankness. taking long-term. play for it and it. you gentlemen. let I the think questions. said the my And

Jack McDonald

Thanks, Bhavan.

Operator

next Jefferies. Brent Thill from is The with question

Jack McDonald

Hello?

Operator

Thill. Mr.

Your is line open.

Jack McDonald

why the questioner. next we around. Operator, back We'll to circle Okay. don’t move

Operator

Scott from Certainly. Needham. The next question is with Please proceed. Berg

Scott Berg

the Rod broader healthy the Hi, customer up enterprise the picking in have utilization, we've can to new mentioned it demand or But Thanks a some last the let's part in pocket everyone want question applications there the while type seen year Jack demand of business? portfolio component, I aside. understand get environment. the – of of that in on around air software the taking in with cylinders you change especially here. of not of take your today? But in in year. guess of sales most this, recover philosophy know, us Upland the move don't clearly guess, or over help interest Is I of is for full acquisition I if firing everyone. on what's my space, pretty just start or are maybe kind kind messaging driving I some last – you I to And is this. applications the kind change not around

Rod Favaron

I'll start I there. -- think this Yes, is Rod.

about interesting Certainly, products. we sold -- are few it. they're selling to been months you is this and the an having part the cross-training pipeline the I to when one as XX started ago got guys And for multiple impact. creation now pocket is nine think we've the of air this other think quarters. process way of that last Many them sales I think, business the product described an

indicators and for of within learning those well. seeing And QX that the that up air and with our and bit accounts curve a accounts now little see by so on the team quarters our depth talk through build what would we're comment lot their been add to is, time a as it's And for that having global they're other relationships going sales being early accounts say account the has go four driven And to in the three that kind with side, about accounts. starting some of in a team I'll and those -- for progressing better that's their that's top the more generally I then, we pocket. QX quarters. pipeline

off, And motion taken in to pay from scratch has new so pipeline a build time while a that those net takes because accounts. enterprise it to

So that's there's things, something it's think would those or don't of sort combination here but systemic. I of a competitive I say

of half going it's I from of last a more the back pipeline bubble think from year the perspective. we're through

Scott Berg

understand Rod. that like $XX you Got us related from help perspective, looks the be what you it. follow-up in Helpful, a Mike, wrote then in quarter. Can might And it million to? goodwill off about

Mike Hill

accounting, Yes. Scott, case is which did finalize have there some purchase adjustments was always no the numbers. the in write-offs. We as we

adjustments any So acquisitions. this on were related just year's to adjustments

Scott Berg

Helpful. all I the it. have. them. Got Thanks taking questions That’s for

Jack McDonald

Thanks, Scott.

Operator

The with next Please is from Tillman Truist. question Terry proceed.

Connor Passarella

my the taking on of that in for for kind the issues the on sales were Passarella Connor make execution? is Thanks speed you'll that mentioned This to guys. logo afternoon, Terry. with a sales, start, new more slowdown questions. of so and give acquisitions to fix to going To is expansion around order Good Hey. which

Jack McDonald

No.

our out a cash keeping leverage in on same funding while acquired are to to and And on remaining of where do million net. been against is hand which we've moderate times a purchase are We debt the at sustainable year that pace self-funded X which $XX X execute the cash basis, million we at the flow plan generated can internally we $XX on revenue. it and acquisition of pace facilities, price that's on

So no of the M&A. in change pace

Rod Favaron

thing. clarify one And to just

put -- bookings -- have of our if put day from in you together us expansion encouraging. bookings do consistently you and is together think is think I continuing to new question. expectations the the existing end is I logo new I our of us the think question motions. more your that new I met customer at way point growth this which expansion base that base strong, to is and product buy the bookings been from said, buy And want business healthy out a as products or same to healthy, go-to-market is we

strong. our bookings that So back just to expansion were reflect

Jack McDonald

those done the dollar so teams, that favorable And locking mid-XXs other in renewals. year I as point, work the business, did substantially moving more account renewal retention a that success that's is those said up health is better. that renewals, going of revenue customer I is in driving in we there got due key of got managers support right? well -- for here, this the Rod higher place, think net in one and it than I add think global multi-year indicator just very as would multi-year XXXX this earlier, that Jack to And the team as amount or as that our back, work year locking we the rates to into throughout the in that that's So that lower structurally a XXXX. trend was have

Rod Favaron

amount energy get adds expansion Yeah. new some maybe done, as games opposed on our did or net that And -- reasonable their of we focus multiyear adds. to a retention and retention to

is And so a have great then already time And again big which make in year, renewal. have a of these And will to they it's retained and getting well you a as they're place, and and had us as move guys did they to deals more, we multiyear lot on. forward. a went more. what start sure accounts a order sell we selling help impact we customer multiyear in capacity major little this them to getting really did have through commitment. working bit had We into that a for deals may And job have of of those because focus

a little to that's say time probably that, account spent, but would it's their pay in So than of bit going anticipated global XXXX more the for we doing team long-term. I us off

Connor Passarella

Okay. quick then follow-up one Thanks me. helpful. That's from really guys. just And

salespeople of cross-sell opportunities right are guys the biggest you you there's that cross-selling, some been Where terms in now that of I products. terms mentioned are know guys. seeing selling multiple training In now? you Thank

Rod Favaron

Yeah.

example the our CDP app with for of to are I products e-mail our buyer different and where it's think vesting wants owns have and buyers oriented or mobile products our have one conversion you buy one sets success, products we products. mobile -- of best it's or analytics that a of our where our to

were that really cross-sell have is So around on small because it value-added XX% focused that's products trained that signs how But something about on will cross-sell coming the We're motion in buyer, focused but talking improved not we around say is earlier. year-over-year, a we I look year-to-date. year-over-year, Again encouraging base we wasn't relatively XX% early a off where adjacent QX substantially team. too. terribly at sales common to cross-sell buyer. good And

as exchange. but get that's announced going reference integrate others products, manager to just integrate And app into Altify our our multiple we is to gives plus we the don't at products this our Salesforce product of more continue then -- all us products, are natively the going that release better to with And integrated in suite, platform our five native we're So that Salesforce our product really products of we that. six products. sales which have integrated ingenious we together products

go products there we with another buyers. We eight platform anchor six, are the that's – that right? approaching our overall certainly sales, over so is those where if impact in faster that on those will. In it year-over-year So But seven, but cases have growth, you lot platform, the will multiple cross-sell, bookings there. other are those of and way going is we that growing Salesforce around partner the target accounts leverage. again they’re time, we're some much than along. nice our a a And And get bigger motions categories which

move And that impact we so as forward. to we expect

Connor Passarella

Great. Thank you guys.

Rod Favaron

Thank you.

Operator

is Thill proceed. question with Thank Brent Please you, Jefferies. from Mr. Connor. The next

Brent Thill

the we what's to Thanks. make of want happening. understand I backdrop sure

overall very robust. the software it's environment, take you If

sales adding You're reps.

had I from go-to-market? lack to the on curious, understand up pocket technology this well? simply over the think is not three what's really not put better going where and hitting It's is growth. everyone not the quarters You Is of to a I'm something Is just at. numbers quarters adding the the side are on? trying of what's street trying Something are really resonating organic three been this happening? there last that's just investors together

Jack McDonald

you for the Thank question. Yeah.

that terms this about guidance, in guidance So we've midpoint below we're range, our $X.X And hitting again range. but the done of quarter of within even our million in we're that.

the of some of some we third in here was on saw. of not hitting did -- quarter We the sort laid assume just these So in bookings that not regular investments basis it. in when logo that credit a of in the shape terms the the level our that's that numbers based new on expectation just piece we and somehow we're and that improvement I'm of of recovery seeing

bookings And happen QX. numbers this trending They new so, right we earlier in inflection didn't those hit logo were didn't that year, in but way the QX.

to bitten see early until improvement new Now QX logo say our the twice a we're going once shy, But down those take as bookings. indicators I good. outlook in look we on sustained

mean I we've piece messaging had that the on then before. and -- So never a sort of misstep

the than new anticipated bookings any that offset was $X.X to did million dollars softness messaging XXX% some the was third to QX that's the in drove phenomenon in quarter. what was just and midpoint which a some midpoint. -- That as to But volumes had partially by the the of lower e-mail have miss that's some revenue drove couple what midpoint. other in miss it to the and business a of We of messaging we Here of goodness is in and million forward parts really text the relates logo the the revenue. less miss

the look, of that outlook conservative drove number. level. we've I none say a think down taken And the So I to would QX

as positive on set QX As we're all think for right? I we're the seeing I move signs Clearly is retention here structural dollar in into we excited relates -- rate, of say And net opportunity. the we're about year improvement to bookings. indicators to QX some we some it early the and renewals execute. intact thesis than where I going because multiyear better remain next as M&A able were

this. just through continue to And so, we'll execute

Brent Thill

the like It Jack it the that disruption other a digital is in is you're that? or causing I political we're seeing way seems environment. not -- going Is that still And message that. mean hangover lower? that? trend causing but What's driving the just what's what's volume

Jack McDonald

was I great principal it's customers driver it and think question yes. question. advocacy that a great customer our can't really organizations. a one -- progressive principally. It's from are it of cohort No among The And that really came

quite have We them platform. a on that few of

the those usage a had really above And e-mail about pretty we million. in at $X came driven overage that shortfall all right? among big business renewals those there's it it again That but -- was And consistently. of small a quarter, that Now is at had quarter the cohort was it piece customers the group. principally advocacy customers running in variable always been $X text that minimums. of this And the from revenue and some quarter million third by in is progressive

that for conservative, again, variable any those taken from we've point. had volumes bounce e-mail back So be $X at messaging revenue we've big in and renewals to the customers. Those order to million outlook could But down quarter. a text

it million taken from a quarter. quarter a $X we've to $X So, million

and conservative in think outlook. basis that's a that those future portion that the surprise so the of that on on a And a small is we any upside hopefully our revenues So to doing we're it's volumes. percentage

Rod Favaron

for revenue just to that didn't group contracted sort the And Yes. change. that on of building what cohort

contracted during a very that that of the this for is we operationally. on contracted renewed quarter for are top matter them cohort actually of commitment And those of close fact staying many revenue As to exactly customers their group.

QX more And didn't in did. we this run they them than running others. less Sometimes they case, campaigns campaigns in than see

overage This -- kind again over above usage business And that base and of business contracted the but uncontracted an that is revenue. so and of is of -- solid. base the

Brent Thill

on just last question Great. just And the go-to-market. then

expanding update Are I Just you XX an had us shape to sales QX. those development think you that the QX keeping in you and that? of productive? us said GMs help in understand get give Can reps are that? nine stable you better you reps

Rod Favaron

Yes.

are not expanding. we no, So,

and into headcount trained oriented. grow retooled holding and this sales are really and and we aimed as team We more flat get account

this a sales from haven't added capacity perspective we year. So,

Brent Thill

Great. Thanks for the color.

Operator

Craig-Hallum. Thank you, is Jeff van with Mr. Thill. with Rhee The next proceed. Please question

Aaron Spychalla

Hey guys. It's for on Aaron Jeff.

messaging to get bit color volume. curious first a little around Just question more the just

it So, that Is campaigns. particular and there? they're What's you bad a less there going I on running think you're driver luck? mentioned of obviously just Is seeing? caught anything or I that, cohort

Jack McDonald

So, revenue messaging again, quarter quarter, customers. all volumes roughly from size customers, just was advocacy And saw the a this principal messaging that lower in customers to prior our progressive advocacy among progressive to million this, variable at were we customers. again but driver $X organization not organization we variable looking just all

that $X taken some a so a a down environment conservative on And we've fluid I'm yesterday. and election million recently is number. And quarter, even that's sure to this obviously, which this political we of think depends as environment as

Rod saw this the see quarter. Again, group we in here. meaningful some maybe So, renewals volumes in third as increased we'll customer indicated,

that gone back away. customers down but them staying the like be have outlook to these going not it's working we're We're close bounce point, at conservative. any take revenue So, and them with could to and to

Rod Favaron

over issues. like systemic But quarters. to They in go had wasn't an there's There's -- no numerous the level product away. just be at -- spend didn't historically didn't no customers they clear there

that back is So, but we'll want get see. until count into don't we what on -- they we when to see will that do But we it again.

Aaron Spychalla

any about in unusual clear that churn the messaging But really you've other then on else you. And been mentioned the any parts concerned? is Got far helpful. That's anything obviously as of you've business not in side. churn business as the of part seeing

Mike Hill

No.

on took and the of to XXXX XX%. those XX% net retention found XX% back rate. in pandemic, have first dollar that in we XXXX, from In And has this a of right the we rates retention year again, dollar XXXX retention XXXX. year sort So, where rates process, been troughing bottom fell our net

to low a mentioned range That frankly where basis points but lower XXX We we again be point. done Rod of of locking on earlier, renewals. this are year we've this this work than lot said, to expected we're as -- in at sort mid-XXs in multiyear

multiyear renewal at revenue if look next It's the less And we year, amount pre-renewed, revenue you have under a renewal. for up right, not that of for up that's deal. substantially so that

we structurally renewed support an net that higher we've increase that percentage rate retention because we've next next a revenue. in through contracted should as already move revenue dollar for of that So, year. already Effectively, year

that's so XXs. that statement start basis to up And marching for back the we mid- Rod's the high in

So that good go forward. as we feel about we

Rod Favaron

them make better pay some impact these of put – everything their as which that in are vote is little as of products. relationship in stronger, us way that as think and faster we accounts bit the I capabilities made success or were is really And their retrain those to the the an were on from of having changed go-to-market that's that deals, off. really that a – – we well commercial get put the Jack processes I our we've types accounts, so managers games confidence And in as this starting customers focused added is and way that our running them both Jack longer-term their done, really customers. just committing commercial that to to sure stronger things. the that a happiness with I to perspective, on Yes. said, And think part and confidence is better, touches as I customer that And in a think we're we've in many it great think

like then renewal we have byproduct next the that. less is up for So anecdotally, really I And have year. – we this

on, new the anticipate and move focused to how they're we're expansion continuing okay, I be running through together, it of to strong. net dollar we dollar with those forward. And with steadily base commitments team All and XXXX. net things the rate moving the as processes think climbing up retention So be back retention we focused the solid and us good gives continues a really just multiyear and

of you. So That’s me. sort That’s for Got helpful. just happy that. we're with

Operator

proceed. Hynes The Thank Please next question is Canaccord. you. from with DJ with

DJ Hynes

Hey, guys.

retention? some little look, churn of there's the Like revenue dynamics. Jack, but that last implicitly overage to the question churn mean does I strong want think I somewhere some heightened about piece that around new that I get the net impact clear that retention, means in logo the business? expansion revenue I net talked in you've discussed dig So headwinds. very a messaging right? business. gross on variable strategy. I the on the bookings you the get bit commentary. lower messaging Is all

Jack McDonald

No. that right XX% again like are say rate, be. again points and in to to where as And And the dollar basis No retention of we'd right? annually, of does. in we sort – XX% you net that's I XXX XXs here which same XXXX, that And range, in it know low in want below sort report XXXX XXXX. we

So exact we for or be that's we this based on to reporting are. where up may sort of year plus minus wind numbers determined XX% but QX

our big revenue as lot under would XXX of like move to the because we've structurally, last multiyear year this into So in points is full basis we again, it we it's through than overall. be And about year. up trending more lower But contracted locked a deals. thus of year renewals

net we're so to rate. going in retention And improvement some see structurally, dollar

DJ Hynes

Okay.

So better gets miles that not feeling it good Go year. ahead. next

Jack McDonald

miles happy multiyear want not saying about locked upward look, done again, the on was points renewals. just I trend yes, it. we we – where to think But we've XXX in an Sorry. with off work we're here be off. basis I And we've with not

DJ Hynes

expansion much Rod, your how happens the activity time Yes. at of of renewal?

Rod Favaron

have the than more head, actual don't fairly I number lot. it's but of the top my half. A off

DJ Hynes

contract, that to that we does renewal customers mean shots activity have expansion? – mean less if we locking guess goal have fewer we're I drive Okay. I longer into next year, on

Rod Favaron

that But in done lot – and Yes we but I'm think done were – sure math draw than think half of how them depends. division country or more are another I of it go. – mean out. I we – or I and not have and group they renewal brand would I or customers, add a as a or house brands expand we if do a who other a users

to going year. sure a than have happen more yeah major could so XX% expansion think But renewal next And time. on that's impact don't -- -- for so I

DJ Hynes

Brent the organization this And had then you organization, just grown sales you of XX for about at have the the I me. sales Okay. said curious growing your time growth in year, the no know how much in firm? one months but last totality asked your there?

Rod Favaron

Yeah.

in three couple acquired think a really can you this of companies. of pieces. So We've

account salespeople. managers So in we those up pick We global added scratch. cases from the

eight in of that -- that lead sales and which we So in XX happy hours XX XX team, that's or think or I kind couple the total. of And group. between built the or there's nine a leaders the guys development group people there's

we XXs headcount XX So to two gone in starting have from almost years.

DJ Hynes

Got for Thank okay. you the it, all color.

Rod Favaron

Thank you.

Operator

Thank Hynes. from Sklar with question proceed. you, Alex The Mr. James. last Raymond is Please

Unidentified Analyst

Thanks for This John for is on questions. Hi. Alex. taking the [ph]

and But surrounding seeing additional mentioned look curious commonality services Just commentary mentioning here as great. you're a quick for color we on here I Jack been know renewals? management any there to any knowledge Thanks. on big next of and would any a these there. year. renewals know can one if more I hear or lot be me you you've focus give you Rod. call financial that more been has retention you should a have broadly towards that for help product multiyear library But or

Jack McDonald

on Yeah. and me Look to Rod. pass then start that just let it one

foundation signs focusing inflection to level and course on crosscurrents that. the on some deeper in in business had that saw since during And selling got mind diamond strengthening -- seeing -- year. but I've we what some an Rod engagement. on next And real believe early take major building again significant terms that months on I see the and happen. positive point, we point again we're you that to as I really here relationships, doing we're in think in to I keep again positive major platform we QX. on got into But we think and right place of the fact would add? inflection the happened in taking is we're what And have still And in in we're we accounts XX of think signs customer a that the a move create enterprise Rod we going is the where seen those in and the QX those retention terms of economy. I we've think setup as that some

Rod Favaron

level in team's this and really products. some to brought one add thing second think leadership which our really here. critical product term quarter haven't in We the we're just is that, back about all I'll which we long we're of really optimizing company to what talked remit make is spending I yet, on sure

have demands. We every lot think of day we others I at than a getting were -- of markets one lot to I Those are in more products better markets And things dynamic good a markets. where think some relative product we're the at of different it.

we portfolio sense say -- that view will an more of had ultimately of adding more because to products each our in a don't lot products it just invest this a portfolio making had successful funded and we bit is want perspective, I give products that with product the think I are what in right view I way. to didn't. a renew a customers that we of our we smarter. from it's R&D how But

every at renews not so than rate, more exact product same have the And some opportunities others.

And the R&D confidence model take second another year, level to ability and to products optimized the the just this focus in decade to we're in for fruit the is long-term two, or we next getting our our I quarter so what continue which doing to bears really market our investments just is. long-term, what adding thing and these which started think

hopefully helps. -- So that that

Unidentified Analyst

you. Thank

Operator

closing now the conference Mr. will you, pass Jack for to I Thank remarks. any over Sklar.

Jack McDonald

call. your the next for earnings all on seeing thank you Well, forward you we and Okay. to Thank time you. look

Operator

Enjoy your day. conference That of the rest concludes call. the

Upland Software (UPLD) 4 Nov 212021 Q3 Earnings call transcript