UPLD - Earnings call 4 2023 | Upland Software, Inc.

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Operator

Thank you for standing by, and welcome to the Upland Software Fourth Quarter 2023 Earnings Call. [Operator Instructions] The conference call will be recorded and simultaneously webcast at investor.uplandsoftware.com, and a replay will be available there for 12 months.

By now, everyone should have access to the fourth quarter 2023 earnings release, which was distributed today at 4:00 p.m. Eastern Time.

If you not received the release, is available on Upland's website.

turn of over Upland to Chairman Jack like CEO and Software. now the to call McDonald, I'd Please go ahead, sir.

John McDonald

CFO. can by All right. earnings Hill, will today XXXX will a that, QX our to call, review. our safe provide start Mike And with some we and before open statement? call the numbers Thank get will you, call. and Q&A. we for I'm But welcome On the guidance detail our on you started, Mike, I up harbor today's the Mike following that XXXX QX joined read for after

Michael Hill

Yes. you, Thank Jack.

During is the made and we assumptions forward-looking include any securities as contained intend reports forward-looking release filed in duty views considered based associated Upland on statements. SEC. today. to information are the are of or detailed today's We A uncertainties call, of statements our our management discussion to periodic statements within available any that the do laws. or risks with not meanings statements will . The revisions such to any of the on and forward-looking and today undertake updates currently with publicly

our comparable provide Upland our measures analytical Upland combination non-GAAP Investor when Relations to will with results, reconciliations GAAP press of call, of is with financial provided announcing tools section has which to website. management financial that, most GAAP in measures measures this On to the refer understand operations. available results, Upland on additional in its financial release the non-GAAP our

a is effort. because needed directly without time reconcile to the unavailable comparable measures at any financial that forward-looking reconciliation to this complete non-GAAP their Please is note information to which measures we're GAAP unable unreasonable financial

turn with Jack. back the And to I'll over that, call

John McDonald

making fourth that adjusted right. guidance QX, add we Mike. new In to the included XXX XX in midpoint, XXX EBITDA and QX, customers. we revenue quarter, new Upland headlines, new in a new in customers that total XXXX. major customers All welcomed beat our of Thanks, The customer

Data course, front, on front we've recognized product of the of on leader underway in product as Content a workflow QX, number our QX. management medalist was that third the knowledge features, and and a and our for called recognition from based And with course, reviews, row exciting. we vendor combined the AI product, users is XXXX year the is great got On for overall are in and In which Enterprise very that satisfaction Upland products. report sentiment. And Management of was gold very of initiatives software busy quadrant some The real is experience, saw of a based automation in capabilities award on placement the filedown. document emotional

help success activity customer references, they to In generate customer and addition launched RO sales, brand a new teams awareness Innovation to reference engage has so and their can more marketing with hub and find customer business. Upland that, most influential boost

organizations of the XX Azure December, seamlessly that many was access, then XXXX covering exciting technology And fourth a also more. products. can in got data. underway Again, manage that dozen Winter intelligence, or of when we products quarter, reports, just and so across market webinar AI on BA and integrated how initiatives half we've Insights, search earned the in derive hosted or across badges variety content, their we AI how revolutionize featuring In from and insights with cutting-edge X search GX's

course, provided GX buyers. proposal and products, independent with based Upland These included management on software reports, and are Covidien, rankings by our knowledge Street. And on and marketing our digital management Upland Upland RightAnswers Edesa data our PanViva, software Upland Upland those solutions, of along real Second

value delivering We focused remain our continue the plan, progress software on make we've on plan. date we go-to-market growth we and by and the feel growth customers. to building for to made encouraged progress on Overall, great

clearing assets in to processing organic a to at but planned our are XXXX going few rate Sunset minutes, as growth for guidance Mike And the out goal around and way the core growth. is XXXX goal, X%. cover a exit We our core of is

turn to by exit with positive back organic our to to and building year more get organic encouraged conservative seen view will we've core and we've than a goal and progress X% investing Now exit. is to as our a to positive core guide date exit. that, growth be the year Again, But the closer probably this the X% and are to year business spent growth.

call come to me later. let Mike. And more over on So the that to now turn

Michael Hill

the Thank I'll And assets and revenue. the the of planned as Jack. for Jack year first of fourth our the for XXXX. you, results XXXX. results significant quarter incremental outlook our Sunset for and quarter of well cover XXXX These as said, as full Yes. reflect product marketing runoff the year investments, financial and another outlook sales,

Total quarter million, revenue fourth for revenue representing million Recurring Perpetual decreased year-over-year in from increased down quarter, $XX.X decrease -- subscription support in of to year-over-year. from quarter X% license million fourth $XX.X of a X% million. decreased revenue the the $X.X that XXXX. and $X.X was the actually up fourth from to

gross depreciation of quarter, declines planned when revenue. runoff which million XX% XX% Professional gross are for decline. margin. cash XX% quarter, assets back margin fourth to was services during a revenue year-over-year amortization, we Sunset $X.X consistent and the revenue Overall as adding the margin with product was our and XX% or was refer the These the gross

which million our of stock-based revenue, Also, acquisition-related as comp, million in generally last XXXX. the expected. expenses, acquisition-related quarter, depreciation, acquisitions all total of expenses $X.X quarter for costs that approximately in should we year, the were the fourth acquisitions Operating XX% or expenses, from and the last $XX.X did those were excluding represent amortization restructuring

should picks going the insignificant Acquisitions in remain expenses acquisition until activity forward up related our back future.

total million $XX.X $XX.X EBITDA revenue XX% the of XXXX. or for from of down fourth revenue quarter of XXXX was or quarter Our XX% total adjusted fourth million

EBITDA described is our growth sunset expected, adjusted as decline This considering the assets and earlier. regarding investments generally our decision as

cash fourth expectations. million for of flow was XXXX, $X.X quarter our the cash million, flow, and For free flow was to in million, cash line with bringing free GAAP our $XX.X operating XXXX cash full which $X.X year flow was

a QX, As free in our free flow was of full year our XXXX additional liquidation reminder, $XX.X cash the rate of flow in half million cash of XXXX. by swaps benefited interest adding

unless This future. just to event we more liquidate the swaps a onetime event decide in is onetime

as in XXXX, million plus of million balance $XXX undrawn the cash December our is Our million, ongoing comprised addition approximately of free of revolver. $XXX XX, to $XX existing approximate on flow our sheet of generation liquidity our cash

balance December debt we the $XXX million of of after had XXXX, As XX, in on outstanding our factoring cash net sheet. approximately

of floats X.X% debt, term an our XXXX. plus $XXX XX, of The X.X% of interest at XXXX, locking interest through debt full on December which of at approximately approximately of is portion which rate SOFR debt XXXX. was of our the $XXX still of now remaining approximately December XXX that rate million which our million, $XXX million term about at As was XX, points, our gross hedged, effectively fully August maturity basis is debt

of during cumulative December repurchase brings program execute. XXXX, reminder, million is limited buybacks early stock XXX.X of the I This of and $XX.X should as total used to potential XX, buyback for fully of our of $XX million, September our plan million a through stock a XXXX. XXXX, total it million will quarter began $XX.X stock back under ended also that in shares the note stock to XX, stock, cash common we that buy December approximately our

I that, forward are usual, For making guidance guidance, revenue of decreasing the guidance of assumes no forward comprehensive following incremental and guidance activity, expenses growth so part be upon reflects our and that will, as future will our to of marketing sales, well plan the as M&A Sunset related the our investments another year course, of we acquisitions. as as adjusted significant product effects note assets.

For the the between subscription total at between the XX% and $XX XXXX. decline revenue March March XX, fourth ended from XXXX, million a to for and and of $XX.X million, $XX revenue expects support million total $XX.X Upland midpoint including reported XX, be in ending revenue million quarter quarter

the margin decrease an and million, to adjusted XX, midpoint For the XXXX. this the midpoint, EBITDA adjusted $XX.X be between ended from the quarter EBITDA at of at for expected XX% a is XX% first is guidance XXXX adjusted March of EBITDA $XX.X million quarter

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

midpoint the ended XX% Full a adjusted guide XXXX. adjusted and million XX, be midpoint. EBITDA the This EBITDA at adjusted year to XXXX EBITDA $XX from is $XX of an decrease for million of expected between the at margin year XX% December is

with call I'll to back the over that, So pass Jack.

John McDonald

All right. Thanks, Mike.

to up call open for We . are the now Q&A.. ready

Operator

[Operator Instructions]

Our the with first question & line comes of Scott on Co. Needham Berg

Scott Berg

year? So your you I think as believe in through in year and this have with X%. pretty where visibility in you feel in working you on Because to target been segment out, drive But understand core your I said of trying guess, core new what to what growth to strategy, are growth you a starting couple go-to-market kind the do you confident of, revenue of exiting process guys I a them. get about that Jack, that? you got are process of the that roll of you

John McDonald

Yes.

we're off. it starting little side, development a and on pay made over the year. starting and we're now We've been So we've see to those product -- improvements a at innovation significant

our product over across of is growing. enabling within now course, our it portfolio. Center Of our of people envelope Excellence India, innovate and to cost build-out And there the us in XXX

think, starting of we're that, that XX bear build we at of Badges are terms we've shoots other And to again, and from in fruit. is I the I that. some The indications Winter received, GX where digital are marketing some to capability. investments think see I beginning look green analysts that our to from awards

there. at build I to improvements in we've see search, of can starting internally a where significant are around we number look KPIs Again, performance. real really made organic around pipeline progress

sales more year tools, a culturally the it ago we've team, than built On sales was generally, in culture. process, it's of sales sales the side, building today really hygiene, sales terms different true a out a organization sales

Bresolin, with Matt Infor new at Head Most our who Officer, Oliver he million business, Revenue was recently, colleague at Chief a Yates, of executive $XXX Sales. was a where hired an ran actually the a who's we Infor

team good we into here. that move very of together, some feel we bringing and are So as XXXX I back about where

I'm progress. I positive going progress we're Again, But with to date. by as is to of the this that. to we say, encouraged core target more at make guide I the about turn that organic than X%. year growth exiting feel good year made And the the we've when the conservatively

Scott Berg

year, down is when QX to try Helpful. noncore for be versus few product that be here just Got to dollars the flattish core looks revenue sunsetting Mike, of going the like our of think the QX level lower down QX. than that your product at year, items as maybe million of I I suggests quarter-over-quarter modestly the the some a from I it. into QX. look we assume there. you're guidance guess what's your for revenues, to probably the And impacting guidance number is rest from the revenue that at the it's

of core revenues do going the revenues the we model? out then non versus -- actual of, don't I year? through truly of the know, get curve or the what see end the noncore But or think curve to doing. When And are the will the will when non-core be how versus this we

Michael Hill

Yes. Thanks, Scott.

described, exit X% rate hopefully XXXX, turning just little we're standpoint, exit. by core a by target growth organic the So least Jack in negative the QX positive we're fact, at here a core the negative, growth turning to from core from like X% in and

is core sort trough of there, So will. turn you making if the

run probably years. off, On the going revenue in X to that sunset than over to continue to here the are going million sunset if assets, assets next couple sort you be it's the related will, $XX to of XXXX, a of less little

year. be those drag, a this will here bit a again, should here turning is that So the but the main of core point be up

Operator

next of line Hynes Your Canaccord. comes from DJ with question the

is Your line open. .

Unknown Analyst

the guess, you, Ryan kind revenue Scott's related hoping of this is coming one for probably up. for me is full Mike, to maybe for bridge through was could I you I on This just year your guide question. DJ.

but of So like any sunset million color midpoint. like alluded I well decline the at assumptions on, the really assets, churn, to guess new you be are kind $XX What we're kind as helpful. I your there bookings of as natural guess, would

Michael Hill

problem. No Yes.

sunset going most the recurring So of decline that revenue. be assets is to

of and revenue a little our that. a we that's guide, do there. perpetual course, lower And guide said, Now like we think to bit have sort of our PSO license we bit revenue is conservative little adding

of $XX really that million the to The adds burning walk. asset decline So headline sunset it's sort up that is off.

Operator

Your of Jeff, floor next line Jeff the question the yours. is with from comes Craig-Hallum. .

David Hynes

I appreciate it.

sales right vision, targeting selling couple, cross-sell stand-alone, each if all a how the approach products, spend product? Is sales you maybe individual there minute this first to on Maybe the periods from now Could -- thinking with as reps all have just just potentially and was a refresher you we're was there through a what are sales been products. now. So opportunities a I the approach here. is know just guys. Mike, where cross-sell various on I'm And approach. a so, purely

John McDonald

Yes.

the is getting . some force. a force sales the some is on done. mid-market again, inside and got the sales early we've motion that to also we year. terms on good from in sales -- And And field successes principally nice see Jack. starting of approach, this up inside an product-based stood size sales capability We've So last that got deals

part so to Now -- we few frankly, those home continue model. go who have we the global still a after course, larger will be account will plus QX, of global of including were deals those opportunities. cross-sell of some million-dollar in have some that And see executives brought by and a that will

So inside of field again, global executives. a it's with number limited account and

to terms and through and of so business that expansion expansion bring expect a finally, XX-XX course want kind on of balance then run should that new. new lower XX% historical into the back It's we in is year that mix, And running this a and roughly to this XX% and higher expansion, new, mix. of bring been

David Hynes

Yes.

terms yields? . it. does around of expectation the cash Mike, then, what's in that -- appreciate Okay. free EBITDA And of the kind I -- that 'XX, what what flow

Michael Hill

Yes. cash million . Jeff, this to we're targeting million $XX free year of XXXX. flow $XX

David Hynes

of, nonorganic said early right. -- several and decline then at the I most last the guess, think Sunset All we're organic me. And I X to looking work of the coming as I million like you is, just that for The question, the think years. you $XX Okay. over answered out assets has off

kind on me X that, products to products of sunset of is picked basket, is that the reason, Just to the change? in works. a basket refresh sunsetted that is that refresh the for how -- to in Or it then Just was a of and done, it whatever hasn't expected that handful any needed sunsetted you there? is what's on variability isn't be and -- there and me

John McDonald

Yes.

we behind took a Sunset of part after and some better identified being that made revision the thought frankly, we that about there point So some terms that a examine of wood arrow And and a the that portfolio of were we driving we HGGC, put others we off process, from really a where did year to in when growth. of wanted as there the growth were a product had we our assets, realized at we what investment those assets. strategic couple that products to potential, sunset. were are to review on that

revision it. to -- a it we to with process we've that. was We view not onetime a our that as then and a is revisit plan that So it completed.

near but I come could that possible anticipate of again. it happening anything that . kind up don't scale it's Now again,

Operator

Jake the Our next question . of Blair. with William from line comes

Jacob Roberge

year. organic Good to X% growth expectation exiting the this hear

X out about margin follow-up. aspiring that And growth it's there much election of have of just political growth thinking transition? I given and how messaging take related . a certain Jack, is business, come year. this we that kind business if you to? when you then curious of be Is And profile should then, this you're how to a an back, Just step

John McDonald

So core above. organic -- year growth count does target not election we're expecting not rate that any

in there's of that So none there.

for core for and motions know organic our that margin to beginning expansion we working our we longer-term business is organic XXXX. And once what terms target through some digits sights turn growth get In will core we the of XXXX that growth. in the is mid-single significant get

place hindsight growth drive we which go-to-market at think in yielding also put while have point, time levers couple motions. less that of and we'll to will part that reducing as the We'll plan, spending continue motions a investments a costs. go-to-market on that are and highest help efficient of return We've through us this growth be the able those adjust

for those, enables increasing the organic the and with involves capability ability drive team to that to of stats X a you cost upfront the investment generate create some but flywheel So for That marketing through to digital search you right? is then example, use efficiency. pipeline, sales time

to on the initiatives the and really hybrid course, of Excellence right deliver And growth, other side, capability and innovation a to envelope addition the our and Center can that expansion. margin development us fits of India ability in in give within offshore that mix have the innovation cost that,

through effectively we a can where drive time. manage margin arbitrage and our cost get So headcount and

some EBITDA AI, the acquisitions again, and digits this we're in then mid-single margins motions model. various to through Also costs XX% turn efficient out to going as manage core And year of business. to move growth XX%, parts those beyond, we finally, between look XXXX using on, and then in growth again, of our So back and time organic targeting driven coming into targeting an this adjusted as by, like would And we up, again, we And to drive something our year leverage, time, do go-to-market also talking were But year, maybe expansion. then that, as last do that to done. we're we through help X again, we on one, see expansion. will margin will we'd deals get get and we'll that about for which this plans. ramping operating internal drive didn't margin focused

Jacob Roberge

couple and just for you And turning you're Okay yes, how of of thinking share you very sounds the kind are and year. looking potential just between allocation. like motion for about kind preempted paydown. potential about M&A you're how in balance helpful. acquisitions of buybacks the debt then this the back of question then the acquisition potential terms there thinking next But capital on a

allocation Just curious capital about how the you're thinking buckets? those between X

John McDonald

Yes.

as a the way, we buyback that. is half So through than of more $XX the are good million mentioned, underway, part the and Mike of way

So that we million. the and filling continuing buyback of $XX anticipate full allocation

I think, step is that, So X. of sort

the is On deals plan the I maybe around. deals X opportunities acquisition present the kind and side, we've but we're looking this year again, around looking if in been actively and market X, maybe think X, X, that but year, internal of becomes at all right themselves, at

to And go control and I of strategic that got we the price. deals the at the timing, those to are focused team growth then with patient remaining available in course, after need feathering top right but And on I've described we'll we some are are and of the earlier we've on making for we this capital assets the again, the acquisitions investments and for also really business ready wanted organic the time spend getting that. core in start right

Your comes floor Raymond is Alex final from Alex, with yours. question the James.

Johnathan McCary

bundling you've I Jack, solutions on John mentioned solutions. past, focusing bundles on in Alex. and think the is for of groups and This

motion successes have on so follow-up. put an behind you've muscle seen update there I you in then XXXX? you us learnings have the what far? that far can any as if a more you And there's go-to-market so And quick So give

John McDonald

be most driven maybe straightforward further cross-sell. new that course, by Yes. and through base, for penetration it to centric, The is motion a logo existing XX% sale are the is has learnings by product and and point motion a us effective expansion of the of then customer there going frankly, XX% that product

earlier what of composition in regarding is response Jeff's to And question that the speaking was with of the consistent force. sales I

going number for product limited global But of to driving we are general, be in -- So sales. looking majority point that and the motion. product of to anticipate executives vast of have at more cross-sell account continuing you're XX% that

Scott Berg

over assets helpful. was next of you this thinking the That year, but from you Mike, next here then, us years? color Sunset you X Okay. flow think how the over X contribution how free I for do And are years? appreciate gave about the the cash that

Michael Hill

Sunset definition, margin, low contributing. Well, assets cash low the Yes. are free flow by

of not neutral, pretty sort quite So but close.

just much not flow free the cash . impact So on there those for

Operator

to Chairman like Jack turn over Executive now Chief and would to Officer. call I the McDonald,

John McDonald

Okay. . see the joining you we thank on for earnings everyone next today. Well, call. will and

Operator

gentlemen, concludes call. today's that Ladies and

You may now disconnect.

Upland Software (UPLD) 22 Feb 242023 Q4 Earnings call transcript