UPLAND SOFTWARE, INC. AUSTIN, Texas, March 23, 2017 /PRNewswire/ -- Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based Enterprise Work Management software, today reported its financial results for the fourth quarter and full year ended December 31, 2016, provided full year 2017 guidance, and provided a positive first quarter 2017 guidance update.
Fourth Quarter 2016 Financial Highlights
-- Total revenue was $19.4 million, an increase of 10% from total revenue
of $17.6 million in the fourth quarter of 2015.
-- Subscription and support revenue was $17.1 million, an increase of 16%
from subscription and support revenue of $14.7 million in the fourth
quarter of 2015.
-- GAAP net loss was $2.0 million compared to a net loss of $4.3 million in
the fourth quarter of 2015.
-- Adjusted EBITDA was $4.3 million, an increase of 133% compared to $1.8
million in the fourth quarter of 2015. A reconciliation of Adjusted
EBITDA to net loss, the most directly comparable GAAP measure, is
provided in the financial tables that accompany this release.
-- Cash on hand as of the end of the fourth quarter was $28.8 million.
Full Year 2016 Financial Highlights
-- Total revenue was $74.8 million, an increase of 7% compared to total
revenue of $69.9 million in 2015.
-- Subscription and support revenue was $65.6 million, an increase of 15%
compared to subscription and support revenue of $57.2 million in 2015.
-- GAAP net loss was $13.5 million compared to a net loss of $13.7 million
in 2015.
-- Adjusted EBITDA was $12.6 million compared to $4.1 million in 2015, an
increase of 204%. A reconciliation of Adjusted EBITDA to net loss, the
most directly comparable GAAP measure, is provided in the financial
tables that accompany this release.
"2016 was a pivotal year on all fronts," said Jack McDonald, chairman and CEO of Upland Software. "Through implementation of UplandOne, our unified operating platform built to enable 100% customer success, we achieved a 500 basis point improvement in net dollar retention rate to 95%," he said. "Moreover, we completed three accretive acquisitions, drove 15% growth in recurring revenues, and doubled Adjusted EBITDA margins from 11% in Q1 to 22% in Q4."
Positive First Quarter 2017 Guidance Update
Upland also announced today that it expects revenue and Adjusted EBITDA for the quarter ending March 31, 2017 to be at the upper end of previously-announced guidance ranges.
"Q1 is coming in strong with continued success in expanding our customer relationships enabling us to affirm our healthy Q1 outlook at the upper end of the revenue and Adjusted EBITDA ranges we announced back in January," said Mr. McDonald.
Fourth Quarter and Full Year 2016 Business Highlights
-- Added 106 new customer relationships, including 7 major accounts, during
the fourth quarter for a total addition of 356 new customer
relationships, including 25 major accounts, for the full year 2016.
-- Delivered 95% annual net dollar retention rate (NDRR) as of December 31,
2016.
-- Raised our long-term Adjusted EBITDA margin target to 35%.
-- Increased our annualized recurring revenue (ARR) to $64.0 million from
$58.9 million.
-- Expanded our Workflow Automation product family by acquiring Advanced
Process and Imaging (API), a highly effective content management
platform, and expanded our Digital Engagement product family by
acquiring LeadLander, a powerful new cloud-based web analytics offering,
and Hipcricket, growing our Mobile Commons cloud-based mobile messaging
platform. All three acquisitions were accretive to Adjusted EBITDA per
share.
-- Focused on driving differentiated value through the UplandOne platform
-- Upland's unified platform that sets the foundation for 100% customer
success. Made numerous platform improvements including:
-- High-touch Customer Success Program: Rolled out Premier Success
plans and quarterly customer virtual user conferences as two key
additions to drive towards our commitment of 100% customer success.
-- Quality-focused R&D: Drove across-the-board improvements to the
reliability, security and performance of our product foundations,
enabling continuous value delivery.
-- Customer-driven innovation: Influenced by Customer Advisory Boards
and product feedback through Upland communities, launched 11 major
product feature releases in 2016 including improvements to user
interfaces, reporting, analytics, administration, integration, and
performance.
-- Expert professional services: Maintained strong profitability
through improved resource utilization, and enhanced service delivery
through process optimization.
-- 24x7 global customer support: Expanded capacity to guarantee
response times as fast as one hour for platinum level customers, and
developed new self-service, trouble-shooting content.
-- Enterprise cloud platform: Consolidated existing data centers and
began migration to a large, global cloud infrastructure provider
driving measurable improvements in platform uptime, ease of
deployment and configuration, scalability, flexibility, and security
at significant long term cost savings.
Business Outlook
On January 11, 2017, Upland announced that, for the quarter ending March 31, 2017, it expected reported total revenue to be in the range of $20.0 to $20.8 million including recurring revenue in the range of $17.5 to $18.1 million, for growth in recurring revenue of 17% at the mid-point over the quarter ended March 31, 2016. Adjusted EBITDA was expected to be in the range of $5.0 to $5.5 million, for an Adjusted EBITDA margin of 26% at the mid-point, representing growth of 162% at the mid-point over the quarter-ended March 31, 2016. Due to strong operating performance, Upland expects revenue and Adjusted EBITDA to be at the upper end of previously announced guidance ranges.
For the full year ending December 31, 2017, Upland expects reported total revenue to be in the range of $82.5 to $86.5 million including recurring revenue in the range of $71.7 to $74.7 million, for growth in recurring revenue of 12% at the mid-point over the year ended December 31, 2016. Adjusted EBITDA is expected to be in the range of $23.0 to $26.0 million, for an Adjusted EBITDA margin of 29% at the mid-point, representing growth of 94% at the mid-point over the year-ended December 31, 2016.
"2017 promises to be another record year and is off to a strong start, as we have already completed our first accretive acquisition, Omtool, issued record guidance and raised our target Adjusted EBITDA margin to 35%," said Mr. McDonald.
Conference Call Details
Upland's executive team will host a live conference call and webcast at 5:00 p.m. Eastern Time today to review Upland's financial results and outlook for the business. The conference call may be accessed within North America by dialing 1.888.684.7501 and outside of North America by dialing 1.925.418.7884, referencing conference code 67662965. The conference call will be simultaneously webcast on Upland's investor relations website, which can be accessed at investor.uplandsoftware.com. This webcast will contain forward-looking statements and other material information regarding Upland's financial and operating results.
Following completion of the live call, a recorded replay of the webcast will be available on Upland's website at investor.uplandsoftware.com. A replay of the conference call will be available as of 8:30 p.m. Eastern Time on March 23, 2017 through 11:59 p.m. Eastern Time on April 6, 2017 at investor.uplandsoftware.com.
About Upland Software
Upland Software (Nasdaq: UPLD) is a leading provider of cloud-based Enterprise Work Management software. Our family of applications enables users to manage their projects, professional workforce and IT investments, automate document-intensive business processes and effectively engage with their customers, prospects and community via the web and mobile technologies. With more than 2,500 customers and over 250,000 users around the world, Upland Software solutions help customers run their operations smoothly, adapt to change quickly, and achieve better results every day. 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) and non-GAAP net income (loss) per share.
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.
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 discontinued operations, plus the impact of amortization of purchased intangible assets, amortization debt discount, stock-based compensation expenses, acquisition-related costs, nonrecurring litigation expenses, purchase accounting adjustments for deferred revenue, nonrecurring provision for income tax, and the related tax effect of the adjustments above.
Annualized recurring revenue value as of December 31 equals the monthly value of our recurring revenue contracts measured as of December 31 multiplied by 12. We define annual dollar renewal rate (also referred to as net dollar retention rate) as of December 31 as the aggregate annualized recurring revenue value at December 31 from those customers that were also customers as of December 31 of the prior fiscal year, divided by the aggregate annualized recurring revenue value from all customers as of December 31 of the prior fiscal year.
Upland's earnings press releases containing such non-GAAP reconciliations can be found on the Investor Relations section of Upland's website at investor.uplandsoftware.com.
Forward-looking Statements
This release contains forward-looking statements which are subject to substantial risks, uncertainties and assumptions. 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" or similar expressions. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: our financial performance and our ability to achieve, sustain or increase profitability or predict financial results; our ability to attract and retain customers; our ability to deliver high-quality customer service; lack of demand growth for enterprise work management applications; our ability to effectively manage our growth; our ability to consummate and integrate acquisitions and mergers; maintaining our senior management and key personnel; our ability to maintain and expand our direct sales organization; 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; fluctuations in currency exchange rates; the operation and reliability of our third-party data centers and other service providers; 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. 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.
Investor Relations Contact:
Mike Hill
Upland Software
512.960.1031
investor-relations@uplandsoftware.com
Media Contact:
Kaley Ganino
Upland Software
512.960.1010
media@uplandsoftware.com
Upland Software, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
Three Months Ended December 31, Twelve Months Ended December 31,
2016 2015 2016 2015
---- ---- ---- ----
Revenue:
Subscription and support $17,062 $14,719 $65,552 $57,193
Perpetual license 542 608 1,650 2,805
--- --- ----- -----
Total product revenue 17,604 15,327 67,202 59,998
------ ------ ------ ------
Professional services 1,770 2,273 7,565 9,913
----- ----- ----- -----
Total revenue 19,374 17,600 74,767 69,911
------ ------ ------ ------
Cost of revenue:
Subscription and support 6,127 5,242 22,734 19,586
Professional services 1,056 1,768 4,831 7,085
----- ----- ----- -----
Total cost of revenue 7,183 7,010 27,565 26,671
----- ----- ------ ------
Gross profit 12,191 10,590 47,202 43,240
------ ------ ------ ------
Operating expenses:
Sales and marketing 3,041 3,058 12,160 12,965
Research and development 3,218 3,848 14,919 15,778
Refundable Canadian tax credits (173) (112) (513) (470)
General and administrative 4,946 3,874 18,286 18,201
Depreciation and amortization 1,021 1,327 5,291 4,534
Acquisition-related expenses 728 1,374 5,583 2,455
--- ----- ----- -----
Total operating expenses 12,781 13,369 55,726 53,463
Loss from operations (590) (2,779) (8,524) (10,223)
Other expense:
Interest expense, net (849) (473) (2,781) (1,858)
Other expense, net 427 (157) (678) (544)
--- ---- ---- ----
Total other expense (422) (630) (3,459) (2,402)
---- ---- ------ ------
Loss before provision for income taxes (1,012) (3,409) (11,983) (12,625)
Provision for income taxes (961) (854) (1,530) (1,039)
---- ---- ------ ------
Net loss $(1,973) $(4,263) $(13,513) $(13,664)
======= ======= ======== ========
Net loss per common share:
Net loss per common share, basic and diluted $(0.12) $(0.28) $(0.82) $(0.91)
Weighted-average common shares outstanding, 16,871,250 15,114,300 16,472,799 14,939,601
basic and diluted
Upland Software, Inc.
Condensed Consolidated Balance Sheets
December 31, 2016 December 31, 2015
----------------- -----------------
Assets
Current assets:
Cash and cash equivalents $28,758 $18,473
Accounts receivable, net of
allowance 15,254 13,972
Prepaid and other 3,287 2,603
Total current assets 47,299 35,048
Canadian tax credits receivable 978 2,018
Property and equipment, net 4,356 6,001
Intangible assets, net 28,512 31,526
Goodwill 69,097 47,422
Other assets 346 399
Total assets $150,588 $122,414
======== ========
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $1,268 $2,548
Accrued compensation 2,541 2,441
Accrued expenses and other 5,505 5,173
Deferred revenue 23,552 19,931
Due to sellers 4,642 2,409
Current maturities of notes
payable 2,190 1,500
Total current liabilities 39,698 34,002
Commitments and contingencies
(Note 9)
Canadian tax credit liability to
sellers 361 368
Notes payable, less current
maturities 45,739 22,366
Deferred revenue 247 8
Noncurrent deferred tax
liability, net 3,404 2,818
Other long-term liabilities 2,126 2,582
Total liabilities 91,575 62,144
Stockholders' equity:
Common stock 2 2
Additional paid-in capital 124,566 112,447
Accumulated other comprehensive
loss (3,152) (3,289)
Accumulated deficit (62,403) (48,890)
Total stockholders' equity 59,013 60,270
------ ------
Total liabilities and
stockholders' equity $150,588 $122,414
======== ========
Upland Software, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Twelve Months Ended December 31,
2016 2015
---- ----
Operating activities
Net loss $(13,513) $(13,664)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 9,794 8,451
Deferred income taxes 529 207
Foreign currency re-measurement (gain) loss (64) 981
Non-cash interest and other expense 327 376
Non-cash stock compensation expense 4,333 2,741
Loss on disposal of business 746 -
Non-cash loss on retirement of fixed assets 276 -
Changes in operating assets and liabilities, net of purchase business combinations:
Accounts receivable (361) 741
Prepaids and other 648 1,873
Accounts payable (1,453) 157
Accrued expenses and other liabilities 413 (2,796)
Deferred revenue 2,200 (570)
Net cash provided by (used in) operating activities 3,875 (1,503)
Investing activities
Purchase of property and equipment (670) (956)
Purchase of customer relationships (408) (791)
Purchase business combinations, net of cash acquired (12,151) (7,664)
Net cash used in investing activities (13,229) (9,411)
Financing activities
Payments on capital leases (1,683) (1,020)
Proceeds from notes payable, net of issuance costs 30,992 24,083
Payments on notes payable (7,190) (23,907)
Issuance of common stock, net of issuance costs (515) (18)
Additional consideration paid to sellers of businesses (2,079) (359)
Net cash provided by (used in) financing activities 19,525 (1,221)
Effect of exchange rate fluctuations on cash 114 (380)
Change in cash and cash equivalents 10,285 (12,515)
Cash and cash equivalents, beginning of period 18,473 30,988
Cash and cash equivalents, end of period $28,758 $18,473
======= =======
Supplemental disclosures of cash flow information:
Cash paid for interest $2,455 $1,523
Cash paid for taxes $488 $314
Noncash investing and financing activities:
Equipment acquired pursuant to capital lease obligations $1,293 $3,428
Issuance of common stock in business combination $8,300 $1,386
Upland Software, Inc.
Reconciliation of Adjusted EBITDA
(Unaudited, in thousands)
Three Months Ended December 31, Twelve Months Ended December 31,
2016 2015 2016 2015
---- ---- ---- ----
Reconciliation of Net loss to Adjusted EBITDA:
Net Loss $(1,973) $(4,263) $(13,513) $(13,664)
Add:
Depreciation and amortization expense 2,295 2,375 9,794 8,452
Interest expense, net 849 473 2,781 1,858
Other expense (income), net (427) 157 678 544
Provision for (benefit from) income taxes 961 854 1,530 1,039
Stock-based compensation expense 1,669 751 4,333 2,741
Acquisition-related expense 728 1,374 5,583 2,455
Nonrecurring litigation expense - 35 25 406
Purchase accounting deferred revenue discount 160 75 1,405 313
Adjusted EBITDA $4,262 $1,831 $12,616 $4,144
====== ====== ======= ======
Upland Software, Inc.
Reconciliation of Non-GAAP Net Income (Loss) and Non-GAAP Diluted EPS
(Unaudited, in thousands, except share and per share data)
Three Months Ended December 31, Twelve Months Ended December 31,
2016 2015 2016 2015
---- ---- ---- ----
Reconciliation of Net Loss to Non-GAAP net income (loss):
Net loss $(1,973) $(4,263) $(13,513) $(13,664)
Add:
Stock-based compensation expense 1,669 751 4,333 2,741
Amortization of purchased intangibles 1,478 1,749 7,107 6,199
Amortization of debt discount 131 64 327 382
Acquisition-related expense 728 1,374 5,583 2,455
Nonrecurring litigation expense - 35 25 406
Purchase accounting deferred revenue discount 160 75 1,405 313
Tax effect of adjustments above (79) (86) (319) (530)
Non-GAAP net income (loss) $2,114 $(301) $4,948 $(1,698)
====== ===== ====== =======
Weighted average ordinary shares outstanding - basic 16,871,250 15,114,300 16,472,799 14,939,601
Weighted average ordinary shares outstanding - diluted 17,457,565 15,440,647 16,892,549 15,258,024
Non-GAAP earnings (loss) per share - basic $0.13 $(0.02) $0.30 $(0.11)
Non-GAAP earnings per share - diluted $0.12 na $0.29 na
Upland Software, Inc.
Supplemental Financial Information
(Unaudited, in thousands)
Three Months Ended December 31, Twelve Months Ended December 31,
2016 2015 2016 2015
---- ---- ---- ----
Stock-based compensation:
Cost of revenue $15 $8 $44 $42
Research and development 124 15 204 203
Sales and marketing 39 9 105 65
General and administrative 1,490 719 3,980 2,431
Total $1,668 $751 $4,333 $2,741
====== ==== ====== ======
Three Months Ended December 31, Twelve Months Ended December 31,
2016 2015 2016 2015
---- ---- ---- ----
Depreciation:
Cost of revenue $648 $505 $2,030 $1,800
Operating expense 169 121 657 452
Total $817 $626 $2,687 $2,252
==== ==== ====== ======
Amortization:
Cost of revenue $626 $542 $2,473 $2,116
Operating expense 852 1,207 4,634 4,083
Total $1,478 $1,749 $7,107 $6,199
====== ====== ====== ======
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SOURCE Upland Software, Inc.
