Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Upland Software Inc (UPLD, Financial) exceeded its Q3 revenue guidance midpoint and met its adjusted EBITDA guidance midpoint.
- The company welcomed 122 new customers, including 18 major ones, and expanded relationships with 312 existing customers.
- Upland Software Inc (UPLD) earned 72 badges in G2's Fall 2024 market reports, up from 56 in the Summer 2024 reports.
- The company announced the availability of Upland BA Insight for Microsoft Azure, enhancing its product offerings.
- Upland Software Inc (UPLD) is targeting positive core organic growth and continued expansion of adjusted EBITDA in 2025.
Negative Points
- Total revenue for Q3 decreased by 10% year over year, with recurring revenue from subscription support declining by 9%.
- Perpetual license revenue and professional services revenue both saw significant declines year over year.
- Operating expenses were 53% of total revenue, reflecting ongoing investments and cost pressures.
- Adjusted EBITDA for Q3 was down from the previous year, reflecting growth investments and sunset asset decisions.
- The company anticipates a decline in total revenue of 7% for the full year 2024 compared to 2023.
Q & A Highlights
Q: Can you provide more details on the cost cuts in OpEx and if these changes are complete? How should we think about these moving forward into 2025?
A: Michael Hill, CFO: Annual costs will continue to decrease as we target increased EBITDA next year. We have infrastructure costs that can be reduced since we're not pursuing as many acquisitions. These cost efficiencies will continue to be recognized. John Mcdonald, CEO: Within growth investments, we are optimizing spending based on returns, which supports expanded margins.
Q: Could you elaborate on the go-to-market changes and where you've seen the most success?
A: John Mcdonald, CEO: We've implemented a modern digital marketing function, improving lead generation and conversion. We've also enhanced our sales capability with new management, leading to better sales processes. Investments in customer success are driving higher renewal rates and product utilization.
Q: What is the strategic thinking behind the recent debt paydown, and how does it set you up for refinancing?
A: Michael Hill, CFO: We paid down $177 million of debt, saving about $7 million annually in interest. We plan to refinance in fiscal year 2025, as our debt matures in August 2026. Delaying refinancing allows us to benefit from our current attractive interest rate.
Q: How are you planning to achieve the core organic growth target for 2025?
A: John Mcdonald, CEO: We are seeing improvements in lead generation and sales processes, which are starting to reflect in bookings. This supports our target of low to mid-single-digit core organic growth in 2025.
Q: Can you discuss the impact of your growth investments on EBITDA and future projections?
A: Michael Hill, CFO: Our adjusted EBITDA has been growing sequentially each quarter this year. We expect to exit 2024 with an annualized run rate of nearly $60 million and target adjusted EBITDA in the low to mid $60 million range next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
