Upland Software (UPLD) 3 Aug 232023 Q2 Earnings call transcript

Thank you for standing by and welcome to the Upland Software Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and 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. By now everyone should have access to the second quarter 2023 earnings release which was distributed today at 4 P.M. Time. Eastern

received available haven't Upland's release the you on it's website. If

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

to that on All following will our After joined right. our that open by our will Mike call Hill, the provide call and up On Mike you guidance. QX start Well and with today QX earnings our QX call. the thank numbers XXXX we'll Q&A. I'm today's I detail CFO. some welcome review. And for

the But Harbor started before we Mike get can you read Safe statement?

Yes, things sure Jack.

such today's meanings is periodic our statements filed of include that contained discussion with we laws. reports the the securities with within detailed A forward-looking and statements During the risks call of in are will SEC. these considered associated uncertainties

The and views to release Upland do statements. on duty undertake forward-looking assumptions available any are as any and not of made statements to based or revisions currently We any updates today. or management information our forward-looking today intend publicly on to

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

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

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

Thanks Mike. right. All

XX midpoints. second We headlines EBITDA of the which QX expansions. in major customers, with for quarter the are We our XXX and beat existing relationships here were So, QX. revenue expanded guidance

second including We welcomed XXX major the XX customers in Upland new new quarter also to customers.

industry deals our products distributed across New and were verticals. customer

a practices covered QX, starting busy this in sales. webinar which enablement enterprise I'll quarter for BXB note a front sales was best product Altify for that our Forrester, with product the On featured that

new used another a Following the have from and leaders of pipeline sales and planning who experiences revenue. multiply collection that, outstanding to best a book which launch account vendor, practices not of is grow Altify real just

Two in Upland's listed in again the products recent Technologies Landscape landscape The the Upland vendors Selling was were Upland the report. Forrester included solutions of enablement Altify QX notable among content landscape And was QX XXXX Account-Based included was Kapost that report. reports. in XXXX

which also rates improvements is UI user help really -- experience productivity aims UX to on and cycles increase content significantly deals. accelerate the win library Qvidian announced on focused latest that and customers release, sales optimizing and its a shortened revamped revamped

HP product efforts their businesses that providing June, In requirements. our Partner Excellence customers their HP's awarded solutions unique was Upland continued modern Award and enable life align with document in flexible that dynamic for Global cycles for with

solid remain early still new value. in are we and our but building growth plan the shareholder progress making focused It's on on process

year. achieve Specifically, core organic next goal growth is to mid-single-digit rate our a

and growth that a but organic minus. achievement. laser-focused team next core year X% or not guidance. on It's targeting is no So, goal plus It's our organization our guarantees,

to I'm to turn call back Mike. the going that, with over So,

Jack. you, Thank

the for XXXX. year the the So, full second our I'll cover financial third for and results quarter and outlook quarter

X% quarter the $XX.X was decrease On representing revenue statement total second year-over-year. of million income a from the

in $X.X revenue of year-over-year subscription million X% $X.X revenue support down XXXX. and to the the second from license million. million quarter decreased to quarter second Recurring Perpetual from in $XX.X decreased

product pursuant are realignments on calls. our services These initiatives our strategic to generally as growth was XX% Professional future $X.X previous decline. revenue for million year-over-year and quarter described, declines an expected the revenue

or XX% back product our Overall, we second at depreciation XX% amortization the refer to during and gross cash margin. remained XX% when as gross and gross adding quarter was strong margin which margin

and excluding expenses, or XX% the million $XX.X generally were of quarter acquisition-related total for amortization stock-based as compensation expenses expected. depreciation Operating revenue all

expenses quarter in acquisitions QX of our forward, up from our represents acquisition last second in which Also, Acquisition-related going acquisition-related future. restructuring should costs approximately the the million activity the until picks of were expenses insignificant $X.X our XXXX. in remain back

decline Our second EBITDA XX% as considering $XX.X expected revenue, is or described $XX.X our growth quarter million adjusted total the investments second of adjusted on total quarter previous XXXX for XXXX. or revenue from million was of of XX% This down EBITDA calls. generally

and cash Cash flow was flow million. free of $X.X was cash for the second XXXX, GAAP flow $X operating quarter million

flow continue anticipate million $XX year the full We million generation $XX to cash to of XXXX. for free

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

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

full and perpetual lowering midpoint due for win by XXXX our PSO revenue million revenue. lower year are churn -- Now Asset and accelerated $X Sunset we guidance by if, to license not guidance,

guidance in down by the group. -- million are growth incremental revenue midpoint lower CLA $X.X We revising some $X.X as our XXXX our as by adjusted due investment to well level EBITDA million that product

revenue $XX.X XX revenue million ended XXth and for XXXX. and of revenue million ending Upland to million, for subscription in million expects $XX.X September the XXXX, total X% the quarter at midpoint be total the that, between September and With between support a including $XX.X $XX.X decline over reported quarter

adjusted an EBITDA decrease a adjusted margin Third XXXX at This the $XX.X September ended XX% to XXXX. expected XXth quarter midpoint. the at the midpoint quarter million for from XX% is EBITDA guide be between of $XX.X of is EBITDA million adjusted and

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

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

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

All right. Mike. Thanks

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

[Operator Great. ahead. And Thanks Needham. Please it go first with from like looks Berg call our Instructions] Scott Jack.

Michael everyone. for Hi years? is quarter refinancing as due Congrats time about Rackers Scott next comes the over the and profile it today. are This few thinking Thanks. over on how debt you on But then potentially the leverage here.

Yeah.

is this Michael, Mike. So

First debt we've time got of to that deal of of through XXXX, -- due our of we've rate the at We do that. debt plenty with so locked remainder and August X.X% all, term interest got the is our term.

We is down think, leverage debt of the right X.X overtime, the now rate annual EBITDA levels interest as to environment leverage hopefully EBITDA. sort net times depressed about rate curve at comes our

And cash so flow build as future. free $XX every time, to from the growth million in thus little and lines a our us easier generation the should and cash over we pull with in standpoint a for bit a refi get our those investments trigger million on debt reducing $XX kick EBITDA levels year and improve we'll of net refi

comes Jeff, go from And Craig-Hallum. Jeff with Rhee ahead. our Van next call

Thanks. Hey, Great. guys. me. for A couple

that growth Can you're you spending little of progress. you're know drive I on I early I innings a you've next year. to made a into on? Where you're what's lot know a just changed? and acceleration Maybe made changing? there. changes. you Jack reps What said maybe but sales, you know expand on organic are of have structure good more you, whatever going effort have time Just lot

Sure.

if motions, One, plan, things. of you where built three couple of go-to-market. a efficient two are which we've our growth So look around really at it's

The first inside is sales.

field reps SDRs. So complementing complement sales an motion and inside full sales our a sales of with development or capacity

that, modern capability digital really a for more a adding been In about marketing pipeline to efficient it's addition provide generation. much to

heads which bringing We a short and point out filled the roster have to just according at these this schedule. our are SDR roster on on is classes DSR fully few

know right the the change marketing of The the has products we roughly in on group plan, in say as going in And growth. significant. the pricing. revenue you comprised with should There's our I this products of a we're really some can really a -- in growth of the on think work -- of positioning go-to-market we where in and place combine been as new XX% part the XX culture of outsized that on roughly a market been focused terms Jeff product our in side organization's right ton drive

new out new of marketing leader We leader brought came of of in a Infor, quarters ago a who came couple who a sales TIBCO. out

see teams progress those pipeline They've some generation in. particularly you folks would first. built to and green which expect where is we starting are So of out around shoots, see fully signs to early their are

were uptick you if pretty year-over-year, uptick generation uptick it's If -- seeing healthy you the what from and year-over-year. at look second pipe at from sequentially we quarter, QX, healthy a sequentially healthy look

completely of the across terms of that complement and different successfully marketing terms field board our demand a in of product collateral expanding a in really and sales with of terms in execute. and our And of capacity. organization. really enablement, tools radically providing new force SDR full sales adding It's terms a in So inside of sales terms they training in gen, to capacity, marketing need

we will expanding Excellence is to continue aggressively while Indian the but And that, onshore, for have addition around in this plan portion margins of India believe to centered time, of product our our through of are growth COE. investment. expand not Center third And really of leg development size our Now product enables we some the increase to we only our our COE, us also development.

into this the products end innovation particularly as see those those you'll pace and in and product, of investment move growth here year. the we year through -- in So of our increase next product

stop kind take of summary other topic. be me to any from let me overview on and So I'd happy as that there questions a

the the kind the And Very other, up Jack. the great. that's No products three-fourth other helpful. Thanks, go-forward growth excluding about obviously revenue suite of XX then products. altogether sunset roughly that make Yeah. with the core one of and XX% products then

In And vector. factor retention of issue? you're have there there's the how been terms or retention attacking products, the of also retention in is obviously the terms trending? How any growth on those the changes but retention approaching

tracking in accordance retention been plan. So with has

was, annual remains it focus the is we on which that publicly report KPI an basis. an what we NDRR So target on

to year is this XX. better to reported target for get the so as December XX% as And of or

would I Jeff no at so say point significant this And changes.

the rates we underway. through a time are in retention laying of to are terms initiatives significant there number of in improve that Now groundwork

a products the One drive And of better of side positioning in organic of And the I would by of that on to of heartening as management just you been product and our better the marketplace process we what's putting to gone the compete strength products. growth. on them our of through to a more them need side, appropriately. -- and in and this the course do job the the the number is to so development we've part of market say them is positioning way really

on that to leading part is think retention But are visibility time. as the think some targeted that to product of we through a competitive innovation of drive we intelligence I result going in higher that have process investments

success Secondly, customer new the side success on customer we promoted a have leader.

customer built have centralized a did that success shared we We previously. service not organization have out

customer We in platform. a a success customer will half new to year software new of the second be the adopted the function have approach and adopting success

great them the to longer-term rates. really on a also health engage of strategic a team our to more care mindset both have we and add with customer customer retention get goal view on increasing enable monitoring being able their but exceptional CSMs to great to a CSMs to Again with responsibilities

our adoption implementation organization drive business the rates and sales cooperation also to And group, that a the and moving cross-functional our to on ensure services right more better are hand-in-hand better organization sure and our kickoffs working kind better for that health an ensure services initial plan PSO returns right and sales retention of we've more professional support customers. building to that handoffs and specifically and necessary ultimately organization success that packaged customer it's good of making going robust better spent that's health time and that our doing for because deal and creating customer process to from from customer ROI product solutions consultant customer

and customer need and the and methodology measure And then teams tools health the giving they improve say customer and and execute manage better I as strategically to retention. success

take to main the on Again that's questions So focus happy that. there. any other

for handful. That’s the Yes. Thanks it. I color. set. All appreciate

My Jake apologies. [Operator ahead. our comes Instructions] Blair. And Jake, William Roberge question from next go with

Jake for quarter. Zerbib on Hey, guys. Congrats the is on Roberge. Jacob This

products? What aware guide. do reduced Just wanted to attribute sunsetting given on the full are you Thank there be to execution the it on impacts, follow we the your any an up should you M&A active with And still of? legacy accelerated these Is guess the to days? macro macro the issues that ask general there of I valuations on you. year just are more or front

Yes.

So for the because that on off as Really opposed us Jack. primary non-core the that better first driver are those question, which sooner sunset to this asset is is accelerated it's frankly burn later is churn to assets. of

And so driver was the of that primary that.

Now of assets and because a -- new you're by have that have that little new to the is you're less driven implementations. of bit with PSO logo course going to going sunsetting with right activity,

temporary. relationships be revenue and really of we the timing perp our that terms it's expect some mostly about to And so OEM of in of

at related factors of just related that the macro to really related and to not to point idiosyncratic outlined. environment I not those more execution kind So this

In terms it on if the go have of happy you M&A to I'm that to I or -- sorry can follow-up question. a take

No, to yes, you can M&A sorry the about that. Thank you, question. go

On the are actively we market. M&A, in

acquisition We opportunities. at number a are looking of

the product, really to capabilities, in more to we attractive that the And our Upland the have more these that some believe of BAI that mindset drive because that of like we are cost starts not the seeing synergies out build we ourselves, growth to an that go-to-market drove of product And Insight, tool it make search enterprise which around As better synergies. strong. positioning we're BAI some is it new go-to-market. acquisitions, drive but historically, with of acquisitions are rates only on revenue I see course, recent of did really we integration where we we

to so go and And we're to acquisitions so we revenue and can do drive out only this continue growth. additional margins, not going drive keep that building again, capability, but

of positioned. control We've got we market. Now, We've a of deals, We're capital. we're well it. timing on plenty pipeline got the in known but

to going we're So execute, the time. right at

rushed quarters get of and well We But by the and to feel have -- something purposeful being getting are thoughtful the in next anticipate back Don't we're we for feel business positioned quarter. closing few within it. about done deals that. this to like,

Got it.

Yes.

Our come from James. final Alex, go with question Alex please Raymond Sklar will ahead.

for Hi, McCary Alex. gentlemen. This on Johnathan is [ph]

Just us. from one,

and touched of R&D now. the I but year innovation little know So running over the had a for engine kind a already, you on you've center up

You've had nice cadence products a new and announcements. functionality of

velocity So, how investments? about should And how what can over should you tell year? those us monetization about trend next we we think think about should of how product the Thanks.

think the next in rate those X% we'll business organic taking digits monetize which rate this minus XXXX, minus growth and I X% most way, positive a from is first mid-single in significant to year. growth Yes, organic a investments,

Now no the It's laser-focused this again, are growth. goal. that's guidance on and organization is a not levers there can drive that guarantees. that But

not saying business. game is for target is we're term. next And a think year, that's We're this saying that I a long a for that changer, ceiling.

is to organic, EBITDA XX% XX% XX% to there margins. X% goal and Our

an I ongoing just be how think company the absolute on viewed will and for, changer that's an valued basis. game

now also acquire any to pods, not capacity can inside scaled systematic the the on sales generate where course, of selling pipeline ability the the on turning context then ability basis. that in only add back in, side, doing to engine, And of inside motion the selling capacity the products a and acquired pull business and go-to-market to personnel, to to sales plug that COE, support around on and it has levers field a M&A inside product a Indian a but working an we pretty the and we

saying generation, we this particularly not give going investment. now, laying I'm for because we there think operationally increased drive humming as are solid the progress the optimism look then everything green that on some that is this all that, in in, return I is future. and creating but around mentioned, believe of shoots and real growth right to we pipeline that And process seeing early So, capability I are us that on are

you. Thank

right. All

final that's question. So our

call everyone, thank just me after joining the for quarter. we let see will So next the and you

the see you much. you we'll call. on QX Thank very So,

call. you, disconnect. that you all may today's does Jack. conclude a Thank everyone. for And gentlemen, Have Thank and great day, and now ladies joining you