Attached files
| file | filename |
|---|---|
| 8-K - 8-K 4Q14 EARNINGS RELEASE - Upland Software, Inc. | a8-k4q14earningsrelease.htm |
Upland Software Reports Fourth Quarter and Full Year 2014 Financial Results
- Reports record fourth quarter and 2014 revenues as annual dollar renewal rate increases to 96%
- Increases customer count to over 1,600 with more than 225,000 users
- Sees growth and operating efficiencies driving expanded Adjusted EBITDA margins in 2015
AUSTIN, Texas, March 26, 2015 /PRNewswire/ -- Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based Enterprise Work Management applications, today reported its financial results for the fourth quarter and full year ended December 31, 2014, and provided guidance for its first quarter and full year 2015.
Fourth Quarter 2014 Financial Highlights
• | Total revenue was $16.5 million, an increase of 36% from total revenue of $12.1 million in the fourth quarter of 2013. On a constant currency basis, total revenue was $16.8 million with a year-over-year growth of 39%. |
• | Subscription and support revenue was $12.7 million, an increase of 42% from subscription and support revenue of $9.0 million in the fourth quarter of 2013. On a constant currency basis, year-over-year subscription and support revenue growth was 45%. |
• | GAAP net loss was $2.7 million compared to a net loss of $5.2 million in the fourth quarter of 2013. |
• | Adjusted EBITDA was $698 thousand, an increase of 712% compared to $86 thousand in the fourth quarter of 2013. 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 $31.0 million. |
Full Year 2014 Financial Highlights
• | Total revenue was $64.6 million, an increase of 57% compared to total revenue of $41.2 million in 2013. On a constant currency basis, total revenue was $65.8 million with a year-over-year growth of 60%. |
• | Subscription and support revenue was $48.6 million, an increase of 57% compared to subscription and support revenue of $30.9 million in 2013. On a constant currency basis, year-over-year growth in subscription and support revenue was 60%. |
• | GAAP net loss was $20.1 million compared to a net loss of $9.2 million in 2013. GAAP net loss for 2014 reflects a pre-IPO one-time non-cash charge of $11.2 million. |
• | Adjusted EBITDA was $3.9 million, an increase of 44% compared to $2.7 million in 2013. |
“We are pleased to report our second consecutive quarter of record revenues since our IPO, closing out a strong 2014,” said Jack McDonald, Chairman and CEO of Upland Software. “As we look forward to 2015, we see opportunities to drive revenue growth through increasing penetration in our more than 1,600 customer accounts, acquire additional best-of-breed cloud-based Enterprise Work Management applications for the Upland product family and continue to improve our operational efficiency.”
“We executed well against key operating metrics throughout 2014, with strong operational improvements and margin performance,” said Mike Hill, CFO of Upland Software. “For 2015, we plan to continue our focus on operational efficiency and Adjusted EBITDA margin expansion.”
Fourth Quarter and Full Year 2014 Business Highlights
• | Added 85 new customer relationships, including 8 major accounts, during the fourth quarter, increasing our year-end 2014 total customer count to over 1,600 with more than 225,000 users. |
• | Opened our first European data center in London during the third quarter, a highly secure facility to serve EMEA customers. |
• | Improved our annual dollar renewal rate (DRR) to 96% for the full year 2014 from 90% for the full year 2013. |
• | Increased our contracted annualized recurring revenue (CARR) to $57.9 million from $49.1 million on a constant currency basis at year-end 2014. |
• | Continued customer-driven innovation with major productivity-enhancing product releases in the fourth quarter, including new releases of our: |
◦ | IT Financial Management application, ComSci, with new and enhanced capabilities for cost modeling and optimization, enabling customers to take a more predictive and prescriptive approach to improving business performance; |
◦ | Enterprise Content Management application, FileBound, with enhanced mobile capability and detailed analytics around defined workflows as well as content in use; |
◦ | Professional Services Automation application, Tenrox, with financial planning and analytical enhancements, expanded platform support and improved performance. |
• | Expanded our product family by acquiring two cloud-based software businesses: Solution Q, Inc. and its SaaS project and portfolio management (PPM) application, Eclipse PPM, and Mobile Commons, Inc. and its cloud-based, mobile engagement management application. |
• | Became a public company and commenced trading on the Nasdaq Global Market (NASDAQ) under the ticker symbol “UPLD” on November 6, 2014. |
Business Outlook
For the quarter ending March 31, 2015, Upland expects its constant currency total revenue to be in the range of $17.6 million to $18.4 million, or growth of 15% at the mid-point over the quarter ended March 31, 2014, and reported total revenue to be in the range of $17.0 million to $17.8 million, or growth of 11% at the mid-point over the quarter ended March 31, 2014, based on the current foreign currency exchange rates. Adjusted EBITDA is expected to be in the range of breakeven to $500 thousand, or Adjusted EBITDA margin of 1% of total revenue at the mid-point for the same period.
For the full year ending December 31, 2015, Upland expects its constant currency total revenue to be in the range of $70.7 million to $74.7 million, or growth of 13% at the mid-point over the full year ended December 31, 2014, and reported total revenue to be in the range of $68.1 million to $72.1 million, or growth of 9% at the mid-point over the full year ended December 31, 2014.
Adjusted EBITDA is expected to be in the range of $2.3 million to $4.3 million, or Adjusted EBITDA margin of 5% of total revenue at the mid-point for the same period. Upland expects to achieve an 8% to 12% quarterly Adjusted EBITDA margin by the fourth quarter of 2015, or 10% at the mid-point.
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 95986891. 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 26, 2015 through 11:59 p.m. Eastern Time on April 10, 2015 at investor.uplandsoftware.com.
About Upland Software
Upland Software, Inc. is a leading provider of cloud-based Enterprise Work Management software. Our family of applications connects people through technology, automates the flow of work and brings visibility to all aspects of the organization. With more than 1,600 customers around the globe, and over 225,000 users, Upland helps teams in IT, marketing, finance, professional services and process excellence 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 provide investors with additional information regarding Upland’s financial results, Upland has disclosed in the table below and elsewhere in this press release Adjusted EBITDA, a non-GAAP financial measure. Upland provided a reconciliation below of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure. Upland defines Adjusted EBITDA as net loss, calculated in accordance with GAAP, plus discontinued operations, depreciation and amortization expense, interest expense, net, other expense (income), net, provision for income taxes, stock-based compensation expense, acquisition-related expenses and one-time litigation expense.
Upland discloses Adjusted EBITDA because it is a key measure used by management, investors and others to understand and evaluate our financial and operating performance, establish our annual operating budgets and operational goals and to assess the effectiveness of our business strategies. Upland believes it also provides more consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. However, Adjusted EBITDA has limitations as an analytical tool, and Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP. Because of these
limitations, you should consider Adjusted EBITDA together with other financial performance measures, including various cash flow metrics, net loss and our other GAAP results.
Upland’s 2015 revenue guidance excludes the impact of reductions due to deferred revenue discounts as a result of GAAP purchase accounting adjustments related to the acquisitions of Solution Q, Inc. and Mobile Commons, Inc. in the fourth quarter of 2014. Upland estimates the total amount of any such adjustments in 2015 to be less than $250 thousand.
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. We believe that our ability to retain our customers and expand their recurring revenue growth over time will be an indicator of the stability of our revenue base and the long-term value of our customer relationships. We track the annual net dollar renewal rate for contracts corresponding to applications that have been part of the Upland family for five quarters or more. Annualized revenue run-rate equals our annualized fourth quarter 2014 total revenue, plus each of Solution Q, Inc.‘s and Mobile Commons, Inc.’s annualized fourth quarter 2014 total revenue.
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 press release contains forward-looking statements, which are subject to substantial risks, uncertainties and assumptions. You should not place reliance on these statements. Accordingly, you should not place undue reliance on these forward-looking statements. These statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "seek," "will," "may" or similar expressions. Forward-looking statements include information concerning our financial performance and our ability to achieve or sustain profitability or predict financial results; our ability to attract and retain customers; our ability to deliver high-quality customer service; the growth of demand for enterprise work management applications; our ability to effectively manage our growth; our ability to consummate and integrate acquisitions; maintaining our senior management and key personnel; our ability to maintain and expand our direct sales organization; our ability to changing market conditions and competition; our ability to successfully enter new markets and manage our international expansion; the operation of and reliability of our third-party data centers; and other risks and potential risk factors that could affect Upland’s business and financial results identified in Upland’s filings with the Securities and Exchange Commission (the “SEC”), including its prospectus filed with the SEC pursuant to Rule 424(b)(4) on November 6, 2014 and its quarterly report filed on Form 10-Q, which was filed on December 22, 2014, and amended on January 22, 2015. All such statements speak only as of the date made. 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. Upland does not intend or undertake any duty to release publicly any updates or revisions to any forward-looking statements contained herein, whether as a result of new information, future events or otherwise.
Upland Software, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share and per share data)
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||
Revenue: | |||||||||
Subscription and support | $ 12,715 | $ 8,974 | $ 48,625 | $ 30,887 | |||||
Perpetual license | 840 | 868 | 2,787 | 2,003 | |||||
Total product revenue | 13,555 | 9,842 | 51,412 | 32,890 | |||||
Professional services | 2,920 | 2,292 | 13,162 | 8,303 | |||||
Total revenue | 16,475 | 12,134 | 64,574 | 41,193 | |||||
Cost of revenue: | |||||||||
Subscription and support | 3,950 | 2,429 | 14,042 | 7,787 | |||||
Professional Services | 2,037 | 1,425 | 9,079 | 5,680 | |||||
Total cost of revenue | 5,987 | 3,854 | 23,121 | 13,467 | |||||
Gross profit | 10,488 | 8,280 | 41,453 | 27,726 | |||||
Operating expenses: | |||||||||
Sales and marketing | 3,752 | 3,496 | 14,670 | 10,625 | |||||
Research and development | 3,979 | 3,204 | 26,165 | 10,340 | |||||
Refundable Canadian tax credits | (682) | (143) | (1,094) | (583) | |||||
General and administrative | 4,330 | 2,250 | 13,561 | 6,832 | |||||
Depreciation and amortization | 1,122 | 735 | 4,310 | 3,670 | |||||
Acquisition-related expenses | 1,557 | 911 | 2,186 | 1,461 | |||||
Total operating expenses | 14,058 | 10,453 | 59,798 | 32,345 | |||||
Loss from operations | (3,570) | (2,173) | (18,345) | (4,619) | |||||
Other Expense: | |||||||||
Interest expense, net | (720) | (1,816) | (1,951) | (2,797) | |||||
Other income (expense), net | 409 | (553) | 101 | (431) | |||||
Total other expense | (311) | (2,369) | (1,850) | (3,228) | |||||
Loss before provision for income taxes | (3,881) | (4,542) | (20,195) | (7,847) | |||||
Provision for income taxes | 1,206 | (506) | 78 | (708) | |||||
Loss from continuing operations | (2,675) | (5,048) | (20,117) | (8,555) | |||||
Loss from discontinued operations | 0 | (131) | 0 | (642) | |||||
Net loss | (2,675) | (5,179) | (20,117) | (9,197) | |||||
Preferred stock dividends and accretion | (204) | (65) | (1,524) | (98) | |||||
Net loss attributable to common shareholders | (2,879) | (5,244) | (21,641) | (9,295) | |||||
Net loss per common share: | |||||||||
Loss from continuing operations per common share, basic and diluted | $ (0.30) | $ (3.57) | $ (4.43) | $ (7.23) | |||||
Income (loss) from discontinued operations per common share, | |||||||||
basic and diluted | 0 | $ (0.09) | 0 | $ (0.54) | |||||
Net loss per common share, basic and diluted | $ (0.30) | $ (3.66) | $ (4.43) | $ (7.77) | |||||
Weighted-average common shares outstanding, basic and diluted | 9,507,246 | 1,430,233 | 4,889,901 | 1,196,668 | |||||
Upland Software, Inc.
Calculation of Weighted-Average Basic and Diluted Shares Assuming Conversion of Redeemable Convertible Preferred Stock
(Unaudited)
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||
2014 | 2013 | 2014 | 2013 | ||||
Basic and Diluted: | |||||||
GAAP basic weighted average common shares | 9,507,246 | 1,430,233 | 4,889,901 | 1,196,668 | |||
Add: Weighted average shares from assumed conversion of redeemable convertible preferred stock | 3,164,456 | 5,084,126 | 5,916,971 | 4,801,945 | |||
Basic and Diluted weighted-average common shares (as converted basis) | 12,671,702 | 6,514,359 | 10,806,872 | 5,998,613 | |||
Upland Software, Inc.
Reconciliation of GAAP Net Loss to Adjusted EBITDA
(Unaudited, in thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
2014 | 2013 | 2014 | 2013 | |||||
Reconciliation of Net loss to Adjusted EBITDA: | ||||||||
Net Loss | $ (2,675) | $ (5,179) | $ (20,117) | $ (9,197) | ||||
Net (income)/loss from discontinued operations | 0 | 131 | 0 | 642 | ||||
Depreciation and amortization expense | 1,994 | 1,223 | 7,456 | 5,310 | ||||
Interest expense, net | 720 | 1,816 | 1,951 | 2,797 | ||||
Other expense (income), net | (409) | 553 | (101) | 431 | ||||
Provision for income taxes | (1,206) | 506 | (78) | 708 | ||||
Stock-based compensation expense | 460 | 125 | 1,077 | 498 | ||||
Acquisition-related expenses | 1,557 | 911 | 2,186 | 1,461 | ||||
Stock-based compensation expense - related party vendor | 0 | 0 | 11,220 | 0 | ||||
Non-recurring litigation costs | 257 | 0 | 257 | 0 | ||||
Adjusted EBITDA | $ 698 | $ 86 | $ 3,851 | $ 2,650 | ||||
Total Revenue | $ 16,475 | $ 12,134 | $ 64,574 | $ 41,193 | ||||
Adjusted EBITDA margin | 4.2% | 0.7% | 6.0% | 6.4% | ||||
Upland Software, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
December 31, | December 31, | |||
2014 | 2013 | |||
Assets | ||||
Current assets: | ||||
Cash | $ 30,988 | $ 4,703 | ||
Accounts receivable, net of allowance | 14,559 | 11,026 | ||
Prepaid and other | 2,069 | 2,562 | ||
Total current assets | 47,616 | 18,291 | ||
Canadian tax credits receivable | 3,959 | 3,583 | ||
Property and equipment, net | 3,930 | 3,942 | ||
Intangible assets, net | 34,751 | 34,747 | ||
Goodwill | 45,146 | 33,630 | ||
Other assets | 364 | 654 | ||
Total assets | $ 135,766 | $ 94,847 | ||
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (deficit) | ||||
Current liabilities: | ||||
Accounts payable | $ 2,258 | $ 1,280 | ||
Accrued compensation | 2,372 | 2,725 | ||
Accrued expenses and other | 4,304 | 2,654 | ||
Deferred revenue | 21,182 | 16,620 | ||
Due to seller | 4,365 | 1,033 | ||
Current maturities of notes payable | 10,964 | 5,245 | ||
Total current liabilities | $ 45,445 | $ 29,557 | ||
Commitments and contingencies: | ||||
Canadian tax credit liability to sellers | 1,616 | 2,595 | ||
Notes payable, less current maturities | 12,407 | 23,438 | ||
Deferred tax liability | 3,006 | 3,084 | ||
Deferred revenue | 194 | 416 | ||
Other long term liabilities | 1,701 | 1,101 | ||
Total liabilities | 64,369 | 60,191 | ||
Redeemable convertible preferred stock | 0 | 50,538 | ||
Stockholders’ equity (deficit): | ||||
Common stock | 2 | 0 | ||
Additional paid-in capital | 108,337 | 0 | ||
Accumulated other comprehensive loss | (1,716) | (773) | ||
Accumulated deficit | (35,226) | (15,109) | ||
Total stockholders’ equity (deficit) | 71,397 | (15,882) | ||
Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (deficit) | $ 135,766 | $ 94,847 | ||
Upland Software, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited, in thousands)
Twelve Months Ended December 31, | ||||
2014 | 2013 | |||
Operating activities: | ||||
Net loss | $ (20,117) | $ (9,197) | ||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||
Depreciation & Amortization | 7,457 | 5,595 | ||
Deferred Income Taxes | (703) | (104) | ||
Non-cash interest and other expense | 589 | 1,585 | ||
Non-cash stock compensation expense | 1,077 | 498 | ||
Stock-based compensation-related party vendor | 11,220 | 0 | ||
Changes in operating assets and liabilities, net of purchase: | ||||
Accounts receivable | (1,579) | 2,941 | ||
Prepaids and other | 243 | (1,617) | ||
Accounts payable | 1,116 | (1,113) | ||
Accrued expenses and other liabilities | (752) | 2,176 | ||
Deferred revenue | 2,626 | (1,003) | ||
Net cash provided by (used in) operating activities | 1,177 | (239) | ||
Investing activities: | ||||
Purchases of property and equipment | (861) | (263) | ||
Purchase business combinations, net of cash acquired | (6,217) | (28,175) | ||
Cash included in distribution of spin-off | 0 | (127) | ||
Net cash used in investing activities | (7,078) | (28,565) | ||
Financing activities: | ||||
Payments on capital leases | (541) | (351) | ||
Proceeds from notes payable | 5,685 | 28,036 | ||
Payments on notes payable | (10,910) | (17,516) | ||
Issuance of redeemable preferred stock, net of issuance costs | (97) | 19,716 | ||
Issuance of common stock, net of issuance costs | 38,846 | 0 | ||
Additional consideration paid to sellers of businesses | (599) | (321) | ||
Net cash provided by (used in) financing activities | 32,384 | 29,564 | ||
Effect of exchange rate fluctuations on cash | (198) | 51 | ||
Net change in cash and cash equivalents | 26,285 | 811 | ||
Cash and cash equivalents, beginning of period | 4,703 | 3,892 | ||
Cash and cash equivalents, end of period | $ 30,988 | $ 4,703 | ||
Supplemental disclosures of cash flow information | ||||
Cash paid for interest | $ 1,382 | $ 1,221 | ||
Cash paid for taxes | 252 | 287 | ||
Noncash investing and financing activities | ||||
Notes payable issue to sellers in business combinations | 0 | $ 3,500 | ||
Equipment acquired pursuant to capital lease obligations | $ 406 | $ 649 | ||
###
Investor Relations Contact:
Mike Hill
Upland Software
Upland Software
512.960.1031
investor-relations@uplandsoftware.com
Media Contact:
Karoline McLaughlin
Upland Software
Upland Software
512.960.1028
kmclaughlin@uplandsoftware.com