• Recurring Revenue: Beat expectations in Q4 2024.
• Adjusted EBITDA: $14.9 million in Q4 2024, up sequentially from Q3.
• Adjusted EBITDA Margin: Improved to 22% in Q4 2024, up from 19% in Q4 2023.
• Free Cash Flow: $9 million in Q4 2024; $23.4 million for the full year 2024.
• Net Dollar Retention Rate: 96% at the end of 2024, up from 95% in the prior year.
• New Customers: 110 new customers in Q4 2024, including 21 major customers.
• Debt Paydown: $33 million paid down in 2025 to date; $189 million paid down in 2024.
• 2025 Revenue Guidance: Reduced by $18 million due to divestitures, with no impact on adjusted EBITDA.
• 2025 Core Organic Growth Guidance: Projected at 2.5%.
• 2025 Adjusted EBITDA Margin Guidance: Expected to increase to 24% from 20% in 2024.

• Warning! GuruFocus has detected 6 Warning Signs with UPLD.

Release Date: March 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Upland Software Inc (NASDAQ:UPLD) beat its recurring revenue expectations and met the midpoint of its adjusted EBITDA guidance for Q4 2024.
• The company reported a net dollar retention rate of 96% at the end of 2024, an improvement from 95% in the prior year.
• Upland Software Inc (NASDAQ:UPLD) welcomed 110 new customers in Q4, including 21 major customers, and expanded relationships with 291 existing customers.
• The company earned 76 badges in the G2 Winter 2025 market reports, showing strong recognition for its products.
• Upland Software Inc (NASDAQ:UPLD) divested two non-strategic underperforming product lines, simplifying its business and focusing on growth products.

Negative Points

• Core organic growth in Q4 was flat, although there is positive growth momentum expected in 2025.
• The divestitures lowered the 2025 revenue guide by about $18 million, although they had no adjusted EBITDA impact.
• Upland Software Inc (NASDAQ:UPLD) expects a decline in total revenue of 12% at the midpoint for Q1 2025 compared to the same quarter in 2024.
• The company is facing a decline in total revenue of 11% at the midpoint for the full year 2025 compared to 2024.
• Upland Software Inc (NASDAQ:UPLD) has a wide revenue guidance range for Q1 2025, indicating uncertainty in revenue projections.

Q & A Highlights

Q: Can you discuss Upland's AI strategy and its impact on growth? A: Jack McDonald, CEO: Upland has invested significantly in AI, enabling 80% of our core content and knowledge management products. Products like BA Insight and Panviva are now AI-enabled, enhancing enterprise search and customer service. This AI strategy is foundational for our growth, with notable sales like a $500,000 ARR deal for Qvidian's AI Assist. We expect AI to drive higher growth rates in the coming years.

Q: What is the status of Upland's asset divestiture strategy, and what were the proceeds from recent sales? A: Mike Hill, CFO: We sold two non-strategic product lines for about $10 million in total. The revenue from these divested assets was $18 million, but they had no impact on adjusted EBITDA. The divestitures help focus our business and improve core organic growth.

Q: How is Upland addressing its debt, and what are the plans for refinancing? A: Jack McDonald, CEO: We have paid down $261 million in debt since the HGGC investment. Our current debt is hedged at a 5.4% interest rate, and we plan to continue paying down up to $2 million per month. We aim to refinance in the second half of this year, considering the attractive current rate and lower principal amount.

Q: Can you elaborate on the improvement in net dollar retention rates? A: Jack McDonald, CEO: The improvement to a 96% net dollar retention rate is driven by better gross dollar retention, thanks to product investments and focusing on our strongest products. We aim to reach a 98% retention rate by the end of 2025, with expansion opportunities from AI-enabled products.

Q: Why is there a wide range in the Q1 revenue guidance? A: Mike Hill, CFO: The guidance range of $59 million to $65 million is consistent with past quarters. The range accounts for variability in perpetual license and professional services revenue, which can be lumpy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.