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Upland Software (UPLD) 1 Aug 24 2024 Q2 Earnings call transcript

AInvestFriday, Aug 2, 2024 6:05 pm ET
2min read

Upland Software, a leading enterprise software company, recently held its second quarter 2024 earnings call, revealing a mixed bag of financial results and strategic insights. Despite a decline in total revenue for the quarter, the company reported strong growth in core bookings and adjusted EBITDA, signaling a positive turnaround.

Key Themes and Trends

Upland Software's earnings call highlighted several key themes and trends that have shaped the company's financial performance and growth prospects.

Core Bookings Exceed Churn: For the second quarter in a row, Upland Software posted core bookings in excess of core churn. This achievement is a significant milestone for the company, as it sets the stage for its target of achieving a 3% core organic growth rate in 2025. Adjusted EBITDA Growth: Upland Software reported a sequential increase in adjusted EBITDA, reaching $13.6 million in the second quarter. This growth is expected to continue throughout the year, with the company aiming to exit 2024 with a nearly $60 million adjusted EBITDA run rate. Customer Expansion and Investment: Upland Software welcomed 155 new customers in Q2, including 17 major new customers and 41 major expansions. The company's focus on expanding relationships with existing customers and investing in product development and sales capacity is paying off, with larger deals and increased ARR (Annual Recurring Revenue) becoming more common. Product Innovation and AI Integration: Upland Software's product portfolio is undergoing significant changes, with a focus on integrating AI capabilities and enhancing sales force automation solutions. This strategic investment in product development and innovation is expected to drive growth and differentiate the company in the market.

Investor Insights

During the earnings call, key investors and analysts raised several questions, providing valuable insights into their concerns and priorities.

Scott Berg from Needham asked about the progress of Upland Software's go-to-market changes. John McDonald, the CEO, reported that the company is halfway through its transformation, with significant improvements in lead generation, inside sales, and field sales. The CEO remains optimistic about the company's growth prospects and is confident in Upland Software's ability to meet its 3% core organic growth target in 2025. Jeff Van Rhee from Craig Hallum inquired about the pace of the sunset asset runoff and Upland Software's strategy for tackling its debt balance. Michael Hill, the CFO, provided details on the expected decline of sunset asset revenue and the company's plans for refinancing in the first half of 2025. Alexander Sklar from Raymond James asked about sales cycles and major account expansions. John McDonald emphasized the importance of proactive customer engagement and the company's focus on improving customer success. He also shared his optimism about the trajectory of major account expansions, which are expected to play a significant role in Upland Software's growth. David Hynes from Canaccord Genuity questioned Upland Software's sales and marketing investments and the potential for M&A activity. John McDonald highlighted the company's focus on organic growth and margin expansion, while also acknowledging the potential for strategic acquisitions in the future.

Conclusion

Upland Software's second quarter 2024 earnings call painted a picture of a company on the mend. Despite challenges, the company's strategic investments in product development, sales capacity, and customer engagement are starting to bear fruit. With a clear focus on growth and margin expansion, Upland Software is well-positioned to navigate the complexities of the enterprise software market and capitalize on the opportunities ahead.

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