Upland Software, Inc. Q4 FY2024 earnings call

• Q4 2024 was strong with beating on recurring revenue and meeting adjusted EBITDA guidance midpoint. Core organic growth was flat but showing positive momentum. Net dollar retention rate improved to 96% from 95% the prior year. - Q4 adjusted EBITDA was $14.9 million, up sequentially, and Q4 free cash flow was $9 million, with full year 2024 free cash flow at $23.4 million. - Welcomed 110 new customers in Q4, including 21 major ones, and expanded relationships with 291 existing customers. - On the product front, earned 76 badges in G2 Winner 2025 Market Reports, with RightAnswers, Panviva, BA Insight, Qvidian, and Upland AI powered solutions receiving recognitions. Upland InterFAX expanded partnership with Konica Minolta. Upland was recognized in IDC reports. - Divested two non-strategic underperforming product lines, lowering 2025 revenue guide by ~$18 million but with no adjusted EBITDA impact, simplifying the business focus.

In Q4 2024, adjusted EBITDA was $14.9 million, which was up sequentially from Q3. Q4 free cash flow came in at $9 million, and full year 2024 free cash flow totaled $23.4 million. The net dollar retention rate was 96% at the end of 2024, an improvement from 95% in the prior year. Revenue contribution details by product segment were not explicitly broken down in absolute terms and percentage, but overall, the company had positive momentum in certain areas like product recognitions and customer expansions.

• Q1 2025: Reported total revenue expected to be between $59 million and $65 million, with subscription and support revenue between $56.4 million and $61.4 million. Adjusted EBITDA expected to be between $11.2 million and $14.2 million. - Full year 2025: Reported total revenue expected to be between $231.5 million and $255.5 million, with subscription and support revenue between $218 million and $238 million. Core organic growth projected at 2.5%. Adjusted EBITDA expected to be between $53.5 million and $65.5 million, with an adjusted EBITDA margin of 24% at the midpoint.

• Divestiture of non-strategic product lines could impact revenue, but no adjusted EBITDA impact. - Potential FX risks affecting revenue. - Uncertainties related to debt refinancing timing and associated interest rate changes.

Q: DJ Hynes asked about the AI story at Upland, specifically with RightAnswers and BA Insights, and key use cases.

A: Upland invested in a center of excellence in India, AI enabled 80% of core content and knowledge management product portfolio. BA Insight is an AI enablement platform connecting enterprise LLMs to proprietary data sources with over 90 enterprise connectors. Panviva has Panviva Sidekick, an AI-driven agent assistant for contact centers. Qvidian has AI Assist for automating RFP and proposal responses.

Q: Jeff Van Rhee inquired about the HGGC investment, go-to-market history, and debt timing.

A: Since the HGGC investment, Upland sold Sunset noncore products, built an India software development function, invested in products, upgraded digital marketing and sales talent, and paid down $261 million of debt. Regarding debt timing, they have an attractive lock rate with swaps and plan to refi debt in the second half of the year, with cash flow allowing them to chip away at debt, aiming for up to $2 million per month in paydowns.

Q: Alexander Sklar asked about net dollar retention, FX impact on the 2.5% core growth.

A: Net dollar retention rate improved due to investments in products and focus on core offerings. The 2.5% core growth outlook has minimal FX impact as most revenue dynamics are internal to the business.