Upland Software, Inc. Q4 FY2025 earnings call

• Q4 headlines: revenue, adjusted EBITDA, and margins as expected. Core organic growth rate flat but with improving multiyear trend. Annual net dollar retention rate 96% in 2025. • Q4 adjusted EBITDA $15.3M, margin 31%. Free cash flow $7.2M in Q4, full-year $24.4M exceeding target. • Welcomed 110 new customers in Q4 including 15 major and expanded with 199 existing customers. • Performed well on product front with 49 badges in G2's Winter 2026 reports, recognized in IDC and Gartner reports. • Announced Sean Nathaniel joining as new CEO, Jack transitioning to Chairman. Sean has deep familiarity with business, AI initiatives, and will focus on sharpening execution.

Q4 2025 revenue was as expected considering divestitures in Q1 2025. Q4 gross margin increased from earlier in 2025 due to higher margins on ongoing product lines. Adjusted EBITDA was $15,300,000 with a margin of 31%, up from 22% in Q4 2024. Full-year 2025 free cash flow was $24,400,000, exceeding the $20,000,000 target. Core organic growth rate was flat in Q4 due to tough compare to Q4 2024 but has a generally improving trend from negative 2% three years ago to 1% positive last year and targeting 1%-2% in 2026. Annual net dollar retention rate in 2025 was 96%, consistent with prior year. Q4 saw 110 new customers including 15 major ones and 199 existing customers expanded with 27 major expansions. Product portfolio focused on KCM market. Revenue mix: roughly two-thirds to three-quarters is growth products (AI-enabled) in knowledge and content management market.

• Q3 2026 reported total revenue expected $47M - $50M, subscription and support revenue $44.8M - $47.3M, decline of 24% at midpoint from Q3 2025 due to divestitures. • Q3 2026 adjusted EBITDA expected $11.9M - $13.4M, decline of 3% at midpoint from Q3 2025, margin 26% at midpoint, 500 basis points increase from year-ago quarter. • Full-year 2026 reported total revenue expected $194.2M - $206.2M, subscription and support revenue $103.6M - $193.7M, decline of 8% at midpoint from 2025. • Full-year 2026 adjusted EBITDA expected $52.6M - $58.6M, decline of 4% at midpoint from 2025, margin 28% at midpoint, 100 basis points increase from 2025. • Core organic growth rate targeting 1%-2% positive in 2026. • 2025 free cash flow beat target by over $4M due to early receivables collections, but 2026 free cash flow target around $20M.

Q: David E. Hynes asked about customer metrics, sales execution, pipeline and EBITDA margin guide.

A: Jack said Q4 bookings performance a bit disappointing but pipeline for 2026 decent, especially in core knowledge management growth products. Mike said EBITDA margin step down in guide due to calendar-based payroll taxes hitting Q1 and Q2 more.

Q: Scott Randolph Berg asked about CEO change reason and go-to-market strategy.

A: Jack said change due to business focus shifting to AI-enabled product portfolio and Sean being product-centric and AI-focused. Jack said first phase of streamlining business done with divestitures and debt refinancing, now focused on execution under Sean's vision.

Q: Jeffrey Van Rhee asked about revenue mix by core capabilities and AI impact.

A: Michael D. Hill said roughly two-thirds to three-quarters of revenue is growth products (AI-enabled) in knowledge and content management market. Jack said products that are systems of record or enabling infrastructure will be more defensible, others may not be, citing examples like Upland Right Answers and partnerships with hyperscalers