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Upland Software, Inc. (UPLD)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $63.7M and adjusted EBITDA of $13.1M (21% margin) both exceeded guidance midpoints; non-GAAP diluted EPS was $0.23, with free cash flow of $7.9M .
  • The company sold its mobile messaging product lines post-quarter, reducing FY25 revenue guidance midpoint by ~$25M but leaving adjusted EBITDA midpoint unchanged; FY25 adjusted EBITDA margin was raised to 27% at the midpoint .
  • Q2 2025 guidance implies continued margin expansion to a 26% adjusted EBITDA margin midpoint despite a reported revenue decline from divestitures; FY25 guides embed a 20% revenue decline at the midpoint and a 7% EBITDA increase .
  • Management emphasized a strategy shift to higher-margin, stickier AI-enabled products, improved net dollar retention pro forma to 99%, and a deleveraging plan with $34.2M debt paydown in Q1 and a path to ~3.7x net leverage by year-end .
  • Results and narrative likely drive investor focus on margin expansion and portfolio mix shift; consensus revenue and EPS were both beaten in Q1 (Revenue $63.7M vs $61.17M*, EPS $0.23 vs $0.17*), supporting estimate-upward bias near term. Values retrieved from S&P Global *.

What Went Well and What Went Wrong

What Went Well

  • Beat revenue and adjusted EBITDA guidance midpoints, with adjusted EBITDA margin at 21% and free cash flow above expectations at $7.9M .
  • Strategic focus on AI-enabled products gaining traction: 107 new customers, 19 new major customers, and 245 expansions; management: “We continued to see some nice, sizable product wins, including with our AI-enabled products” .
  • Post-quarter divestitures sharpened focus and raised FY25 margin profile; management highlighted core organic growth turning positive in Q2 (2%) and margin expansion to 26% in Q2, expanding further in H2 .

What Went Wrong

  • Reported revenue declined 10% YoY to $63.7M as planned runoff/sunset assets weighed; subscription and support declined 10% YoY to $60.2M .
  • GAAP net loss remained high at $(25.8)M due to a $(23.5)M loss on divestitures and interest expense, despite improvement vs prior year; GAAP EPS was $(0.97) .
  • FY25 total revenue guidance cut (midpoint down ~$25M) following divestitures, and Q2 2025 revenue guide implies a 23% YoY decline at midpoint; execution needs to offset top-line pressure with efficiency and mix .

Financial Results

Quarterly Performance vs Prior Periods and Consensus

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$66.7 $68.0 $63.7
Primary EPS Consensus Mean* ($USD)—$0.204*$0.173*
Non-GAAP Diluted EPS ($USD)—$0.41 $0.23
Adjusted EBITDA ($USD Millions)$14.0 $14.9 $13.1
Adjusted EBITDA Margin (%)21% 22% 21%
GAAP Net Loss ($USD Millions)$(1.7) $(3.4) $(25.8)
Free Cash Flow ($USD Millions)$4.2 $9.0 $7.9

Values retrieved from S&P Global.

Prior Year Comparison (YoY)

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$70.7 $63.7
Subscription & Support ($USD Millions)$67.1 $60.2
GAAP Net Loss ($USD Millions)$(96.1) $(25.8)
Non-GAAP Diluted EPS ($USD)$0.19 $0.23
Adjusted EBITDA ($USD Millions)$13.1 $13.1
Adjusted EBITDA Margin (%)19% 21%

Revenue Mix

Revenue Component ($USD Millions)Q3 2024Q4 2024Q1 2025
Subscription & Support$63.8 $64.3 $60.2
Perpetual License$1.1 $1.5 $1.6
Professional Services$1.8 $2.2 $1.9
Total Revenue$66.7 $68.0 $63.7

KPIs

KPIQ3 2024Q4 2024Q1 2025
New Customers122 110 107
Major New Customers18 21 19
Customer Expansions312 291 245
Major Expansions27 42 26
Net Dollar Retention Rate—96% (end of 2024) 99% core pro forma (as of 12/31/24)
Cash & Cash Equivalents ($M)$59.7 $56.4 $33.7
Debt Paydown ($M, period)$177 in Q3 $7.4 in Q4; $188.4 FY24 $34.2 in Q1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)FY 2025$231.5–$255.5 $209.5–$227.5 Lowered (midpoint ↓ ~$25M due to divestitures)
Subscription & Support ($M)FY 2025$218.0–$238.0 $197.5–$212.5 Lowered
Adjusted EBITDA ($M)FY 2025$53.5–$65.5 $55.0–$64.0 Maintained midpoint (unchanged at $59.5M)
Adjusted EBITDA Margin (%)FY 202524% midpoint 27% midpoint Raised
Total Revenue ($M)Q2 2025—$50.3–$56.3 New
Subscription & Support ($M)Q2 2025—$47.5–$52.5 New
Adjusted EBITDA ($M)Q2 2025—$12.1–$15.1 New
Adjusted EBITDA Margin (%)Q2 2025—26% midpoint New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
AI product momentumRightAnswers/BA Insight recognized; Azure AI Search marketplace listing; multiple G2 badges “Sizable product wins” incl. AI; Panviva Sidekick, Adestra Audiences launches reinforced narrative Improving
Core organic growthGuided to turn positive exiting 2024; 2025 ~2.5% Q2 2025 at 2%, targeting increases H2; aiming >4% in 2026 Improving
Margin expansionAdjusted EBITDA grew sequentially in 2024; guide to 24% FY25 26% in Q2; 27% FY25 midpoint Improving
Portfolio pruning/divestituresTwo non-strategic lines sold post year-end; lowered FY25 revenue by ~$18M, no EBITDA impact Mobile messaging divested; FY25 revenue midpoint -$25M; no EBITDA midpoint impact Continuing
Debt reduction$177M paid down in Q3; plan to continue; locked swaps at ~5.4% $34.2M paydown in Q1; targeting ongoing reductions; net leverage ~3.7x YE Improving
GTM changesBuilding modern digital marketing; sales rigor; CS investment CSO role eliminated; sales aligned under GMs; demand gen stair-stepping Evolving
Tariffs/macroNot emphasized previouslyQ2 core growth outlook assumes no macro disruption from tariffs Watch

Management Commentary

  • “We beat our Revenue and Adjusted EBITDA guidance midpoints… We welcomed 107 new customers… including with our AI-enabled products” — Jack McDonald (CEO) .
  • “Those mobile messaging divestitures lowered our 2025 revenue guidance midpoint by $25 million. But they had no impact on 2025 adjusted EBITDA guidance.” — Jack McDonald .
  • “Adjusted EBITDA margin… moving to 26% here in Q2 and then further expanding… with proceeds from our divestitures… we paid down debt… $34.2 million [in 2025 YTD].” — Jack McDonald .
  • “Revenues came in better than expected due to some customer go-lives… and InterFAX delivered more usage volume than originally expected.” — Michael Hill (CFO) .
  • “Free cash flow… $20 million this year before that $5 million [one-timer related to a divestiture].” — Michael Hill .

Q&A Highlights

  • Go-to-market structure: CSO terminated; sales realigned under product GMs to drive focus and efficiency; growth positive at 2% in Q2, increasing in H2 .
  • Divestiture cadence: 2025 repositioning largely complete; core revenue ~$194M, core organic growth 2–3%, NDRR to 99%, EBITDA ~27% .
  • Growth drivers: Mix shift to higher-margin, stickier products; centralized digital marketing ramp; India R&D center completed YE24 improving throughput; notable AI-driven wins (e.g., ~$0.5M ARR enterprise LLM use case) .
  • Free cash flow: FY25 guide $20M ex-$5M one-time; Q1 FCF benefited ~$1.2M from swap sales .
  • Pipeline/visibility: 93% recurring revenue; average contract term ~2 years; NDRR pro forma 99%; internal forecasts show >2% core organic growth H2 and north of 4% in 2026, execution dependent .

Estimates Context

  • Q1 2025: Revenue $63.7M vs consensus $61.2M*; non-GAAP diluted EPS $0.23 vs consensus $0.17* — both beats. Primary EPS and revenue estimates based on 3 estimates in Q1 *.
  • Q4 2024: Revenue $68.0M vs $67.8M*; non-GAAP diluted EPS $0.41 vs $0.20* — beats *.
  • Q1 2024: Revenue $70.7M vs $68.3M*; non-GAAP diluted EPS $0.19 vs $0.14* — beats *.
    Values retrieved from S&P Global.

Consensus vs Actuals

MetricQ1 2024Q4 2024Q1 2025
Revenue Consensus Mean* ($USD Millions)68.33*67.84*61.17*
Revenue Actual ($USD Millions)70.74 68.03 63.66
Primary EPS Consensus Mean* ($USD)0.136*0.204*0.173*
Non-GAAP Diluted EPS Actual ($USD)0.19 0.41 0.23

Values retrieved from S&P Global.

Key Takeaways for Investors

  • The margin story is the core near-term catalyst: Q2 2025 adjusted EBITDA margin at 26% midpoint, FY25 at 27% midpoint despite lower reported revenue from divestitures .
  • Portfolio pruning is largely complete and positions UPLD toward higher-margin AI-enabled products with improving net dollar retention (pro forma 99%), supporting durable margin expansion and eventual growth acceleration .
  • Deleveraging continues: $34.2M Q1 debt paydown; swaps effectively fix ~$217M at ~5.4%; management targets ~3.7x net leverage by YE25, lowering interest burden and risk .
  • Demand generation and product velocity are tangible: centralized digital marketing and India R&D throughput improvements underpin bookings momentum; AI product wins and industry validations (G2 badges) add credibility .
  • Estimates likely move up modestly near term given recurring beats and stronger margin trajectory; watch for H2 core organic growth inflection and FY25 FCF delivery (~$20M ex-one-time) .
  • Key risks: macro/tariff disruptions to Q2 outlook; execution on growth re-acceleration; maintaining renewal improvements post-divestitures; managing top-line declines while expanding margins .
  • Actionable: Focus valuation on EBITDA/FCF multiple given margin trajectory and deleveraging; monitor Q2 mix/margin realization and any incremental AI product monetization milestones .

Notes on Non-GAAP Adjustments

  • Q1 2025 adjusted EBITDA excludes items such as $23.5M loss on divestitures, stock-based comp, interest, and taxes; non-GAAP EPS adjusts for amortization, divestiture-related expenses, and tax effects per reconciliation tables .

Additional Context and Sources

  • Q1 2025 press release financials, reconciliations, and guidance .
  • Q1 2025 earnings call prepared remarks and Q&A .
  • Prior quarters: Q4 2024 press release and transcript ; Q3 2024 press release and transcript .
  • Product updates: Panviva Sidekick, Adestra Audiences .