Upland Software, Inc. (UPLD)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue of $53.4M declined 23% YoY due to divestitures but came in slightly above S&P Global consensus, while non-GAAP diluted EPS of $0.15 missed consensus; Adjusted EBITDA was $13.6M (25% margin), up 500 bps YoY on portfolio mix shift and cost actions . Revenue consensus $53.22M* vs actual $53.38M; EPS (normalized) consensus $0.18* vs actual $0.15. Values retrieved from S&P Global.
• Management returned to positive core organic growth and guided Q3 2025 Adjusted EBITDA margin to ~32% (midpoint), with FY25 Adjusted EBITDA margin of ~27% (midpoint) .
• FY25 guidance midpoints for total revenue and Adjusted EBITDA were lowered by ~$0.7M each, driven by lower professional services; subscription & support midpoint was maintained; revenue range was tightened .
• Balance sheet flexibility improved via refinancing to a $240M term loan due 2031 and a new $30M revolver; Upland paid down $18M at close and has prioritized deleveraging (no near-term M&A) .

What Went Well and What Went Wrong

What Went Well

• Margin expansion: Adjusted EBITDA margin rose to 25% in Q2 (from 20% in Q2’24) as lower-margin assets were divested and cost actions took hold; management sees >30% in Q3 .
• Positive core organic growth: “We are pleased to report a return to positive core organic growth… starting to see the benefits of our focused growth strategy” .
• Strategic refinancing and deleveraging: Debt maturity extended to 2031 with $18M principal paydown; “cash flow is going to be directed toward deleveraging. We don't anticipate M&A at this point.” .

What Went Wrong

• Top-line pressure from portfolio actions: Total revenue fell 23% YoY to $53.4M due primarily to divestitures, and free cash flow was burdened by ~$7M one-time divestiture costs in Q2 .
• EPS miss vs S&P Global: Non-GAAP diluted EPS of $0.15 missed S&P normalized EPS consensus of $0.18* despite the revenue beat; mix and one-time costs weighed . Values retrieved from S&P Global.
• Guidance trim (midpoints): FY25 total revenue and Adjusted EBITDA midpoints each lowered by ~$0.7M, reflecting softer professional services; subscription & support midpoint unchanged, indicating core recurring stability .

Financial Results

Performance by quarter (oldest → newest):

Q2 2025 vs S&P Global consensus:

Values retrieved from S&P Global.

Revenue mix (oldest → newest):

KPIs (commercial activity):

Note: Upland does not report formal operating segments; revenue is presented by type (subscription & support, license, professional services) .

Guidance Changes

Management noted the FY25 midpoint trims were “really as a result of just lower forecasted professional services revenue,” with subscription & support midpoint unchanged .

Earnings Call Themes & Trends

Management Commentary

• “We are pleased to report a return to positive core organic growth… and continued strong momentum in AI product wins.”
• “Adjusted EBITDA margins… 25%… we see adjusted EBITDA margins moving to north of 30% in Q3.”
• “Free cash flow… was burdened by about $7 million of one-time divestiture-related expenses… terminating that contract cost us a little cash upfront, but it is one of the factors that is driving the improvement in our go-forward margins.”
• “We successfully completed the refinancing… paid down an additional $18 million of debt principal and established a new $30 million revolving credit facility… supporting our growth strategy.”
• CFO: “We did lower the midpoint of our full year 2025 total revenue and adjusted EBITDA guidance ranges by $700,000… as a result of just lower forecasted professional services revenue. The midpoint of our subscription and support revenue guidance range remains unchanged.”

Q&A Highlights

• Capital structure & allocation: Private credit was optimal given smaller facility size post paydowns; cash flow directed to deleveraging; no near-term M&A .
• Demand and product momentum: Strength in AI-enabled knowledge and content management; RightAnswers (headless KM), BA Insight (connectors for enterprise AI), and Qvidian AI Assist driving opportunities/upgrades .
• Pipeline and GTM: Demand environment “seems fine”; increases in marketing-sourced bookings over last five quarters; rolling out intent data to bolster outbound; hiring domain-expert sellers from competitors to improve execution .
• Free cash flow outlook: FY25 FCF target raised to ~+$20M on lower divestiture expenses, monetization of swaps, and lower expected cash taxes under new tax legislation .
• Divested revenue tail: ~$4–5M of Q2 revenue related to businesses that were divested (running off), consistent with top-line pressure from portfolio actions .

Estimates Context

• Q2 2025 revenue slightly beat S&P Global consensus ($53.38M actual vs $53.22M*), while non-GAAP diluted EPS missed ($0.15 actual vs $0.18* normalized consensus) . Values retrieved from S&P Global.
• FY25 revenue guidance midpoint ($217.8M) is roughly in line with S&P revenue consensus ($217.88M*), suggesting estimates may need minimal top-line revision; mix suggests modest EPS trimming given Q2 miss and lower services contribution . Values retrieved from S&P Global.

Key Takeaways for Investors

• Portfolio pruning is working: despite YoY revenue declines from divestitures, core organic growth turned positive and margins expanded; near-term catalysts include a potential Q3 margin “print” >30% .
• The investment narrative is shifting to profitable growth: management is targeting ~27% FY25 Adjusted EBITDA margin with FCF ≈$20M; execution on cash conversion should help deleveraging and equity value .
• Guidance fine-tuning reflects services softness, not core recurring weakness: subscription & support midpoint unchanged; watch for services stabilization versus further mix shift to recurring .
• Balance sheet risk moderated: 2031 maturity, $18M paydown at refi, and an undrawn $30M revolver provide liquidity for execution; interest burden and net leverage (~3.9x post-refi) remain key monitoring points .
• AI remains a differentiator: product enhancements and integrations (RightAnswers, Panviva, BA Insight, Qvidian) are winning recognition and driving upsell/expansion opportunities .
• Near-term trading setup: Revenue/EPS consensus is tight; execution on Q3 margin and signs of accelerating core growth (~3% 2H) are likely stock drivers; misses on EPS normalization or further services pressure could weigh .
• Medium-term thesis: A focused, higher-margin portfolio, recurring revenue durability, and deleveraging can compound equity value; delivery on AI-led product adoption and go-to-market upgrades (intent data, domain sellers) is critical .

Additional notes:

• We did not find a separate Item 2.02 8-K for Q2 results in the catalog; the comprehensive Q2 press release and call transcript were used as primary sources .
• Debt refinancing details confirmed via the July 28 press release .

Values retrieved from S&P Global.