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Upland Software, Inc. (UPLD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $50.5M (-24% YoY) and subscription revenue was $47.7M, primarily reflecting prior divestitures; adjusted EBITDA was $16.0M with a 32% margin, and free cash flow was $6.7M .
  • Results beat Wall Street consensus: revenue $49.9M* vs actual $50.5M and EPS $0.17* vs non-GAAP diluted EPS $0.30; company also beat the revenue guidance midpoint and met the adjusted EBITDA guidance midpoint .
  • FY25 guidance was tightened and midpoints lowered by $0.8M (lower perpetual license revenue), while subscription & support midpoint was maintained; Q4 2025 guide: revenue $46.4–$52.4M, adjusted EBITDA $13.8–$16.8M (31% margin midpoint) .
  • Strategic catalysts: large multi-year AI deals ($2M Fortune 100 tech; $1M pharma), AWS Marketplace listings (RightAnswers, BA Insight), and debt refinancing extending maturity to July 2031 with a new $30M revolver; net leverage at ~3.8x and tracking to ~3.7x year-end .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA margin expanded to 32% in Q3 (from 21% a year ago) and free cash flow was $6.7M; CEO: “we beat our revenue guidance midpoint, and we met our adjusted EBITDA guidance midpoint” .
  • AI traction: two new multi-year wins ($2M Fortune 100 tech on RightAnswers + AWS Bedrock/S3; $1M pharma on BA Insight replacing legacy enterprise search), validating AI product strategy .
  • Commercial momentum and channel: RightAnswers and BA Insight now in AWS Marketplace, improving discoverability and procurement; recognition in Forrester’s Customer Service Solutions landscape underscores product impact .

What Went Wrong

  • Topline contraction (-24% YoY) continues due to asset divestitures as the portfolio was streamlined; subscription revenue fell similarly (-25% YoY) .
  • FY25 revenue and adjusted EBITDA midpoints lowered by $0.8M, driven by weaker perpetual license and some professional services expectations into Q4; CFO clarified this is not a lost major deal, just lower perp license activity .
  • Cash on hand decreased to $22.8M at quarter-end after refinancing/paydowns; deleveraging continues but cash balance is lower versus Q2 ($41.0M) .

Financial Results

Summary financials and margins

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$66.7 $63.7 $53.4 $50.5
Subscription & Support ($USD Millions)$63.8 $60.2 $50.5 $47.7
Perpetual License ($USD Millions)$1.1 $1.6 $1.2 $1.2
Professional Services ($USD Millions)$1.8 $1.9 $1.7 $1.6
Adjusted EBITDA ($USD Millions)$14.0 $13.1 $13.6 $16.0
Adjusted EBITDA Margin (%)21% 21% 25% 32%
GAAP Diluted EPS ($)-$0.12 -$0.97 -$0.51 -$0.09
Non-GAAP Diluted EPS ($)$0.42 $0.23 $0.15 $0.30

Notes: All values per company filings; adjusted EBITDA and margins are non-GAAP as defined by the company .

Segment/revenue breakdown detail

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Subscription & Support ($USD Millions)$63.8 $60.2 $50.5 $47.7
Total Product Revenue ($USD Millions)$64.9 $61.8 $51.7 $48.9
Professional Services ($USD Millions)$1.8 $1.9 $1.7 $1.6
Gross Profit ($USD Millions)$47.0 $45.6 $39.9 $38.8

KPIs and balance sheet

KPIQ1 2025Q2 2025Q3 2025
New Customers (count)107 100 97
New Major Customers (count)19 12 14
Expansions (count)245 263 168
Major Expansions (count)26 28 13
Free Cash Flow ($USD Millions)$7.9 $2.7 $6.7
Cash on Hand ($USD Millions)$34.0 $41.0 $22.8
Net Debt ($USD Millions) and Net Leverage (x)~$226; target 3.7x YE ~$217; ~3.9x ~$217; ~3.8x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)FY 2025$211.8–$223.8 $214.0–$220.0 Lowered midpoint by $0.8M
Subscription & Support ($USD Millions)FY 2025$200.0–$210.0 $202.5–$207.5 Maintained midpoint
Adjusted EBITDA ($USD Millions)FY 2025$55.8–$61.8 $56.5–$59.5 Lowered midpoint by $0.8M
Adjusted EBITDA Margin (%)FY 202527% 27% Maintained
Total Revenue ($USD Millions)Q4 2025N/A$46.4–$52.4 Initiated
Adjusted EBITDA ($USD Millions)Q4 2025N/A$13.8–$16.8 Initiated
Adjusted EBITDA Margin (%)Q4 2025N/A31% midpoint Initiated
Total Revenue ($USD Millions)Q3 2025$46.8–$52.8 (issued Q2) Actual $50.5 Achieved within range; beat midpoint

CFO explained the FY25 midpoint reductions were primarily due to lower forecasted perpetual license revenue and a small reduction in professional services, not a competitive loss .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
AI/technology initiativesQ1: Panviva Sidekick; AI-enablement across portfolio . Q2: Copilot Studio integration; strong AI product wins .Two large AI wins ($2M Fortune 100 tech; $1M pharma); RightAnswers and BA Insight in AWS Marketplace .Accelerating enterprise AI adoption and larger deal sizes .
Debt refinancing & liquidityRefinancing plan; paydowns ($34.2M in Q1); net leverage target ~3.7x YE . Q2: refinancing completed; $18M paid down; new $30M revolver .Maturity extended to July 2031; ample liquidity; net leverage ~3.8x; continued deleveraging via FCF .Balance sheet risk reduced; steady deleveraging .
Sales execution & pipelineQ1: sales org realigned under product GMs; positive pipeline visibility . Q2: marketing-sourced bookings stair-step higher; outbound intent data .Domain expert sellers; SEO; SDRs; intent data; channel partnerships with Amazon, Google, Microsoft .Improving GTM quality and partner-led opportunities .
Core organic growthQ1: flat in Q1; targeting ~2% in Q2 . Q2: returned to positive core organic growth .3% core organic growth in Q3; targeting 3% in 2026 and 5%+ thereafter .Uptrend; supported by larger AI-enabled deals .
Subscription retention (NDR)Q1: Core NDR pro forma would have been 99% in 2024 .Targeting upper-90s NDR for 2025; prior-year NDR 99% excluding divestitures .Stable/high retention profile .
Perpetual license/pro servicesQ2: FY midpoint reduced $0.7M on lower pro services .FY midpoint reduced $0.8M on lower perpetual license and some pro services .Structural shift toward subscription; perp license less reliable .

Management Commentary

  • CEO: “In Q3, we beat our revenue guidance midpoint, and we met our adjusted EBITDA guidance midpoint… The new and expanded relationships continue to be spread across our AI-powered product portfolio” .
  • CEO: “We successfully refinanced our debt… moved the maturity… to July 2031… added a $30M revolver… net debt leverage is now down to 3.8x” .
  • CFO: “Adjusted EBITDA margin of 32%, up from 21%… full-year adjusted EBITDA margin of around 27%… free cash flow remains ~ $20M target” .
  • CFO: “We lowered the midpoint for our full year 2025 total revenue and adjusted EBITDA guidance ranges by $800,000, primarily as a result of lower forecasted perpetual license revenue… midpoint of subscription and support revenue guidance remains unchanged” .
  • CEO: “We’re seeing larger opportunities… $2M multi-year deal… $1M multi-year deal… our products being slotted as enabling tech for broader enterprise AI implementations” .

Q&A Highlights

  • Growth durability: CEO emphasized pipeline of larger AI-enabled deals and partnerships (AWS, Microsoft, Google) supporting 3%+ core organic growth targets over the next 1–2 years .
  • Guidance clarification: CFO noted the $0.8M FY midpoint reduction was largely perpetual license revenue plus a minor pro services component; subscription guidance midpoint was unchanged .
  • Retention levels: CFO reiterated NDR excluding divestitures was 99% in 2024; targeting upper-90s for 2025 .
  • AWS Marketplace impact: CEO sees both expansion within installed base and net-new discoverability benefits from RightAnswers and BA Insight listings .
  • Sales execution: CEO highlighted upgraded domain expert sellers, improved SEO leads, and outbound intent data (6sense) improving prospect focus .

Estimates Context

  • Q3 2025 vs S&P Global consensus: revenue $49.9M* vs actual $50.5M; EPS $0.17* vs non-GAAP diluted EPS $0.30 → strong beat on EPS and modest beat on revenue .
  • Estimate counts: 3 EPS estimates*, 3 revenue estimates*; estimates likely to move higher on margin expansion and AI deal momentum, while modeling should reflect lower perpetual license volatility .
MetricQ3 2025 Consensus*Q3 2025 Actual
Revenue ($USD)$49,861,330*$50,526,000
Primary EPS ($)$0.173*$0.30 (Non-GAAP diluted)
EPS - # of Estimates3*—
Revenue - # of Estimates3*—

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Margin-led story: Non-GAAP adjusted EBITDA margin expanded to 32% in Q3 (vs 21% LY), with FY25 margin guide maintained at 27% and Q4 guide midpoint at 31%; this is central to valuation support .
  • Topline stabilization: While divestitures compress YoY revenue, core organic growth turned positive (3% in Q3) with larger AI deals, suggesting improving revenue quality .
  • Estimate revisions: Expect upward EPS estimate adjustments given the $0.30 outcome vs $0.17 consensus*, and potential modest revenue upward bias from AI wins .
  • Guidance quality: FY25 guide tightened with modest midpoint trims (perpetual license softness) but subscription & support midpoint held; reduces uncertainty in modeling .
  • Balance sheet: Debt maturity extended to 2031 and liquidity enhanced by a $30M revolver; deleveraging continues with net leverage ~3.8x, tracking to ~3.7x by YE .
  • Tactical catalysts: Continued AI deal announcements, AWS Marketplace traction, and late-year margin execution could be near-term stock drivers .
  • Medium-term thesis: Focused KCM portfolio with high retention (upper-90s NDR target) and expanding margins supports a durable re-rating if organic growth sustains 3–5%+ .