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Upland Software, Inc. (UPLD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $68.0M (-6% YoY), subscription and support revenue was $64.3M (-6% YoY), and adjusted EBITDA was $14.9M (22% margin); GAAP net loss per share was -$0.18, with free cash flow of $9.0M .
  • Management said Q4 beat the recurring revenue guidance midpoint and met the adjusted EBITDA guidance midpoint, and highlighted traction in AI-enabled products and sequential EBITDA growth through 2024 .
  • 2025 guidance introduced: revenue $231.5–$255.5M (midpoint implies -11% YoY), adjusted EBITDA $53.5–$65.5M (24% margin midpoint, +7% YoY); Q1 2025 guidance revenue $59.0–$65.0M and adjusted EBITDA $11.2–$14.2M (20% margin midpoint) .
  • Subsequent to year-end, Upland divested two non-strategic underperforming product lines, lowering 2025 revenue guidance by ~$18M with no material impact on adjusted EBITDA; the company paid down ~$$33M debt YTD 2025 (on top of $188.4M in 2024) and plans to refinance in 2H 2025 while enjoying a 5.4% effective hedged rate on most debt .

What Went Well and What Went Wrong

What Went Well

  • Beat recurring revenue guidance midpoint and met adjusted EBITDA guidance midpoint, with adjusted EBITDA up sequentially each quarter of 2024 (Q1 $13.1M, Q2 $13.6M, Q3 $14.0M, Q4 $14.9M); “we beat our Recurring Revenue guidance midpoint and met our Adjusted EBITDA guidance midpoint” — Jack McDonald .
  • Strong AI momentum: AI-enabled 80% of core content/knowledge products; notable Qvidian AI Assist $500K ARR deal; BA Insight platform connects LLMs to >90 enterprise data sources; Panviva Sidekick launched for AI-driven agent assistance .
  • Free cash flow improved to $9.0M in Q4 and $23.4M for 2024 despite prior-year one-time swap-related cash benefit; management targets $20–$25M FCF in 2025 .

What Went Wrong

  • Top-line continued to decline due to planned runoff of “Sunset Assets” and divestitures; 2025 guidance midpoint implies -11% YoY revenue, with Q1 2025 midpoint -12% YoY vs prior year .
  • GAAP results remained negative: Q4 GAAP net loss was $3.4M (EPS -$0.18) and FY 2024 GAAP net loss was $112.7M, driven by goodwill impairment and other charges earlier in the year .
  • Guidance range remained wide given lumpy perpetual license/professional services revenue; Q1 2025 was specifically cited as burdened by U.S. payroll tax seasonality and lingering divestiture-related costs .

Financial Results

Key Financials vs Prior Quarters

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$69.339 $66.692 $68.027
GAAP EPS (Basic & Diluted)-$0.47 -$0.12 -$0.18
Non-GAAP Diluted EPS$0.19 $0.42 $0.41
Adjusted EBITDA ($USD Millions)$13.635 $14.000 $14.901
Adjusted EBITDA Margin (%)20% 21% 22%
Free Cash Flow ($USD Millions)$5.196 $4.202 $9.021

Revenue Mix by Quarter

Revenue Component ($USD Millions)Q2 2024Q3 2024Q4 2024
Subscription & Support$65.504 $63.771 $64.332
Perpetual License$1.730 $1.106 $1.531
Professional Services$2.105 $1.815 $2.164
Total Revenue$69.339 $66.692 $68.027

Profitability and Margins

MetricQ2 2024Q3 2024Q4 2024
Gross Profit ($USD Millions)$48.865 $46.987 $48.163
Gross Margin (%)70% 70% 70.8% (computed from $48.163/$68.027)
GAAP Net Income (Loss) ($USD Millions)-$11.439 -$1.733 -$3.430
Net Income Margin (%)-16.5% (computed from -$11.439/$69.339) -2.6% (computed from -$1.733/$66.692) -5.0% (computed from -$3.430/$68.027)

Estimates vs Actuals (S&P Global Wall Street Consensus)

MetricQ4 2024 Consensus (S&P Global)Q4 2024 Actual
Revenue ($USD Millions)N/A (unavailable)$68.027
EBITDA ($USD Millions)N/A (unavailable)$14.901
GAAP EPSN/A (unavailable)-$0.18
Values retrieved from S&P Global were unavailable at the time of query due to a request limit; estimates comparison could not be provided.

KPIs and Operational Metrics

KPIQ2 2024Q3 2024Q4 2024
New Customers155 122 110
New Major Customers17 18 21
Customer Expansions275 312 291
Major Expansions41 27 42
Net Dollar Retention (year-end)——96%
Debt Paydown (context)Gross debt ~$479M; net debt ~$247M; swaps hedge $257M at 5.4% $177M Q3 paydown; gross debt ~$301M; hedged ~$257M at 5.4% $188.4M term loan repayments in 2024; +$32.9M paid YTD 2025

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/OutcomeChange
Total RevenueQ4 2024$65.9–$71.9M $68.0M actual Maintained; in-range
Subscription & SupportQ4 2024$60.2–$65.2M $64.3M actual Beat midpoint (recurring revenue)
Adjusted EBITDAQ4 2024$13.4–$16.4M (22% margin midpoint) $14.9M (22% margin) Met midpoint
Total RevenueQ1 2025—$59.0–$65.0M Initiated
Subscription & SupportQ1 2025—$56.4–$61.4M Initiated
Adjusted EBITDAQ1 2025—$11.2–$14.2M (20% margin midpoint) Initiated
Total RevenueFY 2025—$231.5–$255.5M Initiated; lowered ~$18M due to divestitures
Subscription & SupportFY 2025—$218.0–$238.0M Initiated
Adjusted EBITDAFY 2025—$53.5–$65.5M (24% margin midpoint) Initiated; +7% YoY midpoint

Earnings Call Themes & Trends

TopicQ-2 (Q2 2024)Q-1 (Q3 2024)Current (Q4 2024)Trend
AI/Technology InitiativesBroad AI integration; Qvidian AI Assist; partnerships (IBM Watson X); secure fax momentum; Altify 9.12 release BA Insight for Azure AI Search; 72 G2 badges; product recognition 80% of core content/knowledge products AI-enabled; BA Insight connects LLMs via 90+ connectors; Panviva Sidekick; $500K Qvidian AI Assist ARR deal Strengthening
Sunset Assets Runoff2024 ~$30M → 2025 ~$17M → 2026 ~$8–9M Continued runoff pressuring top line 2024 ~$32M → 2025 ~$14M → 2026 ~$6M; divested two small lines Impact diminishing into 2026
Deleveraging/RefiNet debt ~$247M; swaps fix 5.4% on $257M $177M paydown; gross debt ~$301M; ongoing monthly paydowns ~$33M paydown YTD 2025; plan refi in 2H 2025; effective rate ~5.4% on most debt Improving leverage profile
Go-to-Market ExecutionHalfway through GTM revamp; pipeline/“chunkier” deals emerging Modern digital marketing; upgraded sales rigor; cost efficiencies Upgraded sales talent; demand gen; improved retention; India dev center scaling Execution maturing
Margins/FCFAdj. EBITDA 20%; FCF $5.2M Adj. EBITDA 21%; FCF $4.2M Adj. EBITDA 22%; FCF $9.0M; FY25 FCF target $20–$25M Sequential margin/FCF improvement
Macro/FX/SeasonalityNo elongated sales cycles observed N/ALimited FX impact; Q1 payroll taxes burden margin Neutral-to-minor headwinds

Management Commentary

  • “We beat our Recurring Revenue guidance midpoint and met our Adjusted EBITDA guidance midpoint…Core organic growth rate increasing to 2.5% in 2025 and Adjusted EBITDA margin increasing from 20% last year to 24% this year” — Jack McDonald .
  • “Gross margins stayed constant; adjusted EBITDA margin improved to 22% in Q4…Targeting full year 2025 free cash flow $20–$25M” — Michael Hill .
  • “Subsequent to year-end, we divested 2 nonstrategic underperforming product lines…lowered our 2025 revenue guide by about $18M, but had no adjusted EBITDA impact” — Jack McDonald .
  • “Our gross debt currently sits at about $261M, almost all hedged to effectively lock the interest rate at 5.4%; plan to continue paying down debt by up to $2M per month” — Michael Hill .
  • “We paid down debt by $33M YTD 2025…will look to refi towards the second half of this year” — Jack McDonald .

Q&A Highlights

  • AI strategy underpins growth: BA Insight solves “last-mile” with 90+ connectors; Panviva Sidekick for agent assistance; Qvidian AI Assist integrated with OpenAI and IBM Watson; noted $500K ARR Qvidian win in Q4 .
  • Sunset assets and divestitures: Sale proceeds ~$10M total; sunset revenue pace from ~$32M (2024) → ~$14M (2025) → ~$6M (2026) .
  • Debt/refi timing: Hedged low rate today; plan refinance 2H 2025; paying down principal to offset higher future rates .
  • Guidance range width: Maintained wider range due to lumpy perpetual/professional services revenue .
  • Retention/expansion: NDR improved to 96% driven by product investment and portfolio focus; target ~98% exiting 2025; upsell opportunities via AI features .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 was unavailable at the time of query due to request limits; as a result, explicit comparisons to consensus could not be provided. Values retrieved from S&P Global were unavailable at the time of query.

  • Given the absence of consensus, we anchor performance to company guidance midpoints: Q4 revenue and adjusted EBITDA were in-range, with subscription (recurring) revenue beating midpoint and adjusted EBITDA meeting midpoint, per management .

Key Takeaways for Investors

  • Sequential operational improvement: Adjusted EBITDA and margins rose each quarter of 2024; Q4 margin reached 22% with stronger free cash flow, supporting deleveraging and near-term refi flexibility .
  • AI as growth catalyst: Broad AI enablement across products (BA Insight, RightAnswers, Panviva, Qvidian) and early evidence of larger ARR wins provide a credible medium-term growth vector (core organic growth guided to 2.5% in 2025) .
  • Top-line headwinds are transitory/modeled: Sunset assets and divestitures weigh on 2025 revenue (-11% midpoint), but with no material EBITDA impact from divestitures, mix shift supports margin resilience .
  • Balance sheet and interest rate positioning: Hedged effective rate 5.4% on most debt and ongoing principal paydowns ($33M YTD 2025 after $188.4M in 2024) temper refi risk; watch for details/timing in 2H 2025 .
  • Near-term trading lens: Lumpy license/pro services revenue can widen guidance ranges and create headline volatility; Q1 margin midpoint (20%) burdened by payroll taxes and residual divestiture costs .
  • Medium-term thesis: Improved net dollar retention (96% with 2025 target ~98%), modernized GTM, and AI-driven upsell/cross-sell position Upland to transition from stabilization to low/mid-single-digit core organic growth while expanding EBITDA margins towards 24%+ .
  • Monitoring list: Execution on AI product wins, retention trajectory, pace of sunset runoff/divestiture cleanup, refi terms/quantum, and sustained FCF generation vs guidance .