Upland Software’s Earnings Call: Mixed Results and Strategic Shifts

Upland Software ((UPLD)) has held its Q1 earnings call. Read on for the main highlights of the call.

Upland Software’s recent earnings call painted a picture of mixed performance, highlighting both achievements and challenges. While the company exceeded revenue and EBITDA expectations and made strides in debt reduction, it faced hurdles such as flat core organic growth and a projected revenue decline. The strategic focus on high-margin products and AI innovation offers promise, but successful execution remains crucial.

Revenue and Adjusted EBITDA Beat Expectations

Upland Software reported that its Q1 revenue and adjusted EBITDA surpassed guidance midpoints, with adjusted EBITDA reaching $13.1 million and a 21% margin, an improvement from the previous year’s 20% margin. This performance underscores the company’s ability to deliver strong financial results despite market challenges.

Free Cash Flow Exceeds Expectations

The company also reported a higher-than-expected free cash flow of $7.9 million in Q1. This positive cash flow performance reflects Upland’s effective financial management and operational efficiency.

New Customer Wins and Expansions

Upland welcomed 107 new customers, including 19 major ones, and expanded relationships with 245 existing customers, 26 of which were major expansions. This growth in customer base indicates a robust market presence and the effectiveness of Upland’s customer acquisition strategies.

AI-Enabled Product Recognition

Upland earned 76 badges in G2’s Spring 2025 report, particularly for its AI-enabled products like Upland BA Insight and Upland InterFAX. This recognition highlights the company’s innovation and leadership in AI-driven solutions.

Improved Debt Position

The company successfully paid down $34.2 million of debt in Q1 2025, adding to the $189 million reduced in 2024, which is expected to bring net leverage down to 3.7x by year-end. This improved debt position strengthens Upland’s financial stability and flexibility.

Adjusted EBITDA Margin Growth

Upland expects its adjusted EBITDA margin to expand to 26% in Q2 and 27% for the full year 2025, compared to 20% in 2024. This projected growth in margins signals the company’s focus on enhancing profitability.

Flat Core Organic Growth in Q1

Despite a flat core organic growth rate in Q1, Upland anticipates a 2% increase in Q2. This expected growth reflects the company’s efforts to revitalize its core business operations.

Revenue Decline Due to Divestitures

The divestiture of mobile messaging product lines has lowered Upland’s 2025 revenue guidance midpoint by $25 million. This strategic move, while impacting revenue, aligns with the company’s focus on high-margin markets.

Projected Revenue Decline

For the full year 2025, Upland projects a total revenue decline of 20% at the midpoint from 2024. This forecasted decline underscores the challenges the company faces in maintaining its revenue base amid strategic shifts.

Termination of Chief Sales Officer

In April, Upland terminated its Chief Sales Officer, prompting changes in its go-to-market strategy. This leadership change is part of the company’s efforts to realign its sales approach and drive future growth.

Forward-Looking Guidance

During the earnings call, Upland emphasized its focus on high-margin, high-growth markets, projecting a full-year adjusted EBITDA margin of 27% despite a 20% decline in total revenue from 2024. The company anticipates a 2% core organic growth increase in Q2 and further margin expansions throughout the year.

In conclusion, Upland Software’s earnings call highlighted a mix of strong financial performance and strategic challenges. While the company has made notable achievements in revenue, EBITDA, and customer growth, it faces hurdles such as flat organic growth and projected revenue declines. The focus on high-margin products and AI innovation remains promising, with successful execution being key to future success.