Upland Software (UPLD 39.19, +5.40, +15.98%), which provides cloud-based enterprise work
management (EWM) software, is up nicely despite a down market overall. Upland
reported very strong Q4 results last night and provided solid guidance. Let's
dig into the numbers.
UPLD is a small company that operates in an area that's growing quickly. Basically, its software enables companies to plan, manage, and execute projects and work. Many companies continue to use manual processes and traditional tools, such as paper-based techniques, spreadsheets, and email to manage workflows. Upland offers a suite of products for managing different aspects of operations, including IT, marketing, finance, and professional services. UPLD's software facilitates processes like program & portfolio management, IT financial management, supply chain management, quality management, workflow management etc.
Non-GAAP EPS jumped 57% yr/yr to $0.58, which was much better than expected. Revenue rose 62.6% yr/yr to $45.2 mln, which was decent upside from prior guidance of $42.5-44.5 mln. UPLD also issued upside guidance for FY19, as it sees FY19 revs of $194-198 mln. Revenue is Q1 is expected at $47.9-48.9 mln, which is better than expected.
A standout metric for UPLD is its robust adjusted EBITDA margins, which improved to 37% in Q4 vs 35% a year ago. On a full year basis, UPLD reported 2018 adjusted EBITDA margin of 35%, up from 31% in 2017 and 16% in 2016. Its long-term goal is to get to 40%.
UPLD says Q4 was a strong finish to a transformational year in 2018, marked by accelerating revenue growth, expanding margins etc. Management feels it’s well set up for a great 2019 with productive sales channels, a robust pipeline of acquisitions, and the operating and financial resources to execute on its plan. Additionally, just this week UPLD announced a major new product and go-to-market strategy with the launch of its enterprise cloud solution suites.
Since 1Q17, the company has increased its field sales headcount from 3 to 28 and increased its total sales headcount from 27 to 65. It has also more than doubled its organic growth in reported recurring revenues, all while expanding adjusted EBITDA margins by nearly 1,100 bps, from 26% to 37%. UPLD has also been adding new customers. In Q4, UPLD expanded 204 existing customer relationships, including 28 major expansions, and added 134 new customer relationships, including 27 major accounts.
This was a nice quarter for Upland Software and a nice way to end 2018. Looking ahead, UPLD says its pipeline of acquisitions remains robust and that it has resources to execute on significant revenue growth and margin expansion going forward.
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