Upland Software (UPLD) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $69.3 million, down 7% year-over-year, mainly due to declines in sunset assets and professional services; core bookings exceeded churn for the second consecutive quarter, supporting targeted 3% core organic growth in 2025.

• Adjusted EBITDA was $13.6 million (20% margin), down from $16.6 million (22% margin) in Q2 2023, but up sequentially from Q1; net loss improved to $11.4 million from $15.1 million in Q2 2023.

• 155 new customers and 17 major customers added; 275 existing customer expansions, including 41 major expansions.

• Investments in sales, marketing, and product development are yielding larger deals, improved pipeline generation, and increased product recognition, especially for AI-powered solutions.

• $11 million in share repurchases completed in the first half of 2024, exhausting the authorized plan.

Financial highlights

• Subscription and support revenue declined 7% year-over-year to $65.5 million; perpetual license revenue rose to $1.7 million; professional services revenue fell 23% to $2.1 million.

• Gross margin was 70% in Q2 2024, up from 68% in Q2 2023; product gross margin was 71%, and cash gross margin (excluding D&A) was 75%.

• Operating expenses decreased 9% year-over-year, with notable reductions in general and administrative costs.

• GAAP operating cash flow was $5.5 million; free cash flow was $5.2 million; cash balance at quarter-end was $232.4 million.

• Non-GAAP net income for Q2 2024 was $6.7 million, down from $8.6 million in Q2 2023; non-GAAP EPS (diluted) was $0.19.

Outlook and guidance

• Q3 2024 revenue guidance: $63.2M–$69.2M (down 11% YoY at midpoint); adjusted EBITDA: $12.5M–$15.5M (21% margin at midpoint, down 13% YoY).

• Full-year 2024 revenue guidance: $269.6M–$281.6M (down 7% YoY at midpoint); adjusted EBITDA: $52.6M–$58.6M (20% margin at midpoint, down 14% YoY).

• Sequential quarterly adjusted EBITDA growth expected, exiting 2024 at nearly $60M run rate and targeting mid-$60M in 2025.

• No new acquisitions planned; focus on organic growth, margin expansion, and debt reduction.

• Sunset asset revenue expected to decline from $30M in 2024 to $17M in 2025 and $8–9M in 2026.