Upland Software(US:UPLD)2021-11-04 01:58Financial Data and Key Metrics Changes - Total revenue for Q3 2021 was $76.1 million, representing a growth of 3% year-over-year [33] - Recurring revenue from subscription and support grew 2% year-over-year to $72.3 million [33] - Adjusted EBITDA for Q3 2021 was $25 million, consistent with the previous year, with an adjusted EBITDA margin of 33% [38] - Free cash flow for Q3 2021 was $4.9 million, with a year-to-date total of approximately $28 million [39][40] - The company lowered its Q4 revenue guidance by $3.9 million due to reduced messaging volumes and lower new logo bookings [10][12] Business Line Data and Key Metrics Changes - Organic growth in recurring revenues, excluding political, was flat in Q3 2021, with a full-year expectation of 2% growth [13] - Professional services revenue increased by 12% year-over-year to $3.1 million [33] - The messaging volumes from progressive advocacy organization customers were lower than expected, impacting revenue [12][58] Market Data and Key Metrics Changes - The company expects a quarterly revenue run rate of $75 million for Q4 2021, reflecting the impacts of COVID-19 on the business [11][17] - The net dollar retention rate is currently in the low to mid-90s, down from 94% in 2020, but expected to improve in 2022 due to multiyear renewals [16][25] Company Strategy and Development Direction - The company is targeting total revenue growth of 15% per year, combining organic growth and acquisitions, with a focus on self-funded growth [20][66] - The management remains committed to the current strategy of building a strong go-to-market and product organization, with no plans for a major pivot [62][67] - The company aims to add $40 million to $50 million in acquired revenues by the end of 2022 [11][91] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a mixed quarter with strong adjusted EBITDA but lower than expected messaging volumes [9] - There are positive early indicators for Q4 bookings, but the company is taking a conservative approach until sustained improvement is seen [57][110] - The management expressed confidence in the long-term growth potential and the effectiveness of the changes made in the sales and marketing structure [71][73] Other Important Information - The company has approximately $240 million in liquidity, including $180 million in cash and a $60 million undrawn revolver [41] - The net debt leverage is around 3.6, with outstanding net debt of approximately $350 million [43] Q&A Session Summary Question: Visibility and confidence in the pipeline - Management noted that the pipeline creation was impacted by the transition to a fully digital lead generation model during the pandemic, affecting new logo bookings [54][56] Question: Changes in competitive environment - Management indicated no material competitive changes but noted improved relationships with major platform players like Salesforce [70][72] Question: Impact of new logo and expansion sales on acquisition pace - Management confirmed that the pace of acquisitions remains unchanged at $40 million to $50 million per year, supported by internally generated cash flow [91] Question: Goodwill write-off clarification - Management clarified that there were no write-offs, only adjustments in purchase accounting related to acquisitions [87] Question: Drivers of lower messaging volume - The decline was primarily due to lower variable messaging volumes from progressive advocacy organization customers, not due to churn [112][123]