Upland Software(UPLD)2025-03-12 18:33Financial Data and Key Metrics Changes - Upland Software reported a good Q4 2024, beating recurring revenue expectations and meeting adjusted EBITDA guidance midpoint [7] - Core organic growth in Q4 was flat, but the company is guiding for 2.5% core organic growth in 2025 [7][13] - Adjusted EBITDA margins are expected to increase by 400 basis points in 2025, from 20% in 2024 to 24% [14] - The net dollar retention rate improved to 96% at the end of 2024, up from 95% in the prior year [8] - Q4 adjusted EBITDA was 9 million, contributing to a total of 18 million but had no impact on adjusted EBITDA [11][20] - The company expects reported total revenue for Q1 2025 to be between 65 million, reflecting a decline of 12% at the midpoint from the previous year [21] Company Strategy and Development Direction - Upland is focusing on AI-enabled solutions to improve knowledge sharing and business outcomes, with a significant investment in product development [10][28] - The company aims to simplify its business by divesting underperforming products, which is expected to reduce execution risk and improve core organic growth [12][20] - The strategy includes enhancing the sales pipeline and upgrading sales talent to support new AI-enabled products [42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving core organic growth rate and retention rates, targeting a net dollar retention rate of 98% by the end of 2025 [52] - The company anticipates a turnaround in growth, with a projected improvement from a negative 1% average quarterly growth rate in 2024 to 2.5% in 2025 [14][13] - Management acknowledged the impact of U.S. payroll taxes and costs related to divested assets on Q1 2025 performance [22] Other Important Information - Upland has paid down 189 million in 2024 [13][19] - The company plans to continue paying down debt by up to 2 million per month [19] Q&A Session Summary Question: Insights on AI strategy and use cases - Management highlighted significant investments in AI, with 80% of core products now AI-enabled, and noted strong sales opportunities in AI-driven products [28][30] Question: Status of asset unwind strategy and revenue impact - The divestiture of two product lines generated about 10 million, with a decline in Sunset asset revenues projected to drop from 14 million in 2025 [34] Question: Go-to-market strategy and sales traction - Management discussed improvements in sales talent and demand generation since the HGGC investment, leading to better core organic growth and net renewal rates [42][43] Question: Timing of debt refinancing - Management indicated plans to refinance debt in the second half of the year, benefiting from a lower principal amount despite potentially higher rates [45] Question: Guidance for Q1 revenue range - The wider revenue guidance range for Q1 was attributed to the variability in perpetual license and professional services revenue [47] Question: Core net dollar retention rate components - The improvement in net dollar retention was driven by better gross retention rates and the focus on strong products with high renewal rates [52]