Upland Software(US:UPLD)2025-11-06 17:00Financial Data and Key Metrics Changes - In Q3 2025, the company beat its revenue guidance midpoint and met its adjusted EBITDA guidance midpoint, with a core organic growth rate of 3% [5] - Adjusted EBITDA for Q3 was $16 million, resulting in an adjusted EBITDA margin of 32%, up from 21% in Q3 2024 [12] - Free cash flow for the quarter was $6.7 million, with a target of around $20 million for the full year [10][12] - Net debt leverage decreased to 3.8x, with a goal of reaching 3.7x by year-end [6][13] Business Line Data and Key Metrics Changes - The company welcomed 97 new customers in Q3, including 14 major customers, and expanded relationships with 168 existing customers, 13 of which were major expansions [5] - The product portfolio has been streamlined to focus on markets that drive growth and profitability, with significant momentum in AI-powered products [6][10] Market Data and Key Metrics Changes - The company earned 49 badges in G2's fall 2025 market reports, indicating strong market presence [6] - Upland Right Answers and Upland BA Insight are now available in the AWS marketplace, enhancing customer discovery and purchase processes [6][7] Company Strategy and Development Direction - The company is focusing on AI-enabled products as key technologies in broader enterprise AI implementations, which is expected to drive future growth [9][10] - The strategy includes continued deleveraging of the balance sheet and enhancing liquidity through refinancing and a new $30 million revolver [11][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the sales pipeline, citing larger deals as indicators of positive trends, with a target of 3% growth for 2026 and 5% thereafter [21][22] - The adjusted EBITDA margin is expected to continue expanding, with a long-term target of over 32% [17][18] Other Important Information - The company has significantly improved its balance sheet by paying down $242 million of debt since the beginning of the previous year [18] - Full-year 2025 total revenue is expected to decline by 21% at the midpoint due to earlier divestitures, with guidance for Q4 revenue between $46.4 million and $52.4 million [13][14] Q&A Session Summary Question: What gives confidence in achieving future growth targets? - Management noted that larger deals and partnerships with major players like Microsoft and Amazon provide optimism for future growth [21][22] Question: Clarification on fourth quarter guidance regarding license revenue? - The decline in license revenue is primarily due to professional license revenue not materializing as expected, affecting EBITDA [23][24] Question: Any changes to gross revenue retention trends? - The company targets to maintain upper 90% retention rates, with 99% retention at the end of 2024 [25] Question: Growth from installed base versus net new customers? - Growth is expected from both installed base and new customers, with a focus on knowledge and content management products [28][29] Question: What's working in sales execution? - Upgrading the sales force and leveraging SEO strategies have been effective, along with partnerships with larger tech companies [31][32] Question: How is the pace of new product introductions? - There has been a dramatic improvement in product development, with a focus on AI integration and reliability [34][35] Question: Impact of perpetual license revenue reduction? - The reduction is not due to a single customer loss but reflects a general decrease in expected perpetual license revenue [37]