Delaware | 001-36720 | 27-2992077 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Exhibit No. | Description | |
UPLAND SOFTWARE, INC. | ||||
By: | /s/ John T. McDonald | |||
John T. McDonald Chief Executive Officer |
• | Total revenue was $27.8 million, an increase of 44% from $19.4 million in the fourth quarter of 2016. |
• | Subscription and support revenue was $24.8 million, an increase of 45% from $17.1 million in the fourth quarter of 2016. |
• | GAAP net loss was $3.8 million, an increase of 92% from $2.0 million, in the fourth quarter of 2016, principally as a result of one-time expenses related to the accretive acquisition of Qvidian in the fourth quarter that was not present in the fourth quarter of 2016. |
• | Adjusted EBITDA was $9.7 million, or 35% of total revenue, an increase of 129% from $4.3 million, or 22% of total revenue, in the fourth quarter of 2016. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, is provided in the financial tables that accompany this release. |
• | Cash on hand as of the end of the fourth quarter was $22.3 million. |
• | Total revenue was $98.0 million, an increase of 31% from $74.8 million in 2016. |
• | Subscription and support revenue was $85.5 million, an increase of 30% from $65.6 million in 2016. |
• | GAAP net loss was $18.7 million, an increase of 39% compared to a net loss of $13.5 million in 2016. |
• | Adjusted EBITDA was $30.3 million, or 31% of total revenue, an increase of 140% from $12.6 million, or 17% of revenue, in 2016. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, is provided in the financial tables that accompany this release. |
• | Expanded 227 existing customer relationships, including 21 major expansions, during the fourth quarter for a total of 648 expanded customer relationships, including 68 major expansions, for the full year 2017. |
• | Added 151 new customer relationships, including 19 major accounts, during the fourth quarter for a total of 525 new customer relationships, including 52 major accounts, for the full year 2017. |
• | Delivered 93% annual net dollar retention rate (NDRR) as of December 31, 2017. |
• | Raised our long-term Adjusted EBITDA margin target to 40%. |
• | Completed four acquisitions delivering $48.5 million in aggregate annualized gross revenue run-rate. Each acquisition was accretive to Adjusted EBITDA per share, and included: |
• | Expanded our Workflow Automation family by acquiring Qvidian and AccuRoute. Qvidian is a premier cloud-based RFP and proposal automation software platform serving more than 1,000 companies worldwide, while AccuRoute is one of the industry’s most powerful automation and document management platforms. |
• | Expanded our Digital Engagement family by acquiring Waterfall, a leading cloud-based mobile marketing solution that allows brands to build their existing customer database and drive top-line revenue with targeted, relevant mobile content. |
• | Expanded our Project and IT Management family by acquiring RightAnswers, an award-winning, cloud-based knowledge management system. |
• | Completed a $42.7 million, net, follow-on public offering of common stock in June and increased our acquisition credit facility to $200 million in August. |
• | Influenced by Customer Advisory Boards, Virtual User Conferences, Executive Outreach meetings, and through Upland communities, launched 15 major product feature releases in 2017 including improvements to integration, content monitoring, user experience, reporting, and administration. |
• | Transitioned nine products from co-location data centers to Amazon Web Services, creating a much more scalable, secure, and cost-efficient cloud environment to support our ongoing customer growth. Remaining products will be transitioned in 2018. |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenue: | |||||||||||||||
Subscription and support | $ | 24,756 | $ | 17,062 | $ | 85,467 | $ | 65,552 | |||||||
Perpetual license | 1,050 | 542 | 4,346 | 1,650 | |||||||||||
Total product revenue | 25,806 | 17,604 | 89,813 | 67,202 | |||||||||||
Professional services | 2,041 | 1,770 | 8,139 | 7,565 | |||||||||||
Total revenue | 27,847 | 19,374 | 97,952 | 74,767 | |||||||||||
Cost of revenue: | |||||||||||||||
Subscription and support | 8,148 | 6,127 | 28,454 | 22,734 | |||||||||||
Professional services | 1,355 | 1,056 | 5,193 | 4,831 | |||||||||||
Total cost of revenue | 9,503 | 7,183 | 33,647 | 27,565 | |||||||||||
Gross profit | 18,344 | 12,191 | 64,305 | 47,202 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 3,791 | 3,041 | 15,307 | 12,160 | |||||||||||
Research and development | 4,223 | 3,218 | 15,795 | 14,919 | |||||||||||
Refundable Canadian tax credits | (118 | ) | (173 | ) | (542 | ) | (513 | ) | |||||||
General and administrative | 5,727 | 4,946 | 23,291 | 18,286 | |||||||||||
Depreciation and amortization | 2,387 | 1,021 | 6,498 | 5,291 | |||||||||||
Acquisition-related expenses | 4,724 | 728 | 15,092 | 5,583 | |||||||||||
Total operating expenses | 20,734 | 12,781 | 75,441 | 55,726 | |||||||||||
Loss from operations | (2,390 | ) | (590 | ) | (11,136 | ) | (8,524 | ) | |||||||
Other expense: | |||||||||||||||
Interest expense, net | (2,210 | ) | (849 | ) | (6,582 | ) | (2,781 | ) | |||||||
Other expense, net | 549 | 427 | 289 | (678 | ) | ||||||||||
Total other expense | (1,661 | ) | (422 | ) | (6,293 | ) | (3,459 | ) | |||||||
Loss before provision for income taxes | (4,051 | ) | (1,012 | ) | (17,429 | ) | (11,983 | ) | |||||||
Provision for income taxes | 257 | (961 | ) | (1,296 | ) | (1,530 | ) | ||||||||
Net loss | $ | (3,794 | ) | $ | (1,973 | ) | $ | (18,725 | ) | $ | (13,513 | ) | |||
Net loss per common share: | |||||||||||||||
Net loss per common share, basic and diluted | $ | (0.19 | ) | $ | (0.12 | ) | $ | (1.02 | ) | $ | (0.82 | ) | |||
Weighted-average common shares outstanding, basic and diluted | 19,514,893 | 16,871,250 | 18,411,247 | 16,472,799 |
December 31, | ||||||||
2017 | 2016 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 22,326 | $ | 28,758 | ||||
Accounts receivable, net of allowance | 26,504 | 15,254 | ||||||
Prepaid and other | 2,856 | 3,287 | ||||||
Total current assets | 51,686 | 47,299 | ||||||
Canadian tax credits receivable | 1,196 | 978 | ||||||
Property and equipment, net | 2,927 | 4,356 | ||||||
Intangible assets, net | 70,043 | 28,512 | ||||||
Goodwill | 154,607 | 69,097 | ||||||
Other assets | 800 | 346 | ||||||
Total assets | $ | 281,259 | $ | 150,588 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,887 | $ | 1,268 | ||||
Accrued compensation | 5,157 | 2,541 | ||||||
Accrued expenses and other | 12,148 | 5,505 | ||||||
Deferred revenue | 43,807 | 23,552 | ||||||
Due to sellers | 7,839 | 4,642 | ||||||
Current maturities of notes payable | 2,301 | 2,190 | ||||||
Total current liabilities | 75,139 | 39,698 | ||||||
Commitments and contingencies | ||||||||
Canadian tax credit liability to sellers | — | 361 | ||||||
Notes payable, less current maturities | 108,843 | 45,739 | ||||||
Deferred revenue | 1,570 | 247 | ||||||
Noncurrent deferred tax liability, net | 3,262 | 3,404 | ||||||
Other long-term liabilities | 1,030 | 2,126 | ||||||
Total liabilities | 189,844 | 91,575 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 2 | 2 | ||||||
Additional paid-in capital | 174,944 | 124,566 | ||||||
Accumulated other comprehensive loss | (2,403 | ) | (3,152 | ) | ||||
Accumulated deficit | (81,128 | ) | (62,403 | ) | ||||
Total stockholders’ equity | 91,415 | 59,013 | ||||||
Total liabilities and stockholders’ equity | $ | 281,259 | $ | 150,588 |
Twelve Months Ended December 31, | ||||||||
2017 | 2016 | |||||||
(unaudited) | ||||||||
Operating activities | ||||||||
Net loss | $ | (18,725 | ) | $ | (13,513 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 11,914 | 9,794 | ||||||
Deferred income taxes | (262 | ) | 529 | |||||
Foreign currency re-measurement (gain) loss | (382 | ) | (64 | ) | ||||
Non-cash interest and other expense | 592 | 327 | ||||||
Non-cash stock compensation expense | 9,977 | 4,333 | ||||||
Loss on disposal of business | — | 746 | ||||||
Non-cash loss on retirement of fixed assets | (19 | ) | 276 | |||||
Changes in operating assets and liabilities, net of purchase business combinations: | ||||||||
Accounts receivable | (4,710 | ) | (361 | ) | ||||
Prepaids and other | 1,555 | 648 | ||||||
Accounts payable | 1,254 | (1,453 | ) | |||||
Accrued expenses and other liabilities | 3,715 | 413 | ||||||
Deferred revenue | 2,807 | 2,200 | ||||||
Net cash provided by (used in) operating activities | 7,716 | 3,875 | ||||||
Investing activities | ||||||||
Purchase of property and equipment | (396 | ) | (670 | ) | ||||
Purchase of customer relationships | (55 | ) | (408 | ) | ||||
Purchase business combinations, net of cash acquired | (110,324 | ) | (12,151 | ) | ||||
Net cash used in investing activities | (110,775 | ) | (13,229 | ) | ||||
Financing activities | ||||||||
Payments on capital leases | (1,497 | ) | (1,683 | ) | ||||
Proceeds from notes payable, net of issuance costs | 74,538 | 30,992 | ||||||
Payments on notes payable | (11,912 | ) | (7,190 | ) | ||||
Taxes paid related to net share settlement of equity awards | (3,387 | ) | (726 | ) | ||||
Issuance of common stock, net of issuance costs | 43,797 | 211 | ||||||
Additional consideration paid to sellers of businesses | (5,361 | ) | (2,079 | ) | ||||
Net cash provided by (used in) financing activities | 96,178 | 19,525 | ||||||
Effect of exchange rate fluctuations on cash | 449 | 114 | ||||||
Change in cash and cash equivalents | (6,432 | ) | 10,285 | |||||
Cash and cash equivalents, beginning of period | 28,758 | 18,473 | ||||||
Cash and cash equivalents, end of period | $ | 22,326 | $ | 28,758 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | 6,012 | $ | 2,455 | ||||
Cash paid for taxes | $ | 1,782 | $ | 488 | ||||
Noncash investing and financing activities: | ||||||||
Equipment acquired pursuant to capital lease obligations | $ | 50 | $ | 1,293 | ||||
Issuance of common stock in business combination | $ | — | $ | 8,300 |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Reconciliation of Net loss to Adjusted EBITDA: | |||||||||||||||
Net Loss | $ | (3,794 | ) | $ | (1,973 | ) | $ | (18,725 | ) | $ | (13,513 | ) | |||
Add: | |||||||||||||||
Depreciation and amortization expense | 3,802 | 2,295 | 11,914 | 9,794 | |||||||||||
Interest expense, net | 2,210 | 849 | 6,582 | 2,781 | |||||||||||
Other expense (income), net | (549 | ) | (427 | ) | (289 | ) | 678 | ||||||||
Provision for income taxes | (257 | ) | 961 | 1,296 | 1,530 | ||||||||||
Stock-based compensation expense | 2,173 | 1,669 | 9,977 | 4,333 | |||||||||||
Acquisition-related expense | 4,724 | 728 | 15,092 | 5,583 | |||||||||||
Non-recurring litigation costs | — | — | — | 25 | |||||||||||
Purchase accounting deferred revenue discount | 1,437 | 160 | 4,469 | 1,405 | |||||||||||
Adjusted EBITDA | $ | 9,746 | $ | 4,262 | $ | 30,316 | $ | 12,616 |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Reconciliation of Net Loss to Non-GAAP net income (loss): | |||||||||||||||
Net loss | $ | (3,794 | ) | $ | (1,973 | ) | $ | (18,725 | ) | $ | (13,513 | ) | |||
Add: | |||||||||||||||
Stock-based compensation expense | 2,173 | 1,669 | 9,977 | 4,333 | |||||||||||
Amortization of purchased intangibles | 3,013 | 1,478 | 9,298 | 7,107 | |||||||||||
Amortization of debt discount | 176 | 131 | 592 | 327 | |||||||||||
Acquisition-related expense | 4,724 | 728 | 15,092 | 5,583 | |||||||||||
Nonrecurring litigation expense | — | — | — | 25 | |||||||||||
Purchase accounting deferred revenue discount | 1,437 | 160 | 4,469 | 1,405 | |||||||||||
Tax effect of adjustments above | (82 | ) | (79 | ) | (324 | ) | (319 | ) | |||||||
Non-GAAP net income (loss) | $ | 7,647 | $ | 2,114 | $ | 20,379 | $ | 4,948 | |||||||
Weighted average ordinary shares outstanding, basic | 19,514,893 | 16,871,250 | 18,411,247 | 16,472,799 | |||||||||||
Weighted average ordinary shares outstanding, diluted | 20,668,840 | 17,457,565 | 14,841,316 | 16,892,549 | |||||||||||
Non-GAAP earnings per share, basic | $ | 0.39 | $ | 0.13 | $ | 1.11 | $ | 0.30 | |||||||
Non-GAAP earnings per share, diluted | $ | 0.37 | $ | 0.12 | $ | 1.37 | $ | 0.29 |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Stock-based compensation: | |||||||||||||||
Cost of revenue | $ | 159 | $ | 16 | $ | 436 | $ | 44 | |||||||
Research and development | 236 | 124 | 796 | 204 | |||||||||||
Sales and marketing | 83 | 39 | 232 | 105 | |||||||||||
General and administrative | 1,695 | 1,490 | 8,513 | 3,980 | |||||||||||
Total | $ | 2,173 | $ | 1,669 | $ | 9,977 | $ | 4,333 |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Depreciation: | |||||||||||||||
Cost of revenue | $ | 442 | $ | 648 | $ | 1,904 | $ | 2,030 | |||||||
Operating expense | 347 | 169 | 712 | 657 | |||||||||||
Total | $ | 789 | $ | 817 | $ | 2,616 | $ | 2,687 | |||||||
Amortization: | |||||||||||||||
Cost of revenue | $ | 973 | $ | 626 | $ | 3,512 | $ | 2,473 | |||||||
Operating expense | 2,040 | 852 | 5,786 | 4,634 | |||||||||||
Total | $ | 3,013 | $ | 1,478 | $ | 9,298 | $ | 7,107 |