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Business automation software provider Upland Software (NASDAQ: NASDAQ:UPLD) announced better-than-expected results in Q2 CY2024, with revenue down 6.9% year on year to $69.34 million. On the other hand, next quarter's revenue guidance of $66.2 million was less impressive, coming in 2.6% below analysts' estimates. It made a non-GAAP profit of $0.19 per share, down from its profit of $0.22 per share in the same quarter last year.
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Upland (UPLD) Q2 CY2024 Highlights:
- Revenue: $69.34 million vs analyst estimates of $67.76 million (2.3% beat)
- EPS (non-GAAP): $0.19 vs analyst estimates of $0.13 (42.5% beat)
- Revenue Guidance for Q3 CY2024 is $66.2 million at the midpoint, below analyst estimates of $67.99 million
- The company slightly lifted its revenue guidance for the full year from $273.7 million to $275.6 million at the midpoint
- Gross Margin (GAAP): 70.5%, up from 67.5% in the same quarter last year
- Free Cash Flow of $5.20 million, similar to the previous quarter
- Market Capitalization: $63.6 million
Founder Jack McDonald’s second software rollup, Upland Software (NASDAQ:UPLD) is a one stop shop for sales and marketing software, project management, HR, and contact center services for small and medium sized businesses.
Marketing SoftwareWhether or not companies market their products through social media, all businesses need to meet customers where they are; and increasingly, that is social media. As more and more people use a greater number of social media platforms, social media management software become more valuable to their customers.
Sales GrowthAs you can see below, Upland's revenue has declined over the last three years, shrinking from $76.26 million in Q2 2021 to $69.34 million this quarter.
Upland's revenue was down again this quarter, falling 6.9% year on year.
Next quarter, Upland is guiding for a 10.7% year-on-year revenue decline to $66.2 million, a further deceleration from the 6.8% year-on-year decrease it recorded in the same quarter last year. Looking ahead, Wall Street was expecting revenue to decline 4.9% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Upland has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company's free cash flow margin averaged 12.8% over the last year, slightly better than the broader software sector.
Upland's free cash flow clocked in at $5.20 million in Q2, equivalent to a 7.5% margin. The company's cash profitability regressed as it was 1.5 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren't a big deal because investment needs can be seasonal, but we'll be watching to see if the trend extrapolates into future quarters.
Over the next year, analysts predict Upland's cash conversion will fall. Their consensus estimates imply its free cash flow margin of 12.8% for the last 12 months will decrease to 10.2%.
Key Takeaways from Upland's Q2 ResultsIt was good to see Upland beat analysts' revenue expectations this quarter. On the other hand, its revenue guidance for next quarter missed analysts' expectations. Overall, this quarter could have been better. The stock traded up 4.6% to $2.41 immediately after reporting.
