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On Thursday, Needham maintained a Hold rating on Upland Software (NASDAQ:UPLD) following the company’s fourth-quarter earnings report. Upland Software, a provider of cloud-based enterprise work management software, presented mixed results with revenue matching consensus expectations and adjusted EBITDA of $36.9 million also in line with predictions. According to InvestingPro data, the company maintains a healthy gross profit margin of 69.6%, though revenue declined 8.4% over the last twelve months.
Upland Software’s management is actively refining its go-to-market (GTM) strategies in an effort to achieve revenue growth. Despite winning fewer deals in a cautious macroeconomic environment, the company has observed an increase in the average size of contracts. This trend aligns with management’s expectations for core revenue growth, which is projected to rise by 2.5% in the fiscal year 2025, a significant improvement from the flat year-over-year growth reported in the fourth quarter of 2024. The stock has shown resilience with a 37.8% price return over the past six months, though InvestingPro analysis indicates the company currently trades near its Fair Value.
Additionally, the company has streamlined its operations by divesting two product lines that collectively generated $18 million in revenue. This strategic move is designed to enhance profitability in FY25 by approximately $10 million. The divested product lines were not contributing to adjusted EBITDA or revenue growth, which suggests a more focused and efficient operation moving forward. While currently unprofitable, InvestingPro data reveals analysts expect the company to return to profitability this year, with three analysts recently revising their earnings estimates upward. For deeper insights into Upland Software’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Following these changes, Upland Software has updated its guidance, indicating a 400 basis point increase in adjusted EBITDA margin and an absolute rise in adjusted EBITDA. Needham’s analyst highlighted the importance of waiting for further results to validate the effectiveness of the company’s turnaround strategy before changing their stance on the stock.
In other recent news, Upland Software reported its fourth-quarter 2024 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $0.41, compared to the forecasted $0.19. The company also reported revenues of $68.03 million, slightly above the predicted $67.84 million. Upland Software’s strategic focus on AI-enabled product developments is central to its growth strategy, as highlighted by CEO Jack McDonald. For the first quarter of 2025, Upland projects revenues between $59 million and $65 million, with full-year 2025 revenues expected to range from $231.5 million to $255.5 million. Upland aims to achieve mid-single-digit core organic growth by the end of 2025. The company’s recent divestment of non-strategic product lines is part of its strategy to focus on its best growth products. This move lowered their 2025 revenue guide by about $18 million but had no impact on adjusted EBITDA. Upland Software continues to emphasize its commitment to reducing debt, having paid down $33 million so far in 2025.
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