Acquisition of Cimpl creates first IT Financial Management Cloud with enterprise-class Telecom Expense Management capabilities
Upland Software, Inc. (Nasdaq: UPLD) has acquired Cimpl, a leading cloud-based telecom expense management platform. The addition of Cimpl to Upland’s Project & Financial Management Solution Suite creates the market’s first IT Financial Management Cloud (ITFM Cloud) with enterprise-class IT financial management and full lifecycle telecom expense management, enabling enterprises to measure, manage, and align IT and telecom assets and spending at scale. The acquisition adds approximately $8 million in annualized revenues and will be immediately accretive to Upland’s Adjusted EBITDA per share.
“Acquiring Cimpl enables Upland to offer the market’s first IT Financial Management Cloud that combines IT and telecom expense management,” said Jack McDonald, chairman and CEO of Upland Software. “Moreover, this transaction is immediately accretive to Adjusted EBITDA per share and takes Upland to a $228 million annualized revenue run rate. Our acquisition pipeline is robust, and we are actively pursuing additional opportunities to build out our solution suites.”
Enterprise IT spending was over $3 trillion last year, with telecom spending representing 18% of the total. Against an increasingly complex background of legacy, on-premise and cloud-based spending, including owned and third-party IT, hardware, software and services, mobility and fixed telecom, machine to machine, and Unified Communications assets, enterprises struggle to achieve measurable and repeatable cost savings and strategic alignment with their broader digital business transformation objectives. With Cimpl, Upland can address these objectives directly by offering a comprehensive ITFM Cloud that combines IT financial management (including Bill of IT, consumption and demand management, holistic application management, cloud cost management, visual modeling, call accounting, and showback/chargeback) with enterprise-class telecom expense management (from provisioning through usage, contract, and invoice management, to cost allocation and end-user IT and technology self-service capabilities). In addition, Upland’s proven project & portfolio management platform enables IT and business decision makers to drive, manage, and measure complex digital business transformation initiatives.
“Enterprises are looking for solutions that can help them accelerate their digital business strategy while keeping technology costs under control,” said Mounir Hilal, Upland’s chief customer officer and executive vice president of Project and IT Management Solutions. “Upland’s Project & Financial Management solution suite manages more than $7 billion in IT and telecom spend, more than 10.5 million assets and services, and over 1 million IT-related projects,” he added. “With Cimpl’s powerful telecom expense management platform, Upland delivers a unique enterprise-grade, solution suite that enables organizations to optimize technology investments and drive their continued digital business transformation.”
The purchase price paid for Cimpl was $23.1 million in cash at closing, and a $2.6 million cash holdback payable in 12 months (subject to indemnification claims). Upland expects the acquisition to generate annual revenue of approximately $8.0 million, of which $7.4 million is recurring, subject to reductions for a deferred revenue discount as a result of GAAP purchase accounting, estimated as $0.4 million for the remainder of 2019. The acquisition is within Upland’s target price range of 5-8x pro forma Adjusted EBITDA and will generate at least $3.6 million in Adjusted EBITDA annually once fully integrated. The acquisition will be immediately accretive to Upland’s Adjusted EBITDA per share.
Upland today also announced that it has raised its third quarter and full year 2019 guidance to reflect the Cimpl acquisition, raising revenue, recurring revenue, and Adjusted EBITDA guidance ranges. The increase in 2019 revenue guidance below is net of a reduction for a deferred revenue discount as a result of GAAP purchase accounting and all guidance adjustments are prorated for an effective closing date of August 21, 2019.
For the quarter ending September 30, 2019, Upland expects reported total revenue to be between $54.1 and $56.1 million, including subscription and support revenue between $50.3 and $51.9 million, for growth in recurring revenue of 51% at the mid-point over the quarter-ended September 30, 2018. Third quarter 2019 Adjusted EBITDA is expected to be between $20.1 and $21.1 million, for an Adjusted EBITDA margin of roughly 37% at the mid-point, representing growth of 58% at the mid-point over the quarter-ended September 30, 2018.
For the full year ending December 31, 2019, Upland expects reported total revenue to be between $212.3 and $216.3 million, including subscription and support revenue between $197.5 and $200.7 million, for growth in recurring revenue of 46% at the mid-point over the year ended December 31, 2018. Adjusted EBITDA is expected to be between $78.2 and $80.2 million, for an Adjusted EBITDA margin of roughly 37% at the midpoint, representing growth of 49% at the mid-point over the year ended December 31, 2018. The transaction will be immediately accretive to Upland’s Adjusted EBITDA per share.