Upland Software Announces Acquisition, Raises Guidance

Acquisition of InGenius establishes first Contact Center Productivity solution suite with native CRM agent communications, knowledge management, and customer sentiment analysis

Upland Software, Inc. (Nasdaq: UPLD) has acquired InGenius, a leading Computer Telephony Integration (CTI) solution for enterprise contact centers. With the addition of InGenius’ CTI platform, Upland can now offer the first Contact Center Productivity solution suite that provides a single pane of glass for all voice and CRM data, along with enterprise knowledge management and customer sentiment analysis solutions to drive improved contact center efficiency and customer experience. The acquisition adds approximately $9 million in annualized revenues and will be immediately accretive to Upland’s Adjusted EBITDA per share.

“With InGenius, Upland extends its leadership in Customer Experience Management (CXM) solutions and can now offer the first multi-channel, knowledge-driven contact center agent productivity solution suite that integrates leading CRM and contact center platforms enabling enterprises to offer a personalized, real-time customer experience,” 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 $237 million annualized revenue run rate and an $89 million annualized Adjusted EBITDA run rate,” he added.

“We began the second half of 2019 with great momentum, beating the top of our Q2 guidance ranges on revenue and Adjusted EBITDA, closing two accretive acquisitions in Q2, and notching strong sales bookings,” said McDonald. “That momentum has continued, with two additional accretive acquisitions since the beginning of Q3 and continued strong performance,” he added. “Our acquisition pipeline remains robust; our war chest has been reloaded; we are active in the market for additional acquisitions; and, as our newly raised guidance today reflects, we look forward to a strong finish to 2019.”

Call center productivity software is at the nexus of the CRM and contact center software markets, enabling contact centers to deliver improved service and increased personalization with access to real-time information from across the enterprise and seamless integration with existing contact center workflows. With Upland’s Contact Center Productivity solution suite, customers can solve critical pain points by implementing integrated agent productivity solutions including the InGenius CTI platform that provides a single pane of glass for all voice and CRM related data, RightAnswers for enterprise knowledge management, and Rant & Rave for frontline engagement capabilities and real-time sentiment analysis.

“Contact center leaders are looking for more comprehensive solutions to increase agent productivity with robust CRM integration,” said Mounir Hilal, Upland’s chief customer officer and executive vice president of Project and IT Management Solutions. “Upland’s new Contact Center Productivity solution suite enables a stronger performing enterprise contact center through increased agent productivity, a better omni-channel customer experience, and improved management command over agent experience.”

The purchase price paid for InGenius was $26.4 million in cash at closing, and a $3.0 million cash holdback payable in 12 months (subject to indemnification claims). The foregoing excludes any potential future earn-out payments tied to additional performance-based goals. Upland expects the acquisition to generate annual revenue of approximately $9 million, all of which is recurring, subject to reductions for a deferred revenue discount as a result of GAAP purchase accounting, estimated as $0.8 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 $4 million in Adjusted EBITDA annually once fully integrated. The acquisition will be immediately accretive to Upland’s Adjusted EBITDA per share.

Business Outlook

Upland today also announced that it has raised its full year 2019 guidance to reflect the InGenius 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 October 1, 2019.

For the full year ending December 31, 2019, Upland expects reported total revenue to be between $213.8 million and $217.8 million, including subscription and support revenue between $199.0 and $202.2 million, for growth in recurring revenue of 47% at the mid-point over the year ended December 31, 2018. Adjusted EBITDA is expected to be between $78.8 million and $80.8 million, for an Adjusted EBITDA margin of roughly 37% at the midpoint, representing growth of 50% at the mid-point over the year ended December 31, 2018. The transaction will be immediately accretive to Upland’s Adjusted EBITDA per share.