Dj Upland Software Inc, Inst Holders, 3Q 2025 (Upld)

Upland Software’s third quarter was marked by a sharp year-on-year revenue decline, reflecting the impact of earlier divestitures, yet the company reported results slightly ahead of Wall Street’s revenue expectations. Management attributed the quarter’s performance to progress in core organic growth, strong adjusted EBITDA margins, and new large-scale customer wins in its AI-powered product suite. CEO Jack McDonald pointed specifically to multimillion-dollar agreements with major technology and pharmaceutical companies and highlighted early signs that Upland’s intensified focus on enterprise AI adoption and product innovation is yielding results.

Is now the time to buy UPLD? Find out in our full research report (it’s free for active Edge members).

Upland Software (UPLD) Q3 CY2025 Highlights:

• Revenue: $50.53 million vs analyst estimates of $49.91 million (24.2% year-on-year decline, 1.2% beat)
• Adjusted EPS: $0.30 vs analyst estimates of $0.17 (73.1% beat)
• Adjusted Operating Income: $14.81 million vs analyst estimates of $4.28 million (29.3% margin, significant beat)
• Revenue Guidance for Q4 CY2025 is $49.4 million at the midpoint, below analyst estimates of $50.79 million
• EBITDA guidance for the full year is $58 million at the midpoint, below analyst estimates of $58.82 million
• Operating Margin: 10.6%, up from -5% in the same quarter last year
• Market Capitalization: $50.99 million

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Upland Software’s Q3 Earnings Call

• Scott Berg (Needham): Asked about the sustainability of recent core organic growth trends. CEO Jack McDonald responded that while one quarter is not a trend, growing large-deal momentum and AI product traction are promising indicators for future growth.
• Scott Berg (Needham): Sought clarification on the forecasted decline in perpetual license revenue. CFO Michael Hill explained this was largely due to anticipated deals not closing, mainly impacting non-recurring license revenue rather than core subscription growth.
• Scott Berg (Needham): Inquired about gross revenue retention trends. Hill indicated net dollar retention was 99% at the end of last year and is expected to remain in the upper 90% range this year.
• David Hynes (Canaccord): Questioned the relative importance of customer expansion versus new customer acquisition. McDonald emphasized that both are critical, with installed base retention supporting growth and new large accounts driving upside.
• Jeff Van Rhee (Craig-Hallum): Asked how sales execution and product development are evolving. McDonald noted improved sales talent, targeted marketing, and increased product innovation, particularly through AI integration and partnerships.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) the pace of AI product adoption among large enterprise customers, (2) the impact of further product portfolio streamlining on both growth and margins, and (3) the success of new sales strategies and channel partnerships in driving large-deal momentum. Additionally, the company’s ability to sustain high customer retention and manage the transition away from perpetual license revenue will be critical signposts for ongoing performance.

Upland Software currently trades at $1.77, down from $1.90 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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What Happened?

Shares of cloud software provider Upland Software jumped 8.7% in the afternoon session after the stock's positive momentum continued as the company reported third-quarter results that surpassed Wall Street's revenue and profit expectations. The company's non-GAAP profit of $0.30 per share came in 73.1% above what analysts had forecasted. Management pointed to progress in core organic growth, strong adjusted EBITDA margins, and new large-scale customer wins as reasons for the strong performance. Specifically, the company's CEO noted multimillion-dollar deals with major technology and pharmaceutical companies for its AI-powered product suite.

Is now the time to buy Upland Software? Access our full analysis report here.

What Is The Market Telling Us

Upland Software’s shares are extremely volatile and have had 61 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 6 days ago when the stock dropped 2.9% on the news that markets became increasingly wary of high valuations following a significant AI-driven rally. 

The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector. Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years.Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull market.

Upland Software is down 58.1% since the beginning of the year, and at $1.88 per share, it is trading 64.7% below its 52-week high of $5.31 from December 2024. Investors who bought $1,000 worth of Upland Software’s shares 5 years ago would now be looking at an investment worth $45.85.

P.S. In tech investing, "Gorillas" are the rare companies that dominate their markets—like Microsoft and Apple did decades ago. Today, the next Gorilla is emerging in AI-powered enterprise software. Access the ticker here in our special report.

Cloud software provider Upland Software beat Wall Street’s revenue expectations in Q3 CY2025, but sales fell by 24.2% year on year to $50.53 million. On the other hand, next quarter’s revenue guidance of $49.4 million was less impressive, coming in 2.7% below analysts’ estimates. Its non-GAAP profit of $0.30 per share was 73.1% above analysts’ consensus estimates.

Is now the time to buy UPLD? Find out in our full research report (it’s free for active Edge members).

Upland Software (UPLD) Q3 CY2025 Highlights:

• Revenue: $50.53 million vs analyst estimates of $49.91 million (24.2% year-on-year decline, 1.2% beat)
• Adjusted EPS: $0.30 vs analyst estimates of $0.17 (73.1% beat)
• Adjusted Operating Income: $14.81 million vs analyst estimates of $4.28 million (29.3% margin, significant beat)
• Revenue Guidance for Q4 CY2025 is $49.4 million at the midpoint, below analyst estimates of $50.79 million
• EBITDA guidance for the full year is $58 million at the midpoint, below analyst estimates of $58.82 million
• Operating Margin: 10.6%, up from -5% in the same quarter last year
• Market Capitalization: $52.94 million

StockStory’s Take

Upland Software’s third quarter was marked by a sharp year-on-year revenue decline, reflecting the impact of earlier divestitures, yet the company reported results slightly ahead of Wall Street’s revenue expectations. Management attributed the quarter’s performance to progress in core organic growth, strong adjusted EBITDA margins, and new large-scale customer wins in its AI-powered product suite. CEO Jack McDonald pointed specifically to multimillion-dollar agreements with major technology and pharmaceutical companies and highlighted early signs that Upland’s intensified focus on enterprise AI adoption and product innovation is yielding results.

Looking ahead, Upland Software’s guidance reflects a cautious outlook, with revenue expectations for the next quarter falling below analyst consensus. Management emphasized ongoing investment in product development and AI integration, while also noting the influence of lower perpetual license revenue on forecasts. CFO Michael Hill stated, “Our product portfolio is now much more focused around the KCM [Knowledge and Content Management] market,” and reiterated that future growth will rely on expanding large deals and maintaining high customer retention, even as the company faces headwinds from recent divestitures.

Key Insights from Management’s Remarks

Management credited the quarter’s operational improvements and focused product strategy for driving margin expansion and core deal momentum, despite the revenue decline from divestitures.

• Enterprise AI deal traction: Upland closed two significant multiyear agreements—one with a Fortune 100 technology company and another with a global pharmaceutical firm—leveraging its AI-enabled RightAnswers and BA Insight platforms. These deals validate management’s emphasis on embedding AI into core offerings and partnering with leading cloud providers to support large-scale enterprise deployments.
• Product portfolio streamlining: The company continued to rationalize its product suite, centering future investment and go-to-market efforts on knowledge and content management (KCM) solutions, which now represent approximately 75% of revenue. This focus is intended to drive both profitability and customer value.
• Channel and marketplace expansion: Upland broadened its presence in the AWS Marketplace, making several products—including BA Insight and RightAnswers—more accessible to enterprise buyers. Management believes this move will facilitate both new customer acquisition and expansion within its existing base.
• Sales force and go-to-market evolution: Renewed investments in sales talent, search engine optimization (SEO), and data-driven targeting (such as using 6sense intent data) were highlighted as contributors to improved lead quality and early-stage demand generation. Management views these steps as critical for building a sustainable pipeline for large deals.
• Operational discipline and margin gains: Adjusted EBITDA margin reached 32% for the quarter, supported by higher-margin product lines and ongoing cost control. Management reiterated plans to use free cash flow to continue deleveraging and strengthen the balance sheet, as seen in the recent refinancing and leverage reduction milestones.

Drivers of Future Performance

Upland’s outlook is shaped by its ongoing shift to AI-driven products, tighter portfolio focus, and margin expansion through operational discipline.

• AI product adoption and partnerships: The company expects its knowledge and content management offerings, especially those integrated with AI capabilities, to be key drivers of future growth. Management pointed to growing opportunities in large enterprise deals and deeper collaborations with major cloud providers such as Amazon and Microsoft.
• Portfolio concentration and retention: With a more concentrated product set following divestitures, management believes growth will increasingly depend on both expanding within its installed customer base and winning new large accounts. High net dollar retention (targeting upper 90%) is viewed as essential for supporting this strategy.
• Revenue headwinds from license model: Lower perpetual license revenue is expected to create near-term headwinds, particularly in upcoming quarters. Management acknowledged that future growth will rely more heavily on subscription and support revenue, with perpetual license sales becoming less significant over time.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) the pace of AI product adoption among large enterprise customers, (2) the impact of further product portfolio streamlining on both growth and margins, and (3) the success of new sales strategies and channel partnerships in driving large-deal momentum. Additionally, the company’s ability to sustain high customer retention and manage the transition away from perpetual license revenue will be critical signposts for ongoing performance.

Upland Software currently trades at $1.90, in line with $1.90 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

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