- Upland Software ( NASDAQ: UPLD ) eroded 33% in its value until noon trading after the company posted mixed Q4 results, outlook lower than consensus estimates and a series of rating downgrades at different agencies.
- The new guidance range for FY23 revenue marks a 5% decline at the mid-point over the year ended Dec. 31, 2022 while adj. EBITDA estimates are a 29% drop; Q1 revenue and adj. EBITDA are also a 5% and 27% drop respectively from Mar.31, 2022 levels.
- Upland chairman and CEO Jack McDonald commented, "We are also announcing today our new growth plan. Developed over the past six months, our plan sharpens product focus and is centered around an efficient digital marketing and inside sales capability and an expanded cost-effective offshore development platform. We believe that the meaningful investments we are making now as part of this comprehensive plan will enable us to drive higher core organic growth and higher AEBITDA margins and enhance shareholder value over time."
- Truist downgraded the stock to Hold from Buy (PT to $9 from $11) on execution risk, spending on growth plan, while Needham also cut its rating to Hold from Buy and Roth MKM downgraded the stock to Neutral from Buy (PT to $8 from $10).
- Truist turns cautious stating, We think the plan has merit, however increased near & mid-term investments ($15M incremental opex) along with execution risk in achieving long-term targets for organic growth and adjusted EBITDA.
- Roth believes that the new growth plan will result in lowered revenues with some offerings sun-setted and higher spending to accelerate to only modest targeted growth, and this will leave holes in revenues and earnings ahead of any re-acceleration, if achieved. There are few near-term catalysts for the stock, and little valuation support.
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Upland Software plunge: Downgrades led by Q4 mixed results and uncertainty around growth plan