Upland Software buys Kapost


Upland Software Inc has acquired Boulder, Colorado-based Kapost, an operations platform provider for sales and marketing. The purchase price was $45 million. AGC Partners was financial adviser to Kapost on the transaction. Kapost was backed by Access Venture Partners, Cue Ball Capital, Iron Gate Capital, Salesforce Ventures, Lead Edge Capital and High Country Ventures.

PRESS RELEASE

AUSTIN, Texas–Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based enterprise work management software, has acquired Kapost, a leading content operations platform provider for sales and marketing. Kapost is an important addition to Upland’s Enterprise Sales Enablement and Customer Experience Management (CXM) solution suites. The acquisition adds approximately $15 million in annualized revenues and will be immediately accretive to Upland’s Adjusted EBITDA per share.

“Kapost brings an established enterprise customer base, experienced team, and sophisticated content operations platform to our sales and marketing solutions,” 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 $220 million annualized revenue run rate. Our acquisition pipeline is robust, and we are actively pursuing additional opportunities to build out our solution suites.”

Kapost’s cloud-based content operations platform unites revenue teams to speak in one voice across the customer journey by streamlining the content development process at scale. The platform’s open architecture, robust set of APIs, and deep collaboration capabilities help organizations better orchestrate all stages of content planning, production, and distribution. Advanced analytics enable organizations to pinpoint hidden gaps in their content strategy, track content performance, and measure ROI.

“We are thrilled to welcome Kapost’s customers and team members to Upland,” said Sean Nathaniel, Upland’s chief technology officer and executive vice president of Workflow Automation Solutions. “Kapost’s powerful technology and built-in artificial intelligence adds advanced end-to-end content operations capability to our enterprise sales and marketing solutions, allowing complex sales and marketing organizations to boost the impact, relevance, and return on investment of their content.”

The purchase price paid for Kapost was $45.0 million in cash at closing, and a $5.0 million cash holdback payable in 12 months (subject to indemnification claims). Upland expects the acquisition to generate annual revenue of approximately $15.0 million, of which $13.5 million is recurring, subject to reductions for a deferred revenue discount as a result of GAAP purchase accounting, estimated as $2.2 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 $7.0 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 second quarter and full year 2019 guidance to reflect the Kapost 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 May 24, 2019.

For the quarter ending June 30, 2019, Upland expects reported total revenue to be between $50.5 and $52.5 million, including subscription and support revenue between $47.2 and $48.8 million, for growth in recurring revenue of 45% at the mid-point over the quarter-ended June 30, 2018. Second quarter 2019 Adjusted EBITDA is expected to be between $17.9 and $18.9 million, for an Adjusted EBITDA margin of roughly 36% at the mid-point, representing growth of 47% at the mid-point over the quarter-ended June 30, 2018.

For the full year ending December 31, 2019, Upland expects reported total revenue to be between $209.0 and $213.0 million, including subscription and support revenue between $195.0 and $198.2 million, for growth in recurring revenue of 44% at the mid-point over the year ended December 31, 2018. Adjusted EBITDA is expected to be between $76.5 and $78.9 million, for an Adjusted EBITDA margin of roughly 37% at the midpoint, representing growth of 46% at the mid-point over the year ended December 31, 2018. The transaction will be immediately accretive to Upland’s Adjusted EBITDA per share.

About Upland Software
Upland Software (Nasdaq: UPLD) is a leader in cloud-based enterprise work management software. Upland provides seven enterprise cloud solution suites that enable more than one million users at over 9,000 accounts to win and engage customers, automate business operations, manage projects and IT costs, and share knowledge throughout the enterprise. All of Upland’s solutions are backed by a 100% customer success commitment and the UplandOne platform, which puts customers at the center of everything we do. To learn more, visit www.uplandsoftware.com.

About Kapost
Kapost, now referred to as Upland Kapost, enables organizations with complex buying cycles to strategically plan and produce personalized content with a targeted message, streamline distribution across channels, and analyze content performance at scale. Top enterprises use Kapost technology to reduce content waste and accelerate revenue through more targeted, personalized experiences. To learn more, visit www.kapost.com.

AGC Partners acted as exclusive financial advisor to Kapost.