Upland Software, a leader in cloud-based enterprise work management software, has acquired Localytics, a leading provider of mobile app personalization and analytics solutions.

With Localytics, Upland’s Customer Experience Management (CXM) Cloud sets the bar for rich mobile experiences, personalization, and real-time sentiment analysis across every digital channel, including text, mobile app, browser, wallet, voice, and email. The acquisition adds approximately $20 million in annualized revenues and will be immediately accretive to Upland’s Adjusted EBITDA per share.

“It is now vital for brands to deliver seamless, highly-personalized, mobile-focused experiences at key customer touchpoints. The addition of Localytics to our CXM Cloud offering now allows us to offer sophisticated mobile personalization at scale,” said Jack McDonald, chairman and CEO of Upland Software. “Our acquisition pipeline remains robust, and we are actively pursuing additional opportunities to build out our cloud offerings.”

A pioneer in mobile application analytics, Localytics delivers deep insights into consumer behavior within mobile app experiences and provides the foundation for campaigns that convert better and drive customer loyalty. Localytics’ support for interactions with consumers across push, in-app, inbox, and remarketing combined with rich audience segmentation allows marketers to deliver personalized app experiences with high consumer relevance.

“Our CXM Cloud team is on a mission to give our customers the technology and insights to deliver experiences consumers want and value. Localytics’ technology and expertise are powering app experiences that convert at a consistently higher rate across key consumer verticals like telco, media, retail, and consumer finance,” said Jed Alpert, executive vice president and general manager of the CXM Cloud at Upland Software. “Localytics is a perfect addition to our CXM Cloud, the only mobile-focused platform that harnesses the power of messaging, apps, email, and web interactions to serve today’s consumer on their digital channels of choice.”

Technology from Localytics’ mobile app marketing solution will be used to expand to more consumer touchpoints and upgrade the profound insights about consumer behaviour and preferences that CXM customers receive today. Innovative mobile application capabilities like geo-based push, in-app notifications, and application inbox messaging combined with rich behavioral data like application usage, location, products viewed, and cart abandonment will allow Upland CXM Cloud customers to tune their mobile app experiences to drive better offer conversion and reduce churn across targeted audiences. Connection to other marketing channels, like email and web, will allow Upland CXM Cloud customers to not only orchestrate journeys across technologies but also choose the communication channels that are most cost effective for their businesses.

The purchase price paid for Localytics was $67.7 million in cash at closing (net of cash acquired), paid out of cash on hand, and a $0.3 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 $20.0 million, of which $19.2 million is recurring, subject to reductions for deferred revenue discount as a result of GAAP purchase accounting, estimated at $4.5 million for the remainder of 2020. The price paid for the acquisition is within Upland’s target range of 5-8x pro forma Adjusted EBITDA and Localytics will generate at least $9.0 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 re-affirms its revenue and Adjusted EBITDA guidance for the quarter ended December 31, 2019.

In addition, for the quarter ending March 31, 2020, Upland expects reported total revenue to be in the range of $62.8 million to $65.8 million including recurring revenue in the range of $58.8 million to $61.2 million, for growth in recurring revenue of 33% at the mid-point over the quarter ended March 31, 2019. Adjusted EBITDA is expected to be in the range of $23.1 million to $24.5 million, for an Adjusted EBITDA margin of 37% at the mid-point, representing growth of 34% at the mid-point over the quarter ended March 31, 2019.

For the full year ending December 31, 2020, Upland expects reported total revenue to be between $269.5 and $281.5 million, including subscription and support revenue between $252.6 and $262.2 million, for growth in recurring revenue of 26% at the mid-point over the year ended December 31, 2019. Adjusted EBITDA is expected to be between $99.2 and $104.8 million, for an Adjusted EBITDA margin of roughly 37% at the midpoint, representing growth of 25% at the mid-point over the year ended December 31, 2019.

The first quarter and full year 2020 guidance above reflects the acquisition close date of February 6, 2020 and is net of the estimated purchase accounting discount of $4.5 million for the remainder of 2020. As a result, Localytics is forecast to add approximately $13.5 million of revenue and approximately $6.8 million of Adjusted EBITDA to calendar year 2020.

Upland’s 2020 guidance also reflects increased investment in go to market initiatives including the addition of enterprise software veteran Rod Favaron as Upland’s president and chief commercial officer, planned hires in marketing, sales and customer success and related marketing and sales program spending. Even with these new investments, Upland’s 2020 guidance reflects a 25% increase in Adjusted EBITDA in 2020 over 2019, while maintaining level Adjusted EBITDA margins in 2020 at 37% and with no change to Upland’s goal of achieving 40% Adjusted EBITDA margins at $500 million in annual revenue run rate.

About Upland Software

Upland Software (Nasdaq: UPLD) is a leader in enterprise work management software. Upland’s four enterprise clouds enable thousands of organizations to engage with customers across their experience journey, optimize sales teams, manage projects and IT costs, and automate critical document workflows. All of Upland’s clouds are backed by a 100% customer success commitment and the UplandOne platform, which puts customers at the centre of everything we do.

To learn more, visit www.uplandsoftware.com.

About Localytics

Localytics gives brands the data, intelligence, and marketing channels to deliver a meaningful, personal customer experience. Localytics helps brands discover and deliver exactly what their customers are passionate about, and integrate those insights and experiences across other channels to deliver a digital customer experience that resonates. The Localytics platform is used in more than 37,000 apps on more than 2.7 billion devices by companies such as ESPN, Fox and The New York Times.

To learn more, visit www.localytics.com.

BMO Capital Markets Corp. acted as exclusive financial advisor to Localytics.

Cowen acted as exclusive financial advisor to Upland Software.