Upland Software, Inc. Q1 FY2020 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the Upland Software First Quarter 2020 Earnings Call. The conference call will be simultaneously webcast on Upland's Investor Relations website, which can be accessed at investor.uplandsoftware.com. As a reminder, this conference call is being recorded. Following the completion of the conference, a telephone replay and webcast replay will be available for 12 months on Upland's Investor Relations website at investor.uplandsoftware.com. By now, everyone should have access to the first quarter 2020 earnings release, which was distributed today at approximately 4 p.m. Central Time, 5 p.m. Eastern Time. If you've not received the release, it's available on the Investor Relations tab of Upland's website at investor.uplandsoftware.com. I'd now like to turn the conference over to our host, Mr. Jack McDonald, Chairman and CEO of Upland Software. Please go ahead, sir.

Thank you. Good afternoon, everyone, and welcome to our Q1 2020 earnings call. I'm joined today by Tim Mattox, our President and Chief Operating Officer; and Mike Hill, our CFO. I'd like to welcome Rod Favaron to this call for the first time. Rod has been on the ground with us now for a little over a month as President and Chief Commercial Officer. He joins us to lead a major initiative to create real distribution for Upland's cloud solutions with a new go-to-market leadership team. Rod is a software industry veteran who knows our business well, having served on our Board for over five years. He's brought with him a team of experienced executives in marketing, customer success, and global account sales leadership. This team has a proven and successful track record from high-growth enterprise software organizations, having successfully built and exited both Spredfast. Rod's leadership is already apparent as he and his team have been revitalizing our go-to-market efforts. Rod will join us for the Q&A, so please feel free to address questions directly to him. On today's call, I'll summarize our results and recent highlights and our response to the COVID-19 pandemic. Following that, Mike Hill will provide a more detailed look at the Q1 numbers and share with you our guidance for the second quarter and for the full-year 2020, and then, finally, Tim Mattox will cover sales and operations highlights from the first quarter of 2020, after which, we'll open the call up for Q&A. But before we get started, Mike Hill will read the safe harbor statement. Mike?

Thank you, Jack, and good afternoon, everyone. During today's call, we will include statements that are considered forward-looking within the meanings of the securities laws. In addition, we may make additional forward-looking statements in response to your questions. These statements are subject to risks, assumptions, and uncertainties that could cause our actual results to differ materially. We caution you to consider our discussion of risk factors and other uncertainties that could cause actual results to differ materially from those in the forward-looking statements contained in the press release and in this conference call. Based on information currently available to Upland management as of today, May 7, 2020. We do not intend or undertake any duty to release publicly any updates or revisions to any forward-looking statements, whether as a result of new information, future events or otherwise. On this call, Upland will refer to non-GAAP financial measures that, when used in combination with GAAP results, provide Upland management with additional analytical tools to understand its operations. Upland has provided reconciliations of non-GAAP measures to the most comparable GAAP measures in our press release announcing our first quarter 2020 results, which is available on the Investor Relations section of our website at investor.uplandsoftware.com. Please note that we're unable to reconcile any forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures because the information needed to complete a reconciliation is unavailable at this time without unreasonable effort. To learn more about our outreach plans, please feel free to contact us at investor-relations@uplandsoftware.com. And with that, I'll turn the call back over to Jack.

Thanks, Mike. So I'm going to start today with a review of our strong Q1 performance, then discuss why Upland is well-positioned to navigate the headwinds of COVID-19. I'll talk about actions we've taken in response to the pandemic. And then, finally, I'll discuss some of the assumptions behind our outlook for 2020. But before I begin, on behalf of Upland, I want to extend our thanks to those risking their lives every day on the front lines: doctors, nurses, first responders, and the people keeping critical services running. I also want to say how proud we are of the Upland workforce, who've spent countless hours working alongside our customers to ensure they are well-equipped for the road ahead. Onto our Q1 results. We had a strong Q1 that beat guidance and consensus for both revenue and adjusted EBITDA, 40% total revenue growth, 38% adjusted EBITDA growth, so a very strong Q1. This is our 23rd consecutive quarter of meeting or beating guidance, and again, that is every quarter since going public. What's notable among other things is that our organic growth in recurring revenues, reported recurring revenues came in at a strong 6%. So, 6% organic growth at the upper end of our target range of mid-single digits. Impressive, particularly given the COVID-19 headwinds at the end of the quarter. On the M&A front in Q1, we acquired Localytics, a great strategic acquisition that added mobile app and push messaging to our CXM Cloud. We are going to be pausing M&A for the short term, probably a couple of quarters while nurturing our pipeline. There is no need to rush in for M&A right now until things clear a bit. We're going to use this time to complete all ongoing integrations. You'll recall that we had a very busy 2019 on the acquisition front, and of course, a material deal, Localytics in the first quarter of 2020. So, we will use this time again to complete all ongoing integrations and to fortify our systems. My guess, based on prior experience, is that 2021 could be a great and busy year for acquisitions. And maybe, things will start back up in Q4 of this year; we'll see. I want to talk about Upland's positioning relative to COVID-19, the pandemic and the fallout. I think we're extremely well-positioned to be a company that not only survives but comes out stronger than we went in. Our Q1 performance demonstrates Upland's ability to successfully navigate this storm. Our products have helped our customers succeed in the new remote working environment. Our enterprise customer base, our high recurring revenue, high retention and high margins, our limited exposure to highly-impacted verticals, our strong balance sheet, our flexible cost structure and proven ability to right-size expenses position us well to emerge from this ready to capitalize on new growth opportunities. Let me drill down for a minute on just a couple of those points. On enterprise customer base, it's 1,600 major accounts, averaging 160,000 per year in ARR that drive 90% of our recurring revenue. We have limited exposure to highly-impacted verticals. Our total revenue exposure to travel and hospitality, leisure, retail, and energy, in total, all of those verticals is only 7%. And, of course, we are working with all of the valued customers in those verticals closely. In many cases, there have been new opportunities to drive value and revenue by using our products to address the current COVID situation. For example, with major retailers, using our messaging products to help drive customers from brick-and-mortar to online. We've got a strong balance sheet because of the smart actions that we took in 2019, raising equity and putting in place a great new long-term credit facility. We are sitting today with over $150 million of cash and liquidity on the Upland balance sheet. Our debt is not due until 2026, and our annual principal amortization is only 1%. Additionally, we have no financial covenants on current borrowings. So, not only do we have a strong balance sheet, but we're also generating a comfortable positive cash flow for the remainder of the year. We've got a flexible cost structure and a proven ability to cut costs if ever needed. We have proven that we can effectively manage and reduce costs. We have a track record of 26 acquisitions, wherein each of those acquisitions we've taken out roughly 50% of operating expenses. And of course, near best-in-class adjusted EBITDA margins for a cloud software company in the public market in our size category. So, we've proven that capability. We've got a hardened business model for this kind of an environment. Our UplandOne operating model was built from the ground up to optimize a decentralized remote workforce using today's online technology and collaboration tools. 60% of our employees and contractors worked remotely pre-COVID. So, moving up to 100% as we did a little over a month ago was pretty seamless for us. We've been doing virtual user conferences for years. Our customer engagement motions are largely remote with virtual user conferences and customer gatherings, not large in-person events. A substantial portion of our sales and renewal motions are both inside and virtual. We have built a portfolio of products that are core to how companies accelerate and benefit from digital transformation and a remote working environment. In the past several weeks, many of our customers have had to rapidly enable every function in their business, from sales to customer success, to professional services, to work remotely, and our products have helped them do so. It is clear that we provide the mission-critical solutions that our customers and our communities depend on, especially during this crisis. As some analysts have noted, the system shock of COVID-19 may drive longer-term increased demand for a number of the cloud software categories where Upland plays, including customer experience management and messaging, digital sales enablement and workflow automation. In terms of our outlook assumptions, in just a moment, Mike will review our guidance in detail. I wanted to share with you first a couple of notes about the assumptions underneath that guidance. Our working assumption is that the bookings and renewals environment will be challenged through the end of Q3 and will then begin a return to normal. Our guidance is predicated on factors that are beyond our control, such as the pace of the pandemic, the response and the economic implications of that. Our guidance indicates we roughly see only a 4% reduction in revenue from our previous 2020 guidance midpoint. 65 basis points of that reduction is from foreign currency exchange rate weakness as the dollar has appreciated in this crisis environment. Upland's 2020 guidance still reflects the increased investment in go-to-market initiatives that we talked about earlier this year. We're going to persist in that important investment initiative, so we can be at full fighting strength coming out of this. We can do this because we've got a flexible cost structure, comfortable cash flow and $150 million in liquidity. We expect adjusted EBITDA margins to float back up over time as our revenues do as well. This management team has a proven track record in tough markets. We've navigated these types of market crashes in the past, most specifically at Perficient, where as Chairman and CEO, we weathered both the Dotcom Crash and the Great Financial Recession of 2008. Having experience and respect for history and its ability to repeat itself, we've built the business at Upland to withstand these shocks based on contractually recurring revenue contracts with large enterprise accounts in a high margin and high cash flow model in a mostly virtual operating environment, having raised capital when we could, not when we had to. We're in a position of control to decide to dial back acquisition activity short term to generate more cash flow and invest in go-to-market initiatives. It's why we're in a strong position today and why we intend to emerge out of this market downturn even stronger than when we went in. I'm going to turn the call over to Mike, who will give you a more detailed look at the Q1 numbers and share our guidance.

Thank you, Jack. I'd like to start by reiterating what Jack said. While there is no doubt that COVID-19 has impacted each of us, our business remained strong, and I'm extremely proud of our employees who have been steadfast in their support of our customers. With that, I'll cover the financial results for the first quarter and our outlook for the second quarter and full-year 2020. Total revenue for the first quarter was $68 million, representing growth of 40%. Recurring revenue from subscription and support grew 42% year-over-year to $63.9 million. Professional services revenue was $3.8 million for the quarter, a 32% year-over-year increase. Perpetual license revenue was $0.4 million for the first quarter, a decrease of 45% year-over-year. Looking at gross margins, our overall gross margin was 67% during the first quarter, and our product gross margin remained strong at 69%, or 73% when adding back depreciation of equipment and amortization of acquired intangible assets, which we refer to as cash gross margins. Our professional services gross margin was 40%. Now, turning to our operating expenses. Research and development expense, net of refundable Canadian tax credits, was $9.1 million for the quarter, representing 13% of total revenue. Sales and marketing expense was $10.9 million, representing 16% of total revenue for the first quarter. General and administrative expense was $16.7 million for the first quarter, representing 25% of total revenue. However, excluding non-cash stock compensation expense, G&A expense was $8.8 million or 13% of total revenue in the quarter. Acquisition-related expenses were $15.2 million in the first quarter due to our recent significant acquisition activity, including two acquisitions closing in the fourth quarter of 2019. During the period from April 2019 through March 2020, we closed six acquisitions, representing combined annual revenue run rates of $87 million, all of which contributed to acquisition-related expenses in Q1. Now that we have paused new acquisitions in the short term, these costs will decline dramatically in the coming quarters, and without new acquisitions, would go away completely by January 2021. We're looking at quarterly sequential reductions in acquisition-related expenses of 50% or more to around $6 million in Q2, $3 million in Q3, and $1 million in Q4. Our operating loss was $15.3 million in the first quarter compared to a loss of $2.6 million for the same period in 2019. While we had a tax benefit of $4.3 million in the first quarter compared to $0.6 million benefit in the first quarter of 2019, we don't expect tax benefits in future quarters as we are anticipating a more normalized quarterly tax provision of around $1 million. GAAP net loss was $20.1 million, or a loss of $0.81 per share, compared to a GAAP net loss of $7.8 million, or a loss of $0.38 per share in the first quarter of 2019. Non-GAAP net income was $18.1 million, or $0.72 per share for the first quarter compared to non-GAAP net income of $11.1 million, or $0.53 per share in the first quarter of 2019. Our first quarter 2020 adjusted EBITDA was $24.6 million, or 36% of total revenue, up 38% compared to $17.8 million, or 37% of total revenue for the first quarter of 2019. Refer to the reconciliation of non-GAAP net income and non-GAAP EPS and the reconciliation of adjusted EBITDA in the tables on today's earnings press release and Form 8-K. Moving on to our balance sheet and statement of cash flows, we ended the first quarter with $98.7 million in cash. This cash on hand, plus our undrawn $60 million revolving credit facility, represents over $150 million of liquidity. For the first quarter of 2020, operating cash flow was negative $5.3 million due to significant cash acquisition costs. Normalizing operating cash flow for these costs and temporary timing differences in working capital accounts, Q1 adjusted operating cash flow would have been roughly 55% to 60% of our reported $24.6 million of adjusted EBITDA. Given our forecasted sharp sequential decline in acquisition-related expenses with no new acquisitions, operating and free cash flow should start improving in the coming quarters and should be nicely positive for the year. Upland is cash efficient when looking at income taxes and capital expenditures. Cash taxes for Q1 were $0.5 million compared to cash taxes of $0.8 million for the first quarter of 2019. Upland currently has approximately $321 million of total tax NOLs, of which approximately $197 million are usable, comprised of $166 million of U.S. federal tax NOLs and the remainder mostly in the U.K. We expect to continue to pay around $4 million to $5 million per year in cash taxes, mainly in the form of Canadian revenue agency income taxes, Irish income taxes, and some U.S. state income taxes. CapEx for Q1 was $0.3 million compared to CapEx of $0.2 million for the first quarter of 2019, and we generally expect about $1 million per year in CapEx. As of March 31, 2020, we had approximately $537.3 million of gross debt outstanding excluding deferred debt offering costs, making a net debt of approximately $438.6 million after factoring in the $98.7 million of cash on our balance sheet. I will note that the principal payments on our term debt are 1% per year, or about $5.4 million per year, with the remaining balance maturing in August of 2026. The interest rate on our term debt is locked at 5.4%, making our annual cash interest payments about $29 million. Additionally, our term debt has no financial covenants on current borrowings. While we don't guide to free cash flow, taking the midpoint of the 2020 adjusted EBITDA guide of approximately $90 million as a proxy leaves over $40 million to cover the estimated $10 million of remaining acquisition-related expenses from completed acquisitions and still results in tens of millions of dollars of free cash flow beyond our roughly $99 million of cash on hand, not including availability on our revolver while our debt remains financial covenant-free on current borrowings. This puts Upland in a strong liquidity position to ride out the pandemic and prepare for future acquisitions. Now, for guidance. As Jack mentioned, our working assumption is that the bookings and renewals environment will be challenged through the end of Q3 and will then begin to return to normal. Our guidance is predicated on some factors that are beyond our control, as previous noted. For the quarter ending June 30, 2020, Upland expects reported total revenue to be between $62.5 million and $66.5 million, including subscription and support revenue between $59.9 million and $62.9 million, for growth in recurring revenue of 26% at the midpoint over the quarter ended June 30, 2019. Second quarter 2020 adjusted EBITDA is expected to be between $20.5 million and $22.5 million for an adjusted EBITDA margin of 33% at the midpoint, representing growth of 13% at the midpoint over the quarter ended June 30, 2019. For the full year ending December 31, 2020, Upland expects reported total revenue to be between $257.4 million and $269.4 million, including subscription and support revenue between $244.8 million and $253.8 million for growth in recurring revenue of 22% at the midpoint over the year ended December 31, 2019. Full-year 2020 adjusted EBITDA is expected to be between $87.2 million and $93.2 million for an adjusted EBITDA margin of 34% at the midpoint, representing growth of 9% at the midpoint over 2019. With that, I'll turn the call over to Tim Mattox, our President and COO.

Thanks, Mike, and good afternoon, everyone. Before I get into the sales, product, and operating results, I wanted to highlight a couple of ways in which our customers have been able to lean on our mission-critical resources and expertise. Jack alluded to this, and I want to provide some color on how these customers are using our capabilities to navigate these unprecedented times. Over the past several weeks, mobile messaging has become a vital resource for companies looking to reach their consumers quickly and efficiently. So far in 2020, we've seen nearly 40% increase over the prior year in the amount of monthly text and rich format MMS text messages being sent by our customers, reaching hundreds of millions of messages sent per month for Upland. One customer, in particular, a U.S. home goods retailer significantly impacted by COVID, drove substantial incremental sales between March 15 and April 15, directly attributed to our SMS capabilities and a campaign aimed to drive online sales amid physical store closures. The customer has been very enthusiastic about the success of this campaign and sees themselves continuing to run increased SMS campaigns for the long term, as do other retailers we're working with to drive online success. Another example while some companies are looking for ways to scale their mobile infrastructure through messaging, many were also in desperate need of accelerating their now-remote support teams and their ability to respond to the unparalleled volume of consumer inquiries. One of our customers, a major North American human resource software company, rapidly transitioned over 16,000 employees from their call centers to remote work within days. Our team provided expertise, licensing flexibility, and hands-on knowledge that enabled the remote working of their contact centers to exceed their productivity goals amid the pandemic, strengthening our long-term relationship. COVID-19 presents our customers with a unique set of challenges, and we're committed to providing them with the resources and expertise needed to operate remotely during this critical period. A few weeks ago, we launched our Connected Through Change public and customer webinar series. Today, these have been some of the most highly attended and have proven to be an excellent resource for business leaders across dozens of industries as they look to Upland for support now and in the future. Before I move on, I'd be remiss if I didn't acknowledge the incredible amount of hard work that our team members have put forth in order to support our customers and our business during this time, while also supporting their own families and communities. It's been heartening to watch the Upland team rally under such difficult circumstances. Now, turning to sales. For Q1, we expanded our current relationships with 277 existing customers, 40 of these were major expansions of over $25,000 in annual recurring revenue. Among our expansion deals of hundreds of thousands of dollars were a North American-based infrastructure software company focused on big data, who expanded its commitment to our Enterprise Sales & Marketing Cloud, a global apparel retailer who expanded its commitment to our Customer Experience Management Cloud, and a global automotive services provider, who also expanded their commitment to our Enterprise Sales & Marketing Cloud. Our remaining expansion customers in Q1 committed nearly $4 million in aggregate annual recurring revenue. In addition to these expansions, we also welcomed 122 new customers in Q1, including 49 new major customers, each committing over $25,000 in annual recurring revenue. Among our larger new customers committing hundreds of thousands of dollars were a North American specialty insurance provider who committed to our Project and IT Management Cloud, a large virtual healthcare provider who committed to our Enterprise Sales & Marketing Cloud, and a leader in integrated technology solutions for the retail petroleum and commercial fueling industry who committed to Upland's supply chain collaboration solution. Our remaining new customers in Q1 committed over $2.8 million in annual recurring revenue. Lastly, we continued to focus on solutions selling to existing customers. We're making good progress on our cross-sell pipeline and bookings. Among our Q1 cross-sell bookings was a worldwide entertainment company who had a very positive experience with our Document Workflow Cloud and committed to our PITM, or Project and IT Management Cloud. We are seeing interest from our customers, both within a given cloud and across clouds as we become more programmatic around cross-selling and are ultimately seeing an improved pipeline. On the product front, we continued to invest in our foundational elements of our portfolio while pushing forward customer-driven innovations and product development. We had seven major releases in Q1 and 15 feature packs. For example, in our Enterprise Sales and Marketing Cloud, we concentrated on simplifying and modernizing the products while improving performance and system reliability. In February, we released significant updates to our marketing content operations offering, known as Kapost, focusing on the user experience which included a redesigned preview pane, a new catalog to manage tasks and the ability to route idea notifications to specific users and groups by content type. Additionally, the improvements made to the Upland Analytics platform further support customers in extracting real value from meaningful metrics and provide ways in which they can empower their remote sales forces. Our Project and IT Management Cloud focused on several major innovative additions and many customer enhancements throughout the quarter. Most significantly, we released Microsoft Teams integration across our PITM Cloud, which provides customers with deeper collaboration capabilities for their own remote workforces. Within the Document Workflow Cloud, we released Intelligent Capture, combining simple cloud-based administration with flexible document capture, indexing and workflow customization. Document Workflow Cloud can now fully support on-premise, remote, and hybrid work environments, providing the tools to drive process improvements across document-intensive digital transformation projects. Finally, moving to our CXM Cloud or Customer Experience Management Cloud, mobile continues to be a critical part of our strategy. As Jack mentioned, we announced the acquisition of Localytics in Q1, a company that combines push, in-app, inbox, and remarketing with rich audience segmentation. With the addition of Localytics, our CXM Cloud now provides a broad set of mobile experiences that help customers deliver personalized engagement across the customer journey. As you can see, we're doing significant customer-driven innovation that is delivering even more value for our customers, even in this challenging environment. On the operational front, our InGenius and Altify integration plans are in full swing. We expect that these will be completed by mid-year. For Localytics, we began the integration into the UplandOne platform and integrated our teams into the CXM organizational structure within weeks of the announcement of the acquisition. This allowed us to get in front of our global customer base with a highly attractive CXM portfolio, positioning us well for greater cross-sell potential. Additionally, we evolved our product integration playbook by adding more source code and open-source analytical tools. We also upgraded elements of our third-party back-office infrastructure to support continued future growth across regions and license types. Lastly, we are utilizing this time to strengthen our operational foundation, our integration playbook, and our go-to-market investment initiatives as we pause acquisitions. This way, we can hit the ground running towards the end of the year and into 2021. With that, I'll pass the call back to Jack.

Thanks, Tim. I realize we just had a long call in which we've given you a lot of information to digest. But if you take nothing else from this, I would note, only a 4% revision of revenue from COVID-19, 20% revenue growth this year, 2020, with no further M&A for the remainder of the year. So, even if we do no other acquisitions, we'll still have revenue growth of 20%. $90 million in adjusted EBITDA, that's the midpoint of guidance for this year, with positive free cash flow for the rest of the year and $150 million in cash and liquidity. Finally, we're able to deliver all that and continue our go-to-market investment initiatives, so we come out of this stronger than we went in. And now, we're ready to open up the call for Q&A.

Your first question comes from Brad Zelnick with Credit Suisse. Please go ahead.

Great. Thank you very much and thanks for all the detail. It's great to see the discipline with which you're approaching these unprecedented times. Jack, maybe if I could start just by asking you, you've talked about how well-positioned Upland is to handle the current crisis, the low exposure to highly-impacted industries, enabling your customers to work from home, the benefits of UplandOne. But at the same time, I know you're only lowering at the midpoint the full-year guide by only 4%. But clearly, you're seeing something as we look forward, as is the rest of the world, that's causing you to take a more conservative view. Can you maybe just parse through what it is that you are seeing in terms of maybe renewal business and new business and different areas of the portfolio that you don't think will convert as well or maybe from a pipeline perspective that perhaps aren't building as well that's causing you to revise the outlook, other than just the macro?

Yes. It's really about the bookings environment for the second and third quarters. We wanted to adopt a cautious stance on our guidance and anticipate a more difficult bookings situation during these periods, as we noticed some of that at the end of the first quarter. On the renewal front, we are still experiencing strong renewals. So, while we aim to be conservative in our projections, this is primarily a statement regarding bookings for the next couple of quarters.

Okay, that's fair. Since you mentioned it, I would like to welcome Rod. You've certainly chosen a challenging time to take on an operational role. You're familiar with the company from your time on the Board, but now that you've been involved at the ground level for the past few months, what have you learned that gives you optimism about being able to make a meaningful impact and drive positive change here?

That's a great question. I think a couple of things I've learned when you get on the ground. We have a lot of really strong products, stronger than I even could see from the Board perspective. The customer base is solid. As Jack alluded to, we're seeing a lot of positive signs and renewals, which I think is a good indicator. These are products that people are going to use, and they're sticky. I think that's encouraging. The team is really solid. What gives me early optimism, we've had changes in rhythms already. We've sort of updated how we forecast and made modifications to how we're managing renewals. These are tweaks that make us better and give us more visibility into the business. We've begun shifting our selling focus in the business to be more cross-product and account-focused rather than really product depth and sales.

Great. Well, welcome. Thanks for taking the question. I'm going to jump back in the queue.

Your next question comes from Bhavan Suri with William Blair. Please go ahead.

Hey guys, glad everyone is safe and healthy. Thank you for the color, especially on cash flow. It would be great to understand what the sales team is seeing in terms of pushback on renewal, if there is any. Are people saying contract terms and lengths of contracts, things like that? Also, what's your perspective on the cross-sell question?

We haven't seen anything material in terms of changing selling terms or pushing out payables on receivables. Nothing material there. As for the rest of your question, I'll let Rod answer that.

When Jack talked about bookings in Q2 and Q3, our forecast is driven more by new customer bookings than it is in expansion and cross-sell. We're seeing a strong pipeline, and our engagement at the top of the funnel has been encouraging. We've switched to more virtual events, and we've had record attendance webinars. The challenge is, of course, net new customer deals, which generally require more cycle time. Our expansion business is still feeling good.

That's helpful. I'd love to hear about the details relative to product suites. How many Upland products does each customer have on average?

One of the things that is exciting that Rod is implementing here, he brought in a successful team from Spredfast. Rod articulated the need to evolve from a product-centric sales organization to an account-based sales organization. I don't know that we were ever going to execute successfully on the broader cross-sell vision until now. Rod has put a vision in place for getting that done, and now he's making it happen.

I think step one for us is to get our salespeople comfortable selling more than one product. We are evolving from one product to a suite of products, with sales reps becoming more cross-product aware. We're working on ensuring that our reps quarterback larger accounts, which represents every product we have. We are also adopting the targeted-account selling methodology, which will give us more visibility and effectiveness.

Thanks for the color. One quick question regarding churn metrics. Did you see anything in the month of April? Any impact to be aware of?

No, Bhavan. As Jack mentioned, everything has been pretty strong on renewals. So no updates or changes there.

Thank you, Bhavan.

Your next question comes from Brent Thill with Jefferies. Please go ahead.

Hi, this is Luv Suda on for Brent Thill. Congrats on those impressive numbers. One question was on existing major account expansions, which was quite impressive this quarter. Which of those four cloud categories are benefiting from the work-from-home trend? And is the cross-sell motion already taking hold, or is that a long-term tailwind?

In terms of the clouds benefiting the most, our CXM Cloud has been strong in driving transitions from brick-and-mortar to online. Our contact center productivity cloud offering is connecting physical infrastructures to cloud systems for remote work. For our remote workforce, those with a strong digital presence are seeing success, and we're supporting that while ensuring all products operate seamlessly in either environment.

I think we're seeing great growth opportunities emerging from COVID-19, especially in the wake of this crisis, along with opportunities for acquisitions once the market stabilizes.

Thank you. I'll pass it on.

There are currently no further telephonic questions at this time.

Great. Thank you all for your time today, and we will see you on our next earnings call. Thank you, and good afternoon.

This concludes today's conference call. Thank you for joining. You may now disconnect.