Intrinsic value of Upland Software, Inc. - UPLD

Previous Close

$48.19

  Intrinsic Value

$49.89

stock screener

  Rating & Target

hold

+4%

Previous close

$48.19

 
Intrinsic value

$49.89

 
Up/down potential

+4%

 
Rating

hold

We calculate the intrinsic value of UPLD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  42.50
  38.75
  35.38
  32.34
  29.60
  27.14
  24.93
  22.94
  21.14
  19.53
  18.08
  16.77
  15.59
  14.53
  13.58
  12.72
  11.95
  11.25
  10.63
  10.07
  9.56
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.77
Revenue, $m
  140
  194
  262
  347
  450
  572
  715
  879
  1,064
  1,272
  1,502
  1,754
  2,027
  2,322
  2,637
  2,973
  3,328
  3,702
  4,096
  4,508
  4,939
  5,389
  5,857
  6,345
  6,852
  7,379
  7,927
  8,496
  9,087
  9,702
Variable operating expenses, $m
  146
  193
  254
  329
  419
  527
  653
  798
  962
  1,145
  1,325
  1,548
  1,789
  2,049
  2,327
  2,623
  2,937
  3,267
  3,614
  3,978
  4,358
  4,755
  5,168
  5,599
  6,046
  6,511
  6,994
  7,497
  8,019
  8,561
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  146
  193
  254
  329
  419
  527
  653
  798
  962
  1,145
  1,325
  1,548
  1,789
  2,049
  2,327
  2,623
  2,937
  3,267
  3,614
  3,978
  4,358
  4,755
  5,168
  5,599
  6,046
  6,511
  6,994
  7,497
  8,019
  8,561
Operating income, $m
  -6
  0
  8
  18
  30
  45
  62
  81
  103
  127
  177
  206
  238
  273
  310
  350
  391
  435
  482
  530
  581
  634
  689
  746
  806
  868
  932
  999
  1,069
  1,141
EBITDA, $m
  25
  35
  47
  62
  81
  103
  129
  158
  191
  229
  270
  315
  365
  418
  474
  535
  598
  666
  737
  811
  888
  969
  1,053
  1,141
  1,232
  1,327
  1,426
  1,528
  1,634
  1,745
Interest expense (income), $m
  2
  9
  16
  25
  36
  49
  66
  86
  109
  135
  165
  198
  235
  276
  320
  367
  418
  472
  529
  590
  653
  719
  789
  861
  936
  1,015
  1,097
  1,181
  1,270
  1,361
  1,456
Earnings before tax, $m
  -15
  -16
  -16
  -17
  -19
  -21
  -24
  -28
  -32
  -38
  -22
  -29
  -37
  -47
  -57
  -68
  -81
  -94
  -108
  -123
  -138
  -155
  -172
  -190
  -209
  -229
  -249
  -271
  -293
  -316
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -15
  -16
  -16
  -17
  -19
  -21
  -24
  -28
  -32
  -38
  -22
  -29
  -37
  -47
  -57
  -68
  -81
  -94
  -108
  -123
  -138
  -155
  -172
  -190
  -209
  -229
  -249
  -271
  -293
  -316

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  401
  557
  754
  998
  1,293
  1,644
  2,053
  2,524
  3,058
  3,655
  4,316
  5,040
  5,826
  6,672
  7,578
  8,542
  9,563
  10,639
  11,770
  12,955
  14,193
  15,485
  16,831
  18,232
  19,689
  21,204
  22,778
  24,413
  26,113
  27,880
Adjusted assets (=assets-cash), $m
  401
  557
  754
  998
  1,293
  1,644
  2,053
  2,524
  3,058
  3,655
  4,316
  5,040
  5,826
  6,672
  7,578
  8,542
  9,563
  10,639
  11,770
  12,955
  14,193
  15,485
  16,831
  18,232
  19,689
  21,204
  22,778
  24,413
  26,113
  27,880
Revenue / Adjusted assets
  0.349
  0.348
  0.347
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
Average production assets, $m
  120
  166
  225
  298
  386
  491
  614
  755
  914
  1,093
  1,290
  1,507
  1,741
  1,995
  2,265
  2,554
  2,859
  3,180
  3,518
  3,873
  4,243
  4,629
  5,031
  5,450
  5,886
  6,338
  6,809
  7,298
  7,806
  8,334
Working capital, $m
  -62
  -86
  -116
  -154
  -200
  -254
  -317
  -390
  -473
  -565
  -667
  -779
  -900
  -1,031
  -1,171
  -1,320
  -1,478
  -1,644
  -1,819
  -2,002
  -2,193
  -2,393
  -2,601
  -2,817
  -3,042
  -3,276
  -3,519
  -3,772
  -4,035
  -4,308
Total debt, $m
  192
  297
  430
  595
  794
  1,031
  1,307
  1,625
  1,986
  2,389
  2,835
  3,323
  3,854
  4,425
  5,037
  5,687
  6,376
  7,103
  7,866
  8,666
  9,502
  10,374
  11,282
  12,228
  13,211
  14,234
  15,296
  16,400
  17,548
  18,740
Total liabilities, $m
  271
  376
  509
  673
  873
  1,110
  1,386
  1,704
  2,064
  2,467
  2,913
  3,402
  3,932
  4,504
  5,115
  5,766
  6,455
  7,181
  7,945
  8,744
  9,580
  10,452
  11,361
  12,307
  13,290
  14,312
  15,375
  16,479
  17,626
  18,819
Total equity, $m
  130
  181
  245
  324
  420
  534
  667
  820
  994
  1,188
  1,403
  1,638
  1,893
  2,168
  2,463
  2,776
  3,108
  3,458
  3,825
  4,210
  4,613
  5,033
  5,470
  5,925
  6,399
  6,891
  7,403
  7,934
  8,487
  9,061
Total liabilities and equity, $m
  401
  557
  754
  997
  1,293
  1,644
  2,053
  2,524
  3,058
  3,655
  4,316
  5,040
  5,825
  6,672
  7,578
  8,542
  9,563
  10,639
  11,770
  12,954
  14,193
  15,485
  16,831
  18,232
  19,689
  21,203
  22,778
  24,413
  26,113
  27,880
Debt-to-equity ratio
  1.470
  1.640
  1.760
  1.830
  1.890
  1.930
  1.960
  1.980
  2.000
  2.010
  2.020
  2.030
  2.040
  2.040
  2.040
  2.050
  2.050
  2.050
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.060
  2.070
  2.070
  2.070
  2.070
  2.070
Adjusted equity ratio
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -15
  -16
  -16
  -17
  -19
  -21
  -24
  -28
  -32
  -38
  -22
  -29
  -37
  -47
  -57
  -68
  -81
  -94
  -108
  -123
  -138
  -155
  -172
  -190
  -209
  -229
  -249
  -271
  -293
  -316
Depreciation, amort., depletion, $m
  31
  35
  39
  44
  51
  58
  67
  77
  89
  102
  93
  109
  126
  145
  164
  185
  207
  230
  255
  281
  307
  335
  365
  395
  427
  459
  493
  529
  566
  604
Funds from operations, $m
  16
  19
  23
  27
  32
  37
  43
  49
  56
  64
  72
  80
  89
  98
  107
  117
  126
  137
  147
  158
  169
  180
  192
  205
  217
  230
  244
  258
  273
  288
Change in working capital, $m
  -18
  -24
  -30
  -38
  -46
  -54
  -63
  -73
  -82
  -92
  -102
  -112
  -121
  -131
  -140
  -149
  -158
  -166
  -175
  -183
  -191
  -200
  -208
  -216
  -225
  -234
  -243
  -253
  -263
  -273
Cash from operations, $m
  34
  43
  53
  64
  77
  91
  106
  122
  139
  156
  174
  192
  210
  229
  247
  266
  284
  303
  322
  341
  360
  380
  400
  421
  442
  464
  487
  511
  536
  561
Maintenance CAPEX, $m
  -6
  -9
  -12
  -16
  -22
  -28
  -36
  -44
  -55
  -66
  -79
  -93
  -109
  -126
  -145
  -164
  -185
  -207
  -230
  -255
  -281
  -307
  -335
  -365
  -395
  -427
  -459
  -493
  -529
  -566
New CAPEX, $m
  -36
  -46
  -59
  -73
  -88
  -105
  -122
  -141
  -160
  -179
  -198
  -216
  -235
  -253
  -271
  -288
  -305
  -322
  -338
  -354
  -370
  -386
  -402
  -419
  -436
  -453
  -470
  -489
  -508
  -528
Cash from investing activities, $m
  -42
  -55
  -71
  -89
  -110
  -133
  -158
  -185
  -215
  -245
  -277
  -309
  -344
  -379
  -416
  -452
  -490
  -529
  -568
  -609
  -651
  -693
  -737
  -784
  -831
  -880
  -929
  -982
  -1,037
  -1,094
Free cash flow, $m
  -7
  -12
  -18
  -25
  -33
  -42
  -52
  -63
  -75
  -89
  -103
  -118
  -134
  -151
  -168
  -187
  -206
  -226
  -247
  -268
  -290
  -314
  -337
  -362
  -388
  -415
  -443
  -471
  -501
  -532
Issuance/(repayment) of debt, $m
  81
  105
  133
  165
  199
  237
  277
  318
  360
  403
  446
  489
  530
  571
  612
  651
  689
  726
  763
  800
  836
  872
  909
  946
  983
  1,022
  1,062
  1,104
  1,147
  1,193
Issuance/(repurchase) of shares, $m
  54
  66
  80
  97
  115
  135
  157
  181
  206
  232
  236
  264
  293
  322
  352
  382
  412
  444
  475
  508
  541
  575
  610
  646
  683
  721
  761
  802
  845
  890
Cash from financing (excl. dividends), $m  
  135
  171
  213
  262
  314
  372
  434
  499
  566
  635
  682
  753
  823
  893
  964
  1,033
  1,101
  1,170
  1,238
  1,308
  1,377
  1,447
  1,519
  1,592
  1,666
  1,743
  1,823
  1,906
  1,992
  2,083
Total cash flow (excl. dividends), $m
  128
  159
  195
  236
  282
  330
  382
  436
  491
  546
  580
  635
  689
  743
  795
  846
  895
  944
  992
  1,039
  1,086
  1,133
  1,181
  1,229
  1,278
  1,329
  1,381
  1,435
  1,491
  1,550
Retained Cash Flow (-), $m
  -54
  -66
  -80
  -97
  -115
  -135
  -157
  -181
  -206
  -232
  -236
  -264
  -293
  -322
  -352
  -382
  -412
  -444
  -475
  -508
  -541
  -575
  -610
  -646
  -683
  -721
  -761
  -802
  -845
  -890
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  74
  93
  115
  140
  167
  195
  225
  255
  285
  315
  343
  371
  397
  421
  443
  464
  483
  500
  517
  532
  545
  559
  571
  583
  595
  608
  620
  633
  646
  660
Discount rate, %
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
  68
  79
  89
  98
  104
  108
  109
  107
  103
  96
  88
  78
  68
  58
  48
  38
  30
  23
  18
  13
  9
  6
  4
  3
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  94.4
  89.8
  86.0
  82.8
  79.9
  77.4
  75.2
  73.2
  71.4
  69.8
  68.4
  67.2
  66.0
  64.9
  63.9
  62.9
  62.0
  61.1
  60.3
  59.5
  58.7
  58.0
  57.3
  56.6
  56.0
  55.4
  54.8
  54.2
  53.6
  53.1

Upland Software Inc. is a provider of cloud-based enterprise work management software. The Company provides a family of cloud-based enterprise work management software applications for the information technology, process excellence, finance, professional services and marketing functions within organizations. Its software applications serve a range of enterprise work management needs, from strategic planning to task execution. It services customers ranging from corporations and Government agencies to small- and medium-sized businesses. Its customers operate in a range of industries, including financial services, retail, technology, manufacturing, education, consumer goods, media, and telecommunications, Government, food and beverage, healthcare and life sciences, chemicals and travel and hospitality. The Company provides a family of cloud-based enterprise work management software applications under the Upland brand.

FINANCIAL RATIOS  of  Upland Software, Inc. (UPLD)

Valuation Ratios
P/E Ratio -61.2
Price to Sales 11.4
Price to Book 14.5
Price to Tangible Book
Price to Cash Flow 214.3
Price to Free Cash Flow 285.8
Growth Rates
Sales Growth Rate 7.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 15
Current Ratio 0
LT Debt to Equity 78%
Total Debt to Equity 81.4%
Interest Coverage -5
Management Effectiveness
Return On Assets -8.5%
Ret/ On Assets - 3 Yr. Avg. -11.4%
Return On Total Capital -14.7%
Ret/ On T. Cap. - 3 Yr. Avg. -18.6%
Return On Equity -23.5%
Return On Equity - 3 Yr. Avg. -27.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 62.7%
Gross Margin - 3 Yr. Avg. 62.4%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. -7.6%
Operating Margin -10.7%
Oper. Margin - 3 Yr. Avg. -17.5%
Pre-Tax Margin -16%
Pre-Tax Margin - 3 Yr. Avg. -21.8%
Net Profit Margin -18.7%
Net Profit Margin - 3 Yr. Avg. -23.1%
Effective Tax Rate -16.7%
Eff/ Tax Rate - 3 Yr. Avg. -8.1%
Payout Ratio 0%

UPLD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UPLD stock intrinsic value calculation we used $98 million for the last fiscal year's total revenue generated by Upland Software, Inc.. The default revenue input number comes from 0001 income statement of Upland Software, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our UPLD stock valuation model: a) initial revenue growth rate of 42.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.1%, whose default value for UPLD is calculated based on our internal credit rating of Upland Software, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Upland Software, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of UPLD stock the variable cost ratio is equal to 111.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for UPLD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 8.3% for Upland Software, Inc..

Corporate tax rate of 27% is the nominal tax rate for Upland Software, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the UPLD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for UPLD are equal to 85.9%.

Life of production assets of 13.8 years is the average useful life of capital assets used in Upland Software, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for UPLD is equal to -44.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $91.415 million for Upland Software, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 21.589 million for Upland Software, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Upland Software, Inc. at the current share price and the inputted number of shares is $1.0 billion.

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