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Upland Software Inc  (NASDAQ:UPLD)
Q1 2019 Earnings Call
May. 02, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Upland Software First Quarter 2019 Financial Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) The conference 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 call a 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 2019 earnings release, which was distributed today at approximately 3 p.m. Central Time and 4 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.

John T. McDonald -- Chairman and Chief Executive Officer

Thank you. Good afternoon, everyone, and welcome to our Q1 2019 earnings call. I'm joined by Tim Mattox, our President and COO; and Mike Hill, our CFO.

On today's call, I'll start by summarizing our results and some recent highlights. After that, Mike will give a more detailed look at the numbers and share with you our guidance for the second quarter and full year 2019 and then Tim will cover sales and operations highlights. After that we'll open up for Q&A.

But before we get started Mike will read the Safe Harbor statement. Mike?

Michael D. Hill -- Chief Financial Officer

Thank you, Jack. And good afternoon, everyone. During today's call, we will include statements that are considered forward-looking within the meanings of 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.

A detailed discussion of such risks and uncertainties are contained in our annual report on Form 10-K as periodically updated as needed in our quarterly reports on Form 10-Q filed with the SEC. The forward-looking statements made today are based on our views and assumptions and on information currently available to Upland management as of today, May 2, 2019. 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 fourth quarter 2018 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 which is 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.

John T. McDonald -- Chairman and Chief Executive Officer

Thanks, Mike. So a few major headlines today, we had a record Q1 with better than 50% growth in total revenue and better than 60% growth in recurring revenues. After you factor in the acquisition of PostUp, which we announced after the quarter close, on April 22. Total revenue now on an annualized run rate basis has broken through $200 million for the first time, actually at about $205 million revenue run rate today. And, of course, PostUp was both accretive, immediately accretive and strategic to our CXM Solution Suite.

We had record adjusted EBITDA in the quarter at an annualized run rate north of $71 million and pro forma for PostUp, it's now at $76 million. So $76 million adjusted EBITDA pro forma for PostUp. This is the 19th straight quarter of meeting or beating guidance. And again, that's every single quarter since going public. We had a host of new product innovations in the quarter. We also had strong organic growth. So organic growth and recurring revenues was 10%, actually 9.6% rounded to 10%. So very pleased by that, but not ready to declare that's sustainable.

That was an easy compare, we had a number of customer go lives that increased revenue. So we're thrilled to have two double digit organic growth quarters in a row. But it's not the new normal, we will bounce around 10%, 5%, 8%, et cetera and we will continue to guide conservatively at flat to 5%.

And then finally, as Mike will detail in a couple of minutes here a very strong Q2 guidance, we feel great about Q2 and the year. I would note that our M&A pipeline is strong. And again, we are being invited into M&A opportunities that we used to have to fight our way into and so we feel very good about our strong pipeline of accretive and strategic potential acquisitions. So again, the Upland engine is firing on all cylinders and we look forward to a great 2019.

And with that, I'm going to turn the call over to Mike.

Michael D. Hill -- Chief Financial Officer

Thank you, Jack. Today, I'll cover the financial results for the first quarter and as we said, our outlook for the second quarter and full year 2019. Total revenue for the first quarter was $48.5 million, representing growth of 53%. Recurring revenues from subscription and support grew 62% year-over-year at $45 million. Professional services revenue was $2.9 million for the quarter, a 26% year-over-year increase. And perpetual license revenue was $0.7 million for the first quarter for a decrease of 60% year-over-year.

Moving down to P&L, the gross margins. Overall gross margin was 70% during the first quarter and our product gross margins remain strong at 71% or 76% when adding back depreciation of equipment, amortization of acquired intangible assets, which we refer to as cash gross margins. Our professional services gross margin were 47% now that we have the newer acquisitions and model. Our target is 40% margin, so we're actually over our target for professional services margins here in Q1.

Turning to our operating expenses. Research and development expense, net of refundable Canadian tax credits was $6.3 million for the first quarter, representing 13% of total revenue. Sales and marketing expense was $7 million, representing 14% of total revenue for the first quarter. General and administrative expense was $10 million in the first quarter, representing 21% of total revenue. However, excluding noncash stock compensation expense, G&A expense was $6 million or 12% of total revenue.

Acquisition-related expenses were $7.7 million in the first quarter, resulting from our recent significant international expansion activity. I'll note here that we closed the PostUp acquisition in April, as Jack mentioned. So we will have some new acquisition related expenses starting in Q2 for PostUp, in addition to the transformation expenses related to Rant & Rave and Adestra acquired in Q4.

Acquisition related expenses, as you know, taper off to zero during the four quarters following an acquisition unless or until we have additional acquisition activity. Operating loss was $2.6 million in the first quarter compared to a loss of $0.5 million for the same period in 2018. GAAP net loss was $7.8 million or a loss of $0.38 per share, compared to GAAP net loss of $3.2 million or a loss of $0.16 per share in the first quarter of 2018.

Non-GAAP net income was $11.1 million or $0.53 per share in the first quarter of 2019, compared to non-GAAP net income of $7.7 million or $0.37 per share in the first quarter of 2018. Our first quarter 2019 adjusted EBITDA was $17.8 million or 37% of total revenue, up 65% compared to $10.8 million or 34% of total revenue for the same period last year.

Now onto our balance sheet and statement of cash flows. We ended the first quarter with $14 million in cash. Cash flows provided by operating activities were $4.9 million for Q1 and, of course, it would have been much higher without the acquisition related expenses paid in the period. Furthermore, Upland is cash efficient when looking at income taxes and capital expenditures. Cash taxes in Q1 '19 were $0.8 million, compared to cash taxes of $1 million in Q1 of 2018. Upland currently has approximately $135 million of usable tax NOLs, which is comprised of $115 million of US federal tax NOLs and $20 million of UK tax NOLs. We expect to continue to pay roughly $4 million per year in cash taxes, mostly in the form of Canada revenue agency income taxes, Ireland income taxes and some US state income taxes.

We currently have approximately $321 million of gross debt outstanding. making net debt of approximately $307 million. We now have approximately $75 million of available capacity on our existing credit facility, including the uncommitted accordion, so we have dry powder for the next acquisition.

With the quarter ending June 30, 2019 Upland expects reported total revenue to be between $49.9 million and $51.9 million, including subscription and support revenue between $46.7 million and $48.3 million for growth in recurring revenue of 43% at the midpoint over the quarter ended June 30, 2018. Second quarter 2019 adjusted EBITDA is expected to be between $17.7 million and $18.7 million for an adjusted EBITDA margin of roughly 36% at the midpoint, representing growth of 45% at the midpoint over the quarter ended June 30, 2018.

For the full year ending December 31, 2019 Upland expects reported total revenue to be between $202.4 million and $206.4 million, including subscription and support revenue between $189.2 million and $192.4 million million for growth in recurring revenue of 40% at the midpoint over the year ended December 31, 2018. Full year 2019 adjusted EBITDA is expected to be between $73.7 million and $76.1 million for an adjusted EBITDA margin of 37% at the midpoint representing growth of 41% at the midpoint over the year ended December 31, 2018.

And with that, I'll turn the call over to Tim Mattox, our President and COO.

Tim Mattox -- President and Chief Operating Officer

Thanks, Mike. And good afternoon, everyone. Today I'll cover our Q1 results across sales, product and operating areas. On the sales front, we welcomed 161 new customers across a diverse array of industries to Upland. 28 new major customers each committed over $25,000 in annual recurring revenue with several customers each committing greater than $100,000 in annual recurring revenue. These larger customers include a financial services provider based in Europe who committed to our customer experience management solutions suite or CXM suite. In international, automotive parts manufacturer based in the US, who committed to our supply chain solution and a non-profit organization who committed to our enterprise knowledge management solutions suite. 158 other new customers committed over $2.3 million in total annual recurrent spend with Upland.

We also expand our relationships with 231 existing customers in Q1, 24 of which were major expansions of $25,000 in annual recurring revenue or greater. Several customers expanded their commitments by greater than $150,000 in annual recurring revenue, including a multinational ERP business that expanded its commitment to our CXM solutions suite, a global technology business has expanded its commitment to our enterprise sales enablement solutions suite and a national real estate business that expanded its commitment to our professional services automation solutions suite. 228 other existing customers expanded their commitments by close to $1.9 million in aggregate annual recurring revenue.

Turning to the product area, we continue to deliver customer driven product innovation through efficient and high quality internal research and development. In Q1, we delivered four major releases and 14 feature packs across our portfolio of solutions suites. These releases improve performance, reliability and the user experience for our customers. And as Jack mentioned, last month we closed PostUp.

As many of you know, we complement internally developed customer driven product innovation with targeted acquisition activity. With the PostUp acquisition we added sophisticated email and audience development solutions targeting the media and publishing verticals to our CXM solutions suite. Expect to see us continue to invest across our seven cloud based enterprise work management solutions suites through acquisition and internal development.

On the operations front, we maintained our unwavering focus on delighting customers through the UplandOne operating platform. Our foundation for 100% customer success. Major accomplishments included integrating Rant & Rave and Adestra into a single operating structure with shared management within our CXM solutions suite. We also further refined our back office processes, which help to contribute to our cash efficiency this quarter. So in summary we are off to a good start for 2019 with our Q1 results and we anticipate continued positive performance going forward.

With that I'll pass the call back to Jack.

John T. McDonald -- Chairman and Chief Executive Officer

Thanks Jim. So at this time we are ready to open up the call for questions.

Questions and Answers:

Operator

(Operator Instructions) Your first question comes from the line of Bhavan Suri. You're line is now live.

Bhavan Suri -- William Blair. -- Analyst

Hey, gentlemen. Thanks for taking my question and congratulations. Really nice set of numbers there. I guess, I just wanted to start with, just on the solution suite. I know it's still early with the solution suite rolled out and obviously, they're enabling a more integrated buying function or buying motion for certain functions. But, I guess, I'd love to hear your thoughts on what's logical step for you long term, which is cross-selling between solution suits and functions, like, how you think about that opportunity? And then given the broader product portfolio, I ask the cross-selling question every quarter (inaudible) maybe a different answer, which is, it is becoming something more meaningful, because organic growth -- despite how much Jack (inaudible) it has been really solid and it has accelerated from 3% a year or so ago to let's just say even 7% to 10% range. So just trying to understand sort of what the cross-sell is playing out and how the suite is imperative to that or is that still early days?

John T. McDonald -- Chairman and Chief Executive Officer

Well. Thanks, Bhavan. The -- it is still early days on the solution suites. We think it represents the right way to go to market and frankly to add additional value for our customers. I think the plan is to bring together functionality and capabilities, two ways, right, to innovate through acquisition as Tim alluded to a moment ago. And then to bring those acquired solutions on to our unified product platform in a way that is seamless, that is deep and value added and that drives productivity and great benefits for customers.

And so, as a part of that, obviously, building out the enterprise sales force. And what it winds up with I think is, is us getting to a point where all three flywheels are really working. We've got the M&A flywheel which again a proven capability of buying great cloud software products with Blue Chip customer bases at highly accretive multiples. And operating flywheel which enables us to take those products and take them from break even or money losing to 45%, 50% contribution margins, professionalize their operations give them the capability to drive higher customer success which leads to number three, which is our ability now to use those solutions to further penetrate our accounts through our growing enterprise sales force.

And it's a rinse and repeat motion. We're seeing the benefits of it, it's creating a lot of value. And the good news is, we're just getting started.

Bhavan Suri -- William Blair. -- Analyst

That's helpful, Jack. Thank you. And maybe one for -- maybe you and Tim. You obviously made a bunch of acquisition in the past 12, 24 months, some of them sizable. You also reorganized products portfolio, created solution suites. I guess if we pause on the acquisition front for a moment and get sort of a bird's eye view. Where do you think you are with a product portfolio, like, within the solution suites you have so far you still see like some of them being in product expansion mode or are they any of those verticals like whether it's the workflow automation piece or the marketing automation piece where you feel comfortable enough to say, we're ready to step on the gas in terms of organic investments vis-a-vis acquisition. Meaning, they're fully fleshed out product suites. How should we think about the areas you focused on and what those acquisitions brought? What's left to be done so to speak from a technology point of view? Thank you.

John T. McDonald -- Chairman and Chief Executive Officer

Sure. Look, that top down is a $25 billion TAM. So there is a ton of opportunity in each one of those suites across multiple buying centers. And so when we look at our filters for M&A, we're looking at -- we create that checkerboard and that roadmap for functionality, we want to add three (ph) suite. We're constantly talking to our customers about the solutions that are in demand by them. And we see a great opportunity to continue to expand what we're doing around CXM. Sales enablement, there's a ton of great opportunity. Workflow automation, I feel like we're just scratching the surface on. We're very excited about the opportunities in project and financial management and also, of course, in Upland PSA where we did a major rebranding and for the first time are really bringing kind of product is a feature in, right, where we're taking capabilities from multiple products and presenting them via one dashboard through our upcoming Upland work center capability. So plenty of opportunity to continue to expand.

In terms of organic, as we've said before, right now we're paying about $1 in sales and marketing for every dollar of bookings that we generate. And if you look at our disclosures for ASC 606 purposes, right, this is a six year duration, so that is a great relationship in terms of what we're paying for that ARR and long term value of it.

So we will continue to invest in sales and marketing consistent with that efficient growth mode. And with this upwardly ramping EBITDA margin to 40%. And I think we'll see what -- we're in search of that efficient frontier. And we'll see what organic growth rate that ultimately yields.

Now again, it is going to bounce around, you're going to have some quarters that are 10%, some that are 5%, some that are 8% and we will continue to guide conservatively.

Bhavan Suri -- William Blair. -- Analyst

That's great, Jack. Thanks for the color there. Congrats guys.

John T. McDonald -- Chairman and Chief Executive Officer

Thank you.

Operator

You next question comes from the line of Richard Davis from Canaccord. Richard, your line now open.

Richard Davis -- Canaccord -- Analyst

Okay. Thanks very much. So look, I mean, the proof is in your numbers, but, look, in a world where the average software company trades at nine times forward revenues. You talked about kind of an ample hunting grounds out there. Is there anything particular that you're seeing -- doing to get these good companies at attractive prices? And then a sub question would be, is there a mixed shift in terms of companies? Are these competitive bids that you're going after? And do you run into more strategic or less strategic versus private equity? And I have a quick follow-up. Thanks.

John T. McDonald -- Chairman and Chief Executive Officer

Yes. So the pipeline is, our potential acquisition is stronger than it's ever been. And I think it's worth kind of just noting how that pipeline is being created, right. It's -- the bulk of it is being created by VC investment. And VC's have invested $205 billion in cloud software since 2000. And the bulk of the companies that we've bought to date, the 21 acquisitions we've done, average birth date -- birth year for those company is 1999 and most of them received the bulk of their funding between '99 and 2005 when we sees on average, we're investing about $1 billion per year in cloud software.

By contrast, last year alone they invested $35 billion. And if you look through the last five, six, seven years the rates of investment have dwarfed the rates that prevailed during the years that created the businesses we're buying today. So the clear message from that is that, this is a supply of great cloud companies that is going to grow and grow significantly in the coming years as these later investments and later funds begin to age out. And we're playing an important role in rationalizing that part of the ecosystem, taking these great products, putting them on to an enterprise grade platform, professionalizing their operations, positioning them for sustainable growth and providing the support and the customer driven development that enterprise customers need and the balance sheet to lean forward and buy more of them. Again it's that flywheel we talked about earlier and we are at a rinse and repeat kind of position there.

In terms of the competitive landscape for M&A, I would tell you this, if this were strictly a financial exercise, then I'd feel differently. But the UplandOne platform, our ability to convert these businesses pretty much overnight from flat or money losing on the EBITDA line to 45% to 50% and then now increasingly to get the network effects of being able to pump these great solutions into our seven solution suites and then sell them into our 9000 customer accounts through a growing enterprise sales force has really changed the game. And it puts us in a very good position more and more often when I'm talking to our M&A team about prospective acquisitions in the pipe. I'm hearing the words pole position, right. More and more often Upland is in a pole position as those acquisition opportunities are concerned.

So again, we don't want to get ahead of ourselves, we're always going to maintain our conservative stance, we all know and we'll say again that there are no guarantees where M&A is concerned, but we feel very, very good about the state of the pipeline, our ability to execute and having the resources required to get it done.

Richard Davis -- Canaccord -- Analyst

That's super helpful. And just a really quick question maybe for Tim on technology. One of the hot areas these days is (inaudible) we were to report on this robotic process automation stuff. Is that notion or that technology relevant to you guys? Is that something you could add or is it just like, yeah, fine whatever, we'll let other folks do that. I was just curious. Thanks.

Tim Mattox -- President and Chief Operating Officer

It's a good question. I think there is an opportunity there for us Richard. And as Jack mentioned, there's a lot of VC investment in that area and so I'm sure we'll see an array of companies that become available to us from an M&A perspective. But certainly in workflow automation that can be applicable for us, that's probably the solution area where it's most relevant, that's helpful to you.

Richard Davis -- Canaccord -- Analyst

Yeah. Well, that makes sense. Thanks so much.

Operator

Your next question comes from the line of Scott Berg from Needham. Scott, your line is now open.

Joshua Reilly -- Needham -- Analyst

Hey, guys. This is Josh for Scott. So you've had some impressive success in scaling your business. And now you're getting into some hotter product categories. Would you consider a partner strategy to augment your internal sales efforts at this point?

John T. McDonald -- Chairman and Chief Executive Officer

So, we have multiple go to market motion today, direct enterprise we have, OEM partners we have inside. And so we do have multiple motions. And in the workflow automation space, we've got some go to market partners that have been great for us. So, yes, we would -- we get a lot of inbound interest on that and it's something that we always evaluate as part of the go to market mix.

Joshua Reilly -- Needham -- Analyst

Okay, great. And then another question on the increased sales force distribution in the UK and Europe following Rant & Rave and the Adestra acquisitions. You mentioned one large deal in the quarter. How is the national pipeline shaping up for the rest of the year? And how do you think about expanding sales investments in this territory?

John T. McDonald -- Chairman and Chief Executive Officer

Yeah. It's shaping up well, consistent with the strong guidance that we provided. We are well along on consolidating the various acquisitions that we've made in Europe and feel good about where that's going -- we love about CXM and this relates, of course, to a Adestra and to Rant & Rave Rant as well as Postup and our core Upland Mobile Messaging assets and to our enterprise knowledge management assets is that, there is a cohesive, consistent and strong selling message in the sales and marketing organizations regarding being able to really manage the customer journey from prospect repurchase, through repurchase through advocacy across multiple channels, social, web, email, text and to do it in a personalized way, but at scale.

And I feel like we've assembled now the core assets that we need to do that. That's not to say there aren't additional assets we can add on but we've got some very powerful ones. We are refining that sales motion, we're already seeing a number of opportunities within the existing customer base to sell a solution that includes multiple offerings. So, short answer is, we feel very good about the opportunity both in Europe and of course bringing those products into the US.

Tim Mattox -- President and Chief Operating Officer

Jack, I would just add that, these are smaller companies that is typically grown in one geography. And as Jack mentioned, bringing those products into another geography for us is a immediate arbitrage. So we're bringing Rant & Rave and Adestra into North America and then the UMM product suites into the UK. And we have seen the pipeline light up where we've really focused on developing the deeper customer relationships with our messaging customers. And so more often than not they have an email -- current email solution and just endemic to that market it's not necessarily one that they're delighted with. So we're seeing interest not just on the technology that we purchase, but our approach to the customer and how we build loyalty.

John T. McDonald -- Chairman and Chief Executive Officer

When it really comes down to where we are at, I don't want to overstate it, because I think it's early days on it, but -- we are early days building strategic relationships with our customers. So we talk about 9000 customers, 1300 of those what we call major accounts, we're averaging north of $100,000 a year in ARR with those accounts with -- story after story of customer accounts that we've acquired at a lower ARR, and dramatically expanded through time, and building out because of UplandOne, because of that focus on existing customers, because of the enterprise grade delivery and the increasing customer satisfaction which is manifested in the 98% net dollar retention rate that we recently published, which was a 500 basis point improvement over the year before.

We are really beginning to build more strategic relationships with customers, and that is what leads to what Tim is talking about now. There's really few things that feel better than when you complete an acquisition that stands on its own as a highly accretive transaction. And you know it's dramatic, but that then drives the number of inbound calls from existing customers about their desire to learn more and to see if they can begin to deploy that solution as well. So all very positive on that front.

Joshua Reilly -- Needham -- Analyst

Great. Thanks guys.

Operator

(Operator Instructions) Your next question comes from the line of Brian Peterson from Raymond James. Brian. Your line is now open.

Brian Peterson -- Raymond James -- Analyst

Hi, gentlemen. Thanks for taking my question. So just first is to hit on the M&A pipeline. Jack, you mentioned that you guys are getting invited to a lot more deals. If I think about -- I'm assuming that means larger deals, but if I think about the seven solutions suites today, as you potentially look at larger acquisitions. Is it possible that we could see acquisitions that would inhale an entire new suite or are we still looking at something that would be synergistic with your existing portfolio?

John T. McDonald -- Chairman and Chief Executive Officer

Synergistic with the existing portfolio for the foreseeable future. Size of deals will -- acquired companies in terms of their revenue will continue to be between $5 million and $25 million, consistent with what we've done. But you're right. There has been $1 million or $2 million a year increase in the average transaction, and I wouldn't be surprised to see that continue over the next few years. We'll continue to target, and again, there were no guarantees with M&A, four acquisitions and between $25 millions and $50 million a year of acquired revenue. But we've got a robust pipeline right now. It's all tied to extensions of existing solution suites. More solutions to sell in to our existing customer base, into the buying centers that were servicing today. So we like where that stands.

Brian Peterson -- Raymond James -- Analyst

Got it. Thanks, Jack. And I just wanted to follow-up on Bhavan's question on the organic growth. If we could dig into that a little bit and just understand from what we've seen and obviously the 10% number the last few quarter has been much higher than what we've modeled. How much of that is coming from up sell versus cross-sell versus new logos. And if we think about how that organic motion evolves over, I call it, the next maybe 12 months to 24 months, does that change and are we seeing any incremental investments there? Thanks, guys.

John T. McDonald -- Chairman and Chief Executive Officer

Yeah. Thank you. So a couple of things. I would say -- you look at the net dollar retention rate number that we recently published of 98%, right. Up 500 basis points from 93% which was the number for 2017. So that 98% is a very good platform for organic growth, right. And it starts with satisfying existing customers and if that drive to customer success, that's what supports renewals, that's what supports expansion, that what creates pricing power and that is the foundation of the business.

In addition to that, obviously, we've expanded our sales capacity, we realized, right, with scale a couple of years ago that we could buy in new products and retain the sales forces, we might cut some of the marketing spend but we could keep the productive sales capacity and the related sales enablement spending and still hit our contribution margin targets. And so, we began doing that about two years ago and we've seen the impact of that on organic growth.

And it's also really catalyzed and iterative process internally where a more sales oriented culture led us to revise and improve our go to market to group our solutions around core buying centers in the enterprise so that our sales people could present a more cohesive, more seamless opportunity to customers and customers reacted well to it and they perceived that as adding additional value.

So that's the backstory on it and we feel good about it. But I do want to be clear, as I said at the front of the call, it's great to have two back to back double digit quarters of organic growth, but they're not all going to be that. We had an easier compare in Q1, we had some go lives, you could see 10%, you could see 5%, you could see 8%, you could see 6%. And that is the -- that's the sort of framework you could see and we will continue to guide conservatively. And so, our flat to five will continue to be the case. Of course, there's a tremendous amount of value potential and growth here just on the M&A side of it, although, we understand the power of positive organic growth and are again investing in it consistent with that efficient growth index of paying $1 in sales and marketing for $1 of ARR bookings and that upwardly ramping EBITDA margin to 40% at the $250 million to $300 million revenue range.

Brian Peterson -- Raymond James -- Analyst

Great. Thanks, Jack.

John T. McDonald -- Chairman and Chief Executive Officer

Thank you.

Operator

(Operator Instructions)

John T. McDonald -- Chairman and Chief Executive Officer

Okay. Great. So, operator, thank you. I think that's what we've got for now. I want to thank everybody for their time on today's call. And we look forward to speaking to you again on our next quarterly conference call. So thank you and good afternoon.

Operator

Thank you for joining Upland Software first quarter 2019 financial results call. You may now disconnect.

Duration: 39 minutes

Call participants:

John T. McDonald -- Chairman and Chief Executive Officer

Michael D. Hill -- Chief Financial Officer

Tim Mattox -- President and Chief Operating Officer

Bhavan Suri -- William Blair. -- Analyst

Richard Davis -- Canaccord -- Analyst

Joshua Reilly -- Needham -- Analyst

Brian Peterson -- Raymond James -- Analyst

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