Why Upland Software Acquired Kapost For $50 Million

By Noah Long ● June 6, 2019
  • Upland Software, a cloud-based enterprise work management leader, recently acquired Kapost for $50 million

Cloud-based enterprise work management software company Upland Software recently announced that it acquired content operations platform provider company Kapost for $50 million. This deal came on the heels of Upland Software acquiring email and audience development technology and services company PostUp in late April.

Kapost is going to be integrated into Upland’s Enterprise Sales Enablement and Customer Experience Management product suites. Going forward Kapost will be branded to Upland Kapost.

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How does Kapost work? The company offers open architecture and APIs to help brands with content production and distribution.

This deal is valued at $45 million in cash at closing and $5 million in cash holdback payable over a year. And the deal adds about $15 million in annualized revenues of which $13.5 million is recurring (estimated as $2.2 million for the remainder of 2019), which will be immediately accretive to Upland’s Adjusted EBITDA per share.

“Kapost brings an established enterprise customer base, experienced team, and sophisticated content operations platform to our sales and marketing solutions,” said Upland Software chairman and CEO Jack McDonald in a statement. “Moreover, this transaction is immediately accretive to Adjusted EBITDA per share and takes Upland to a $220 million annualized revenue run rate. Our acquisition pipeline is robust, and we are actively pursuing additional opportunities to build out our solution suites.”Kapost’s cloud-based content operations platform unites revenue teams to speak in one voice across the customer journey by streamlining the content development process at scale. And the platform’s open architecture, API sets, and deep collaboration capabilities help customers orchestrate all the stages of content production and distribution. Plus its advanced analytics enable organizations to pinpoint hidden gaps in content strategies, track content performance, and measure ROI.

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

Another notable point from the announcement is that this acquisition is within Upland’s target price range of about 5-8x pro forma Adjusted EBITDA and will generate at least $7 million in Adjusted EBITDA annually once it is fully integrated. This acquisition will be immediately accretive to Upland’s Adjusted EBITDA per share.

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For the quarter ending June 30, 2019, Upland is expecting reported total revenue to hit between $50.5 million and $52.5 million, including subscription and support revenue between $47.2 and $48.8 million. And the second quarter of 2019 Adjusted EBITDA is expected to be between $17.9 million and $18.9 million. And for the full year ending December 31, 2019, Upland is expecting to report total revenue of between $209 million and $213 million including subscription and support revenue between $195 million and $198.2 million.

AGC Partners served as the exclusive financial advisor to Kapost. Prior to the acquisition, Kapost raised $19 million in funding (Crunchbase profile) from investors like Salesforce Ventures, Access Venture Partners, Lead Edge Capital, Cue Ball, High Country Venture, Techstars, and Zelkova Ventures. And Kapost was originally founded by CEO Toby Murdock, CTO Nader Akhnoukh, and former president Mike P Lewis.