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Upland Software Inc (UPLD) Q1 2021 Earnings Call Transcript

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Upland Software Inc (NASDAQ: UPLD)

Q1 2021 Earnings Call

May 5, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

And welcome to the Upland Software First Quarter 2021 Earnings Call. [Operator Instructions] By now, everyone should have access to the first quarter 2021 earnings release, which was distributed today at 4:00 p.m. Eastern Time. If you have not received the release, it's available on Upland's website.

I'd now like to turn the call over to Jack McDonald, Chairman and Chief Executive Officer of Upland Software. Please go ahead.

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John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Thank you, and welcome to our Q1 2021 earnings call. I'm joined today by Rod Favaron, our President and Chief Commercial Officer; and Mike Hill, our Chief Financial Officer. I'll summarize our results and recent sales, product and operations highlights. Following that, Mike will provide some insights on the Q1 numbers and our guidance. Then we'll open the call up for Q&A. But before we get started, Mike will read the safe harbor statement.

Mike Hill -- Chief Financial Officer

Thank you, Jack. During today's call, we will include statements that are considered forward-looking within the meanings of securities laws. These statements are subject to risks, assumptions and uncertainties that could cause our actual results to differ materially. A detailed discussion of these risks and uncertainties are contained in our annual report on Form 10-K as periodically updated 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. We do not intend or undertake any duty to release publicly any updates or revisions to any forward-looking statements. On this call, Upland will refer to non-GAAP financial measures that were used in combination with GAAP results provide Upland management with additional [Indecipherable] 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 2021 results, which is available on the Investor Relations section of our website. Please note that we're unable to reconcile [Indecipherable] 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.

And with that, I'll turn the call back over to Jack.

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Thanks, Mike. In the first quarter, we restarted our M&A engine. We completed two strategic and accretive acquisitions: Second Street, BlueVenn. And we did that while posting strong free cash flow of 12-point, and that's even after acquisition expenses. And while there can be no guarantees, our goal is to make 2021 a strong year for acquisitions. Our acquisition pipeline is robust, and we are active in the market for additional opportunities.

And as we've noted before, our acquisition program is now self-sustaining as our free cash flow and financial resources mean that we're no longer dependent on the equity capital markets. In the first quarter, we had 9% total revenue growth. As expected, adjusted EBITDA came in at 31%, reflecting our go-to-market investments. Our Q1 free cash flow was $12.2 million. We had 3% recurring growth in the organic side.

Now when you exclude political-related revenue from the first quarter of 2020, the comparison period, our recurring revenue organic growth was 6%. On the sales front in the first quarter, we expanded relationships with 283 customers, 45 of which were major expansions. We also welcomed 118 new customers to Upland in the first quarter, including 32 new major customers. Product side, we expanded security and collaboration capabilities across the Upland product portfolio with three major releases and five feature packs.

In our project and IT management products, we delivered product integrations with key partners, Salesforce and Sage Intacct. And following the Upland and HP, Hewlett-Packard, joint announcement in the fall, we released new capabilities in our document workflow product suite in support of HP Workpath. And these apps will provide HP customers the ability to capture and digitize documents from multiple sources, for example, faxes, emails, scans, electronic content to extract and index key content and then route documents for further action directly from their specific devices.

Again, on the acquisition front, as I mentioned, Q1 was an active quarter for M&A. We closed the acquisition of BlueVenn, which is a leading customer data platform, anchoring Upland's customer experience management suite with a single view of the customer that will drive deeper engagement across email, SMS, mobile applications and online. We also closed the acquisition of Second Street, another nice addition to our CXM suite. Second Street interactive content and contest capabilities give our customers more ways to engage their consumers to drive revenue. As I mentioned, the M&A pipeline is strong. And again, while there can be no guarantees, it's our goal to make 2021 a very strong year for acquisitions. We are active in the market for additional opportunities.

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

Mike Hill -- Chief Financial Officer

Thank you, Jack. I'll cover the financial highlights for the first quarter and our outlook for the second quarter and full year 2021. On the income statement, total revenue for the first quarter $74 million, representing growth of 9%. Recurring revenue from subscription and support grew 11% year-over-year to $70.7 million. Professional services revenue was $3 million for the quarter, a 22% year-over-year decline, which was expected due to the COVID-19 travel impacts.

Overall gross margin was 67% during the first quarter, and our product gross margin remained strong at 68% or 72% when adding back depreciation and amortization, which we refer to as cash gross margin. Operating expenses, excluding acquisition-related expenses, depreciation, amortization and stock compensation, were $30.4 million for the first quarter or 41% of total revenue, all generally as expected.

Also, acquisition-related expenses were approximately $9.6 million in the first quarter. And of course, these acquisition-related expenses will continue as a result of our renewed acquisition activity. I will note that $1.2 million of this Q1 expense is related to an office lease exit from last year's acquisition. Acquisition-related expenses are generally 50% to 60% of acquired annual revenue run rate and varies from acquisition to acquisition depending on uncontrollable factors such as geographic location.

Generally, for each acquisition, 45% to 50% of these transaction and transformation expenses are incurred within the first three months and then taper down rapidly until complete by the acquisitions first anniversary. Our first quarter 2021 adjusted EBITDA was $22.8 million or 31% of total revenue, down 7% compared to $24.6 million or 36% of total revenue for the first quarter of 2020. As expected, adjusted EBITDA was lower due to our increased go-to-market investments compared to last year. On the cash flow.

For the first quarter of 2021, GAAP operating cash flow was $12.5 million and free cash flow was $12.2 million, even with $9.6 million of acquisition-related expenses in Q1. We also had some positive changes in some of the working capital accounts like collections on accounts receivable. 2021 free cash flow should be over $30 million and possibly over $40 million, depending upon the size and timing of future acquisition. So we are focused on generating substantial GAAP operating cash flow and free cash flow even after acquisition-related expenses.

So for the balance sheet, this ongoing free cash flow generation is in addition to our existing liquidity of $246.7 million, comprised of approximately $106.7 million of cash on our balance sheet as of March 31, 2021, and our $60 million undrawn revolver. This ongoing cash flow generation, available capital and expanding our credit facility while maintaining net debt leverage of up to a maximum of around 4.0 times, should allow for its self-sustained growth without dependency on the equity markets.

I should note that our net debt leverage is currently at around 3.5 times based on the midpoint of our 2021 adjusted EBITDA guide. With regard to income taxes, I will note that Upland currently has approximately $356 million of total tax NOL carryforwards. And of these, we estimate that approximately $215 million will be available for utilization prior to expiration.

As of March 31, 2021, we had outstanding net debt of approximately $345.2 million, after factoring in the $186.7 million of cash in our balance sheet. I will note that principal payments on our term debt are 1% per year or about $5.4 million per year, with the remaining balance in August of 2026. The interest rate on our outstanding term debt is locked at 5.4%, making our annual cash interest payments approximately $30 million at our current debt levels. Additionally, I will point out that our term debt has no financial covenants on current borrowings. Now for guidance.

For the quarter ended June 30, 2021, Upland expects reported total revenue to be between $73 million and $77 million, including subscription and support revenue between $70.2 million and $73.2 million for growth in recurring revenue of 6% at the midpoint over the quarter ended June 30, 2020. Second quarter 2021 adjusted EBITDA is expected to be between $22 million and $24 million for an adjusted EBITDA margin of 31% at the midpoint representing a reduction of 3% at the midpoint over the quarter ended June 30, 2020, reflecting our incremental investment in our go-to-market activities.

For the full year ending December 31, 2021, Upland expects reported total revenue to be between $299 million and $311 million, including subscription and support revenue between $285.3 million and $295.3 million for growth in recurring revenue of 5% at the midpoint over the year ended December 31, 2020. Full year 2021 adjusted EBITDA is expected to be between $94.4 million and $100.4 million for an adjusted EBITDA margin of 32% at the midpoint, representing a reduction of 3% at the midpoint over the year ended December 31, 2020, again, reflecting our incremental investments in go-to-market activities.

So with that, I'll pass the call back over to Jack.

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Thanks, Mike. And now we're ready to open the call up for Q&A. Please feel free to direct questions to Mike, Rod or me.

Questions and Answers:

Operator

[Operator Instructions] And our first question comes from Bhavan Suri of William Blair. Please go ahead.

Jake -- William Blair -- Analyst

Hi everyone.This is Jake on for Bhavan. Congrats on the great quarter. Just first off, I would love to hear how the BlueVenn and Second Street acquisitions are progressing. I know it's early, but just would love to hear about the initial interest from current customers.

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Yes, great. Thanks for the question. So very excited about both BlueVenn and second Street acquisitions, both creative acquisitions but also highly strategic. Both of them fit into our CXM product suite and fulfill some key functions there. BlueVenn is a CDP customer data platform, and it enables us to maintain a centralized record on behalf of our customers of their consumers, so that they can create automated marketing campaigns, which they can then execute across multiple digital channels, right?

And we've already got those capabilities as part of our product portfolio around SMS and text delivery, in-app and push notification, email and web. This adds a very powerful core platform to our CXM suite. On the Second Street side, a key challenge for our customers is to continue to build their database of consumers. And so Second Street brings to the table a number of proven technologies and interactive content and contests that can be used to drive subscriber and user databases and thus, increase the effectiveness of our customers' consumer marketing campaign.

So two great acquisitions. The integration is proceeding as planned on both of them. One of the things that we're doing differently today with Rob's leadership is beginning to drive cross-sell campaigns for these products much sooner than we would have before, really looking at that product fit and how we bring acquired products into our existing sales distribution is now a core part of our pre-closing diligence, and we really like to hit the to the ground running now on that. So let me pass it over to Rod to give his thoughts on kind of early days of pushing those products through our channel, cross-sell and early observations there.

Rod Favaron -- President

Yes. So building on that. Obviously, we started tucking Second Street in earlier in the quarter and BlueVenn a little bit later in the quarter. And as Jack said, those two products themselves can leverage each other as Second Street being at place to really gather audience data to decorate the database that we got from BlueVenn.

So the fairly crisply, it's very early in integrating both these companies, but fairly crisply, we were able to get our CXM customer experience and salespeople, cross-selling those products with the Second Street and BlueVenn sales team. So we -- part of the playbook that really what we really worked on last year was making that a much more crisp and quick process of those part of our customers.

And so we're excited about just sort of how quickly we were able to get that out there. Look, it takes time to sell enterprise software to people and build pipeline. But that not got to tuck-in pretty quickly. And the sales cycles have already begun and pipelines getting generated for both of those products into our base.

Jake -- William Blair -- Analyst

Great. And then just a follow-up on the M&A funnel. Where are you seeing the greatest opportunity? Do you think you'll continue to invest in CXM? Or is it likely that you'll target a different segment with the next acquisition?

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

So we've got a very strong pipeline right now, really across all four key product suites and frankly, in some other use cases in the enterprise because there are really six or seven use cases or buying centers that we're addressing. So it's a pretty strong pipeline. Across those, my guess would be the next one will be outside of CXM. And there's a lot that we're looking at on contact center. There are some opportunities in document workflow as well as in the ITM. So I think you'll see activity in all of those areas as we move through the year.

Jake -- William Blair -- Analyst

Great, Thanks for taking my questions.

Operator

Next question comes from Brent Thill of Jefferies. Please go ahead.

Luv Sodha -- Jefferies -- Analyst

Hi, This is Luv Sodha on for Brent Thill. Congrats on the free cash flow number this quarter. Maybe the first question is for both Road and Jack. I guess it's been a little bit over a year since rod joins the team. And I know you mentioned it's still early. But wanted to ask, like if we were to frame this in like baseball terminology, what innings of the cross-sell journey are we in? And maybe like when could we see that cross-sell motion will be taking hold in terms of driving organic revenue growth.

Rod Favaron -- President

Yes. So this is Rod. I'll start and Jack can color or commentate here. So I appreciate you pointing out that I've been here for a year. We have made a lot of progress over the last year in go-to-market infrastructure and the flying formation, just sort of as a refresher. We've added new executive leadership and marketing sales, customer success ahead of global accounts.

We hired team of eight global account managers to manage our top 175 customers vertically. So those teams are now in place and ramping on their knowledge of the customers and building pipeline. And we like what we see there. The other thing we did was retool demand gen, bottom up. So you'll see a new Upland website we launched in late January, really designed to drive pipeline, frankly.

And then the other thing we did, which we set late last year but built out and is building out in Q1, is qualifying sales development rep team and SDR team. We now have a team of 15 SDRs centrally located, really catching and qualifying all of our lead flow that the marketing team is focused on generating. So we've been doing a lot of foundational work to get the team in a place to continue to grow.

As part of that demand gen machine, if you will, a lot of the proactive campaigns we're running now are very cross-sell specific. And the cross-sell pipeline is showing good growth. Again, these deals take time to convert. A couple of things I'll point out. While we have made a lot of good progress on go-to-market, and remember, our net dollar retention rate did decrease about 300 basis points last year due to COVID.

And obviously, in recurring [Indecipherable] business, we have to wait until we fully lap that of an impact in order to see and appreciate really the improvements in go to market. So I'll just sort of add to that this is a multi-quarter journey into 2022. And as we said, there are no guarantees on outcomes, but we think this work is definitely preparing us to scale to the next level as a company.

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Yes. And so the only thing I would add is, I think Rod has really catalyzed a different kind of go-to-market culture here at Upland, and he's walked through the key moves he's made on personnel and on process and now increasingly on product as well as the distribution piece. And we couldn't be more excited about it. Consistent with what that he said from the beginning and what Mike and I have said, it is a multi-quarter journey.

And I think you start to see this really beginning ahead as you move into 2022. And as Rod said, there can be no guarantees on outcomes. But we've got a great suite of products here, a tremendous customer base. And we think the opportunity is there to really drive cross-sell and new logo acquisition as we go forward. So we're excited about where we can take it.

Luv Sodha -- Jefferies -- Analyst

Got it. One quick follow-up, if I may. On the overall demand environment, obviously, as Rod pointed out, last year, you did see some impact because not the whole lot from COVID, but some impact. So as we see the economy open back up with folks coming back to work and stuff like that, is -- are you seeing overall spend on par? And would be going into the back half of the year, will that benefit you to a certain extent?

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Yes, I think that's consistent with our outlook. Now we'll see how the year plays out. And you're right, the business proved to be incredibly resilient last year in the phase of COVID. And so the net dollar retention rate was still mid-90s, even given the pandemic, which is impressive. And I think you're seeing the demand environment begin to move back toward a more normal pre-COVID environment. Our gut is that, that takes a few more quarters to fully play out. So we're going to maintain a conservative outlook on that. But in terms of trend, it seems to be positive.

Luv Sodha -- Jefferies -- Analyst

Got it, Thank you.

Operator

Next question comes from Scott Berg of Needham. Please go ahead.

John -- Needham -- Analyst

Hi, This is John on for Scott. As far as the mobile messaging products go and I think obviously benefited a in deletion cycle, what are you seeing as far as you to trade through those products today are relative to six months ago? Obviously, they're going to be going down a lot, but not zero. So is there anything you can quantify there as far as the rates go?

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Yes. No, thanks for the question. So what we wanted to do, and we talked about this last year, was to share with investors a transparent view of demand with and without the political revenue that we saw last year. Obviously, we had a spike in usage related to the presidential election cycle.

So that's why we're breaking out that organic growth number. And so that's coming in that organic growth number ex-politics, mid single-digit, 6% this quarter, but right where we would have expected it. And then there are a lot of applications for messaging beyond politics. And obviously, we're focused on growing that business and feel great about CXM as a long-term offering for Upland.

John -- Needham -- Analyst

Great, Thanks guys.

Operator

The next question comes from Jeffrey Van Rhee of Craig-Hallum. Please go ahead.

Jeffrey Van Rhee -- Craig-Hallum -- Analyst

Several for me. I think -- I guess, this is also, Ron and Jack. If I look at the bookings, I know we don't get a bookings report on the quarter, but quantitative, qualitatively, how did bookings come in for the quarter? Maybe a little more color on just describing them, in line with expectations, particular surprises in strength and maybe challenges as well. And then also pipeline makeup. I know you referred to some early indicators of the cross-sell. But just any other color around the breadth and depth of pipeline would be helpful.

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Yes. So thanks, Jeff. Bookings in line, consistent with our expectations for this year, which I mentioned a moment ago, which is that the recovery will play out through the course of the year. It's not a sort of snap back on phenomenon, right, but in line with how we had those numbers budgeted. And so we feel good about that. In terms of pipeline growth, I want to kick that one to Rob, because there's been a lot of great work that's been done in building a legion and in at Upland that we really didn't have before. And again, all in context, this is a multi-quarter journey, but there's some exciting stuff going on. Rod speak directly to that.

Rod Favaron -- President

Yes. So happy to. On the one other color point on bookings, we did see a little more new versus expansion in the mix because we -- which I think we'll see -- we expect to see that as we kind of come out of COVID here. You talked last year about a little bit more expansion in the mix bookings, and we saw a little bit of movement on that were a little more new kind of got in the mix.

To Jack's point, the SDR team is kind of our new pipeline engine. We obviously generate multiple ways. Our customer success folks, client expansion pipeline, our salespeople find their own pipeline. We have partners we work with, like HP, we talked about a minute ago. We drive pipeline, but kind of that sort of inbound pipeline that we run through our SDRs is, they had, frankly, a strong first quarter. They literally hit their seats on January four was a new quota for pipeline creation and our expectations were modest given that the team is new, and they got to those with a little bit of upside.

The other thing were -- the other dynamic of the pipeline, we saw a couple of anecdotes, and we're watching for this, right? If we come out of COVID, we expect more shorter sales cycles. There is some pent-up demand out there. It's not released yet. We don't know when that will happen. But we saw a few, what we call creating flows anecdotally during the quarter where the deal qualified in, in January and closed in March, which you don't usually see. We certainly didn't see during quarter -- during COVID, and we only saw the anecdotal in Q1. So we don't draw on to that. But it's just early indicators.

I think that both the legion engine that we put in place is going to start working. And again, our sales cycles are not in weeks, they're in month. So -- and sometimes quarters. So it's going to take a while to get on the other side of this and see bookings. And I did mention before, we track gross as a percent of our pipeline, and that's growing. So we know what we're doing there starting to work.

Jeffrey Van Rhee -- Craig-Hallum -- Analyst

Yes. Helpful. And maybe one -- I guess, maybe a two part question, actually. But as I look at -- I think the earliest efforts that you made, Rod, coming in were primarily around renewal some of the low-hanging fruit. I know you put leadership and process in there. Any quantification of the impact of those early changes? And then last one for me. The churn, give the overall number on an annual basis, but maybe some qualitative commentary on just kind of how that's ebbing and flowing right now.

Rod Favaron -- President

So I think the customer success leadership and processes we put in place, really sort of segmented the team on major accounts, minor accounts, we have other names internally for them, but our biggest customers and the next biggest customers, you could probably guess at how we segment them. That network is definitely bearing fruit.

I think we have more energy on our bigger customers, both with the global account guys and with our customer success team. So that was really the biggest shift in just making sure the product growing are aligned, and we're sort of treating the bigger customers with more energy, right? So I think that -- from a process perspective, that's working. Sorry, Jack, I think you had a...

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Look, just on the churn question, again, I think from our perspective, it's pretty consistent with what we're seeing on bookings in line and consistent with our expectation that the recovery out of COVID is one that plays out through the course of the year. It's not a one quarter phenomenon, but that you're going to see that sort of net ARR improvement as we move through the course of the year.

Jeffrey Van Rhee -- Craig-Hallum -- Analyst

Sounds good. Great. And great to see the cash flow.

Operator

The next question comes from DJ Hynes of Canaccord. Please go ahead.

DJ Hynes -- Canaccord -- Analyst

Hey guys, I'll start with one for Rod and then a follow-up for Jack. So Rod, if you build out the sales muscle, how are you thinking about retaining acquired sales talent versus maybe going outside of the organization and bringing in reps with broader solution selling experience, right? How do you strike the right balance there?

Rod Favaron -- President

Yes, great question. So look, when we acquire a product, BlueVenn is a great example. That team has been selling that product for years. They know that specific competitive landscape. Ironically, they know our products because we had already integrated with BlueVenn, for example, with our email product, which they were reselling at some point.

And so that's a team where we want to keep the best, right? And so we focus on keeping the best talent on the go-to-market side of these acquisitions. Not unlike. Look, many years ago, I ran a company that IBM acquired, and they left us alone for a year to sell our -- to be the experts on what we do before we got integrated. We do the same thing. We let these guys, bring their expertise, we integrate them into our bigger sales organization.

And really, the leverage comes in, if I've got a small BlueVenn team or a small Second Street team, I can give them access to a much bigger Upland team and that Upland team is introducing them into accounts and those kinds of the product specialist. That's how we think about it. And we want to keep as many of these the best sellers as we possibly can. So we work to do that.

If they have sellers who aren't productive or maybe they're newer, right, it's not as big a loss if they don't stick around those acquisitions, but we try and keep the best ones. And again, we let them focus on what they know, how to do really well, and we open up doors for them. And then their job is to cross-train our team. So a year from now, 18 months from now, we have lots of people who can sell that product.

DJ Hynes -- Canaccord -- Analyst

Yes. Makes sense. And then, Jack, in response to one of the first questions around M&A, you referenced opportunities in document workflow. Just curious along those lines, if there's any update on what you're seeing with your HP relationship.

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Well, mentioned this in opening remarks, and we highlighted it in the earnings release as well. But very exciting relationship that has been developing really a long-standing [Indecipherable] HP, but a new initiative around HP work path which is so consistent with the vision that we had for a document workflow to create this integrated hybrid deploying the cloud, deploy on-prem is needed capability that can ingest and mine and distribute content across multiple channels. So we're very excited. I'm going to let Rod chime in on this because he's been directly involved in building out the relationship. And so let me let Rod give his views on that.

Rod Favaron -- President

Yes. So obviously, we're excited about this, really the standing up the cloud part of the story with HP. Workpath is a big strategic initiative for HP as they said publicly. Obviously, a gigantic hardware vendor, trying to bring more solutions to their customer base. We did announce that relationship, the cloud part of the relationship back in the fall.

We've now their sales organization is trained. It's in their bag, and they're off and running. So -- and we're meeting regularly, starting to train and build pipeline. So we're excited about this particular relationship. It's actually, we worked with HP for a long time. We haven't worked with them relative to Workpath and our cloud solutions from a document perspective. So new set of products for us, new set of go-to-market with them, and as strategic as I think they believe this is. We're paying close attention to them. We're investing in it, both product and go to market, and we're excited about what's possible.

Operator

[Operator Instructions] The next question comes from Alex Sklar of Raymond James.

Alex Sklar -- Raymond James -- Analyst

One for Rob, following up on some of the discussion on the cross-sell early pipeline strength. I wanted to ask about some of the changes you've made on the product side in terms of packaging and bundling and targeting some of the verticals in particular. Anything you can share with how that's resonating within the top 200 or major -- top 200 or some major accounts? And are those packages fairly set at this point? Or are they constantly required from

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Yes. It's a great question. Yes. I mean, look, we've got a couple of different ways that we cross-sell. And obviously, the most successful is adjacencies. You own one of our customer experience financial products, and we're talking to a common buyer who would be interested in another one. So we offer stand-alone cross-sell opportunities. And then we will do things like bundle our SMS and our email or bundle, our email and our CDP.

We went to market with Second Street, just recently, bundling it with our CDP and our email products because you can imagine, a big part of the email mission is to build your database and audience development tools are perfect for that. And so that's really what we try and do is focus on where we can package things together where it's a common buyer that mentioned earlier, we've really simplified the buyers we're going to market to.

You can literally navigate to our website now, and there's a sort of a buyer path where you can see all the products that are relevant for you. And in some cases, you a bundle, for example. So yes, that's how we think about it. These bundles are going to persist. They're not -- they really not temporal. We think they're available for when customers are ready to make the move. So [Indecipherable] and go with them. We really create them, and we think we'll support them for a long, long time.

Alex Sklar -- Raymond James -- Analyst

Okay. Great. And Jack, on the BlueVenn acquisition, I think when you spoke after you first closed, you suggested it might have been your most strategic to date. And now hearing Rob talk about how it was already integrated with on the product side as well on the go-to-market side and then the early synergies in Second Street, that -- those problems make a lot of sense. I'm curious when you look at the pipeline of opportunities now, how many other ones fit a kind of similar strategic mold? Or was this really kind of unique opportunity?

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

It's a great question. The strategic bar for our acquisitions has been going up through time, right? This is a process that really started a couple -- three years ago. And so what we're trying to do is build cohesive suites that serve key buying centers. Because that is what's going to create the velocity, in part, it's what's going to create the velocity for cross-sell, to build those compelling product suites core buying centers in the enterprise and then build that sales distribution channel.

So as I look at the opportunities we've got across other suites, I see acquisitions of great strategic value. And these are acquisitions that fit within our size and valuation criteria and so there's going to be accretive deals as well as deals that build-out the pipeline, and I think set the predicate for cross-sell as we get the sales distribution up and going.

Operator

Next question comes from Terrell Tillman of Truist. Please go ahead.

Conor -- Truist -- Analyst

Hey, Everyone. This is Conor on for Terry. I just had a question around the contact center products. It seems like there's a lot of CX efforts being focused in this area. I just kind of wanted to hear what you guys are seeing in this market.

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

I'm sorry, I lost some of that with the static. Can you repeat that?

Conor -- Truist -- Analyst

Yes, yes absolutely. So I just wanted to ask a quick question around the contact center product. So it seems like we're seeing a lot of CX efforts focused in this area. I just kind of wanted to know what you're thinking -- what you're kind of seeing in this market?

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Yes. Let me let Rod offer his thoughts on that.

Rod Favaron -- President

Yes. So that's a really good point. We actually have -- for example, one of our acquisitions from a few years back, a company called which is a of customer, a value proposition. It actually sits in our CXM suite, but we sell it to contact centers, right? So you just sort of highlighted where the overlap happens between the buying group and our customer experience products either are bought by marketers or they are bought by people who are customers and contact centers.

And so we see the contact center space or what others might call a service cloud area is really a rich area for us. We only have a few solutions there now. Obviously, we've got a really strong knowledge management position. We've got some that really connects the phone and voice with CRM, a business we bought is -- which really connects salesforce.com service cloud to telephony. I mentioned Ray, which is really more voice of customer, ironically, also input into BlueVenn.

So if you're actually surveying your customers, it's structured data that we tuck into the CDP and append to you as a consumer. So these things all sort of fit together. But likely contact center when we look at M&A opportunities, some look at pipeline, we want to see things in that pipeline in that area because we think it's a -- we think that's a growing market in general, and we certainly have interest in growing our solution suite out.

Operator

Next question comes from Richard Baldry of ROTH Capital. Please go ahead.

Richard Baldry -- ROTH Capital -- Analyst

Thanks. Could you talk just from a high level about how the M&A pipeline has sort of reacted or altered given coal big conditions? Sort of curious that the willingness to sell has changed on the side of the vendor, the price sensitivity, maybe there's some desire to sort of normalize operations before you sell it. And then I guess, tied to that, does it skew the ability to really evaluate the quality of a target if there retention also had a challenging 2020, right, as you'd expect? How do you view those through a lens of trying to compensate for the year that they've had?

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Thanks, Richard. The COVID impacts on pipeline, I'd say the first one is that there were folks that were to transact last year and could not. And so those deals are coming to market now. And so you've got a little bit of two years of supply, if you will, coming to market in one year. So I think that's goodness from a buyer's perspective. I think there are some trends in the market around digital transformation, as we know, have been accelerated by COVID.

And so I think you've got folks that are looking to team up and see the benefits of becoming part of a larger organization that can bring access to customers that can bring adjacent product sets that could bring sales distribution to the table. I think our fundamental message to sellers around speed and certainty to close that we've been a dependable buyer that over the course of our career across a couple of platforms, signed maybe 51, 52 letters of intent, and closed, north of 45 acquisition.

So we take the process seriously and that we represent a great home for customers and for product and for a subset of high-performing employees. So I think all of those kind of fundamental factors remain in place. In terms of the kind of final part of your question, it's actually a great lens to look at how these products did through COVID.

So obviously, you look at -- you're going to put a little bit more emphasis into a trailing two- or trailing three-year trend. But it's nice to see how net ARR for these prospective acquisitions held up under COVID. And so it's kind of a great test, right? It kind of weeds out some of the weaker players, I think, leads to better overall quality of pipeline.

Richard Baldry -- ROTH Capital -- Analyst

Great, Thanks.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Jack McDonald for any closing remarks.

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Well, great. Thank you very much for your time this afternoon, and we look forward to seeing you on the next earnings call.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

John T. McDonald - -- Chairman Of The Board, Chief Executive Officer

Mike Hill -- Chief Financial Officer

Rod Favaron -- President

Jake -- William Blair -- Analyst

Luv Sodha -- Jefferies -- Analyst

John -- Needham -- Analyst

Jeffrey Van Rhee -- Craig-Hallum -- Analyst

DJ Hynes -- Canaccord -- Analyst

Alex Sklar -- Raymond James -- Analyst

Conor -- Truist -- Analyst

Richard Baldry -- ROTH Capital -- Analyst

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