Upland Software Inc. has acquired InterFAX Communications Ltd., a provider of cloud-based messaging solutions including enterprise cloud fax and secure document distribution.
The transaction marks Upland's first deal in Europe.
The purchase price paid for Dublin-based InterFAX and related entities, including operations in Ireland, Israel, and a U.S. reseller, was $37 million in cash at closing, net of cash acquired, and a $5.0 million cash holdback payable over 18 months and subject to reduction for indemnification claims. This excludes any potential future earn out payments related to performance-based goals.
Upland expects the acquisition to generate annualized recurring revenues of approximately $15.0 million, subject to reductions for a deferred revenue discount, as a result of GAAP purchase accounting, estimated at $700,000 for the remainder of 2018. The acquisition will generate an estimated $6.0 million in adjusted EBITDA annually for Upland and will be immediately accretive to its adjusted EBITDA per share.
In connection with the acquisition, Upland amended and expanded its credit facility to $258.7 million from $200 million. About $50 million of new term debt was drawn, taking Upland's gross debt outstanding to $163.7 million from $113.7 million. The outstanding debt, net of cash on hand, is now approximately $135 million.
Additionally, Upland raised its full-year 2018 guidance to reflect the InterFAX acquisition. The company now expects reported total revenue to be between $131.0 million and $135.0 million, including subscription and support revenue between $118.4 million and $121.6 million. Adjusted EBITDA is now expected to be between $46.5 million and $48.5 million. The previous guidance called for total revenue of $120.4 million to $124.4 million, including subscription and support revenue of $107.8 million to $111.0 million, and adjusted EBITDA of $42.0 million to $44.0 million.