VirnetX (NYSE:VHC) and Upland Software (NASDAQ:UPLD) Critical Analysis

VirnetX (NYSE:VHC) and Upland Software (NASDAQ:UPLD) are both small-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, risk, analyst recommendations, valuation, institutional ownership and profitability.

Analyst Recommendations

This is a summary of recent ratings and target prices for VirnetX and Upland Software, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VirnetX	0	0	0	0	0.00
Upland Software	1	0	2	0	2.33

Upland Software has a consensus target price of $4.00, indicating a potential upside of 168.46%. Given Upland Software’s stronger consensus rating and higher probable upside, analysts clearly believe Upland Software is more favorable than VirnetX.

Profitability

This table compares VirnetX and Upland Software’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VirnetX	N/A	-44.89%	-36.13%
Upland Software	-18.43%	-80.37%	6.38%

Institutional and Insider Ownership

10.4% of VirnetX shares are owned by institutional investors. Comparatively, 77.8% of Upland Software shares are owned by institutional investors. 15.0% of VirnetX shares are owned by company insiders. Comparatively, 14.8% of Upland Software shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares VirnetX and Upland Software”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VirnetX	$106,000.00	847.35	-$18.17 million	($4.91)	-4.28
Upland Software	$274.79 million	0.16	-$112.73 million	($1.75)	-0.85

VirnetX has higher earnings, but lower revenue than Upland Software. VirnetX is trading at a lower price-to-earnings ratio than Upland Software, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

VirnetX has a beta of 2.15, meaning that its stock price is 115% more volatile than the S&P 500. Comparatively, Upland Software has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500.

Summary

Upland Software beats VirnetX on 8 of the 14 factors compared between the two stocks.

About VirnetX

VirnetX Holding Corporation, through its subsidiary VirnetX, Inc., operates as an Internet security software and technology company primarily in the United States. The company develops software and technology solutions, including secure domain name registry and GABRIEL Connection Technology that are designed to secure communications over the Internet using zero trust network access. It also offers a portfolio of licenses and services, such as VirnetX One, a security-as-a-service platform that protects enterprise applications, services, and infrastructure from cyber-attacks; GABRIEL Connection Technology software development kit to assist with rapid integration of its techniques into existing software implementations; War Room software that offers safe and secure video conferencing meeting environment where sensitive communications and data is invisible to those not authorized to view it; and VirnetX Matrix that provides security for internet-enabled enterprise applications and their connected devices. In addition, the company provides GABRIEL Collaboration Suite that enables seamless and secure cross-platform communications between users’ devices. It serves domain infrastructure and communication service providers, and system integrators; and enterprise customers, developers, and original equipment manufacturers of chips, servers, desktops, smart phones, tablets, laptops, net books, and other devices in the IP-telephony, mobility, fixed-mobile convergence, and unified communications markets. The company has a partnership with ObjectSecurity LLC to provide secure cyber vulnerability analysis in private cloud environments. VirnetX Holding Corporation was incorporated in 2005 and is headquartered in Zephyr Cove, Nevada.

About Upland Software

Upland Software, Inc., together with its subsidiaries, provides cloud-based software applications under the Upland brand name in the United States, the United Kingdom, Canada, and internationally. It offers software applications that enable organizations to plan, manage and execute projects, and work in the areas of marketing, sales, contact center, knowledge management, project management, information technology, business operations, human resources, and legal. The company also provides professional services, such as implementation, data extraction, integration and configuration, and training services, as well as customer support services. It serves corporations, government agencies, and small and medium-sized businesses in the financial, consulting, technology, manufacturing, media, telecommunication, insurance, non-profit healthcare, life sciences, retail, and hospitality sectors. The company was formerly known as Silverback Enterprise Group, Inc. and changed its name to Upland Software, Inc. in November 2013. Upland Software, Inc. was incorporated in 2010 and is headquartered in Austin, Texas.