What pricing model and revenue share terms does AWS Marketplace impose, and how will that affect Upland's margins?

Pricing model & revenue‑share

AWS Marketplace requires ISV‑s to list their software on a “pay‑as‑you‑go” or subscription basis that is billed through AWS. For every transaction AWS collects the list price, deducts a Marketplace fee (typically 20 % of the net list price) and remits the remainder to the vendor. The fee is applied to both usage‑based (hourly) and term‑based (monthly/annual) subscriptions, and the vendor must price the product in a way that is compatible with AWS’s consumption‑metering (e.g., per‑seat, per‑user, or per‑CPU‑hour).

Impact on Upland’s margins

Upland will now have to surrender roughly one‑fifth of the RightAnswers subscription revenue to AWS. Assuming the company’s pre‑Marketplace gross margin on a direct sale is ~70 %, the 20 % marketplace carve‑out will compress the effective gross margin on AWS‑channel sales to roughly 56 % (70 % × 0.80). The lower margin is offset by the potential for a much larger, scalable customer base and accelerated sales cycles that AWS Marketplace delivers—especially for contact‑center and enterprise customers that already consolidate spend on AWS.

Trading implications

In the near term the margin compression may weigh on Upland’s earnings guidance, creating short‑term upside‑risk for the stock if analysts price‑target on historic gross‑margin levels. However, the platform‑level exposure to AWS can boost recurring‑revenue growth (ARR) and improve long‑run revenue visibility, which is a positive catalyst for the equity. Traders should watch for the next earnings call for any margin‑impact commentary and consider a neutral‑to‑slightly‑bullish stance: price‑dip on the margin hit, but a longer‑run upside as the Marketplace channel fuels top‑line expansion.