AUSTIN, Texas--(BUSINESS WIRE)--Upland Software, Inc. (Nasdaq: UPLD), a leader in AI-powered knowledge and content management software, today announced that Upland Qvidian, an industry leader in proposal automation and RFP management, released its first annual report on the adoption of artificial intelligence (AI) throughout the proposal industry. The 2025 AI Adoption in Proposal Management: Trends and Observation Report is a technology-agnostic, industry-wide study that collects results and observations fr ...

AUSTIN, Texas--(BUSINESS WIRE)--Upland Software, Inc. (Nasdaq: UPLD), a leader in AI-powered knowledge and content management software, today announced it has earned 49 badges in G2's Winter 2026 market reports, highlighting consistent value and customer validation for its products. Upland BA Insight, the company's AI enablement solution, increased earned badges this season, while AI-powered proposal management software, Upland Qvidian, continues to deliver impactful results. Upland Panviva als. ...

Core Insights - Upland Software reported Q3 CY2025 revenue of $50.53 million, a 24.2% year-on-year decline, but exceeded Wall Street's expectations by 1.2% [1][6] - The company provided Q4 revenue guidance of $49.4 million, which is 2.7% below analyst estimates of $50.79 million [1][4][6] - Non-GAAP profit was $0.30 per share, significantly beating analysts' consensus estimates by 73.1% [1][6] Revenue and Profitability - Adjusted operating income was $14.81 million, with a margin of 29.3%, surpassing analyst expectations of $4.28 million [6] - Operating margin improved to 10.6%, up from -5% in the same quarter last year [6] - Market capitalization stands at $52.94 million [6] Management Commentary - Management highlighted operational improvements and a focused product strategy as key drivers for margin expansion despite revenue decline due to divestitures [5] - CEO Jack McDonald noted significant agreements with major technology and pharmaceutical companies, indicating progress in AI product adoption [3] - CFO Michael Hill emphasized the company's focus on the Knowledge and Content Management market and the importance of expanding large deals and maintaining customer retention [4]

Financial Data and Key Metrics Changes - In Q3 2025, the company beat its revenue guidance midpoint and met its adjusted EBITDA guidance midpoint, with a core organic growth rate of 3% [5] - Adjusted EBITDA for Q3 was $16 million, resulting in an adjusted EBITDA margin of 32%, up from 21% in Q3 2024 [12] - Free cash flow for the quarter was $6.7 million, with a target of around $20 million for the full year [10][12] - Net debt leverage decreased to 3.8x, with a goal of reaching 3.7x by year-end [6][13] Business Line Data and Key Metrics Changes - The company welcomed 97 new customers in Q3, including 14 major customers, and expanded relationships with 168 existing customers, 13 of which were major expansions [5] - The product portfolio has been streamlined to focus on markets that drive growth and profitability, with significant momentum in AI-powered products [6][10] Market Data and Key Metrics Changes - The company earned 49 badges in G2's fall 2025 market reports, indicating strong market presence [6] - Upland Right Answers and Upland BA Insight are now available in the AWS marketplace, enhancing customer discovery and purchase processes [6][7] Company Strategy and Development Direction - The company is focusing on AI-enabled products as key technologies in broader enterprise AI implementations, which is expected to drive future growth [9][10] - The strategy includes continued deleveraging of the balance sheet and enhancing liquidity through refinancing and a new $30 million revolver [11][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the sales pipeline, citing larger deals as indicators of positive trends, with a target of 3% growth for 2026 and 5% thereafter [21][22] - The adjusted EBITDA margin is expected to continue expanding, with a long-term target of over 32% [17][18] Other Important Information - The company has significantly improved its balance sheet by paying down $242 million of debt since the beginning of the previous year [18] - Full-year 2025 total revenue is expected to decline by 21% at the midpoint due to earlier divestitures, with guidance for Q4 revenue between $46.4 million and $52.4 million [13][14] Q&A Session Summary Question: What gives confidence in achieving future growth targets? - Management noted that larger deals and partnerships with major players like Microsoft and Amazon provide optimism for future growth [21][22] Question: Clarification on fourth quarter guidance regarding license revenue? - The decline in license revenue is primarily due to professional license revenue not materializing as expected, affecting EBITDA [23][24] Question: Any changes to gross revenue retention trends? - The company targets to maintain upper 90% retention rates, with 99% retention at the end of 2024 [25] Question: Growth from installed base versus net new customers? - Growth is expected from both installed base and new customers, with a focus on knowledge and content management products [28][29] Question: What's working in sales execution? - Upgrading the sales force and leveraging SEO strategies have been effective, along with partnerships with larger tech companies [31][32] Question: How is the pace of new product introductions? - There has been a dramatic improvement in product development, with a focus on AI integration and reliability [34][35] Question: Impact of perpetual license revenue reduction? - The reduction is not due to a single customer loss but reflects a general decrease in expected perpetual license revenue [37]

Financial Performance - For the three-month period ended September 30, 2025, the Core Organic Growth Rate was 2.6%[139] - Total revenue for the three months ended September 30, 2025, was $50,526,000, compared to $66,692,000 for the same period in 2024, representing a decline of approximately 24.2%[143] - Core organic revenue for the three months ended September 30, 2025, was $45,176,000, up from $44,029,000 in 2024, indicating a year-over-year increase of approximately 2.6%[143] - The net loss for the three months ended September 30, 2025, was $1,122,000, compared to a net loss of $1,733,000 for the same period in 2024[146] - Adjusted EBITDA for the three months ended September 30, 2025, was $16,032,000, compared to $14,000,000 for the same period in 2024, reflecting an increase of approximately 14.5%[146] - Total revenue for the three months ended September 30, 2025, was $50.5 million, a decrease of 24% from $66.7 million in the same period of 2024, primarily due to declines in divested product lines[153] - Subscription and support revenue decreased by 25% to $47.7 million for the three months ended September 30, 2025, compared to $63.8 million in 2024[152] - For the nine months ended September 30, 2025, total revenue was $167.6 million, down 19% from $206.8 million in 2024, mainly due to declines in divested product lines[154] Cost and Expenses - Total cost of revenue for the three months ended September 30, 2025, was $11.7 million, a decrease of 41% from $19.7 million in 2024[155] - Gross profit for the three months ended September 30, 2025, was $38.8 million, representing a gross margin of 77%, compared to 70% in the same period of 2024[155] - Operating expenses for the three months ended September 30, 2025, totaled $33.5 million, representing 66% of total revenue, compared to 75% in 2024[155] - Sales and marketing expense decreased to $9.7 million in Q3 2025 from $16.3 million in Q3 2024, a decline of 41%[161] - For the nine months ended September 30, 2025, sales and marketing expense was $34.2 million, down 32% from $50.1 million in the same period in 2024[162] - Research and development expense was $7.9 million in Q3 2025, a decrease of 31.1% from $11.4 million in Q3 2024[164] - For the nine months ended September 30, 2025, research and development expense totaled $29.2 million, down 19.1% from $36.1 million in the same period in 2024[165] - General and administrative expense was $8.8 million in Q3 2025, a decrease of 20% from $11.1 million in Q3 2024[167] - For the nine months ended September 30, 2025, general and administrative expense was $30.6 million, down 20% from $38.2 million in the same period in 2024[168] - Depreciation and amortization expense was $6.4 million in Q3 2025, a decrease of 45% from $11.5 million in Q3 2024[171] - For the nine months ended September 30, 2025, depreciation and amortization expense was $21.2 million, down 38% from $34.3 million in the same period in 2024[172] - Divestiture-related expenses were $0.8 million in Q3 2025, compared to nil in Q3 2024, marking a 100% increase[174] Losses and Impairments - Net loss attributable to common shareholders for the three months ended September 30, 2025, was $2.6 million, or $0.09 per share, compared to a net loss of $3.1 million, or $0.12 per share, in 2024[152] - The company reported a loss before provision for income taxes of $1.4 million for the three months ended September 30, 2025, compared to a loss of $1.2 million in 2024[152] - Loss on divestitures of businesses was $0.5 million for the three months ended September 30, 2025, compared to nil in the same period of 2024, as the company finalized divestitures of certain product lines[180] - Loss on debt extinguishment was $2.3 million for the three months ended September 30, 2025, compared to nil in the same period of 2024, due to the replacement of the previous credit facility[181] - For the nine months ended September 30, 2025, loss on divestitures of businesses totaled $24.4 million, with no such losses reported in the same period of 2024[184] - Impairment of goodwill and other intangibles recorded was $2.5 million in the nine months ended September 30, 2025, compared to $87.2 million in the same period in 2024, a decrease of 97%[176] Cash Flow and Financing - Cash provided by operating activities was $18.5 million for the nine months ended September 30, 2025, an increase of approximately $3.6 million from $14.9 million in the same period of 2024[197] - Cash provided by investing activities was $8.0 million for the nine months ended September 30, 2025, compared to cash used of $0.6 million in the same period of 2024, reflecting an increase of $8.5 million[200] - Cash used in financing activities was $61.6 million for the nine months ended September 30, 2025, a decrease of $131.2 million from $192.8 million in the same period of 2024[202] - As of September 30, 2025, the company had $23.4 million in cash and cash equivalents, down from $57.1 million as of December 31, 2024, primarily due to debt repayments[191] - Cash paid for lender fees and debt issuance costs was $6.8 million for the nine months ended September 30, 2025, compared to $0.1 million for the same period in 2024[203] - As of September 30, 2025, the outstanding balance under the Credit Agreement was $240.0 million, maturing in July 2031[212] - A hypothetical change of 100 basis points in variable rate debt could have resulted in a $0.6 million increase in total interest expense for the nine months ended September 30, 2025[213] - The company has an interest rate cap on $120 million of outstanding debt, effectively capping the secured overnight financing rate at 4.5%[212] Market Risks and Economic Factors - The financial impact of the One Big Beautiful Bill Act (OBBBA) is being monitored for potential future effects through 2027[133] - The company plans to continue monitoring macroeconomic factors, including inflation and supply chain constraints, that may impact its operations[131] - The company is exposed to market risks including interest rate, foreign exchange, and inflation risks due to its operations both domestically and internationally[210] - The effect of a hypothetical 10% change in foreign currency exchange rates could have resulted in a change in revenue of $3.6 million for the nine months ended September 30, 2025[214] - The company has not engaged in any currency hedging strategies to manage foreign exchange rate exposure[214] Customer and Product Strategy - The company reported a total of 1,100 enterprise customers relying on its AI-powered knowledge and content management software[135] - The company is focused on expanding its go-to-market operations and increasing sales of its products[131] - The company is committed to integrating AI functionality into its products to enhance customer experiences and drive measurable ROI[135] Accounting Policies - The company evaluates its estimates, judgments, and assumptions on an ongoing basis, which may change as new events occur[207] - There were no material changes in critical accounting policies and estimates compared to the Annual Report for the year ended December 31, 2024[206]

Revenue Performance - Total revenue for Q3 2025 was $50.5 million, a decrease of 24% from $66.7 million in Q3 2024, primarily due to divestitures[5] - Subscription and support revenue was $47.7 million, down 25% from $63.8 million in Q3 2024, also primarily due to divestitures[5] - For Q4 2025, total revenue is expected to be between $46.4 million and $52.4 million, reflecting a year-over-year decline of 27% at the midpoint[6] - Full year 2025 total revenue is projected to be between $214.0 million and $220.0 million, indicating a 21% decline at the midpoint from 2024[7] - Total revenue for Q3 2025 was $50,526,000, a decrease of 24.2% compared to $66,692,000 in Q3 2024[29] Profitability Metrics - Adjusted EBITDA was $16.0 million, representing 32% of total revenue, compared to $14.0 million or 21% of total revenue in Q3 2024[5] - Adjusted EBITDA for the full year 2025 is expected to be between $56.5 million and $59.5 million, a 4% increase at the midpoint from 2024[7] - Adjusted EBITDA for Q3 2025 was $16,032 thousand, up from $14,000 thousand in Q3 2024, representing an increase of about 14.5%[35] - Gross profit for Q3 2025 was $38,849,000, representing a gross margin of 76.7% compared to 70.4% in Q3 2024[29] Net Loss and Expenses - GAAP net loss was $1.1 million, an improvement from a net loss of $1.7 million in Q3 2024, with a loss per share of $0.09 compared to $0.12 in Q3 2024[5] - Net loss for Q3 2025 was $1,122,000, an improvement from a net loss of $1,733,000 in Q3 2024[29] - Operating expenses for Q3 2025 totaled $33,501,000, a decrease from $50,298,000 in Q3 2024[29] - The company reported a loss on divestitures of businesses amounting to $24,364 thousand for the nine months ended September 30, 2025[36] - The company incurred $2,301 thousand in loss on debt extinguishment for Q3 2025, with no such loss reported in Q3 2024[35] Cash Flow and Assets - Free Cash Flow for Q3 2025 was $6,681 thousand, compared to $4,202 thousand in Q3 2024, indicating a growth of approximately 58.9%[38] - Cash and cash equivalents were $22,755,000, down from $56,426,000 at the end of 2024[31] - Cash, cash equivalents, and restricted cash at the end of Q3 2025 totaled $23,381 thousand, down from $59,739 thousand at the end of Q3 2024[33] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $18,482 thousand, compared to $14,898 thousand for the same period in 2024, an increase of approximately 23.0%[33] Customer Acquisition and Market Presence - Upland welcomed 97 new customers in Q3 2025, including 14 major customers, and expanded relationships with 168 existing customers[4] - Upland RightAnswers and Upland BA Insight are now available in AWS Marketplace, enhancing customer access to AI solutions[8] Debt and Liabilities - The company's debt was successfully refinanced, extending maturity to July 2031 and securing a $30 million revolver for liquidity[5] - Total current assets decreased to $65,100,000 from $118,392,000 as of December 31, 2024[31] - Total liabilities decreased to $328,764,000 from $424,597,000 as of December 31, 2024[31]

Core Insights - Upland Software reported a total revenue of $50.5 million for Q3 2025, a decrease of 24% from $66.7 million in Q3 2024, primarily due to divestitures [4] - The company achieved an Adjusted EBITDA of $16.0 million, representing 32% of total revenue, an increase from 21% in the same quarter last year [4] - Upland welcomed 97 new customers in Q3 2025, including 14 major customers, and expanded relationships with 168 existing customers [5] Financial Performance - Subscription and support revenue was $47.7 million, down 25% from $63.8 million in Q3 2024 [4] - GAAP net loss was $1.1 million, an improvement from a loss of $1.7 million in Q3 2024, with a net loss per share of $0.09 compared to $0.12 in the previous year [4] - Free cash flow increased to $6.7 million from $4.2 million in Q3 2024 [4] Business Outlook - For Q4 2025, Upland expects total revenue to be between $46.4 million and $52.4 million, indicating a year-over-year decline of 27% at the midpoint [7] - Full year 2025 revenue is projected to be between $214.0 million and $220.0 million, reflecting a 21% decline at the midpoint from 2024 [8] - Adjusted EBITDA for the full year is expected to be between $56.5 million and $59.5 million, a 4% increase from the previous year [8] Product and Market Developments - Upland's AI product portfolio is gaining traction, with significant multi-year customer contracts [3] - The company received 49 badges in G2's Fall 2025 market reports, indicating strong momentum across its product offerings [5] - Upland RightAnswers and Upland BA Insight are now available in AWS Marketplace, enhancing customer accessibility to Upland's AI solutions [5]

Financial Results Announcement - Upland Software, Inc. will release its financial results for the third quarter of 2025 before market opens on November 6, 2025 [1] - A conference call and webcast will follow at 10:00 a.m. Central Time / 11:00 a.m. Eastern Time [1] Access Information - The call can be accessed via a webcast on investor.uplandsoftware.com or by dialing specific toll-free numbers for North America and international participants [2] - Attendees will need to use conference ID 8422976 to join the call [2] - A recording of the webcast will be available on investor.uplandsoftware.com after the call [2] Company Overview - Upland Software is a leader in AI-powered knowledge and content management software, helping enterprises unlock critical knowledge and automate content workflows [3] - The company serves over 1,100 enterprise customers, focusing on enhancing customer and employee experiences while supporting regulatory compliance [3] Recent Achievements - Upland Software earned 49 badges in G2's Fall 2025 market reports, indicating continued momentum across its product portfolio [5] - Upland's AI-powered proposal management software, Upland Qvidian, received numerous positive customer reviews [5] Product Availability - Upland RightAnswers is now available in AWS Marketplace, facilitating easier access to the company's knowledge management solution for enterprise contact centers [6] Industry Engagement - Upland BA Insight will showcase generative AI innovation at ILTACON 2025, emphasizing its focus on innovation and strategic partnerships [7]

Core Insights - Upland Software, Inc. has achieved 49 badges in G2's Fall 2025 market reports, indicating strong performance and recognition in the industry [1] Product Performance - Upland's AI-powered proposal management software, Upland Qvidian, received numerous positive customer reviews, highlighting its effectiveness and customer satisfaction [1] - Upland BA Insight, the company's AI enablement solution, also received several recognitions, showcasing its value in the market [1]

Core Viewpoint - Upland Software has stabilized its business with a sharper product focus, stronger cash flow visibility, and a clear growth path through debt reduction and AI-driven innovation [1] Financial Performance - Upland is projected to generate over $20 million in annual free cash flow (FCF) and expects 10%+ FCF growth without significant margin or revenue expansion [3] - The company is valued at approximately 6.2x fiscal 2025 FCF guidance of $20 million and trades at 7.3x fiscal 2025 adjusted EBITDA [4] Strategic Focus - Upland has shifted its focus to Knowledge and Content Management (KCM), which accounts for 70% of core revenue and nearly all growth, while divesting low-margin front-office products [6] - The company plans to allocate most of its FCF towards debt repayments, with a minimum of 50% FCF sweep required under covenants [4] Growth Initiatives - Upland is leveraging AI to enhance upsell momentum, with products like call center bots and automated RFP writing [7] - The company has abandoned its centralized sales model in favor of product-level field sales to improve new customer acquisition and deepen product expertise [8] Profitability and Margins - Management targets EBITDA margins of 31%+ by 2027, with fiscal 2026 margins projected at 29%–30% [9] - R&D outsourcing and reduced front-office investment have already improved profitability, with sales and marketing expenses expected to decrease by 200–300 basis points [9]