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 Fall 2025 market reports, reflecting continued momentum across its portfolio of products. Upland's AI-powered proposal management software, Upland Qvidian, received numerous recent customer reviews while Upland BA Insight, the company's AI enablement solution, garnered several recognitions. Upland Panviva and Upla. ...

Needham's Scott Berg said Upland Software UPLD has stabilized its business with a sharper product focus, stronger cash flow visibility and a clear path to growth through debt reduction and AI-driven innovation.The analyst noted Upland emerging as a leaner, cash-generating software player, projecting over $20 million in annual free cash flow and margin expansion as the company doubles down on knowledge and content management solutions.He upgraded Upland Software to Buy from Hold and set a price target of $4. ...

Upland Software (UPLD) FY Conference Summary Company Overview - Upland Software has undergone a significant business transformation over the last eighteen months, focusing on divesting underperforming assets and concentrating on markets with strong competitive advantages, high margins, and growth rates [4][20] - The company has built an offshore development center in India to enhance product innovation and has AI-enabled its product portfolio [4][6] Financial Performance - Upland has repaid $242 million of debt since the beginning of the previous year, reducing net debt leverage to 3.9 times, with a target of 3.7 times by year-end [5] - Adjusted EBITDA margins have improved from 20% last year to 27% this year, with expectations to exceed 30% in the back half of the year [6][24] - The company reported approximately $200 million in annual total core revenue, growing at over 2.5% in the latter half of the year [7][19] - 93% of Upland's revenue is recurring, with a net dollar retention rate of 99% [9][15] Market Position and Growth - Upland operates in an $11 billion market that is growing at 15% annually [7][16] - The company aims for long-term organic growth in the mid to upper single digits [17][31] - Upland's products are highly rated and serve a diverse range of industries, including technology, financial services, healthcare, and manufacturing [16] Product and Customer Insights - Upland's AI-powered knowledge and content management software provides real ROI for enterprise customers [6][11] - Notable customer success stories include significant cost savings achieved through Upland's products, such as a global payroll processor saving $4 million annually and a top-tier US bank saving $6 million [12][13] - The average annual recurring revenue (ARR) for Upland's 1,100 enterprise accounts is approximately $137,000, representing nearly 90% of recurring revenue [15] Strategic Focus - The company is shifting from an acquisition-driven growth model to a focus on organic growth and product improvement [30][31] - Upland is enhancing its sales strategy by moving back to a field sales model, hiring salespeople with niche market experience [35][36] - Marketing efforts have been centralized while also incorporating digital marketing strategies to improve lead generation [38] Debt Refinancing and Future Outlook - Upland has successfully refinanced its debt, extending maturity by six years and adding a $30 million undrawn revolver for liquidity [5][41] - The management team is focused on maintaining a simple, product-driven business model while continuing to pay down debt [31][32] - The company anticipates that reported numbers will improve as divestitures and sunset assets are behind them, leading to increased visibility and interest from investors [45]

Core Insights - Upland Software reported Q2 2025 results reflecting a strategic shift towards core operations, with GAAP revenue of $53.4 million slightly exceeding analyst expectations of $53.2 million, while non-GAAP EPS was $0.15, marking a year-over-year revenue decline of 22.9% [1][2][5] - The company is focusing on high-margin core businesses, resulting in a significant drop in free cash flow to $2.7 million from $5.2 million a year earlier [1][2][6] Financial Performance - GAAP revenue for Q2 2025 was $53.4 million, down from $69.3 million in Q2 2024, a decrease of 22.9% [2][5] - Non-GAAP EPS decreased by 21.1% year-over-year, from $0.19 in Q2 2024 to $0.15 in Q2 2025 [2] - Adjusted EBITDA remained stable at $13.6 million, with an improved margin rising from 20% in Q2 2024 to 25% in Q2 2025 [2][6] - Free cash flow declined by 48.9% year-over-year, from $5.2 million to $2.7 million [2][6] Business Strategy - Upland Software is concentrating on product families where it has a competitive edge, particularly through AI integration across its applications [3][4] - The company aims to drive product innovation, customer retention, and maintain a stable recurring revenue model, with a focus on cross-selling and new account growth [4][10] Customer Metrics - Upland added 100 new customers, including 12 major accounts, and expanded relationships with 263 existing clients, although this growth slightly lags behind earlier in the year [9] - The company reported a net dollar retention rate of 96% as of December 31, 2024, with a pro forma figure of 99% for the current business [9][10] Future Guidance - For Q3 2025, Upland expects total revenue between $46.8 million and $52.8 million, with adjusted EBITDA projected between $14.5 million and $17.5 million [12] - For FY2025, the company forecasts total revenue of $211.8 million to $223.8 million, with adjusted EBITDA expected in the range of $55.8 million to $61.8 million, indicating a projected adjusted EBITDA margin increase to 27% [13]

[Part I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) This part covers the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Upland Software, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), stockholders' deficit, and cash flows, along with detailed notes on accounting policies and key financial items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' deficit at specific dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :---------------- | :--------- | | Cash and cash equivalents | $41,011 | $56,426 | $(15,415) | -27.3% | | Accounts receivable (net) | $20,129 | $38,647 | $(18,518) | -47.9% | | Total current assets | $83,387 | $118,392 | $(35,005) | -29.6% | | Intangible assets, net | $76,513 | $123,903 | $(47,390) | -38.2% | | Total assets | $441,722 | $529,522 | $(87,800) | -16.6% | | Total current liabilities | $89,636 | $120,420 | $(30,784) | -25.6% | | Notes payable, less current maturities | $252,458 | $286,970 | $(34,512) | -12.0% | | Total liabilities | $357,989 | $424,597 | $(66,608) | -15.7% | | Total stockholders' deficit | $(42,389) | $(18,305) | $(24,084) | 131.6% | - Total assets decreased by **$87.8 million**, or **16.6%**, from December 31, 2024, to June 30, 2025, primarily driven by reductions in intangible assets and accounts receivable[9](index=9&type=chunk) - Total liabilities decreased by **$66.6 million**, or **15.7%**, mainly due to a reduction in notes payable and deferred revenue[9](index=9&type=chunk) - Stockholders' deficit significantly increased by **$24.1 million**, or **131.6%**, indicating a worsening equity position[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance over specific periods, including revenue, expenses, and net loss Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :---------------- | :--------- | | Total revenue | $53,383 | $69,339 | $(15,956) | -23.0% | | Gross profit | $39,948 | $48,865 | $(8,917) | -18.2% | | Loss from operations | $(7,035) | $(5,371) | $(1,664) | 31.0% | | Net loss | $(13,029) | $(11,439) | $(1,590) | 13.9% | | Net loss per common share, basic and diluted | $(0.51) | $(0.47) | $(0.04) | 8.5% | | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Total revenue | $117,038 | $140,075 | $(23,037) | -16.4% | | Gross profit | $85,555 | $98,552 | $(12,997) | -13.2% | | Loss from operations | $(8,087) | $(97,012) | $88,925 | -91.7% | | Net loss | $(38,877) | $(107,569) | $68,692 | -63.9% | | Net loss per common share, basic and diluted | $(1.47) | $(3.92) | $2.45 | -62.5% | - Total revenue decreased by **23%** for the three months and **16.4%** for the six months ended June 30, 2025, primarily due to divested product lines and Sunset Assets[11](index=11&type=chunk) - Net loss increased by **13.9%** for the three months ended June 30, 2025, but significantly decreased by **63.9%** for the six months ended June 30, 2025, largely due to a substantial goodwill impairment in the prior year period[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the company's net loss and other comprehensive income (loss) components, reflecting total comprehensive performance Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :---------------- | :--------- | | Net loss | $(13,029) | $(11,439) | $(1,590) | 13.9% | | Other comprehensive income (loss) | $7,029 | $(2,907) | $9,936 | -341.8% | | Comprehensive loss | $(6,000) | $(14,346) | $8,346 | -58.2% | | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Net loss | $(38,877) | $(107,569) | $68,692 | -63.9% | | Other comprehensive income (loss) | $12,616 | $(6,768) | $19,384 | -286.4% | | Comprehensive loss | $(26,261) | $(114,337) | $88,076 | -77.0% | - Other comprehensive income (loss) significantly improved, moving from a loss of **$2.9 million** in Q2 2024 to an income of **$7.0 million** in Q2 2025, primarily due to unrealized foreign currency translation adjustments and intercompany loan gains[14](index=14&type=chunk) - Comprehensive loss decreased by **58.2%** for the three months and **77.0%** for the six months ended June 30, 2025, driven by the improved net loss and positive other comprehensive income components[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Deficit](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Deficit) This section details changes in the company's equity position, including preferred stock, common stock, and accumulated deficit Condensed Consolidated Statements of Stockholders' Deficit Highlights (in thousands, except share amounts) | Item | June 30, 2025 | December 31, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :---------------- | :--------- | | Preferred Stock Amount | $126,122 | $123,230 | $2,892 | 2.3% | | Common Stock Shares | 28,708,922 | 28,168,267 | 540,655 | 1.9% | | Additional Paid-In Capital | $607,463 | $605,286 | $2,177 | 0.4% | | Accumulated Other Comprehensive Loss | $(9,374) | $(21,990) | $12,616 | -57.4% | | Accumulated Deficit | $(640,481) | $(601,604) | $(38,877) | 6.5% | | Total Stockholders' Deficit | $(42,389) | $(18,305) | $(24,084) | 131.6% | - The total stockholders' deficit increased by **$24.1 million**, or **131.6%**, from December 31, 2024, to June 30, 2025, primarily due to the accumulated deficit increasing by **$38.9 million**[17](index=17&type=chunk)[19](index=19&type=chunk) - Accumulated Other Comprehensive Loss improved by **$12.6 million**, or **57.4%**, mainly driven by positive foreign currency translation adjustments[17](index=17&type=chunk)[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Net cash provided by operating activities | $11,594 | $10,591 | $1,003 | 9.5% | | Net cash provided by (used in) investing activities | $8,005 | $(457) | $8,462 | -1851.6% | | Net cash used in financing activities | $(36,262) | $(14,298) | $(21,964) | 153.6% | | Change in cash, cash equivalents and restricted cash | $(15,415) | $(4,184) | $(11,231) | 268.4% | | Cash, cash equivalents and restricted cash, end of period | $41,637 | $232,375 | $(190,738) | -82.1% | - Net cash provided by operating activities increased by **9.5%** to **$11.6 million** for the six months ended June 30, 2025[21](index=21&type=chunk) - Investing activities shifted from a net cash outflow of **$0.5 million** in 2024 to a net cash inflow of **$8.0 million** in 2025, primarily due to proceeds from divestitures[21](index=21&type=chunk) - Net cash used in financing activities significantly increased by **153.6%** to **$36.3 million**, mainly due to higher debt repayments[21](index=21&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Organization and Nature of Operations](index=11&type=section&id=1.%20Organization%20and%20Nature%20of%20Operations) This note describes Upland Software, Inc.'s business, its focus on AI-powered software, and its customer base - Upland Software, Inc. is a leader in AI-powered knowledge and content management software, headquartered in Austin, Texas[24](index=24&type=chunk) - The Company's solutions help enterprises unlock critical knowledge, automate content workflows, and drive measurable ROI, serving over **1,100 enterprise customers** across diverse industries[24](index=24&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the accounting principles used in preparing the financial statements and key accounting policies - The condensed consolidated financial statements are prepared in conformity with GAAP and include all adjustments of a normal recurring nature necessary for fair presentation[25](index=25&type=chunk)[26](index=26&type=chunk) Restricted Cash (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Restricted cash | $626 | $626 | - No individual customer represented more than **10%** of total revenues for the six months ended June 30, 2025, or more than **10%** of accounts receivable as of June 30, 2025 or December 31, 2024, indicating diversified customer base[33](index=33&type=chunk) - The Company is evaluating the potential impact of recently issued accounting pronouncements, ASU 2024-04 (Debt-Debt with Conversions and Other Options), ASU 2024-03 (Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures), and ASU 2023-09 (Income Taxes), on its disclosures and financial statements[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [3. Fair Value Measurements](index=13&type=section&id=3.%20Fair%20Value%20Measurements) This note details the valuation methodologies and fair value hierarchy used for financial assets and liabilities Assets Measured at Fair Value on a Recurring Basis (in thousands) | Item | June 30, 2025 (Level 1) | June 30, 2025 (Level 2) | December 31, 2024 (Level 1) | December 31, 2024 (Level 2) | | :-------------------------------- | :---------------------- | :---------------------- | :-------------------------- | :-------------------------- | | Cash equivalents - money market funds | $21,573 | — | $40,428 | — | | Interest rate swaps | — | $5,094 | — | $9,742 | - The fair value of the Company's long-term debt (before discount) was **$258.1 million** at June 30, 2025, and **$293.7 million** at December 31, 2024, based on valuation methodologies using Level 2 inputs[44](index=44&type=chunk) [4. Goodwill and Other Intangible Assets](index=14&type=section&id=4.%20Goodwill%20and%20Other%20Intangible%20Assets) This note provides information on the company's goodwill and other intangible assets, including changes and impairment charges Goodwill Balance (in thousands) | Item | Amount | | :-------------------------------- | :----- | | Balance at December 31, 2024 | $260,976 | | Divestitures of businesses | $(8,633) | | Foreign currency translation adjustment | $8,362 | | Balance at June 30, 2025 | $260,705 | Intangible Assets, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Customer relationships | $67,383 | $108,961 | | Trade name | $421 | $1,380 | | Developed technology | $8,588 | $13,426 | | Favorable Leases | $121 | $136 | | Total intangible assets | $76,513 | $123,903 | - During the three months ended June 30, 2025, the Company recorded a **$2.5 million** impairment charge related to intangible assets associated with certain Sunset Assets[48](index=48&type=chunk) - Total amortization expense decreased to **$7.9 million** for Q2 2025 (from **$13.5 million** in Q2 2024) and **$17.3 million** for YTD 2025 (from **$27.0 million** in YTD 2024)[49](index=49&type=chunk) [5. Income Taxes](index=15&type=section&id=5.%20Income%20Taxes) This note details the company's income tax benefit or provision and related deferred tax assets and liabilities Income Tax Benefit (Provision) (in thousands) | Period | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Three Months Ended June 30 | $171 | $(1,210) | | Six Months Ended June 30 | $1,516 | $(663) | - The income tax benefit for 2025 periods is primarily related to the deferred tax benefit due to divestitures of businesses, offset by income taxes from U.S. and non-U.S. operations[51](index=51&type=chunk) - The Company has recorded a valuation allowance against its United States net deferred tax assets due to historical operating losses and limited history of profits[53](index=53&type=chunk) [6. Debt](index=17&type=section&id=6.%20Debt) This note provides details on the company's long-term debt, interest rates, covenants, and interest rate swap agreements Long-term Debt (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Senior secured loans | $255,698 | $290,194 | | Less current maturities | $(3,240) | $(3,224) | | Total long-term debt | $252,458 | $286,970 | - The Company's Term Loans accrue interest at a floating rate, which was **8.2%** at June 30, 2025[57](index=57&type=chunk) - The Company was in compliance with all covenants under its Credit Facility as of June 30, 2025[58](index=58&type=chunk) - Interest rate swaps, with notional amounts of **$216.3 million** at June 30, 2025, were de-designated in August 2024, with subsequent changes in fair value recorded to interest expense, net[60](index=60&type=chunk)[61](index=61&type=chunk) [7. Net Loss Per Share](index=18&type=section&id=7.%20Net%20Loss%20Per%20Share) This note presents the calculation of basic and diluted net loss per common share and anti-dilutive equivalents Net Loss Per Common Share (basic and diluted) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss per common share | $(0.51) | $(0.47) | $(1.47) | $(3.92) | | Weighted-average common shares outstanding | 28,518,839 | 27,348,672 | 28,370,711 | 28,133,285 | Anti-Dilutive Common Share Equivalents (in thousands) | Item | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Stock options | 87,561 | 122,530 | | Restricted stock units | 2,338,055 | 2,716,299 | | Performance restricted stock units | 350,000 | 350,000 | | Series A Preferred Stock (if-converted) | 7,467,267 | 7,140,482 | | Total anti–dilutive common share equivalents | 10,242,883 | 10,329,311 | [8. Commitments and Contingencies](index=19&type=section&id=8.%20Commitments%20and%20Contingencies) This note outlines the company's contractual commitments, legal proceedings, and potential financial obligations - The Company has purchase commitments for hosting services and third-party technology, and is involved in various lawsuits and legal proceedings in the normal course of business, not anticipating a material adverse effect[68](index=68&type=chunk)[69](index=69&type=chunk) - A **$0.6 million** letter of credit is maintained as collateral for an operating lease, expiring July 2029[70](index=70&type=chunk) [9. Mezzanine Equity](index=19&type=section&id=9.%20Mezzanine%20Equity) This note details the Series A Convertible Preferred Stock, including issuance, dividends, and conversion terms - The Company issued **115,000 shares** of Series A Convertible Preferred Stock at **$1,000 per share** for an aggregate of **$115.0 million** in August 2022[71](index=71&type=chunk) - Series A Preferred Stock holders are entitled to a **4.5% annual dividend** (increasing to **7.0%** after seven years), which accrues and compounds quarterly, and can be paid in cash or in kind[72](index=72&type=chunk) - As of June 30, 2025, accrued unpaid dividends on Series A Preferred Stock totaled **$15.7 million**, representing **895,839 Common Stock shares** upon conversion at **$17.50 per share**[73](index=73&type=chunk) - The Series A Preferred Stock has a conversion price of **$17.50 per share**, subject to customary anti-dilution adjustments[79](index=79&type=chunk) [10. Stockholders' Deficit](index=23&type=section&id=10.%20Stockholders'%20Deficit) This note describes the company's common stock, share repurchase plan, tax benefit preservation plan, and stock-based compensation - The Company's common stock has a par value of **$0.0001 per share**, with each share entitled to one vote[81](index=81&type=chunk) - The Share Repurchase Plan, authorized in September 2023 for up to **$25 million**, expired in May 2024 after all authorized shares were repurchased[82](index=82&type=chunk) - The 2024 Tax Benefit Preservation Plan was adopted to protect the Company's ability to use net operating loss carryforwards (NOLs) by deterring any person from acquiring **4.9% or more** of outstanding stock without Board approval[83](index=83&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $143 | $199 | $264 | $385 | | Research and development | $318 | $638 | $608 | $1,244 | | Sales and marketing | $52 | $362 | $304 | $759 | | General and administrative | $2,561 | $3,934 | $4,573 | $6,267 | | Total | $3,074 | $5,133 | $5,749 | $8,655 | [11. Revenue Recognition](index=25&type=section&id=11.%20Revenue%20Recognition) This note explains the company's revenue recognition policies, performance obligations, and revenue breakdown by type and geography - Revenue is recognized when control of promised goods or services is transferred to customers, based on a five-step model, with performance obligations including subscription and support, perpetual licenses, and professional services[93](index=93&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk) - As of June 30, 2025, approximately **$169.4 million** of revenue is expected to be recognized from remaining performance obligations, with about **72%** expected within the next 12 months[111](index=111&type=chunk) Total Revenue by Type and Geography (in thousands) | Revenue Type/Geography | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Subscription and support:** | | | | | | United States | $37,046 | $47,342 | $80,770 | $95,066 | | United Kingdom | $5,207 | $8,397 | $12,788 | $17,472 | | Canada | $3,010 | $3,217 | $6,022 | $6,545 | | Other International | $5,204 | $6,548 | $11,069 | $13,499 | | Total subscription and support revenue | $50,467 | $65,504 | $110,649 | $132,582 | | **Perpetual license:** | | | | | | Total perpetual license revenue | $1,199 | $1,730 | $2,807 | $3,200 | | **Professional services:** | | | | | | Total professional service revenue | $1,717 | $2,105 | $3,582 | $4,293 | | **Total revenue** | **$53,383** | **$69,339** | **$117,038** | **$140,075** | [12. Divestitures](index=29&type=section&id=12.%20Divestitures) This note details the company's divestiture activities, including consideration received and related expenses - The Company completed divestitures of certain product lines for combined total consideration of **$10.0 million** for the three months and **$15.5 million** (plus up to **$4.0 million** in earn-outs) for the six months ended June 30, 2025[114](index=114&type=chunk) - A secured promissory note of **$5.5 million** (fair value **$4.9 million**) was received as part of the consideration, with a **$1.5 million** reserve provided against it[114](index=114&type=chunk) Loss on Divestitures and Related Expenses (in thousands) | Item | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :-------------------------------- | :------------------------------- | :----------------------------- | | Net losses on divestitures | $(434) | $(23,891) | | Divestiture-related expenses | $6,879 | $8,624 | - Divestiture-related expenses for the three months ended June 30, 2025, included a one-time termination fee of **$5.2 million** for a legacy vendor contract[116](index=116&type=chunk) [13. Segment Information](index=30&type=section&id=13.%20Segment%20Information) This note clarifies that the company operates as a single operating and reporting segment - The Company operates as a single operating and reporting segment, with the CEO managing the business as a multi-product cloud-based software application business[119](index=119&type=chunk) [14. Subsequent Events](index=30&type=section&id=14.%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, including debt refinancing details - On July 25, 2025, the Company refinanced its outstanding Term Loans with a new **$240.0 million** senior secured term loan and a **$30.0 million** senior secured revolving credit facility[120](index=120&type=chunk)[121](index=121&type=chunk) - The new Term Loan matures on July 25, 2031, and bears interest at the secured overnight financing rate (not less than **1.5%**) plus a margin of **6.0% per annum**[121](index=121&type=chunk) - The Credit Facilities include a quarterly covenant limiting the consolidated secured leverage ratio to **6.0 to 1.0** or under and are secured by substantially all of the Company's assets[121](index=121&type=chunk)[123](index=123&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Upland Software, Inc.'s financial condition, results of operations, key metrics, and critical accounting policies [Forward Looking Statements](index=31&type=section&id=Forward%20Looking%20Statements) This section highlights the forward-looking nature of certain statements and cautions readers about inherent risks and uncertainties - The report contains forward-looking statements regarding future financial performance, acquisitions, divestitures, market expansion, AI integration, and other business aspects, subject to risks and uncertainties[124](index=124&type=chunk) - Readers are cautioned not to place undue reliance on these statements, as actual results may differ materially, and the Company undertakes no obligation to update them[125](index=125&type=chunk)[126](index=126&type=chunk) [Overview](index=33&type=section&id=Overview) This section provides a high-level description of Upland Software, Inc.'s business and its role in AI-powered software solutions - Upland Software, Inc. is a leader in AI-powered knowledge and content management software, helping over **1,100 enterprise customers** with critical knowledge, automated workflows, and regulatory compliance[128](index=128&type=chunk) [Key Metrics and Non-GAAP Financial Measures](index=33&type=section&id=Key%20Metrics%20and%20Non-GAAP%20Financial%20Measures) This section presents key performance indicators and non-GAAP financial measures used by management to evaluate the business - The Core Organic Growth Rate for the three-month period ended June 30, 2025, was **1.2%**[131](index=131&type=chunk) Reconciliation of Total Revenue to Core Organic Revenue (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Total revenue | $53,383 | $69,339 | | Less: Perpetual license revenue | $1,199 | $1,730 | | Less: Professional services revenue | $1,717 | $2,105 | | Less: Subscription and support revenue from Sunset Assets | $3,336 | $4,001 | | Less: Subscription and support revenue from divestitures | $2,170 | $15,434 | | Less: Overage Charges | $572 | $2,187 | | Core organic revenue | $44,389 | $43,882 | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(13,029) | $(11,439) | $(38,877) | $(107,569) | | Adjusted EBITDA | $13,585 | $13,635 | $26,667 | $26,739 | [Consolidated Statements of Operations Data](index=38&type=section&id=Consolidated%20Statements%20of%20Operations%20Data) This section provides a summary of the company's consolidated statements of operations, including revenue breakdown and gross profit margins Revenue Breakdown as Percentage of Total Revenue | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Subscription and support | 95% | 94% | 95% | 95% | | Perpetual license | 2% | 2% | 2% | 2% | | Professional services | 3% | 4% | 3% | 3% | - Gross profit as a percentage of revenue increased to **75%** for the three months ended June 30, 2025 (from **70%** in 2024) and to **73%** for the six months ended June 30, 2025 (from **70%** in 2024)[144](index=144&type=chunk) [Comparison of the Three and Six Months Ended June 30, 2025 and 2024](index=39&type=section&id=Comparison%20of%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section provides a detailed comparative analysis of the company's financial performance for the specified periods [Revenue](index=39&type=section&id=Revenue) This section analyzes the changes in total revenue, attributing declines to divested product lines and Sunset Assets Total Revenue (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $53,383 | $69,339 | (23)% | | Six Months Ended June 30 | $117,038 | $140,075 | (16)% | - The decrease in total revenue for both periods is primarily due to declines from divested product lines (**$14.8 million** for Q2, **$19.8 million** for YTD) and Sunset Assets (**$0.7 million** for Q2, **$2.3 million** for YTD)[148](index=148&type=chunk)[149](index=149&type=chunk) [Cost of Revenue](index=40&type=section&id=Cost%20of%20Revenue) This section examines the changes in cost of revenue, highlighting reductions due to divestitures and personnel-related expenses Total Cost of Revenue (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $13,435 | $20,474 | (34)% | | Six Months Ended June 30 | $31,483 | $41,523 | (24)% | - Cost of subscription and support revenue decreased by **36%** for Q2 and **25%** for YTD, mainly due to divested product lines (**$5.7 million** for Q2, **$7.8 million** for YTD) and Sunset Assets[151](index=151&type=chunk)[153](index=153&type=chunk) - Cost of professional services and other revenue decreased by **17%** for Q2 and **13%** for YTD, primarily due to reduced personnel-related expenses in both divested and ongoing product lines[152](index=152&type=chunk)[154](index=154&type=chunk) [Operating Expenses](index=41&type=section&id=Operating%20Expenses) This section analyzes the various components of operating expenses, including sales and marketing, R&D, and G&A [Sales and Marketing Expense](index=41&type=section&id=Sales%20and%20Marketing%20Expense) This section details the changes in sales and marketing expense, attributing decreases to divestitures and personnel costs Sales and Marketing Expense (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $10,771 | $16,791 | (36)% | | Six Months Ended June 30 | $24,527 | $33,809 | (27)% | - The decrease in sales and marketing expense is attributed to divested product lines (**$3.2 million** for Q2, **$4.6 million** for YTD), Sunset Assets, and personnel-related costs in ongoing product lines[156](index=156&type=chunk)[157](index=157&type=chunk) [Research and Development Expense](index=41&type=section&id=Research%20and%20Development%20Expense) This section analyzes the changes in research and development expense, noting reductions from divested product lines and contract termination Research and Development Expense (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $9,781 | $12,185 | (20)% | | Six Months Ended June 30 | $21,323 | $24,640 | (13)% | - The decrease in R&D expense is primarily due to reduced personnel-related costs in divested product lines, Sunset Assets, and remaining product lines, along with the termination of an outsourced R&D contract[159](index=159&type=chunk)[160](index=160&type=chunk) [General and Administrative Expense](index=42&type=section&id=General%20and%20Administrative%20Expense) This section details the changes in general and administrative expense, primarily due to reduced personnel and divestiture-related costs General and Administrative Expense (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $10,219 | $13,880 | (26)% | | Six Months Ended June 30 | $21,840 | $27,112 | (19)% | - The decrease in G&A expense is mainly due to reduced personnel-related costs, including non-cash stock compensation, and lower costs related to divested product lines[162](index=162&type=chunk)[163](index=163&type=chunk) [Depreciation and Amortization Expense](index=42&type=section&id=Depreciation%20and%20Amortization%20Expense) This section analyzes the decrease in depreciation and amortization expense, driven by divested assets and fully amortized intangibles Total Depreciation and Amortization Expense (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $6,864 | $11,380 | (40)% | | Six Months Ended June 30 | $14,859 | $22,776 | (35)% | - The decrease in D&A expense is primarily due to the decline in amortization from intangible assets associated with divested product lines (**$7.8 million** for YTD) and some ongoing intangible assets becoming fully amortized[165](index=165&type=chunk)[166](index=166&type=chunk) [Divestiture-related Expenses](index=43&type=section&id=Divestiture-related%20Expenses) This section details the significant increase in divestiture-related expenses, including professional fees and a contract termination fee Divestiture-related Expenses (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $6,879 | $0 | 100% | | Six Months Ended June 30 | $8,624 | $0 | 100% | - Divestiture-related expenses significantly increased in 2025 due to professional fees, personnel costs, and a one-time **$5.2 million** termination fee for a legacy vendor contract[168](index=168&type=chunk)[169](index=169&type=chunk) [Impairment of goodwill and other intangibles](index=43&type=section&id=Impairment%20of%20goodwill%20and%20other%20intangibles) This section discusses impairment charges on intangible assets and goodwill, including a significant prior-year impairment Impairment of Goodwill and Other Intangibles (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $2,469 | $0 | N/A | | Six Months Ended June 30 | $2,469 | $87,227 | (97)% | - A **$2.5 million** impairment charge was recorded on intangible assets related to Sunset Assets during Q2 2025, following a triggering event and valuation[170](index=170&type=chunk) - A significant goodwill impairment of **$87.2 million** was recognized in Q1 2024 due to declines in the Company's stock price[171](index=171&type=chunk) [Other Expense](index=44&type=section&id=Other%20Expense) This section analyzes changes in other expenses, including interest expense and losses from business divestitures Total Other Expense (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $(6,165) | $(4,858) | 27% | | Six Months Ended June 30 | $(32,306) | $(9,894) | 227% | - Interest expense, net, decreased by **18%** for Q2 and **34%** for YTD, primarily due to debt prepayments, partially offset by changes in interest rate swap fair value and lower interest income[173](index=173&type=chunk)[176](index=176&type=chunk) - Loss on divestitures of businesses was **$0.4 million** for Q2 2025 and **$23.9 million** for YTD 2025, as the Company divested product lines to focus on higher-margin opportunities[174](index=174&type=chunk)[177](index=177&type=chunk) [Benefit from Income Taxes](index=45&type=section&id=Benefit%20from%20Income%20Taxes) This section explains the shift from an income tax provision to a benefit, primarily due to deferred tax benefits from divestitures Benefit from (Provision for) Income Taxes (in thousands) | Period | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $171 | $(1,210) | (114)% | | Six Months Ended June 30 | $1,516 | $(663) | (329)% | - The shift from an income tax provision in 2024 to a benefit in 2025 is primarily due to the deferred tax benefit from business divestitures[180](index=180&type=chunk)[181](index=181&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flows from operating, investing, and financing activities, and overall liquidity [Cash Flows from Operating Activities](index=46&type=section&id=Cash%20Flows%20from%20Operating%20Activities) This section analyzes the increase in cash provided by operating activities, including a non-recurring cash gain Net Cash Provided by Operating Activities (in thousands) | Period | 2025 | 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :----- | :----- | :---------------- | :--------- | | Six Months Ended June 30 | $11,594 | $10,591 | $1,003 | 9.5% | - The increase in cash provided by operating activities is primarily due to a non-recurring **$1.2 million** cash gain from the sale of a portion of interest rate swaps[191](index=191&type=chunk) [Cash Flows from Investing Activities](index=46&type=section&id=Cash%20Flows%20from%20Investing%20Activities) This section details the shift to cash provided by investing activities, mainly driven by divestiture proceeds Net Cash Provided by (Used in) Investing Activities (in thousands) | Period | 2025 | 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :----- | :----- | :---------------- | :--------- | | Six Months Ended June 30 | $8,005 | $(457) | $8,462 | -1851.6% | - The shift to cash provided by investing activities is mainly due to **$9.1 million** in cash proceeds from divestitures of certain products[194](index=194&type=chunk) [Cash Flows from Financing Activities](index=46&type=section&id=Cash%20Flows%20from%20Financing%20Activities) This section analyzes the increased cash used in financing activities, primarily due to higher debt repayments Net Cash Used in Financing Activities (in thousands) | Period | 2025 | 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :----- | :----- | :---------------- | :--------- | | Six Months Ended June 30 | $(36,262) | $(14,298) | $(21,964) | 153.6% | - The increased cash used in financing activities is primarily due to **$32.9 million** in additional payments on Term Loans in 2025, partially offset by no common stock repurchases in 2025 compared to **$11.0 million** in 2024[196](index=196&type=chunk) [Critical Accounting Policies and the Use of Estimates](index=47&type=section&id=Critical%20Accounting%20Policies%20and%20the%20Use%20of%20Estimates) This section discusses the significant management judgments and estimates involved in the company's financial reporting - Critical accounting policies involve significant management judgments and estimates, particularly concerning income taxes and goodwill and other intangibles[197](index=197&type=chunk)[202](index=202&type=chunk) - No specific event or circumstance as of July 31, 2025, requires updates to estimates or revisions of asset/liability carrying values, but actual results may differ from estimates[198](index=198&type=chunk)[200](index=200&type=chunk) [Recent Accounting Pronouncements](index=47&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for information on recently issued accounting pronouncements and their potential impact - For information on recent accounting pronouncements and their impact, refer to Note 2 of the condensed consolidated financial statements[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines Upland Software, Inc.'s exposure to market risks, focusing on interest rate and foreign currency exchange risks and their management [Interest Rate Risk](index=48&type=section&id=Interest%20Rate%20Risk) This section details the company's exposure to interest rate fluctuations on its variable rate debt and mitigation strategies - The Company's exposure to interest rate risk primarily relates to its cash equivalents and variable rate indebtedness, with investment activities focused on preserving principal[204](index=204&type=chunk) - Interest rate swap agreements with a total notional value of **$216.3 million** at June 30, 2025, limit exposure to interest rate risk by converting variable interest payments to a fixed rate of **5.4%**[205](index=205&type=chunk) - A hypothetical **100 basis point** change in interest rates could result in a **$0.2 million** increase to total interest expense for the six months ended June 30, 2025[206](index=206&type=chunk) - Subsequent to quarter-end, the Company refinanced its Term Loans with a new **$240.0 million** term loan bearing interest at SOFR (not less than **1.50%**) plus a **6.00% margin**[207](index=207&type=chunk) [Foreign Currency Exchange Risk](index=48&type=section&id=Foreign%20Currency%20Exchange%20Risk) This section describes the company's exposure to foreign exchange rate fluctuations and their impact on operations - The Company is exposed to foreign exchange rate fluctuations as a portion of its operating expenses are incurred in foreign currencies (e.g., AUD, CAD, INR, GBP, EUR, ILS)[208](index=208&type=chunk) - A hypothetical **10%** change in foreign currency exchange rates could have resulted in a **$1.1 million** change in revenue for the six months ended June 30, 2025[208](index=208&type=chunk) - Foreign currency gains/losses from intercompany loans used to fund foreign subsidiaries are recognized in accumulated other comprehensive income (loss)[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of Upland Software, Inc.'s disclosure controls and procedures, confirming their effectiveness and noting no material changes [Evaluation of Disclosure Controls and Procedures](index=49&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025 - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[212](index=212&type=chunk) - The condensed consolidated financial statements fairly present, in all material respects, the Company's financial condition, results of operations, and cash flows in conformity with GAAP[212](index=212&type=chunk) [Changes in Internal Control over Financial Reporting](index=49&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms no material changes to internal control over financial reporting during the quarter ended June 30, 2025 - There were no changes to the Company's internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[213](index=213&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=49&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) This section acknowledges the inherent limitations of internal control over financial reporting, including human error and circumvention - Internal control over financial reporting cannot provide absolute assurance due to inherent limitations such as human diligence, judgment lapses, and potential circumvention by collusion or improper management override[214](index=214&type=chunk) [Part II. OTHER INFORMATION](index=50&type=section&id=Part%20II.%20OTHER%20INFORMATION) This part includes risk factors, other information, and an index of exhibits [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the comprehensive risk factors detailed in the 2024 Annual Report on Form 10-K, confirming no material changes in 2025 - Readers should consider the risk factors discussed in Part I, 'Item 1A. Risk Factors' of the 2024 Annual Report on Form 10-K[217](index=217&type=chunk) - There have been no material changes during 2025 to the risk factors included in the Company's Annual Report on Form 10-K[217](index=217&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) This section reports on Rule 10b5-1 trading plans, confirming no adoption or termination by officers or directors during Q2 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[218](index=218&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including CEO/CFO certifications and XBRL data - The exhibit index includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), and 18 U.S.C. Section 1350[221](index=221&type=chunk) - Inline XBRL (Extensible Business Reporting Language) formatted financial statements and notes are included as Exhibit 101[221](index=221&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2025, the company beat its revenue and adjusted EBITDA guidance midpoints, achieving an adjusted EBITDA of $13.6 million, resulting in an adjusted EBITDA margin of 25%, a 500 basis point increase from 20% in 2024 [6][7][16] - Free cash flow for Q2 remained strong at $2.7 million, impacted by approximately $7 million of one-time divestiture-related expenses [8][17] - The company has paid down $242 million of debt since the beginning of last year and extended the maturity of its debt to July 2031 [13][14] Business Line Data and Key Metrics Changes - The company welcomed 100 new customers in Q2, including 12 major customers, and expanded relationships with 263 existing customers, with 28 major expansions [9][10] - The growth rate of retained core assets has turned positive, indicating a meaningful milestone for the business [7] Market Data and Key Metrics Changes - The company expects core organic growth to improve to approximately 3% in 2025, assuming no macro disruptions from tariffs [20] - For Q3 2025, reported total revenue is expected to be between $46.8 million and $52.8 million, reflecting a year-over-year decline primarily due to divestitures [20][21] Company Strategy and Development Direction - The company has streamlined its product portfolio, focusing on markets with consistent growth and higher margins, while AI enabling its product offerings [13][14] - The company aims to continue deleveraging and driving organic growth, with potential for M&A opportunities in the future once the business stabilizes [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand environment, noting improvements in marketing sourced bookings and the potential for AI to act as a tailwind for the business [38] - The company is focused on enhancing its sales execution and pipeline generation, with ongoing investments in demand generation [48] Other Important Information - The company successfully completed refinancing of its debt, establishing a new $30 million revolving credit facility, which strengthens its balance sheet and enhances liquidity [13][19] - The company earned 68 badges in G2's summer 2025 reports, reflecting strong performance across its product portfolio [10][12] Q&A Session Summary Question: Why is private credit the right option versus other facilities? - The company moved to private credit due to the size of its current term facility being below the range for the TLD market, and it is excited about the partnership with SoundPoint [26][27] Question: What is the plan for excess cash flow over the next couple of years? - The company plans to direct cash flow toward deleveraging rather than M&A at this point [28] Question: What products are selling well in the current macro environment? - The company is seeing opportunities in large enterprises, particularly with products like Upland Right Answers and Upland BAI Insight, which are integral to larger enterprise AI implementations [30][31] Question: Is there a future for M&A activity? - While the focus is currently on organic growth and deleveraging, the company may consider M&A opportunities in the future once the business stabilizes [35][36] Question: How is the demand environment and pipeline build? - The demand environment appears fine, with increasing marketing sourced bookings and investments in demand generation showing positive results [38] Question: What drove the change in free cash flow guidance? - The increase in free cash flow guidance was due to lower divestiture-related expenses, cash from the sale of swaps, and reduced tax liabilities [41][42] Question: How much revenue in Q2 was from divested businesses? - Revenue from divested businesses in Q2 was approximately $4 million to $5 million [43] Question: What are the priorities for accelerating top-line growth? - The company has focused on AI enabling its product portfolio and improving sales execution, particularly in outbound lead generation [48]

EXHIBIT 99.1 Upland Software Reports Second Quarter 2025 Financial Results July 31, 2025, 09:00 AM Eastern Standard Time AUSTIN, Texas--(BUSINESS WIRE)-- Upland Software, Inc. (Nasdaq: UPLD), a leader in AI-powered knowledge and content management software, today announced its financial and operating results for the second quarter 2025 and issued guidance for its third quarter and full year of 2025. Second Quarter 2025 Financial Highlights "With our Q2 results, we are pleased to report a return to positive ...

Financial Data and Key Metrics Changes - Q1 adjusted EBITDA was $13.1 million, resulting in an adjusted EBITDA margin of 21%, up from 20% reported in 2024 [6][16] - Free cash flow for Q1 was $7.9 million, which was higher than expected [7] - The company anticipates adjusted EBITDA margins to increase to 26% in Q2 and further expand in the second half of 2025 [12][20] Business Line Data and Key Metrics Changes - The core organic growth rate in Q1 was flat, but is expected to move to 2% in Q2, with further increases anticipated throughout 2025 [6][11] - The company welcomed 107 new customers in Q1, including 19 major customers, and expanded relationships with 245 existing customers [7][8] Market Data and Key Metrics Changes - The divestiture of mobile messaging product lines lowered the 2025 revenue guidance midpoint by $25 million but had no impact on adjusted EBITDA guidance [11][18] - The net dollar retention rate for the core business as of December 31, 2024, would have been 99% excluding divestitures, compared to the reported 96% [11] Company Strategy and Development Direction - The company is focusing on markets with the strongest competitive advantage, higher margins, and higher growth rates [11][27] - The divestitures are part of a strategy to streamline operations and enhance focus on core products [11][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about positive core organic growth starting in Q2 and increasing throughout the year [12][27] - The company has seen improvements in digital marketing capabilities, contributing to increased marketing sourced bookings [36][38] Other Important Information - The company paid down $34.2 million of debt in Q1 2025, with total debt paydowns in 2025 reaching approximately $34.2 million [13][17] - The average customer lifetime for the core business is now over eight years, indicating strong customer retention [47] Q&A Session Summary Question: How should the market view the go-to-market strategy following the termination of the Chief Sales Officer? - Management noted significant progress in the go-to-market strategy, emphasizing a focus on markets with competitive advantages and realigning sales with product group general managers [27] Question: Should additional divestitures be expected as the company streamlines towards growth? - Management indicated that no material additional divestitures are anticipated, as the repositioning of the business is largely complete [29] Question: What is driving the faster organic growth and improving margins? - The primary driver of improvement is the focus on high-margin, high-growth products, along with investments in digital marketing and product enhancements [34][36] Question: When was the full build-out of the India development center completed, and what benefits have been seen? - The full build-out was completed at the end of the previous year, with increased productivity and throughput being observed [42][43] Question: What is the outlook for free cash flow and any one-time costs related to divestitures? - The company expects $20 million in free cash flow for the year, excluding one-time divestiture-related expenses [45] Question: What is the visibility into top-line acceleration and pipeline metrics? - Management reported strong visibility with 93% of revenue being recurring and a net dollar retention rate of 99%, indicating confidence in future growth [47][49]

Financial Data and Key Metrics Changes - Q1 adjusted EBITDA was $13.1 million, resulting in an adjusted EBITDA margin of 21%, up from 20% in 2024 [6][16] - Free cash flow for Q1 was $7.9 million, which was higher than expected [7] - The company anticipates adjusted EBITDA margins to increase to 26% in Q2 and further expand in the second half of 2025 [6][20] Business Line Data and Key Metrics Changes - The core organic growth rate in Q1 was flat, but is expected to improve to 2% in Q2, with further increases anticipated throughout 2025 [6][12] - The company welcomed 107 new customers in Q1, including 19 major customers, and expanded relationships with 245 existing customers [7][8] Market Data and Key Metrics Changes - The divestiture of mobile messaging product lines lowered the 2025 revenue guidance midpoint by $25 million but did not impact adjusted EBITDA guidance [12][18] - The net dollar retention rate for the core business as of December 31, 2024, would have been 99% excluding divestitures, compared to the reported 96% [12] Company Strategy and Development Direction - The company is focusing on markets with the strongest competitive advantage, higher margins, and higher growth rates [27] - The divestitures are part of a strategy to streamline operations and enhance focus on core products [29] - The company has realigned sales with general managers of product groups, eliminating the need for centralized sales management [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about positive growth momentum, projecting a core organic growth rate of 2% in Q2 and further increases in the second half of 2025 [6][12] - The company has seen improvements in digital marketing capabilities, contributing to increased marketing-sourced bookings [35] - Management noted strong visibility in revenue, with 93% being recurring and an average customer lifetime of nearly nine years [45] Other Important Information - The company paid down $34.2 million of debt in Q1 2025, with total paydowns in 2025 reaching approximately $34.2 million, in addition to $189 million in 2024 [14][17] - The full year 2025 adjusted EBITDA is expected to be between $55 million and $64 million, representing a 7% increase from 2024 [19][20] Q&A Session Summary Question: How should the market view the go-to-market strategy following the termination of the Chief Sales Officer? - Management highlighted progress in the go-to-market strategy, focusing on competitive advantages and higher growth rates, with a positive core organic growth rate expected [27] Question: Should additional divestitures be expected as the company streamlines towards growth? - Management indicated that substantial repositioning has been completed, and no material additional divestitures are anticipated at this time [29] Question: What is driving the faster organic growth and improving margins? - Management attributed the improvements primarily to focusing on high-margin, high-growth products and enhancing digital marketing capabilities [35] Question: When was the full build-out of the India development center completed, and when will benefits be seen? - The full build-out was completed at the end of the previous year, with increased productivity expected from ongoing R&D investments [42] Question: What is the outlook for free cash flow and any one-time costs related to divestitures? - Management confirmed a revised free cash flow outlook of $20 million, excluding one-time divestiture-related expenses [43] Question: What is the visibility into top-line acceleration and pipeline metrics? - Management reported strong visibility with a high net dollar retention rate and an average contract term of two years, indicating confidence in exceeding the 2% growth target [45]

Revenue Performance - Upland Software's revenue grew from $149.9 million in 2018 to $274.8 million in 2024, representing a compound annual growth rate of 11%[120]. - For the three-month period ended March 31, 2025, total revenue was $63.655 million, a decrease from $70.736 million in the same period of 2024[129]. - Total revenue for the three months ended March 31, 2025, was $63.7 million, a decrease of 10% from $70.7 million in the same period of 2024[139]. - Upland's subscription and support revenue from Sunset Assets was $4.481 million for the three-month period ended March 31, 2025[129]. - Subscription and support revenue decreased by $6.4 million, primarily due to a decline of $2.5 million from Sunset Assets and $3.9 million from divested businesses[139]. Profitability and Expenses - Adjusted EBITDA for the three-month period ended March 31, 2025, was $13.082 million, compared to $13.103 million in the same period of 2024[132]. - Total cost of revenue was $18.0 million, down 14% from $21.0 million in the prior year, resulting in a gross profit of $45.6 million, which is 72% of total revenue[140]. - Operating expenses totaled $46.7 million, a significant decrease from $141.3 million in the previous year, leading to a loss from operations of $1.1 million[140]. - Sales and marketing expenses decreased by 19% to $13.8 million, representing 22% of total revenue[144]. - Research and development expenses were $11.5 million, a decrease of 7% from $12.5 million, maintaining 18% of total revenue[146]. - General and administrative expenses decreased by 12% to $11.6 million, accounting for 18% of total revenue[148]. - Depreciation and amortization expenses were $8.0 million, down 30% from $11.4 million, primarily due to the decline in amortization from intangible assets associated with divested product lines[150]. - Divestiture-related expenses amounted to $1.7 million, representing 2% of total revenue, with no such expenses recorded in the prior year[152]. - Net loss attributable to common shareholders was $27.3 million, compared to a net loss of $97.5 million in the same period last year[139]. - The company reported a net loss of $25.848 million for the three-month period ended March 31, 2025, compared to a net loss of $96.130 million in the same period of 2024[132]. Cash Flow and Financial Position - Cash provided by operating activities was $8.3 million for the three months ended March 31, 2025, an increase of approximately $3.2 million from $5.1 million in 2024[165]. - Cash provided by investing activities was $3.8 million for the three months ended March 31, 2025, compared to cash used of $(0.2) million in 2024[168]. - Cash used in financing activities increased to $(34.7) million for the three months ended March 31, 2025, compared to $(9.6) million in 2024, primarily due to increased payments on Term Loans[170]. - As of March 31, 2025, the company had $33.7 million in cash and cash equivalents, down from $57.1 million as of December 31, 2024[160]. - The company had a working capital deficit of $17.1 million as of March 31, 2025, compared to a deficit of $2.0 million as of December 31, 2024[162]. Strategic Initiatives - Upland plans to pursue acquisitions of complementary technologies and businesses to expand its product library and market access[121]. - The company aims to incorporate AI functionality into its products to enhance customer experiences and drive measurable ROI[119]. - Upland's management emphasizes the importance of maintaining relationships with third parties and adapting to changing market conditions[122]. Foreign Operations and Currency Impact - Foreign revenue as a percentage of total revenue was 29% for the three months ended March 31, 2025, compared to 30% for the same period in 2024[120]. - The effect of a hypothetical 10% change in foreign currency exchange rates could have resulted in a change in revenue of $1.4 million for the three months ended March 31, 2025[181]. - The company incurs operating expenses in various foreign currencies, including Australian dollars, Canadian dollars, Indian Rupees, British pounds, Euros, and Israeli New Shekels[181]. - The translation adjustments of non-financial assets and liabilities of foreign subsidiaries are recorded in accumulated other comprehensive income (loss)[182]. - Foreign currency gains (losses) from intercompany loans used to fund acquisitions of foreign subsidiaries are recognized as a component of accumulated other comprehensive income (loss)[182]. Interest and Other Financial Metrics - Net interest income improved to $(2.4) million for the three months ended March 31, 2025, a 51% decrease from $(5.0) million in the same period of 2024[155]. - Total other expense increased by 419% to $(26.1) million for the three months ended March 31, 2025, compared to $(5.0) million in 2024[154]. - Benefit from income taxes increased by 146% to $0.5 million for the three months ended March 31, 2025, compared to $1.3 million in 2024[157]. - The effective cash interest rate for the three months ended March 31, 2025, was 5.9%[179]. - As of March 31, 2025, the outstanding balance of Term Loans is $259.4 million, maturing on August 6, 2026[180]. - A hypothetical change of 100 basis points in variable rate debt could have resulted in a $0.1 million increase in total interest expense for the three months ended March 31, 2025[180].