Upland Software, Inc. (NASDAQ:UPLD) Q2 2023 Earnings Conference Call August 3, 2023 5:00 PM ET Company Participants Jack McDonald - Chairman and Chief Executive Officer Mike Hill - Chief Financial Officer Conference Call Participants Michael Rackers - Needham Jeff Van Rhee - Craig-Hallum Jacob Zerbib - William Blair Operator Thank you for standing by and welcome to the Upland Software Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a ques ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-36720 UPLAND SOFTWARE, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpo ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-36720 UPLAND SOFTWARE, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorp ...

Upland Software, Inc. (NASDAQ:UPLD) Q1 2023 Earnings Conference Call May 4, 2023 5:00 PM ET Company Participants Jack McDonald - Chairman and CEO Mike Hill - CFO & Treasurer Conference Call Participants Jeff Van Rhee - Craig-Hallum Jake Roberge - William Blair Operator Thank you for standing by and welcome to the Upland Software First Quarter 2023 Earnings Call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session. Instructions will be given at that ti ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) Upland Software provides cloud-based software applications for digital transformation, primarily growing through acquisitions and operating on a recurring revenue model - Upland provides cloud-based software applications for digital transformation in areas like Marketing, Sales, Contact Center, Knowledge Management, Project Management, and IT[19](index=19&type=chunk) - The company's growth strategy focuses on acquiring complementary technologies and businesses, with **31 acquisitions** completed in the 11 years ending December 31, 2022[21](index=21&type=chunk) Revenue Growth and Mix (2021 vs 2022) | Metric | 2021 | 2022 | Growth | | :--- | :--- | :--- | :--- | | Total Revenue | $302.0M | $317.3M | 5% | | Subscription & Support Revenue | $287.6M | $297.9M | 4% | Revenue Breakdown by Type (FY2020-2022) | Revenue Type | % of Total Revenue (2022) | % of Total Revenue (2021) | % of Total Revenue (2020) | | :--- | :--- | :--- | :--- | | Subscription and support | 94% | 95% | 95% | | Perpetual license | 2% | 1% | 1% | | Professional services | 4% | 4% | 4% | - Upland's annual net dollar retention rate was **95%** as of December 31, 2022, driven by a dedicated customer success organization[25](index=25&type=chunk) - As of December 31, 2022, the company had **1,006 full-time employees**, with a majority located in the United States, Australia, Canada, India, Ireland, and the United Kingdom[41](index=41&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from its acquisition strategy, cybersecurity, financial covenants, and data privacy regulations - A primary risk is the company's reliance on acquisitions for growth, including challenges in identifying suitable candidates, consummating deals, and integrating acquired businesses successfully[45](index=45&type=chunk)[47](index=47&type=chunk) - The company faces risks from operating as a multinational corporation, including foreign currency fluctuations, varied political and labor conditions, and complex tax laws, with approximately **30% of total revenue in 2022** from customers outside the U.S[60](index=60&type=chunk) - Actual or perceived security vulnerabilities and cyberattacks pose a material risk, potentially leading to loss of confidential information, reputational damage, litigation, and regulatory fines[70](index=70&type=chunk) - The company's loan facility contains operating and financial covenants that may restrict business activities, including incurring additional debt, making investments, and paying dividends[95](index=95&type=chunk)[96](index=96&type=chunk) - The issuance of Series A Preferred Stock in 2022 introduces risks, as these shares rank senior to common stock in priority of distribution and have additional corporate governance rights, including the right to elect a director[133](index=133&type=chunk)[135](index=135&type=chunk) - The company's ability to use its net operating loss (NOL) carryforwards of approximately **$357.8 million** is subject to limitations under Section 382 of the Internal Revenue Code, which could result in the expiration of a significant portion of these tax assets before utilization[101](index=101&type=chunk)[102](index=102&type=chunk) - The company is subject to evolving data privacy laws like GDPR in Europe and CCPA/CPRA in California, with non-compliance potentially leading to significant monetary penalties and reputational damage[118](index=118&type=chunk)[119](index=119&type=chunk) [Unresolved Staff Comments](index=33&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[142](index=142&type=chunk) [Properties](index=33&type=section&id=Item%202.%20Properties) Upland's principal corporate office is in Austin, Texas, with additional leased facilities domestically and internationally - The main corporate office is in Austin, Texas, with a lease for **9,900 sq. ft.** expiring in June 2025[143](index=143&type=chunk) - The company leases additional office space in various US states and internationally, including Australia, Canada, Europe, and India[143](index=143&type=chunk) [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business - As of the report date, Upland is not involved in any legal proceedings expected to have a material adverse effect on the company[144](index=144&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[145](index=145&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Upland's common stock trades on NASDAQ, with the company historically retaining earnings for growth rather than paying dividends - The company's common stock is traded on the NASDAQ Global Market under the symbol "**UPLD**"[147](index=147&type=chunk) - Upland has never declared or paid dividends on its common stock and does not expect to in the foreseeable future, with earnings planned for reinvestment into the business[149](index=149&type=chunk) - As of February 21, 2023, there were **29 stockholders of record**[148](index=148&type=chunk) [Reserved](index=35&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 2022's 5% revenue growth, key financial metrics, liquidity, and critical accounting policies, including a Q4 goodwill impairment charge - Total revenue grew **5%** from **$302.0 million** in 2021 to **$317.3 million** in 2022, including a **2% negative impact** from foreign currency exchange rates[194](index=194&type=chunk) - In Q4 2022, the company decided to sunset certain non-strategic product offerings and customer contracts, referred to as "Sunset Assets"[162](index=162&type=chunk) - A Goodwill impairment charge of **$12.5 million** was recorded in Q4 2022 due to a decline in the company's stock price and market capitalization[176](index=176&type=chunk)[208](index=208&type=chunk) Key Metrics (as of Dec 31) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Annualized recurring revenue (ARR) | $266.3M | $257.1M | $220.5M | | Annual net dollar retention rate | 95% | 94% | 94% | | Adjusted EBITDA | $97.1M | $96.7M | $99.9M | - Total liquidity increased from **$249.2 million** at year-end 2021 to **$308.7 million** at year-end 2022, primarily due to the **$115.0 million** Series A Preferred Stock issuance[227](index=227&type=chunk)[230](index=230&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $29,979 | $41,738 | | Net cash used in investing activities | $(63,222) | $(93,532) | | Net cash provided by (used in) financing activities | $94,151 | $(8,180) | [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Upland is exposed to interest rate, foreign currency, and inflation risks, with interest rate risk on term loans mitigated by swap agreements - The company's primary market risks are interest rate, foreign exchange, and inflation[272](index=272&type=chunk) - Interest rate risk on the **$540 million** in term loans is hedged via interest rate swaps, effectively fixing the rate at **5.4%**, while the **$60 million** revolver remains at a floating rate but is undrawn[275](index=275&type=chunk) - The company is exposed to foreign currency exchange risk from its international operations but has not engaged in hedging; a hypothetical **10%** change in exchange rates would have impacted revenue by **$7.5 million** in 2022[276](index=276&type=chunk) [Financial Statements and Supplementary Data](index=59&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements and the auditor's unqualified opinion, highlighting critical audit matters like revenue recognition and goodwill impairment - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[284](index=284&type=chunk)[508](index=508&type=chunk) - Critical Audit Matters identified by the auditor include: revenue recognition for new products and services, measurement of the income tax provision, and the evaluation of goodwill for impairment[288](index=288&type=chunk) Consolidated Statement of Operations Highlights (in thousands) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total Revenue | $317,303 | $302,016 | $291,778 | | Gross Profit | $213,562 | $202,563 | $193,332 | | Loss from Operations | $(40,228) | $(34,677) | $(23,813) | | Impairment of goodwill | $12,500 | $0 | $0 | | Net Loss | $(68,413) | $(58,212) | $(51,219) | | Net Loss per Share | $(2.23) | $(1.92) | $(1.92) | Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $248,653 | $189,158 | | Total Assets | $1,113,459 | $1,029,007 | | Goodwill | $477,043 | $457,472 | | Total Liabilities | $692,298 | $712,719 | | Total Stockholders' Equity | $308,870 | $316,288 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=104&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None[496](index=496&type=chunk) [Controls and Procedures](index=104&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the auditor concluded the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[497](index=497&type=chunk) - Based on the COSO 2013 framework, management assessed internal control over financial reporting to be effective as of December 31, 2022[500](index=500&type=chunk) - There were no changes to internal control over financial reporting during the year ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[502](index=502&type=chunk) [Other Information](index=104&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[503](index=503&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=106&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2023 Proxy Statement - The required information is incorporated by reference from the registrant's Proxy Statement for the 2023 Annual Meeting of Stockholders[517](index=517&type=chunk) [Executive Compensation](index=106&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2023 Proxy Statement - The required information is incorporated by reference from the registrant's Proxy Statement for the 2023 Annual Meeting of Stockholders[518](index=518&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=106&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the company's 2023 Proxy Statement - The required information is incorporated by reference from the registrant's Proxy Statement for the 2023 Annual Meeting of Stockholders[519](index=519&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=106&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related party transactions, and director independence is incorporated by reference from the company's 2023 Proxy Statement - The required information is incorporated by reference from the registrant's Proxy Statement for the 2023 Annual Meeting of Stockholders[520](index=520&type=chunk) [Principal Accountant Fees and Services](index=106&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2023 Proxy Statement - The required information is incorporated by reference from the registrant's Proxy Statement for the 2023 Annual Meeting of Stockholders[521](index=521&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=106&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and provides an index of all exhibits filed with or incorporated by reference into the Form 10-K - This section provides a list of the financial statements included in Item 8 and an index of all exhibits filed with the report[522](index=522&type=chunk) [Form 10-K Summary](index=106&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[523](index=523&type=chunk)

Upland Software Inc. (NASDAQ:UPLD) Q4 2022 Results Conference Call February 23, 2023 5:00 PM ET Company Participants Jack McDonald - Chairman and CEO Mike Hill - CFO & Treasurer Conference Call Participants Michael Rackers - Needham Robert Dee - Truist Jeff Van Rhee - Craig-Hallum Jake Roberge - William Blair Alex Sklar - Raymond James Operator Thank you for standing by and welcome to the Upland Software Fourth Quarter 2022 Earnings Call. At this time all participants are in a listen-only mode. Later we wil ...

Upland Software, Inc. (NASDAQ:UPLD) Q3 2022 Earnings Conference Call November 3, 2022 5:00 PM ET Company Participants Jack McDonald – Chairman and Chief Executive Officer Mike Hill – Chief Financial Officer Conference Call Participants Jeff Van Rhee – Craig-Hallum Jake Roberge – William Blair John Messina – Raymond James Operator Thank you for standing by, and welcome to the Upland Software Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a q ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-36720 UPLAND SOFTWARE, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of in ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-36720 UPLAND SOFTWARE, INC. (Exact name of registrant as specified in its charter) Delaware 27-2992077 (State or other jur ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2022 was $80.2 million, a 5% year-over-year increase, with an 8% growth without FX impact [21] - Recurring revenue from subscription and support increased 4% year-over-year to $75 million, with a 6% growth without FX impact [21] - Adjusted EBITDA for Q2 2022 was $24.5 million, maintaining a 31% margin, up from $23.7 million in Q2 2021 [23] - Free cash flow generated in Q2 was $13.9 million, contributing to a total of $22 million year-to-date [24] Business Line Data and Key Metrics Changes - Perpetual license revenue increased to $1.9 million in Q2 2022, up from $0.4 million in Q2 2021 [22] - Professional services revenue was $3.4 million for the quarter, reflecting a 3% year-over-year decline [22] - Strong expansion was noted in products such as Kapost, InGenius, Objectif Lune, and BA Insight [10][11] Market Data and Key Metrics Changes - The company expanded relationships with 403 existing customers, including 53 major expansions, and welcomed 123 new customers in Q2 [10] - The company experienced a strong quarter for selling Premier Success Plans, which provide high fidelity support to customers [11] Company Strategy and Development Direction - The company is committed to innovation, with product improvements announced for Altify and Objectif Lune [9] - A strategic equity investment of $115 million from HGGC was announced, aimed at strengthening the business and capitalizing on acquisition opportunities [14][16] - The company is actively pursuing additional acquisitions and sees a favorable market environment for such opportunities [14][54] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment has not significantly impacted customer buying behaviors, with no deals pushed out [51] - The company remains conservative in its guidance, with expected revenue growth impacted by FX headwinds [28][44] - Management expressed confidence in the M&A pipeline, anticipating a favorable environment for acquisitions due to recent market turbulence [54] Other Important Information - The company has approximately $366 million in total tax NOL carry forwards, with an estimated $211 million available for utilization [27] - As of June 30, 2022, the company had outstanding net debt of approximately $387 million, which is expected to drop to around $277 million after the new investment closes [25] Q&A Session Summary Question: Could you elaborate on cross-selling and expansion success within existing customers? - Management highlighted strong expansion activity in Kapost, InGenius, Objectif Lune, and BA Insight, driven by investments in go-to-market strategies [34] Question: Are there specific products or regions facing macro impacts? - Management indicated no significant macro impacts affecting specific products or regions [35] Question: What benefits do you foresee from the HGGC partnership? - Management emphasized HGGC's expertise in M&A and go-to-market strategies, which will support Upland's growth and value creation [38][39] Question: Can you discuss the guidance and confidence in sequential growth? - Management stated that guidance is conservative, primarily affected by FX impacts, and expressed confidence in maintaining growth [44] Question: Any changes in investment focus regarding R&D and product development? - Management confirmed no major changes, maintaining a commitment to innovation and go-to-market investments [45] Question: What is the outlook for the M&A pipeline? - Management anticipates a favorable M&A environment due to market turbulence, with a strong pipeline but a patient approach to execution [54] Question: Is the cross-sell motion still a priority? - Management affirmed that expansion through customer success and product AEs remains a key focus [63] Question: Is there additional conservatism in the guidance due to the macroeconomic environment? - Management confirmed that a typical level of conservatism is embedded in the guidance [64] Question: What is the rationale for the recent equity raise? - Management highlighted the strategic partnership with HGGC and the validation of the business model as key reasons for the equity raise [66]