Upland Software(UPLD) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Upland Software's unaudited Q1 2020 condensed consolidated financial statements, covering balance sheets, operations, cash flows, and detailed notes Condensed Consolidated Balance Sheets Presents Upland Software's condensed consolidated balance sheets as of March 31, 2020, and December 31, 2019 | Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Assets | | | | Cash and cash equivalents | $98,688 | $175,024 | | Total current assets | $170,872 | $238,880 | | Total assets | $883,533 | $896,828 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $135,287 | $129,367 | | Total liabilities | $724,441 | $683,967 | | Total stockholders' equity | $159,092 | $212,861 | | Total liabilities and stockholders' equity | $883,533 | $896,828 | - Cash and cash equivalents decreased by $76.3 million from December 31, 2019, to March 31, 2020[10] - Total assets decreased by $13.3 million, while total liabilities increased by $40.5 million, leading to a $53.8 million decrease in total stockholders' equity[10] Condensed Consolidated Statements of Operations Details Upland Software's condensed consolidated statements of operations for the three months ended March 31, 2020, and 2019 | Metric | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | YoY Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------- | | Total revenue | $68,032 | $48,493 | 40.3% | | Gross profit | $45,831 | $33,705 | 35.9% | | Loss from operations | $(15,323) | $(2,565) | 497.4% | | Net loss | $(20,081) | $(7,830) | 156.5% | | Net loss per common share, basic and diluted | $(0.81) | $(0.38) | 113.2% | | Weighted-average common shares outstanding | 24,906,932 | 20,442,626 | 21.8% | - Subscription and support revenue increased by 42% to $63.9 million in Q1 2020 from $45.0 million in Q1 2019[12] - Total operating expenses significantly increased by 68.6% to $61.2 million, primarily due to higher acquisition-related expenses ($15.2 million in Q1 2020 vs $7.7 million in Q1 2019)[12] Condensed Consolidated Statements of Comprehensive Loss Outlines Upland Software's condensed consolidated statements of comprehensive loss for the three months ended March 31, 2020, and 2019 | Metric | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net loss | $(20,081) | $(7,830) | | Foreign currency translation adjustment | $(3,459) | $(637) | | Unrealized translation gain (loss) on foreign currency denominated intercompany loans | $(7,313) | $3,006 | | Unrealized loss on interest rate swaps | $(31,401) | — | | Comprehensive loss | $(62,254) | $(5,461) | - The comprehensive loss significantly increased from $(5.5) million in Q1 2019 to $(62.3) million in Q1 2020, primarily driven by a substantial unrealized loss on interest rate swaps of $(31.4) million and increased foreign currency translation adjustments[16] Condensed Consolidated Statements of Stockholders' Equity Presents Upland Software's condensed consolidated statements of stockholders' equity as of December 31, 2019, and March 31, 2020 | Metric | Balance at December 31, 2019 (in thousands) | Balance at March 31, 2020 (in thousands) | | :-------------------------------- | :---------------------------------------- | :--------------------------------------- | | Common Stock (Shares) | 25,250,120 | 25,305,427 | | Common Stock (Amount) | $3 | $3 | | Additional Paid-In Capital | $345,127 | $353,720 | | Accumulated Other Comprehensive Loss | $(1,223) | $(43,396) | | Accumulated Deficit | $(131,046) | $(151,235) | | Total Stockholders' Equity | $212,861 | $159,092 | - Total stockholders' equity decreased by $53.8 million, primarily due to a net loss of $20.1 million and significant unrealized losses on interest rate swaps ($31.4 million) and foreign currency translation adjustments[20] - Additional paid-in capital increased by $8.6 million, largely due to $9.3 million in stock-based compensation[20] Condensed Consolidated Statements of Cash Flows Details Upland Software's condensed consolidated statements of cash flows for the three months ended March 31, 2020, and 2019 | Metric | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by (used in) operating activities | $(5,309) | $4,877 | | Net cash used in investing activities | $(68,148) | $(3,172) | | Net cash used in financing activities | $(3,204) | $(4,800) | | Change in cash and cash equivalents | $(76,336) | $(2,716) | | Cash and cash equivalents, end of period | $98,688 | $14,022 | - The company experienced a significant shift from net cash provided by operating activities ($4.9 million) in Q1 2019 to net cash used in operating activities ($(5.3) million) in Q1 2020[22] - Net cash used in investing activities dramatically increased to $(68.1) million in Q1 2020, primarily due to $67.7 million for business combinations (Localytics acquisition)[22] Notes to Condensed Consolidated Financial Statements 1. Summary of Significant Accounting Policies Outlines Upland's significant accounting policies, covering financial statement presentation, estimates, credit risk, COVID-19 impact, derivatives, fair value, and recent pronouncements - The company adopted ASU 2016-13 in Q1 2020, resulting in a cumulative-effect adjustment to decrease the beginning balance of Accumulated deficit by $0.1 million due to accelerated recognition of credit losses[39] - As of March 31, 2020, the fair value of interest rate swaps, included in Other long-term liabilities, was $29.0 million, compared to $2.4 million in Other assets as of December 31, 2019, reflecting a significant change in fair value[31] - Management is not aware of any specific event or circumstance requiring an update to its estimates or judgments or a revision of asset/liability carrying values as of May 8, 2020, despite the COVID-19 pandemic[28] 2. Acquisitions Details Upland's acquisition of Localytics in Q1 2020 and summarizes 2019 acquisitions, including consideration and preliminary purchase accounting - Acquired Localytics on February 6, 2020, for a total consideration of $69.0 million, including $67.655 million in cash[41][42] - Localytics contributed approximately $2.5 million in revenue from acquisition date through March 31, 2020[41] - Total transaction-related expenses for acquisitions were **$3.