Upland Software(UPLD) - 2024 Q4 - Annual Report

Customer Base and Revenue - The company has over 10,000 customers, with no single customer accounting for more than 10% of revenue[5] - Approximately 90% of recurring revenue for the year ended December 31, 2024, was generated from major accounts, defined as those with contracted annual recurring revenue of $25,000 or more[23] - The annual net dollar retention rate was 96% as of December 31, 2024, indicating strong customer loyalty and success[5] - The company aims to increase sales to existing customers, as very few currently use more than one application, presenting significant cross-selling opportunities[5] Sales and Marketing Strategy - The company employs a land-and-expand go-to-market strategy, focusing on expanding the adoption of initial applications across customer organizations[24] - The customer success organization is dedicated to driving adoption, value realization, retention, and loyalty across the customer base[28] Employee and Organizational Structure - The company has a total of 998 full-time employees as of December 31, 2024, with a majority located in the United States and other countries[39] Financial Performance and Seasonality - The company has historically experienced seasonality, with a higher percentage of agreements signed in the fourth quarter, leading to increased cash flow in the first quarter[37] Research and Development - The company continues to invest in research and development to enhance applications and support third-party integrations[5] Tax and Valuation Considerations - As of December 31, 2024, the company recorded a valuation allowance of $50.4 million against its deferred tax assets, indicating potential future tax expense implications[252] - The company has adopted an indefinite reinvestment position for foreign earnings, resulting in no deferred tax liability accrued for anticipated future dividends from foreign subsidiaries[253] - The company assesses goodwill for impairment annually on October 1st, with evaluations based on qualitative and quantitative analyses of fair value compared to carrying value[255][256] - The company utilizes the asset and liability method for accounting income taxes, recognizing deferred tax assets and liabilities based on expected future tax consequences[251] - Significant estimates are made in determining the value of deferred tax assets, including expected reversal periods and the availability of net operating losses[251] - The company accounts for tax uncertainties based on a "more likely than not" threshold for recognition and derecognition of tax positions[254] - The company’s tax provision could be adversely affected by lower-than-anticipated earnings in jurisdictions with lower statutory rates[250] Debt and Lease Obligations - Future interest on debt obligations is calculated using the interest rate effective as of December 31, 2024, with floating-to-fixed interest rate swap agreements in place to mitigate interest rate risk[47] - The company leases office space under operating leases that expire between 2024 and 2033, with future rental income from subletting excess space not included in operating lease obligations[47] Currency and Business Changes - Changes in foreign currency exchange rates, entry into new businesses, and changes in existing businesses may affect the company's tax provision[250]