Upland Software(US:UPLD)2025-11-06 16:42Financial Performance - For the three-month period ended September 30, 2025, the Core Organic Growth Rate was 2.6%[139] - Total revenue for the three months ended September 30, 2025, was $50,526,000, compared to $66,692,000 for the same period in 2024, representing a decline of approximately 24.2%[143] - Core organic revenue for the three months ended September 30, 2025, was $45,176,000, up from $44,029,000 in 2024, indicating a year-over-year increase of approximately 2.6%[143] - The net loss for the three months ended September 30, 2025, was $1,122,000, compared to a net loss of $1,733,000 for the same period in 2024[146] - Adjusted EBITDA for the three months ended September 30, 2025, was $16,032,000, compared to $14,000,000 for the same period in 2024, reflecting an increase of approximately 14.5%[146] - Total revenue for the three months ended September 30, 2025, was $50.5 million, a decrease of 24% from $66.7 million in the same period of 2024, primarily due to declines in divested product lines[153] - Subscription and support revenue decreased by 25% to $47.7 million for the three months ended September 30, 2025, compared to $63.8 million in 2024[152] - For the nine months ended September 30, 2025, total revenue was $167.6 million, down 19% from $206.8 million in 2024, mainly due to declines in divested product lines[154] Cost and Expenses - Total cost of revenue for the three months ended September 30, 2025, was $11.7 million, a decrease of 41% from $19.7 million in 2024[155] - Gross profit for the three months ended September 30, 2025, was $38.8 million, representing a gross margin of 77%, compared to 70% in the same period of 2024[155] - Operating expenses for the three months ended September 30, 2025, totaled $33.5 million, representing 66% of total revenue, compared to 75% in 2024[155] - Sales and marketing expense decreased to $9.7 million in Q3 2025 from $16.3 million in Q3 2024, a decline of 41%[161] - For the nine months ended September 30, 2025, sales and marketing expense was $34.2 million, down 32% from $50.1 million in the same period in 2024[162] - Research and development expense was $7.9 million in Q3 2025, a decrease of 31.1% from $11.4 million in Q3 2024[164] - For the nine months ended September 30, 2025, research and development expense totaled $29.2 million, down 19.1% from $36.1 million in the same period in 2024[165] - General and administrative expense was $8.8 million in Q3 2025, a decrease of 20% from $11.1 million in Q3 2024[167] - For the nine months ended September 30, 2025, general and administrative expense was $30.6 million, down 20% from $38.2 million in the same period in 2024[168] - Depreciation and amortization expense was $6.4 million in Q3 2025, a decrease of 45% from $11.5 million in Q3 2024[171] - For the nine months ended September 30, 2025, depreciation and amortization expense was $21.2 million, down 38% from $34.3 million in the same period in 2024[172] - Divestiture-related expenses were $0.8 million in Q3 2025, compared to nil in Q3 2024, marking a 100% increase[174] Losses and Impairments - Net loss attributable to common shareholders for the three months ended September 30, 2025, was $2.6 million, or $0.09 per share, compared to a net loss of $3.1 million, or $0.12 per share, in 2024[152] - The company reported a loss before provision for income taxes of $1.4 million for the three months ended September 30, 2025, compared to a loss of $1.2 million in 2024[152] - Loss on divestitures of businesses was $0.5 million for the three months ended September 30, 2025, compared to nil in the same period of 2024, as the company finalized divestitures of certain product lines[180] - Loss on debt extinguishment was $2.3 million for the three months ended September 30, 2025, compared to nil in the same period of 2024, due to the replacement of the previous credit facility[181] - For the nine months ended September 30, 2025, loss on divestitures of businesses totaled $24.4 million, with no such losses reported in the same period of 2024[184] - Impairment of goodwill and other intangibles recorded was $2.5 million in the nine months ended September 30, 2025, compared to $87.2 million in the same period in 2024, a decrease of 97%[176] Cash Flow and Financing - Cash provided by operating activities was $18.5 million for the nine months ended September 30, 2025, an increase of approximately $3.6 million from $14.9 million in the same period of 2024[197] - Cash provided by investing activities was $8.0 million for the nine months ended September 30, 2025, compared to cash used of $0.6 million in the same period of 2024, reflecting an increase of $8.5 million[200] - Cash used in financing activities was $61.6 million for the nine months ended September 30, 2025, a decrease of $131.2 million from $192.8 million in the same period of 2024[202] - As of September 30, 2025, the company had $23.4 million in cash and cash equivalents, down from $57.1 million as of December 31, 2024, primarily due to debt repayments[191] - Cash paid for lender fees and debt issuance costs was $6.8 million for the nine months ended September 30, 2025, compared to $0.1 million for the same period in 2024[203] - As of September 30, 2025, the outstanding balance under the Credit Agreement was $240.0 million, maturing in July 2031[212] - A hypothetical change of 100 basis points in variable rate debt could have resulted in a $0.6 million increase in total interest expense for the nine months ended September 30, 2025[213] - The company has an interest rate cap on $120 million of outstanding debt, effectively capping the secured overnight financing rate at 4.5%[212] Market Risks and Economic Factors - The financial impact of the One Big Beautiful Bill Act (OBBBA) is being monitored for potential future effects through 2027[133] - The company plans to continue monitoring macroeconomic factors, including inflation and supply chain constraints, that may impact its operations[131] - The company is exposed to market risks including interest rate, foreign exchange, and inflation risks due to its operations both domestically and internationally[210] - The effect of a hypothetical 10% change in foreign currency exchange rates could have resulted in a change in revenue of $3.6 million for the nine months ended September 30, 2025[214] - The company has not engaged in any currency hedging strategies to manage foreign exchange rate exposure[214] Customer and Product Strategy - The company reported a total of 1,100 enterprise customers relying on its AI-powered knowledge and content management software[135] - The company is focused on expanding its go-to-market operations and increasing sales of its products[131] - The company is committed to integrating AI functionality into its products to enhance customer experiences and drive measurable ROI[135] Accounting Policies - The company evaluates its estimates, judgments, and assumptions on an ongoing basis, which may change as new events occur[207] - There were no material changes in critical accounting policies and estimates compared to the Annual Report for the year ended December 31, 2024[206]