8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

May 4, 2023

Date of Report (Date of earliest event reported)

UPLAND SOFTWARE, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-36720	27-2992077
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

401 Congress Avenue, Suite 1850

Austin, Texas 78701

(Address of principal executive offices, including zip code)

(512) 960-1010

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	UPLD	The Nasdaq Global Market
Preferred Stock Purchase Rights	-	The Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                                              ☐

Item 2.02 Results of Operations and Financial Condition.

On May 4, 2023, the Company issued a press release announcing its financial results for the quarter ended March 31, 2023. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01      Financial Statements and Exhibits.

(d) Exhibits.
Exhibit No.	Description
99.1	Press Release of Upland Software, Inc. dated May 4, 2023
104	The cover page from this Current Report on Form 8-K, formatted as Inline XBRL

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	UPLAND SOFTWARE, INC.
By:	/s/ Kin Gill
	Kin Gill Chief Legal Officer and Secretary
Date: May 4, 2023

EX-99.1

EXHIBIT 99.1

Upland Software Reports First Quarter 2023 Financial Results

Company Beats Q1 Guidance and Reaffirms Full Year 2023 Guidance

May 4, 2023, 04:01 PM Eastern Standard Time

AUSTIN, Texas--(BUSINESS WIRE)-- Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based tools for digital transformation, today announced financial and operating results for the first quarter 2023 and issued guidance for its second quarter and full year of 2023.

First Quarter 2023 Financial Highlights

•Total revenue was $77.1 million, a decrease of 2% from $78.7 million in the first quarter of 2022. Total revenue growth includes a negative impact of 2% from changes in foreign currency exchange rates ("FX"). Without FX, total revenue growth would have been flat.

•Subscription and support revenue was $72.9 million, a decrease of 1% from $73.6 million in the first quarter of 2022. Subscription and support revenue growth includes a negative impact of 2% from FX. Without FX, subscription and support revenue growth would have been 1%.

•GAAP net loss was $140.0 million compared to a GAAP net loss of $22.8 million in the first quarter of 2022. GAAP net loss attributable to common stockholders was $141.4 million compared to GAAP net loss attributable to common stockholders of $22.8 million in the first quarter of 2022. GAAP net loss per share attributable to common stockholders was $4.38 per share, compared to a GAAP net loss per share attributable to common stockholders of $0.73 per share in the first quarter of 2022. This quarter-over-quarter increase in quarterly GAAP net loss is primarily attributable to a $128.8 million non-cash Goodwill impairment charge.

•Adjusted EBITDA was $17.6 million, or 23% of total revenue, compared to $23.4 million, or 30% of total revenue, in the first quarter of 2022.

•GAAP operating cash flow was $15.8 million, compared to GAAP operating cash flow of $8.2 million in the first quarter of 2022. Free cash flow was $15.6 million, compared to free cash flow of $8.0 million in the first quarter of 2022.

•Cash on hand as of the end of the first quarter of 2023 was $257.7 million.

"In Q1, we beat our revenue and Adjusted EBITDA guidance midpoints, even after FX headwinds and free cash flow came in stronger than expected," said Jack McDonald, Upland's chairman and chief executive officer. "We also added 20 new major customers and announced a host of new product innovations," he added. "It's still early, but we are making progress on our new growth plan and remain focused on building shareholder value over time.”

First Quarter Business Highlights

•We expanded relationships with 333 existing customers, 38 of which were major expansions. We also welcomed 207 new customers to Upland in the first quarter, including 20 new major customers.

•We hosted a webinar featuring Forrester to discuss the future of knowledge management and the beta release of Upland’s AI Knowledge Assistant, currently available to RightAnswers customers. With Upland’s new AI Knowledge Assistant, which utilizes OpenAI's ChatGPT API, knowledge workers can streamline the creation of knowledge by simply requesting

content related to their topic at hand and receiving a real-time response with full article content, summarization, and identification of key words.

•FileBound was one once again recognized as a gold medalist and leader in the Enterprise Content Management Data Quadrant Report from SoftwareReviews for document management and workflow automation capabilities.

•AccuRoute’s latest release extends MFP integrations with Lexmark, increases DMS visibility, and expands fax API support to ensure the security of Personally Identifiable Information in highly-regulated industries, such as healthcare.

•BA Insight was recognized by KMWorld's 2023 list of 100 companies that matter in knowledge management.

Business Outlook

The guidance below reflects the significant incremental sales, marketing and product investments that Upland is making as part of its comprehensive growth plan.

For the quarter ending June 30, 2023, Upland expects reported total revenue to be between $69.8 and $75.8 million, including subscription and support revenue between $65.7 and $70.7 million, for a decline in total revenue of 9% at the mid-point over the quarter-ended June 30, 2022. Second quarter 2023 Adjusted EBITDA is expected to be between $15.0 and $18.0 million, for an Adjusted EBITDA margin of 23% at the mid-point. This Adjusted EBITDA guide at the mid-point is a decrease of 33% from the quarter-ended June 30, 2022.

For the full year ending December 31, 2023, Upland expects reported total revenue to be between $288.0 and $312.0 million, including subscription and support revenue between $269.0 and $289.0 million, for a decline in total revenue of 5% at the mid-point over the year ended December 31, 2022. Full year 2023 Adjusted EBITDA is expected to be between $63.0 and $75.0 million, for an Adjusted EBITDA margin of 23% at the mid-point. This Adjusted EBITDA guide at the midpoint is a decrease of 29% over the year ended December 31, 2022.

Conference Call Details

Upland's executive team will host a live conference call and webcast at 4:00 p.m. Central Time, 5:00 p.m. Eastern Time today to review Upland’s financial results and outlook for the business. The call can be accessed via a webcast on investor.uplandsoftware.com, or by dialing 1-888-800-8770 in North America or +1-646-307-1953 if outside North America, international rates apply. Attendees will need to use access code 6485253 to join the call. This webcast will contain forward-looking statements and other material information regarding Upland’s financial and operating results.

Following the completion of the conference call, a recording of the webcast will be made available at investor.uplandsoftware.com for twelve months.

About Upland Software

Upland helps global businesses accelerate digital transformation with a powerful cloud software library that provides choice, flexibility, and value. Our growing library of products delivers the "last mile" plug-in processes, reporting, and job specific workflows that major cloud platforms and homegrown systems don’t provide. We focus on specific business challenges and support every corner of the organization, operating at scale and delivering quick time to value for our ~1,800 enterprise customers. To learn more, visit www.uplandsoftware.com.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Adjusted EBITDA, non-GAAP net income (loss), non-GAAP net income (loss) per share and free cash flow.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results, such as our revenues excluding the impact for foreign currency fluctuations or our operating performance excluding not only non-cash charges, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and they are used by our institutional investors and the analyst community to help them analyze the health of our business. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the tables provided below in this release.

We are unable to reconcile any forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort. Additionally, we are unable to quantify the impact of foreign currency exchange fluctuations on components of our income statement beyond revenues because the information which is needed to do so is unavailable at this time without unreasonable effort.

Upland defines Adjusted EBITDA as net income (loss), calculated in accordance with GAAP, plus net income (loss) from discontinued operations, depreciation and amortization expense, interest expense, net, other expense (income), net, provision for income taxes, stock-based compensation expense, acquisition-related expenses, non-recurring litigation costs, purchase accounting adjustments for deferred revenue and impairment of goodwill.

Upland defines non-GAAP net income (loss) as net income (loss), calculated in accordance with GAAP, plus, amortization of purchased intangible assets, amortization of debt discount, loss on debt extinguishment, stock-based compensation expenses, acquisition-related expenses, non-recurring litigation expenses, purchase accounting adjustments for deferred revenue, non-recurring provision for income tax, impairment of goodwill and the related tax effect of the adjustments above.

Upland defines free cash flow as GAAP operating cash flow less purchases of property and equipment.

Upland defines major accounts as accounts with greater than or equal to $25,000 in annual recurring revenue.

Upland defines major expansions as existing customers who expanded the amount of annual recurring revenue under their contract by at least $25,000.

Upland defines cash gross margin as product revenue less subscription and support cost of sales, excluding depreciation & amortization.

Forward-looking Statements

This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance, including our guidance related to future performance, and are subject to substantial risks, uncertainties and assumptions. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make. Accordingly, you should not place undue reliance on these forward-looking statements. Forward-looking statements include any statement that does not directly relate to any historical or current fact and often include words such as “anticipate,” “believe,” “may,” “will,” “continue,” “seek,” “estimate,” “intend,” “hope,” “predict,” “could,” “should,” “would,” “project,” “plan,” “expect” or the negative or plural of these words or similar expressions, although not all forward-looking statements contain these words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but are not limited to:our financial performance and our ability to achieve or sustain profitability or predict future results; our plans regarding future acquisitions and our ability to consummate and integrate acquisitions; our ability to expand our go to market operations, including our marketing and sales organization, and successfully increase sales of our products; our ability to obtain financing in the future on acceptable terms or at all; our expectations with respect to revenue, cost of revenue and operating expenses in future periods; our expectations with regard to revenue from perpetual licenses and professional services; our ability to adapt to macroeconomic factors impacting the global economy, including foreign currency exchange risk, inflation and supply chain constraints; our ability to attract and retain customers; our ability to successfully enter new markets and manage our international expansion; our ability to comply with privacy laws and regulations; our ability to deliver high-quality customer service; our plans regarding, and our ability to effectively manage, our growth; maintaining our senior management team and key personnel; the performance of our resellers; our ability to adapt to changing market conditions and competition; our ability to adapt to technological change and continue to innovate; global economic and financial market conditions and uncertainties; the growth of demand for cloud-based, digital transformation applications; our ability to integrate our applications with other software applications; maintaining and expanding our relationships with third parties; costs associated with defending intellectual property infringement and other claims; our ability to maintain, protect and enhance our brand and intellectual property; our expectations with regard to trends, such as seasonality, which affect our business; impairments to goodwill and other intangible assets; our beliefs regarding how our applications benefit customers and what our competitive strengths are; the operation, reliability and security of our third-party data centers; the risk that we did not consider another contingency included in this list; our expectations as to the payment of dividends; and factors that could affect our business and financial results identified in Upland's filings with the Securities and Exchange Commission (the "SEC"), including Upland's most recent 10-K filed with the SEC. Additional information will also be set forth

in Upland's future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that Upland makes with the SEC. The forward-looking statements herein represent Upland's views as of the date of this press release, and these views could change. However, while Upland may elect to update these forward-looking statements at some point in the future, Upland specifically disclaims any obligation to do so, except as required by law. These forward-looking statements should not be relied upon as representing the views of Upland as of any date subsequent to the date of this press release.

###

Investor Relations Contact:

Mike Hill

investor-relations@uplandsoftware.com

512-960-1031

Media Contact:

Kendell Kelton

media@uplandsoftware.com 

678-575-7428

Upland Software, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended March 31,
	2023		2022
	(unaudited)		(unaudited)
Revenue:
Subscription and support	$	72,914	$	73,627
Perpetual license	1,571		1,778
Total product revenue	74,485		75,405
Professional services	2,571		3,311
Total revenue	77,056		78,716
Cost of revenue:
Subscription and support	23,485		22,069
Professional services and other	2,051		2,686
Total cost of revenue	25,536		24,755
Gross profit	51,520		53,961
Operating expenses:
Sales and marketing	14,289		15,593
Research and development	12,530		12,067
General and administrative	17,189		19,614
Depreciation and amortization	15,094		11,051
Acquisition-related expenses	1,094		10,413
Impairment of goodwill	128,755		—
Total operating expenses	188,951		68,738
Loss from operations	(137,431)		(14,777)
Other expense:
Interest expense, net	(5,461)		(7,762)
Other income (expense), net	1,425		(418)
Total other expense	(4,036)		(8,180)
Loss before benefit from income taxes	(141,467)		(22,957)
Benefit from income taxes	1,422		126
Net loss	$	(140,045)	$	(22,831)
Preferred stock dividends	(1,315)		—
Net loss attributable to common stockholders	$	(141,360)	$	(22,831)
Net income (loss) per common share:
Net loss per common share, basic and diluted	$	(4.38)	$	(0.73)
Weighted-average common shares outstanding, basic and diluted	32,259,110		31,163,273

Upland Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

	March 31,		December 31,
	2023		2022
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	257,720	$	248,653
Accounts receivable, net of allowance	40,475		47,594
Deferred commissions, current	10,901		10,961
Unbilled receivables	6,225		5,313
Prepaid expenses and other current assets	10,193		8,774
Total current assets	325,514		321,295
Tax credits receivable	1,719		2,411
Property and equipment, net	1,719		1,830
Operating lease right-of-use asset	5,088		5,719
Intangible assets, net	232,368		248,851
Goodwill	349,990		477,043
Deferred commissions, noncurrent	13,552		13,794
Interest rate swap assets	33,014		41,168
Other assets	2,502		1,348
Total assets	$	965,466	$	1,113,459
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	14,793	$	14,939
Accrued compensation	9,427		7,393
Accrued expenses and other current liabilities	7,758		10,644
Deferred revenue	106,974		106,465
Liabilities due to sellers of businesses	447		5,429
Operating lease liabilities, current	2,822		3,205
Current maturities of notes payable	3,109		3,136
Total current liabilities	145,330		151,211
Notes payable, less current maturities	510,967		511,847
Deferred revenue, noncurrent	4,411		4,707
Operating lease liabilities, noncurrent	4,391		4,947
Noncurrent deferred tax liability, net	18,691		18,416
Other long-term liabilities	1,237		1,170
Total liabilities	685,027		692,298
Series A Convertible Preferred Stock	113,606		112,291
Stockholders’ equity:
Common stock	3		3
Additional paid-in capital	611,667		606,755
Accumulated other comprehensive loss	4,206		11,110
Accumulated deficit	(449,043)		(308,998)
Total stockholders’ equity	166,833		308,870
Total liabilities, convertible preferred stock and stockholders’ equity	$	965,466	$	1,113,459

Upland Software, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended March 31,
	2023		2022
	(unaudited)		(unaudited)
Operating activities
Net loss	$	(140,045)	$	(22,831)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	18,500		14,262
Change in fair value of liabilities due to sellers of businesses	—		(75)
Deferred income taxes	(1,975)		(1,341)
Amortization of deferred costs	3,352		2,896
Foreign currency re-measurement loss	(859)		—
Non-cash interest and other expense	573		555
Non-cash stock compensation expense	6,462		11,619
Non-cash loss on impairment of goodwill	128,755		—
Changes in operating assets and liabilities, net of purchase business combinations:
Accounts receivable	6,991		9,182
Prepaid expenses and other current assets	(4,845)		1,787
Accounts payable	(184)		(4,145)
Accrued expenses and other liabilities	(859)		(4,790)
Deferred revenue	(41)		1,103
Net cash provided by operating activities	15,825		8,222
Investing activities
Purchase of property and equipment	(215)		(176)
Purchase business combinations, net of cash acquired	—		(62,333)
Net cash used in investing activities	(215)		(62,509)
Financing activities
Proceeds from notes payable, net of issuance costs	(130)		(3)
Payments on notes payable	(1,350)		(1,350)
Taxes paid related to net share settlement of equity awards	(235)		(547)
Issuance of common stock, net of issuance costs	—		182
Additional consideration paid to sellers of businesses	(5,066)		(2,493)
Net cash used in financing activities	(6,781)		(4,211)
Effect of exchange rate fluctuations on cash	238		(217)
Change in cash and cash equivalents	9,067		(58,715)
Cash and cash equivalents, beginning of period	248,653		189,158
Cash and cash equivalents, end of period	$	257,720	$	130,443

Upland Software, Inc.

Reconciliation of Adjusted EBITDA

(in thousands, unaudited)

	Three Months Ended March 31,
	2023		2022
Reconciliation of net loss to Adjusted EBITDA:
Net loss	$	(140,045)	$	(22,831)
Add:
Depreciation and amortization expense	18,500		14,262
Interest expense, net	5,461		7,762
Other expense (income), net	(1,425)		418
Benefit from income taxes	(1,422)		(126)
Stock-based compensation expense	6,462		11,619
Acquisition-related expense	1,086		10,413
Non-recurring litigation costs	—		—
Purchase accounting deferred revenue discount	228		1,929
Impairment of goodwill	128,755		—
Adjusted EBITDA	$	17,600	$	23,446

Upland Software, Inc.

Reconciliation of Non-GAAP Net Loss and Non-GAAP EPS

(in thousands, except share and per share data, unaudited)

	Three Months Ended March 31,
	2023		2022
Reconciliation of net loss to non-GAAP net income:
Net loss	$	(140,045)	$	(22,831)
Add:
Stock-based compensation expense	6,462		11,619
Amortization of purchased intangibles	18,170		13,825
Amortization of debt discount	573		555
Acquisition-related expense	1,086		10,413
Nonrecurring litigation expense	—		—
Purchase accounting deferred revenue discount	228		1,929
Impairment of goodwill	128,755		—
Tax effect of adjustments above	(4,253)		(2,603)
Non-GAAP net income	$	10,976	$	12,907
Weighted average ordinary shares outstanding, basic	32,259,110		31,163,273
Weighted average ordinary shares outstanding, diluted	38,979,587		31,324,492
Non-GAAP earnings per share, basic	$	0.34	$	0.41
Non-GAAP earnings per share, diluted	$	0.28	$	0.41

Upland Software, Inc.

Reconciliation of Operating Cash Flow to Free Cash Flow

(in thousands, unaudited)

	Three Months Ended March 31,
	2023		2022
Reconciliation of Operating Cash Flow to Free Cash Flow:
Net cash provided by operating activities	$	15,825	$	8,222
Less: Purchase of Property and Equipment	(215)		(176)
Free Cash Flow	$	15,610	$	8,046

Upland Software, Inc.

Supplemental Financial Information

(in thousands, unaudited)

	Three Months Ended March 31,
	2023		2022
Stock-based compensation:
Cost of revenue	$	302	$	402
Research and development	655		748
Sales and marketing	576		1,474
General and administrative	4,929		8,995
Total	$	6,462	$	11,619

	Three Months Ended March 31,
	2023		2022
Depreciation:
Cost of revenue	$	2	$	2
Operating expense	328		435
Total	$	330	$	437
Amortization:
Cost of revenue	$	3,404	$	3,209
Operating expense	14,766		10,616
Total	$	18,170	$	13,825

XML

Cover	May 04, 2023
Document Information [Line Items]
Document Type	8-K
Document Period End Date	May 04, 2023
Entity Registrant Name	UPLAND SOFTWARE, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-36720
Entity Tax Identification Number	27-2992077
Entity Address, Address Line One	401 Congress Avenue, Suite 1850
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78701
City Area Code	512
Local Phone Number	960-1010
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0001505155
Amendment Flag	false
Common Stock, par value $0.0001 per share
Document Information [Line Items]
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	UPLD
Security Exchange Name	NASDAQ
Preferred Stock Purchase Rights
Document Information [Line Items]
Title of 12(b) Security	Preferred Stock Purchase Rights
Security Exchange Name	NASDAQ