UPLAND SOFTWARE, INC.

(Exact name of registrant as specified in its charter)


Delaware		27-2992077


~~State of Delaware~~	~~27-2992077~~
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

~~401 Congress Avenue, Suite 1850~~ ~~Austin, Texas~~	~~78701~~
~~(Address of principal executive offices)~~	~~(Zip Code)~~

401 Congress Ave., Suite 1850

Austin, Texas 78701

(Address, including zip code, of registrant’s principal executive offices)

(512) 960-1010

(Registrant’s telephone number, including area ~~code: (512) 960-1010~~code)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth ~~company..~~company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

¨☐

Accelerated filer

¨☒

Non-accelerated filer

¨☐

(Do not check if a smaller reporting company)

Smaller reporting company

¨☐

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. x☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of April 30, 2024, 27,592,899 shares of the registrant’s Common Stock were outstanding.



~~Class~~		~~Shares Outstanding at November 3, 2017~~
~~Common Stock, $0.0001 par value~~		~~20,775,731~~

Table of Contents

Upland Software, Inc.

Table of Contents



	Page
Part I.		FINANCIAL INFORMATION
Item 1.		Financial Statements ~~(unaudited)~~
		Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023	1
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and ~~Nine months ended September 30, 2017 and September 30, 2016~~March 31, 2023	2
		Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2024 and ~~Nine months ended September 30, 2017 and September 30, 2016~~March 31, 2023	3
		Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2024 and March 31, 2023	4
		Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016~~March 31, 2023	45
		Notes to Condensed Consolidated Financial Statements	56
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	1822
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	3435
Item 4.		Controls and Procedures	3536
Part II.		OTHER INFORMATION	3637
~~Item 6.~~Item1A.		~~Exhibits~~Risk Factors	37
~~Signature~~Item 2.		39Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 5.		Other Information	37
Item 6.		Exhibits	37
Exhibit Index			38
Signature			39

Table of Contents

Upland Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share and per share amounts)

Item 1. Financial Statements

~~Upland Software, Inc.~~

~~Condensed Consolidated Balance Sheets~~

~~(in thousands, except for share and per share information)~~

September 30,
2017

December 31, 2016

March 31, 2024

(unaudited)

(audited)

Assets

March 31, 2024

ASSETS

Current assets:

Cash and cash equivalents

52,976

28,758

Accounts receivable (net of allowance of $1,194 and $658 at September 30, 2017 and December 31, 2016, respectively)

19,129

15,254

Prepaid and other

2,970

3,287

Cash and cash equivalents

Accounts receivable (net of allowance of $389 and $572 at March 31, 2024, and December 31, 2023, respectively)

Deferred commissions, current

Unbilled receivables

Income tax receivable, current

Prepaid expenses and other current assets

Total current assets

75,075

47,299

Canadian tax credits receivable

1,715

978

Total current assets

Tax credits receivable

Property and equipment, net

3,462

4,356

Property and equipment, net

Operating lease right-of-use asset

Intangible assets, net

47,512

28,512

Goodwill

122,904

69,097

Goodwill

Deferred commissions, noncurrent

Interest rate swap assets

Other assets

179

346

Total assets

250,847

150,588

Liabilities and stockholders’ equity

Total assets

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

3,976

1,268

Accounts payable

Accrued compensation

3,869

2,541

Accrued expenses and other

8,897

5,505

Accrued compensation

Accrued expenses and other current liabilities

Deferred revenue

31,842

23,552

Due to sellers

8,305

4,642

Current maturities of notes payable (includes unamortized discount of $674 and $329 at September 30, 2017 and December 31, 2016, respectively)

1,701

2,190

Deferred revenue

Operating lease liabilities, current

Current maturities of notes payable (includes unamortized discount of $2,143 and $2,228 at March 31, 2024, and December 31, 2023, respectively)

Total current liabilities

58,590

39,698

Canadian tax credit liability to sellers

—

361

Notes payable, less current maturities (includes unamortized discount of $2,025 and $1,113 at September 30, 2017 and December 31, 2016, respectively)

90,006

45,739

Deferred revenue

1,299

247

Total current liabilities

Notes payable, less current maturities (includes unamortized discount of $2,657 and $3,148 at March 31, 2024, and December 31, 2023, respectively)

Deferred revenue, noncurrent

Operating lease liabilities, noncurrent

Noncurrent deferred tax liability, net

4,239

3,404

Noncurrent deferred tax liability, net

Other long-term liabilities

1,366

2,126

Total liabilities

155,500

91,575

Total liabilities

Mezzanine Equity

Series A Convertible Preferred stock, $0.0001 par value; 5,000,000 shares authorized; 115,000 shares issued and outstanding as of March 31, 2024, and December 31, 2023, respectively

Stockholders’ equity:

Common stock, $0.0001 par value; 50,000,000 shares authorized: 20,761,399 and 17,785,288 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively

Stockholders’ equity:

Common stock, $0.0001 par value; 75,000,000 shares authorized; 27,996,656 and 29,908,407 shares issued and outstanding as of March 31, 2024, and December 31, 2023, respectively

Additional paid-in capital

174,990

124,566

Accumulated other comprehensive loss

(2,311

)

(3,152

)

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

(77,334

)

(62,403

)

Total stockholders’ equity

95,347

59,013

Total liabilities and stockholders’ equity

250,847

150,588

Total stockholders’ equity

Total liabilities, convertible preferred stock and stockholders’ equity

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Upland Software, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except for share and per share ~~information)~~amounts)

~~(unaudited)~~



	Three Months Ended March 31,
	2024		2023
Revenue:
Subscription and support	$	67,078	$	72,914
Perpetual license	1,470		1,571
Total product revenue	68,548		74,485
Professional services	2,188		2,571
Total revenue	70,736		77,056
Cost of revenue:
Subscription and support	19,829		23,485
Professional services and other	1,220		2,051
Total cost of revenue	21,049		25,536
Gross profit	49,687		51,520
Operating expenses:
Sales and marketing	17,018		14,289
Research and development	12,455		12,530

General and administrative	13,232		17,189
Depreciation and amortization	11,396		15,094
Acquisition-related expenses	—		1,094
Impairment of goodwill	87,227		128,755
Total operating expenses	141,328		188,951
Loss from operations	(91,641)		(137,431)
Other expense:
Interest expense, net	(4,958)		(5,461)

Other income (expense), net	(78)		1,425
Total other expense	(5,036)		(4,036)
Loss before benefit from income taxes	(96,677)		(141,467)
Benefit from income taxes	547		1,422


Net loss	$	(96,130)	$	(140,045)
Preferred stock dividends	(1,375)		(1,315)
Net loss attributable to common stockholders	$	(97,505)	$	(141,360)
Net loss per common share:
Net loss per common share, basic and diluted	$	(3.37)	$	(4.38)


Weighted-average common shares outstanding, basic and diluted	28,917,897		32,259,110

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenue:
Subscription and support $ 23,169
$ 17,029
$ 60,711
$ 48,490
Perpetual license 856
332
3,296
1,108
Total product revenue 24,025
17,361
64,007
49,598
Professional services 2,047
1,880
6,098
5,795
Total revenue 26,072
19,241
70,105
55,393
Cost of revenue:
Subscription and support 7,737
5,747
20,306
16,607
Professional services 1,376
1,045
3,838
3,775
Total cost of revenue 9,113
6,792
24,144
20,382
Gross profit 16,959
12,449
45,961
35,011
Operating expenses:
Sales and marketing 4,258
3,097
11,516
9,119
Research and development 4,092
3,737
11,572
11,701
Refundable Canadian tax credits (195 ) (115 ) (424 ) (340 )
General and administrative 5,084
4,670
17,564
13,340
Depreciation and amortization 1,648
1,322
4,111
4,270
Acquisition-related expenses 4,399
1,047
10,368
4,855
Total operating expenses 19,286
13,758
54,707
42,945
Loss from operations (2,327 ) (1,309 ) (8,746 ) (7,934 )
Other expense:
Interest expense, net (2,277 ) (709 ) (4,372 ) (1,932 )
Loss on debt extinguishment 1,634
—
—
—
Other expense, net (130 ) (64 ) (260 ) (1,105 )
Total other expense (773 ) (773 ) (4,632 ) (3,037 )
Loss before provision for income taxes (3,100 ) (2,082 ) (13,378 ) (10,971 )
Provision for income taxes (406 ) (308 ) (1,553 ) (569 )
Net loss $ (3,506 ) $ (2,390 ) $ (14,931 ) $ (11,540 )
Net loss per common share:
Net loss per common share, basic and diluted $ (0.18 ) $ (0.14 ) $ (0.83 ) $ (0.71 )
Weighted-average common shares outstanding, basic and diluted 19,380,519
16,702,062
18,043,365
16,339,983

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Upland Software, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(in thousands)

~~(unaudited)~~


	Three Months Ended March 31,
	2024		2023
Net loss	$	(96,130)	$	(140,045)
Other comprehensive income (loss):
Foreign currency translation adjustment	(2,611)		15
Unrealized translation gain (loss) on foreign currency denominated intercompany loans, net of taxes	(1,412)		1,235
Interest rate swaps	162		(8,154)
Other comprehensive loss:	$	(3,861)	$	(6,904)
Comprehensive loss	$	(99,991)	$	(146,949)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net loss $ (3,506 ) $ (2,390 ) $ (14,931 ) $ (11,540 )
Foreign currency translation adjustment 508
(67 ) 841
414
Comprehensive loss $ (2,998 ) $ (2,457 ) $ (14,090 ) $ (11,126 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Upland Software, Inc.

Condensed Consolidated Statements of ~~Cash Flows~~Equity

(unaudited)

(in ~~thousands)~~thousands, except share amounts)

~~(unaudited)~~


	Three Months Ended March 31, 2024
	Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2023	115,000	$	117,638	29,908,407	$	3	$	608,995	$	6,168	$	(488,872)	$	126,294



Dividends accrued - Convertible Preferred Stock		1,375		—	—		(1,375)		—		—		(1,375)
Issuance of stock under Company plans, net of shares withheld for tax				330,903	—		(331)		—		—		(331)

Stock repurchases and retirements				(2,242,654)			(7,998)						(7,998)
Stock-based compensation				—	—		3,522		—		—		3,522


Foreign currency translation adjustment	—	—		—	—		—		(2,611)		—		(2,611)
Unrealized translation gain (loss) on intercompany loans with foreign subsidiaries	—	—		—	—		—		(1,412)		—		(1,412)
Interest rate swaps	—	—		—	—		—		162		—		162
Net loss				—	—		—		—		(96,130)		(96,130)
Balance at March 31, 2024	115,000	$	119,013	27,996,656	$	3	$	602,813	$	2,307	$	(585,002)	$	20,121



	Three Months Ended March 31, 2023
	Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2022	115,000	$	112,291	32,221,855	$	3	$	606,755	$	11,110	$	(308,998)	$	308,870





Dividends accrued - Convertible Preferred Stock	—	1,315		—	—		(1,315)		—		—		(1,315)
Issuance of stock under Company plans, net of shares withheld for tax	—	—		219,155	—		(235)		—		—		(235)


Stock-based compensation	—	—		—	—		6,462		—		—		6,462

Foreign currency translation adjustment	—	—		—	—		—		15		—		15
Unrealized translation gain (loss) on intercompany loans with foreign subsidiaries	—	—		—	—		—		1,235		—		1,235
Interest rate swaps	—	—		—	—		—		(8,154)		—		(8,154)
Net loss	—	—		—	—		—		—		(140,045)		(140,045)
Balance at March 31, 2023	115,000	$	113,606	32,441,010	$	3	$	611,667	$	4,206	$	(449,043)	$	166,833

Nine Months Ended September 30,
2017 2016
Operating activities
Net loss $ (14,931 ) $ (11,540 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 8,112
7,499
Deferred income taxes 698
251
Foreign currency re-measurement (gain) loss (422 ) (222 )
Non-cash interest and other expense 416
196
Non-cash stock compensation expense 7,804
2,664
Loss on disposal of business —
686
Non-cash loss on retirement of fixed assets (18 ) —
Changes in operating assets and liabilities, net of purchase business combinations:
Accounts receivable 753
310
Prepaids and other 1,664
820
Accounts payable 1,736
(126 )
Accrued expenses and other liabilities 789
(828 )
Deferred revenue (793 ) 1,425
Net cash provided by operating activities 5,808
1,135
Investing activities
Purchase of property and equipment (443 ) (886 )
Purchase of customer relationships (55 ) (408 )
Purchase business combinations, net of cash acquired (61,108 ) (11,846 )
Net cash used in investing activities (61,606 ) (13,140 )
Financing activities
Payments on capital leases (1,098 ) (1,320 )
Proceeds from notes payable, net of issuance costs 54,683
14,925
Payments on notes payable (11,319 ) (1,560 )
Issuance of common stock, net of issuance costs 42,629
197
Additional consideration paid to sellers of businesses (5,361 ) (1,484 )
Net cash provided by financing activities 79,534
10,758
Effect of exchange rate fluctuations on cash 482
254
Change in cash and cash equivalents 24,218
(993 )
Cash and cash equivalents, beginning of period 28,758
18,473
Cash and cash equivalents, end of period $ 52,976
$ 17,480
Supplemental disclosures of cash flow information:
Cash paid for interest $ 3,966
$ 1,707
Cash paid for taxes $ 1,463
$ 518
Noncash investing and financing activities:
Equipment acquired pursuant to capital lease obligations $ 121
$ 802
Issuance of common stock in business combination $ —
$ 8,100

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


Upland Software, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)

	Three Months Ended March 31,
(In thousands)	2024		2023
Operating activities
Net loss	$	(96,130)	$	(140,045)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	13,802		18,500

Deferred income taxes	(1,057)		(1,975)
Amortization of deferred costs	3,047		3,352
Foreign currency re-measurement loss	(164)		(859)
Non-cash interest, net and other income, net	(882)		573
Non-cash stock-based compensation expense	3,522		6,462
Non-cash loss on impairment of goodwill	87,227		128,755




Changes in operating assets and liabilities, net of purchase business combinations:
Accounts receivable	9,361		6,991
Prepaid expenses and other current assets	(4,117)		(2,362)
Other assets	(2,608)		(2,483)
Accounts payable	(3,459)		(184)
Accrued expenses and other liabilities	(389)		(859)
Deferred revenue	(3,032)		(41)
Net cash provided by operating activities	5,121		15,825
Investing activities
Purchase of property and equipment	(183)		(215)



Net cash used in investing activities	(183)		(215)
Financing activities

Payments of debt costs	—		(130)
Payments on notes payable	(1,350)		(1,350)

Stock repurchases and retirement	(7,918)		—


Taxes paid related to net share settlement of equity awards	(331)		(235)


Additional consideration paid to sellers of businesses	—		(5,066)
Net cash used in financing activities	(9,599)		(6,781)
Effect of exchange rate fluctuations on cash	(284)		238
Change in cash and cash equivalents	(4,945)		9,067
Cash and cash equivalents, beginning of period	236,559		248,653
Cash and cash equivalents, end of period	$	231,614	$	257,720
Supplemental disclosures of cash flow information:
Cash paid for interest, net of interest rate swaps	$	8,720	$	7,134
Cash paid for taxes	$	2,114	$	2,507

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Upland Software, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Nature of Operations

Upland Software, Inc. (“Upland,” “we,” “us,” “our,” or the “Company”), a Delaware corporation, enables global businesses to work smarter with over 25 cloud software products that help increase revenue, reduce costs, and deliver business value. Upland's solutions cover digital marketing, knowledge management, contact center service, sales productivity, and content lifecycle automation. Upland services over 10,000 customers ranging from large global corporations and various government agencies to small and medium-sized businesses. The Company's customers operate in a wide variety of industries, including financial services, consulting services, technology, manufacturing, media, telecommunications, government, insurance, non-profit, healthcare, life sciences, retail, and hospitality.

Through a series of acquisitions and integrations, the Company has established a library of diverse software applications under the Upland brand that address specific digital transformation needs. In addition to its strategy to increase core organic growth, Upland intends to pursue acquisitions within its cloud offerings of complementary technologies and businesses. Upland expects that this will expand its product offerings, customer base and market access, resulting in increased benefits of scale.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ~~("GAAP"~~(“GAAP”). The condensed consolidated financial statements include the accounts of ~~the Company~~Upland Software, Inc. and its wholly owned ~~subsidiaries.~~subsidiaries (collectively referred to as “Upland”, the “Company”, “we”, “us” or “our”). All intercompany accounts and transactions have been eliminated in consolidation. No material changes have been made to the Company’s significant accounting policies disclosed in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, in our Annual Report.

The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ~~("SEC"~~(the “SEC”) for interim financial reporting. In the opinion of management of the Company, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, in all material respects, and include all adjustments of a normal recurring nature necessary for a fair presentation. The results of operations for the three months ended ~~September 30, 2017~~March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2017~~2024 or for any other period.

The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s ~~2016~~2023 Annual Report on Form 10-K filed with the SEC on ~~March 30, 2017.~~

During the third quarter of 2017, we identified and corrected an immaterial charge in the reported non-cash loss on debt extinguishment and interest expense recorded in the second quarter 2017 in our Condensed Consolidated Statements of Operations. The Fourth Amendment to the Company’s Credit Agreement should have been accounted for as a modification rather than an extinguishment in accordance with the accounting literature under ASC 470, Debt. The unaudited Consolidated Statements of Operations for the three months ended September 30, 2017, reflect a reversal of the immaterial non-cash net $1.4 million charge to loss on debt extinguishment and interest expense. This matter had no effect on the reported revenue, gross profit, or the Condensed Consolidated Statement of Cash Flows and had no material effect on the Condensed Consolidated Balance Sheet, or Condensed Consolidated Statements of Comprehensive Loss. See Note 6 - Debt for more information related to the Company’s Credit Agreement.February 22, 2024.

Use of Estimates

The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include those related to revenue recognition, deferred commissions, allowance for ~~doubtful accounts,~~credit losses, stock-based compensation, contingent consideration, acquired intangible assets, impairment of goodwill, intangibles and long-lived assets, the useful lives of intangible assets and property and equipment, the fair value of the Company’s interest rate swaps and income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ from those estimates.

Upland is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of May 2, 2024, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable and ~~accounts receivable.~~the Company’s interest rate swap hedges. The Company’s cash and cash equivalents are placed with ~~high-quality~~high quality financial institutions, which, at times, may exceed federally insured limits. The Company has not experienced any losses in these accounts, and the Company does not believe it is exposed to any significant credit risk related to cash and cash equivalents. The Company provides credit, in the normal course of business, to a number of its ~~customers. The~~customers and generally does not require collateral. To manage accounts receivable credit risk, the Company performs periodic credit evaluations of its customers and ~~generally does not require collateral.~~ maintains current expected credit losses which considers such factors as historical loss information, geographic location of customers, current market conditions, and reasonable and supportable forecasts.

No individual customer represented more than 10% of total revenues infor the three months ended ~~September 30, 2017 or~~

~~for the year ended December~~March 31, ~~2016,~~2024, or more than 10% of accounts receivable as of ~~September 30, 2017~~March 31, 2024 or December 31, ~~2016.~~

~~Fair Value of Financial Instruments~~

The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, and accounts payable, and long–term debt. The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value, primarily due to short maturities. The carrying values of the Company’s debt instruments approximated their fair value based on rates currently available to the Company.2023.

Recent Accounting Pronouncements

Recently issued accounting pronouncements ~~not yet adopted~~- Not Adopted

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 (Topic 606), Revenue from Contracts with Customers. ASU 2014-09 amends the existing accounting standards for revenue recognition and is based on the principle that revenue should be recognized to depict the transfer of goods or services to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The Company will adopt ASU 2014-09 on January 1, 2018, and we expect to use the modified retrospective application method. The Company has made significant progress in the assessment phase of this project but has not yet fully determined the impact of the new revenue recognition standard on its systems, processes and consolidated financial statements; however, we expect the new standard may have the most significant impact on the manner in which we account for certain costs to acquire new contracts (i.e., selling and commission costs). Generally, as it relates to these types of costs, the provisions of the new standard will result in the deferral of these costs on the consolidated balance sheets and subsequently amortizing these costs to the consolidated statements of income over the expected life of our customer relationships, which we have preliminarily estimated to be approximately 6 years.

~~In February 2016,~~November 2023, the FASB issued ASU ~~2016-02, Leases. The core change~~2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments' significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU ~~2016-2 is the requirement for the recognition of lease assets~~2023-07, as well as all existing segment disclosures and ~~lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The new standard~~reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for ~~fiscal years, and interim periods within those~~ fiscal years beginning after December 15, ~~2018,~~2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 should be applied on a retrospective basis. The Company is currently evaluating the impact of adopting ASU 2023-07 on its disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 should be applied on a prospective basis, and retrospective application is permitted. The Company is currently evaluating the ~~effect that the adoption~~impact of adopting ASU ~~2016-02 will have~~2023-09 on its ~~financial statements.~~disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company is currently evaluating the effect that the adoption of ASU 2016-13 will have on its financial statements.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. The guidance in ASU 2016-15 is required for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this guidance will have a material impact on its financial statements.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, which revises the definition of a business and assists in the evaluation of when a set of transferred assets and activities is a business. ASU 2017-01 is effective for interim and annual reporting periods beginning after December 15, 2017, and should be applied prospectively. Early adoption is permitted under certain circumstances. The Company does not expect the adoption of this guidance will have a material impact on its financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net

assets should be disclosed. ASU 2017-04 is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption is permitted. We currently anticipate that the adoption of ASU 2017-04 will not have a material impact on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment awarded require an entity to apply modification accounting. ASU 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The amendments in ASU 2017-09 are to be applied prospectively to an award modified on or after the adoption date; consequently, the impact will be dependent on whether we modify any share-based payment awards and the nature of such modifications. The adoption of this standard is not expected to have a material impact on our financial statements.

~~Recently adopted accounting pronouncements~~

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. The Company adopted ASU 2014-15 during the first quarter of 2017. No additional disclosure was deemed necessary upon the adoption of ASU 2014-15. This standard would not result in an amount being recorded.

In March 2016, the FASB issued ASU 2016-09, Stock Compensation. The core change with ASU 2016-09 is the simplification of several aspects of the accounting for share-based payment transactions, including the income tax consequences, classifications of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. The Company adopted ASU 2016-09 during the first quarter of 2017. No impact on the financial statements was recorded as a result of the adoption of ASU 2016-09.

~~2. Acquisitions~~

~~2017 Acquisitions~~

On January 10, 2017, the Company completed its purchase of Omtool, Ltd ("Omtool"), a document capture, fax and workflow solution company. The purchase price consideration paid was approximately $19.3 million in cash payable at closing (net of $3.0 million of cash acquired). Revenues recorded since the acquisition date through September 30, 2017 were approximately $8.0 million.

On April 21, 2017, the Company acquired RightAnswers, Inc. ("RightAnswers"), a cloud-based knowledge management system. The purchase price was $17.4 million, in cash at closing (net of $0.1 million cash acquired) and a $2.5 million cash holdback payable in one year (subject to indemnification claims) and excludes potential future earn-out payments tied to additional performance-based goals. Revenues recorded since the acquisition date through September 30, 2017 were approximately $3.4 million.

On July 13, 2017, the Company acquired Waterfall International Inc. (“Waterfall”), a cloud-based mobile messaging platform. The purchase price consideration paid was approximately $24.4 million in cash at closing (net of $0.4 million of cash acquired) and a $1.5 million cash holdback payable in 18 months (subject to indemnification claims). The foregoing excludes additional potential $3.0 million in earnout payments tied to performance-based conditions. Revenues recorded since the acquisition date through September 30, 2017 were approximately $2.6 million.

~~2016 Acquisitions~~

On January 7, 2016, the Company completed its purchase of LeadLander, Inc. ("LeadLander"), a website analytics provider. The purchase price consideration paid was approximately $8.0 million in cash payable at closing (net of $0.4 million of cash acquired) and a $1.2 million cash holdback payable in 12 months (subject to indemnification claims), which was fully paid after December 31, 2016. In addition, the Asset Purchase Agreement included a contingent share consideration component pursuant to which the Company issued an aggregate of $2.4 million in common stock on July 25, 2016.

On March 14, 2016, the Company completed its purchase of HipCricket, Inc. ("HipCricket"), a cloud-based mobile messaging software provider. The consideration paid to the seller consisted of the issuance of one million shares of the Company's common stock and the transfer of the Company's EPM Live product business. The value of the shares on the closing date of the transaction was approximately $5.7 million, and the fair value of the EPM Live product business was approximately $5.9 million. At the time of the acquisition, the Company recognized a loss on the transfer in conjunction with the EPM Live net asset value of approximately $0.7 million in other expenses, net. Prior to the transaction, HipCricket was owned by an affiliate of ESW Capital, LLC, which is a shareholder of the Company. Raymond James & Co. provided a fairness opinion to the Company in connection with the transaction.

On April 27, 2016, the Company acquired Advanced Processing & Imaging, Inc. ("API"), a content management platform driving workflow in governments and schools. The purchase price consideration consisted of $4.1 million in cash payable at closing (net of $0.1 million of cash acquired), and a $0.8 million cash holdback payable in 12 months (subject to indemnification claims).

The following condensed table presents the preliminary and finalized acquisition-date fair value of the assets acquired and liabilities assumed for the acquisitions in 2016 and through the nine months ended September 30, 2017, as well as assets and liabilities (in thousands):

Preliminary Finalized
Waterfall RightAnswers Omtool API HipCricket LeadLander
Year Acquired 2017 2017 2017 2016 2016 2016
Cash $ 435
$ 139
$ 2,957
$ 125
$ —
$ 365
Accounts receivable 1,442
2,164
784
821
1,226
199
Other current assets 1,031
125
607
54
273
55
Property and equipment 74
158
63
68
—
5
Customer relationships 5,700
5,700
4,400
1,420
1,000
970
Trade name 110
200
170
40
70
70
Technology 2,800
2,600
3,180
810
900
1,410
Goodwill 18,747
20,100
13,933
3,420
8,531
13,104
Other assets —
—
33
89
—
6
Total assets acquired 30,339
31,186
26,127
6,847
12,000
16,184
Accounts payable (605 ) (139 ) (219 ) (11 ) (44 ) —
Accrued expense and other (1,382 ) (1,321 ) (915 ) (137 ) —
(254 )
Deferred revenue (1,220 ) (5,428 ) (2,779 ) (1,699 ) (356 ) (910 )
Total liabilities assumed (3,207 ) (6,888 ) (3,913 ) (1,847 ) (400 ) (1,164 )
Total consideration $ 27,132
$ 24,298
$ 22,214
$ 5,000
$ 11,600
$ 15,020

Tangible assets were valued at their respective carrying amounts, which approximates their estimated fair value. The valuation of identifiable intangible assets reflects management’s estimates based on, among other factors, use of established valuation methods. Customer relationships were valued using an income approach, which estimates fair value based on the earnings and cash flow capacity of the subject asset. The value of the marketing-related intangibles was determined using a relief-from-royalty method, which estimates fair value based on the value

~~the owner of the asset receives from not having to pay a royalty to use the asset. Developed technology was valued using a cost-to-recreate approach.~~

The Company recorded the purchase of the acquisitions described above using the acquisition method of accounting and, accordingly, recognized the assets acquired and liabilities assumed at their fair values as of the date of the acquisition. The purchase price allocations for the 2017 acquisitions of Omtool, RightAnswers, and Waterfall are preliminary as the Company has not obtained and evaluated all of the detailed information necessary to finalize the opening balance sheet amounts in all respects. The purchase price allocations for the 2016 acquisitions of Leadlander, HipCricket, and API are final. Management has recorded the purchase price allocations based upon acquired company information that is currently available. Management expects to close its purchase price allocations for Omtool and RightAnswers during the last quarter of 2017 and during the first half of 2018 for Waterfall.

The goodwill of $77.8 million for the above acquisitions is primarily attributable to the synergies expected to arise after the acquisition. Goodwill deductible for tax purposes is $11.6 million for the LeadLander acquisition, $8.2 million for HipCricket, and $3.7 million for Waterfall. There was no goodwill deductible for tax purposes for the API, Omtool, and RightAnswers acquisitions.

3. Fair Value Measurements

~~Fair~~The Company recognizes financial instruments in accordance with the authoritative guidance on fair value ~~is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer~~measurements and disclosures for financial assets and liabilities. This guidance defines fair value, establishes a ~~liability~~framework for measuring fair value in ~~an orderly transaction between market participants as of the measurement date.~~accordance with GAAP, ~~sets forth~~and expands disclosures about fair value measurements. The guidance also establishes a ~~three–tier~~three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. ~~The three~~

These tiers ~~are~~include Level 1, defined as observable inputs, such as quoted ~~market~~ prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, ~~which~~ therefore, ~~requires~~requiring an entity to develop its own assumptions.

~~Changes to the~~The Company’s financial instruments consist principally of cash and cash equivalents, money market funds, accounts receivable, accounts payable, interest rate swap hedges, and debt. The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value, ~~of earnout liabilities are recorded~~primarily due to ~~other expense, net. Liabilities~~short maturities.

Assets measured at fair value on a recurring basis are summarized below (in thousands):

Fair Value Measurements at December 31, 2016
Level 1 Level 2 Level 3 Total
Earnout consideration liability $ —
$ —
$ 2,500
$ 2,500


	Fair Value Measurements at March 31, 2024
	(unaudited)
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds included in cash and cash equivalents	$	206,058	$	—	$	—	$	206,058
Interest rate swaps	—		15,889		—		15,889
Total	$	206,058	$	15,889	$	—	$	221,947

Fair Value Measurements at September 30, 2017
(unaudited)
Level 1 Level 2 Level 3 Total
Earnout consideration liability $ —
$ —
$ 4,193
$ 4,193


	Fair Value Measurements at December 31, 2023

	Level 1		Level 2		Level 3		Total
Assets:
Money market funds included in cash and cash equivalents	$	211,661	$	—	$	—	$	211,661
Interest rate swaps	—		14,270		—		14,270
Total	$	211,661	$	14,270	$	—	$	225,931

~~The Level 3 earnout consideration liability consists of amounts associated with the acquisitions of LeadLander~~Money market funds included in ~~January 2016, RightAnswers in April 2017,~~cash and Waterfall in July 2017. The December 31, 2016 Level 3 earnout consideration liability opening balance for LeadLander of $2.5 million was settled in March 2017, a Level 3 earnout consideration liability associated with RightAnswers added $4.0 million in April 2017, of which $1.0 million was settled during September 2017, leaving a remaining balance of $3.0 million as of September 30, 2017. In addition, a Level 3 earnout consideration liability associated with Waterfall added $1.2 million in July 2017.

~~The following table presents additional information about liabilities~~cash equivalents are highly-liquid investments and are measured at fair value ~~on a recurring basis~~using quoted market prices and ~~for which we have utilized significant unobservable (Level 3) inputs to determine fair value (in thousands):~~

Ending balance at December 31, 2016 $ 2,500
Additions - cash earnouts 5,226
Settlements - cash earnouts (3,533 )
Ending balance at September 30, 2017 $ 4,193
active markets, therefore are categorized as Level 1.

The fair value of the ~~cash earnout consideration was determined using~~Company's interest rate swaps are measured at the ~~Binary Option model~~end of each interim reporting period based on the ~~present~~then assessed fair value ofand adjusted if necessary. As the ~~probability-weighted earnout consideration.~~fair value measure is based on the market approach, they are categorized as Level 2.

Debt

The Company believes the carrying value of its long-term debt at ~~September 30, 2017~~March 31, 2024 approximates its fair value based on ~~the~~its variable interest rate feature ~~or based upon~~and interest rates currently available to the Company.

The estimated fair ~~value and carrying~~ value of the Company's debt, before debt discount, at ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016 is $94.4~~2023 was $480.7 million and ~~$49.4~~$482.1 million, respectively, based on valuation methodologies using interest rates currently available to the Company which are Level 2 ~~inputs.~~inputs..

4. Goodwill and Other Intangible Assets

Changes in the Company’s goodwill balance for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 are summarized in the table below (in thousands):


Balance at December 31, 2023	$	353,778




Impairment of goodwill	(87,227)
Foreign currency translation adjustment	(2,539)
Balance at March 31, 2024	$	264,012

As a result of the decline of our stock price impacting our market capitalization during the quarters ended March 31, 2024 and March 31, 2023, we performed quantitative impairment evaluations, which resulted in goodwill impairments of $87.2 million and $128.8 million, respectively. Our quantitative goodwill impairment analysis applied two methodologies to estimate the Company’s fair value which were: a) a discounted cash flow method and b) a guideline public company method. The two methods indicated that the fair value of the Company was less than its carrying value. The discounted cash flow method required significant judgments, including estimation of future cash flows, which is dependent on internally developed forecasts, estimation of the long-term rate of growth for our business, and determination of our weighted average cost of capital. Under the guideline public company method, we estimated fair value based on a market multiple of revenues and earnings derived for comparable publicly traded companies with similar operating characteristics as the Company. We will continue to evaluate Goodwill for impairment and adjust as indicators arise.

Balance at December 31, 2016 $ 69,097
Acquired in business combinations 52,782
Adjustment due to prior year business combinations 17
Foreign currency translation adjustment 1,008
Balance at September 30, 2017 $ 122,904

~~Net intangible~~Intangible assets, net include the estimated acquisition-date fair values of customer relationships, marketing-related assets, and developed technology that the Company recorded as part of its business acquisitions.

The following is a summary of the Company’s intangible assets, net (in thousands):


	Estimated Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
March 31, 2024:		(unaudited)
Customer relationships	1-10	$	354,070	$	210,034	$	144,036
Trade name	1.5-10	9,467		7,532		1,935
Developed technology	4-9	86,948		66,107		20,841

Favorable Leases	6.3	274		98		176
Total intangible assets		$	450,759	$	283,771	$	166,988


	Estimated Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
September 30, 2017:
	Estimated Useful Life (Years)							Estimated Useful Life (Years)	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
December 31, 2023:
Customer relationships
Customer relationships
Customer relationships	1-10	$	49,159	$	16,131	$	33,028
Trade name	1.5-3	3,134		2,799		335
Developed technology	4-7	24,007		9,858		14,149

Favorable Leases
Favorable Leases
Favorable Leases
Total intangible assets		$	76,300	$	28,788	$	47,512

~~11. Related Party Transactions~~

During the nine months ended September 30, 2017 and September 30, 2016, the Company purchased software development services pursuant to a technology services agreement with DevFactory FZ-LLC, in the amountTable of $1.8 million and $1.7 million, respectively. On March 28, 2017, the Company entered into an amendment to the Amended and Restated Technology Services Agreement to extend the initial term end date from December 31, 2017 to December 31, 2021. Additionally, the Company amended the option for either party to renew annually for one additional year. The effective date of the amendment is January 1, 2017. The Company has an outstanding purchase commitment in 2017 for software development services pursuant to a technology services agreement in the amount of $2.5 million. For years after 2017, the purchase commitment amount for software development services will be equal to the prior year purchase commitment increased (decreased) by the percentage change in total revenue for the prior year as compared to the preceding year. For example, if 2017 total revenues increase by 10% as compared to 2016 total revenues, then the 2018 purchase commitment will increase by approximately $250,000 from the 2017 purchase commitment amount to approximately $2.8 million.Contents

The Company purchased approximately $2.2 million and $1.1 million in services from Crossover, Inc. during the nine months ended September 30, 2017 and September 30, 2016, respectively. While there are no purchase commitments with Crossover, Inc., the Company continues to use its services in 2017.

The Company has an arrangement with a former subsidiary to provide management, human resource, payroll and administrative services. The Company received fees from this arrangement during the nine months ended September 30, 2017 and September 30, 2016 totaling $270,000 in each period, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with ~~our~~the unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form ~~10-Q.~~

~~This~~10-Q and our other filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 22, 2024. In addition to historical information, this Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements may be identified by the use of forward-looking 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. ~~Factors or risks that could cause our actual results to differ from the results we anticipate~~These forward-looking statements include, but are not limited ~~to:~~to, statements concerning the following:

•our financial performance and our ability to achieve or sustain profitability or predict future results;

•our ~~ability to attract~~plans regarding future acquisitions and ~~retain customers;~~

~~our ability to deliver high-quality customer service;~~

~~the growth of demand for enterprise work management applications;~~

~~our ability to effectively manage our growth;~~

our ability to consummate and integrate acquisitions;

~~maintaining our senior management team and key personnel;~~

•our ability to ~~maintain and~~ expand our ~~direct~~go to market operations, including our marketing and sales ~~organization;~~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, usage fees, and professional services;

•our ability to adapt to ~~changing market conditions~~macroeconomic factors impacting the global economy, including foreign currency exchange risk, inflation and ~~competition;~~supply chain constraints;

•our ability to attract and retain customers;

•our ability to successfully enter new markets and manage our international expansion;

~~the operation and reliability of our third-party data centers and hosting providers;~~

•our ability to comply with privacy laws and regulations;

•our ability to incorporate and deliver artificial intelligence (“AI”) functionality into our products and services;

•our ability to deliver high-quality customer service;

•our plans regarding, and our ability to effectively manage, our ~~consultants~~growth;

•maintaining our senior management team and ~~contractors;~~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 ~~conditions;~~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 ~~ability~~expectations with regard to ~~comply with privacy laws~~trends, such as seasonality, which affect our business;

•impairments to goodwill and ~~regulations;~~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;

•our expectations as to the payment of dividends;

Table of Contents

•our Share Repurchase Plan (as defined in Note 10. Stockholders' Equity), including expectations regarding the timing and manner of repurchases made under the Share Repurchase Plan;

•our current level of indebtedness, including our exposure to variable interest rate risk;

•potential elimination or limitation of tax incentives or tax losses and/or reduction of U.S. federal net operating loss carryforwards (“NOLs”); and

•other risk factors included under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2023, filed with the SEC on ~~March 30, 2017,~~February 22, 2024, as updated by this Quarterly Report on Form ~~10-Q.~~10-Q and periodically updated as necessary in our future quarterly reports on Form 10-Q and other filings that we make with the SEC.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to ~~known and unknown~~ risks, uncertainties, and other factors, including those described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could ~~cause~~have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, toevents or circumstances could differ materially from ~~our~~those described in the forward-looking statements.

The forward-looking statements ~~including risks and uncertainties detailed in this and our other reports and filings with the SEC. The forward-looking statements~~made in this Quarterly Report on Form 10-Q ~~represent our views~~relate only to events as of the date ofon which the statements are made. We undertake no obligation to update any forward-looking statements made in this

Quarterly Report on Form ~~10-Q. We anticipate that subsequent~~10-Q to reflect events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent toor circumstances after the date of this Quarterly Report on Form ~~10-Q.~~10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on 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.

Overview

We ~~provide cloud-based enterprise~~enable global businesses to work smarter with over 25 cloud software products that help increase revenue, reduce costs, and deliver business value. Our solutions cover digital marketing, knowledge management, ~~software. We define enterprise work management software as software applications that enable organizations to plan, manage~~contact center service, sales productivity, and execute projects and work. Our family of applications enables users to manage their projects, professional workforce and IT investments, automate document-intensive business processes and effectively engage with their customers, prospects and community via the web and mobile technologies.

The continued growth of an information-based economy has given rise to a large and growing group of knowledge workers who operate in dynamic work environments as part of geographically dispersed and virtual teams. We believe that manual processes and legacy on-premise enterprise systems are insufficient to address the needs of the modern work environment. In order for knowledge workers to be successful, they need to interact with intuitive enterprise work systems in a collaborative way, including real-time access. Today, legacy processes and systems are being disrupted and replaced by cloud-based enterprise work management software that improves visibility, collaboration and productivity.

In response to these changes, we are providing organizations and their knowledge workers with software applications that better align resources with business objectives and increase visibility, governance, collaboration, quality of customer experience and responsiveness to changes in the business environment. This results in increased work capacity, higher productivity, better execution and greater levels of customer engagement. Our applications are easy-to-use, scalable and offer real-time collaboration for knowledge workers distributed on a local or global scale. Our applications address enterprise work challenges in the following categories:

~~Project & Information Technology (IT) Management:~~ ~~Enables users to manage their organization’s projects, professional workforce and IT costs.~~

~~Workflow Automation:~~ ~~Enables users to automate document-intensive workflow business processes across their enterprise and supply chain.~~

~~Digital Engagement:~~ ~~Enables users to effectively engage with their customers, prospects and community via the web and mobile technologies.~~

We sell our software applications primarily through a direct sales organization comprised of inside sales and field sales personnel. In addition to our direct sales organization, we have an indirect sales organization, which sells to distributors and value-added resellers. We employ a land-and-expand go-to-market strategy. After we demonstrate the value of an initial application to a customer, our sales and account management teams work to expand the adoption of that initial application across the customer, as well as cross-sell additional applications to address other enterprise work management needs of the customer. Our customer success organization supports our direct sales efforts by managing the post-sale customer lifecycle.

~~Our subscription agreements are typically sold either on a per-seat basis or on a minimum contracted volume basis with overage fees billed in arrears, depending on the application being sold.~~content lifecycle automation. We service over 10,000 customers ranging from large global corporations and various government agencies ~~to small-~~as well as small and medium-sized businesses. ~~We have more than 2,500~~Our customers ~~with over 250,000 users across~~operate in a ~~broad range~~wide variety of industries, including financial services, ~~retail,~~consulting services, technology, manufacturing, ~~education, consumer goods,~~ media, telecommunications, government, ~~food~~insurance, non-profit, healthcare, life sciences, retail and ~~beverage, healthcare and life sciences.~~hospitality.

Through a series of acquisitions and integrations, we have established a library of diverse ~~family of~~ software applications under the Upland brand ~~and in three product categories (Project & IT Management, Workflow Automation, and Digital Engagement), each of which addresses a~~that address specific ~~enterprise work management need.~~digital transformation needs. Our revenue has grown from ~~$22.8~~$149.9 million in ~~2012~~the year ended December 31, 2018 to ~~$74.8~~$297.9 million in ~~2016 (and to $70.1 million for~~ the ~~nine~~year ended December 31, 2023, representing a compound annual growth rate of 15%. During the three months ended ~~September 30, 2017), representing a 228% period-over-period growth rate. See Note 10 — Domestic~~March 31, 2024 and

~~Foreign Operations in Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding our~~ 2023, foreign revenue as ~~it relates to domestic~~a percent of total revenue was 30% and ~~foreign operations.~~29%, respectively.

To support continued growth, we intend to pursue acquisitions of complementary technologies ~~products~~ and businesses. This will expand our product ~~families,~~library, customer base, and market access resulting in increased benefits of scale. ~~We will prioritize acquisitions within our current core product categories including Project & IT Management, Workflow Automation, and Digital Engagement.~~ Consistent with our growth strategy, we have made ~~fifteen~~31 acquisitions ~~since~~from February 2012 through ~~September 30, 2017.~~March 31, 2024.

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Key Metrics and Non-GAAP Financial Measures

In addition to the GAAP financial measures described below in ~~“Components~~“Results of ~~Operating Results,~~Operations,” we regularly review the following key metrics and non-GAAP financial measures to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions.

Core Organic Growth Rate

Beginning with the three months ended June 30, 2023, we began disclosing our Core Organic Growth Rate, a non-GAAP financial measure. We use Core Organic Growth Rate as a key performance measure to assess our consolidated operating performance over time and for planning and forecasting purposes. Core Organic Growth Rate is the percentage change between two reported periods in subscription and support revenue, excluding subscription and support revenue from Sunset Assets and Overage Charges, each as defined below. We calculate our year-over-year Core Organic Growth Rate as though all acquisitions or dispositions closed as of the end of the latest period were closed as of the first day of the prior year period presented. Core Organic Growth Rate does not represent actual organic revenue generated by our business as it stood at the beginning of the respective period.

For the three-month period ended March 31, 2024, our Core Organic Growth Rate was negative 1.9%.

Core Organic Growth Rates are not necessarily indicative of either future results of operations or actual results that might have been achieved had certain Sunset Asset classifications not been made or had certain acquisitions or dispositions been consummated on the first day of the prior year period presented. We believe that this metric is useful to management and investors in analyzing our financial and operational performance period-over-period along with evaluating the growth of our business normalized for the impact of acquisitions and dispositions, as well as adjusting for the exclusion of non-core Sunset Assets and non-committed Overage Charges. For example, by including pre-acquisition revenue, Core Organic Growth Rate allows us to measure the underlying revenue growth of our business as of the end of the period presented, which we believe provides insight into our current performance.

Related Defined Terms

In connection with periodic reviews of our business, we have decided to discontinue the availability of certain non-strategic product offerings and a limited number of non-strategic customer contracts (collectively referred to as “Sunset Assets”). It is possible that during future periodic reviews of our business we may determine to add additional non-strategic product offerings or non-strategic customer contracts to Sunset Assets or remove certain product offerings or customer contracts from the classification of Sunset Assets. In either case, we will adjust the revenues attributable to Sunset Assets and properly reflect the year over year change for such addition or removal.

Overage Charges are subscription and support revenues earned in addition to contractual minimum customer commitments as a result of the usage volume of services including text and e-mail messaging and third-party pass-through costs that exceed the levels stipulated in contracts with the Company.

The following table represents a reconciliation of total revenue, the most comparable GAAP measure, to core organic revenue for each of the periods indicated.


	Three Months March 31,
	2024		2023

	(dollars in thousands)
Reconciliation of total revenue to core organic revenue:
Total revenue	$	70,736	$	77,056
Less:
Perpetual license revenue	1,470		1,571
Professional services revenue	2,188		2,571
Subscription and support revenue from Sunset Assets	9,232		13,533
Overage Charges	1,425		1,878
Core organic revenue	$	56,421	$	57,503

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Adjusted EBITDA

We monitor our Adjusted EBITDA to help us evaluate the effectiveness and efficiency of our operations. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss), calculated in accordance with GAAP, ~~plus~~adjusted for depreciation and amortization expense, net interest expense, ~~net,~~ loss on debt extinguishment, net other expense, ~~(income), net, provision for~~benefit from income taxes, stock-based compensation expense, acquisition-related ~~expenses, non-recurring litigation costs, and~~expense, purchase accounting ~~adjustments for~~ deferred ~~revenue.~~revenue discount and impairment of goodwill.

The following table ~~presents~~represents a reconciliation of net loss from continuing operations, the most comparable GAAP measure, to Adjusted EBITDA for each of the periods indicated.


	Three Months Ended
	March 31,
	2024		2023

	(dollars in thousands)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss	$	(96,130)	$	(140,045)
Add:

Depreciation and amortization expense	13,802		18,500
Interest expense, net	4,958		5,461

Other expense (income), net	78		(1,425)
Benefit from income taxes	(547)		(1,422)
Stock-based compensation expense	3,522		6,462
Acquisition-related expense	—		1,086

Non-recurring litigation costs	118		—
Purchase accounting deferred revenue discount	75		228
Impairment of goodwill	87,227		128,755
Adjusted EBITDA	$	13,103	$	17,600

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(dollars in thousands)
Reconciliation of Net loss to Adjusted EBITDA:
Net Loss $ (3,506 ) $ (2,390 ) $ (14,931 ) $ (11,540 )
Add:
Depreciation and amortization expense 3,066
2,424
8,112
7,499
Interest expense, net 2,277
709
4,372
1,932
Loss on debt extinguishment (1,634 ) —
—
—
Other expense, net 130
64
260
1,105
Provision for income taxes 406
308
1,553
569
Stock-based compensation expense 1,884
1,100
7,804
2,664
Acquisition-related expense 4,399
1,047
10,368
4,855
Nonrecurring litigation expense —
—
—
25
Purchase accounting deferred revenue discount 1,294
313
3,032
1,245
Adjusted EBITDA $ 8,316
$ 3,575
$ 20,570
$ 8,354

Weighted average ordinary shares outstanding - basic 19,380,519
16,702,062
18,043,365
16,339,983
Weighted average ordinary shares outstanding - diluted 20,633,820
17,250,700
19,169,180
16,721,515
Adjusted EBITDA per share - basic $ 0.43
$ 0.21
$ 1.14
$ 0.51
Adjusted EBITDA per share - diluted $ 0.40
$ 0.21
$ 1.07
$ 0.50

Total revenue- plus purchase accounting deferred revenue discount $ 27,366
$ 19,554
$ 73,137
$ 56,638
Adjusted EBITDA margin (using Total revenue plus purchase accounting deferred revenue discount) 30 % 18 % 28 % 15 %
Total revenue $ 26,072
$ 19,241
$ 70,105
$ 55,393
Adjusted EBITDA margin 32 % 19 % 29 % 15 %

We believe that Adjusted EBITDA provides useful information to management, investors and others in understanding and evaluating our operating results for the following reasons:

•Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;

•Our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, in the preparation of our annual operating budget, as a measure of our operating performance, to assess the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance because Adjusted EBITDA eliminates the impact of items that we do not consider indicative of our core operating performance; ~~and~~

•Adjusted EBITDA provides more consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP. The use of Adjusted EBITDA as an analytical tool has limitations ~~including:~~such as:

~~Depreciation~~•Impairment of goodwill and depreciation and amortization are non-cash charges, and the assets being depreciated or amortized, which contribute to the generation of revenue, will often have to be replaced in the ~~future.~~future and Adjusted EBITDA does not reflect cash requirements for such replacements; however, much of the depreciation and amortization ~~currently reflected~~ relates to amortization of acquired intangible assets as well as the goodwill as a result of business combination purchase accounting adjustments, which will not need to be replaced in the future;

•Adjusted EBITDA may not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;

•Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation;

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•Adjusted EBITDA does not reflect interest ~~expense, acquisition-related expense, other expense, non-recurring litigation expense, loss on debt extinguishment, revenue discount required by purchase accounting,~~ or tax payments that ~~may~~could reduce cash available for use; and

•Other companies, including companies in our industry, might calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider Adjusted EBITDA together with other financial performance measures, including various cash flow metrics, net loss and our other GAAP results.

~~Results of Operations~~

~~Consolidated Statements of Operations Data~~

The following tables set forth our results of operations for the specified periods, as well as our results of operations for the specified periods as a percentage of revenue. The period-to-period comparisons of results of operations are not necessarily indicative of results for future periods.

Table of ~~facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.~~Contents

Critical Accounting Policies and the Use of Estimates

We prepare our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United ~~States.~~States (“GAAP”). The preparation of our condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

The following critical accounting policies reflect significant judgments and estimates used in the preparation of our condensed consolidated financial statements:

• ~~revenue recognition and deferred revenue;~~

~~• stock-based compensation;~~

• income taxes; and

• ~~business combinations and the recoverability of~~ goodwill and ~~long-lived assets.~~other intangibles.

We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of May 2, 2024, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

Other Key Accounting Policies

Our unaudited interim financial statements and other financial information for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2024, as presented herein and in “Item 11. Financial Statements” to this Quarterly Report on Form 10-Q, ~~reflects~~reflect no material changes in our critical accounting policies and estimates as set forth in our Annual ~~report~~Report on Form 10-K for

the year ended December 31, ~~2016~~2023 filed with the SEC on ~~March 30, 2017.~~February 22, 2024 (the “Annual Report”). Please refer to ~~this~~our Annual Report for a detailed description of our critical accounting policies that involve significant management judgment.

We evaluate our estimates, judgments and assumptions on an ongoing basis, and while we believe that our estimates, judgments and assumptions are reasonable, they are based upon information available at the time. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.

~~Under Section 107(b)~~Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of ~~the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply~~these pronouncements on our condensed consolidated financial statements, refer to ~~private companies. We are choosing~~“Note 2. Basis of Presentation and Summary of Significant Accounting Policies—Recent Accounting Pronouncements” to ~~opt out~~our condensed consolidated financial statements.

Table of such extended transition period, however, and we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate, foreign exchange and inflation risks, as well as risks relating to changes in the general economic conditions in the countries where we conduct business. ~~The~~Any impact on our statement of operations ~~impact~~ is mitigated by having an offsetting liability in deferred revenue to partially or

completely offset against the outstanding receivable if an account should become uncollectible. Our cash balances are kept in customary operating accounts, a portion of which are insured by the Federal Deposit Insurance Corporation, and uninsured money market accounts. The majority of our cash balances in money market accounts are with ~~Comerica Bank, our former~~the lender under our ~~loan and security agreements.~~Credit Facility. To date, we have not used derivative instruments to mitigate the impact of our market risk exposures. We also have not used, nor do we intend to use, derivatives for trading or speculative purposes.

Interest Rate Risk

Our exposure to market risk for changes in interest rates primarily relates to our cash equivalents and ~~any~~ variable rate indebtedness.

The primary objective of our investment activities is to preserve principal while maximizing yields without significantly increasing risk. This objective is accomplished currently by making diversified investments, consisting only of money market mutual funds and ~~certificates of deposit. Any draws under~~FDIC insured institutional liquid deposit accounts.

In 2019, the Company entered into floating-to-fixed interest rate swap agreements to limit exposure to interest rate risk related to our ~~loan and security agreements bear interest at a variable rate tied to~~debt, effectively converting the ~~prime rate. As of September 30, 2017, we had a principal~~entire balance of ~~$89.0~~the Company's Term Loans from variable interest payments to fixed interest rate payments, based on an annualized fixed rate of 5.4%, for the 7-year term of debt. On August 24, 2023, the Company sold a portion of their interest rate swaps received $20.5 million ~~under~~of net cash proceeds. After giving effect to such sale, $257.9 million of the Term Loans has an effective annualized fixed interest rate of 5.4%, and the remaining principal outstanding at March 31, 2024 has a floating interest rate of 9.2% based on the interest rate as described in “Note 6. Debt.

The interest rate associated with our ~~U.S. Term Loan, none under our U.S.~~$60 million Revolver $5.4 million under our Canadian Term Loan and none under our Canadian Revolver. See Note 12 — Subsequent Events in Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding additions to this facility.remains floating.

As of ~~December~~March 31, ~~2016,~~2024, we had ~~a principal~~an outstanding balance of ~~$43.8 million~~$480.7 under our ~~U.S. Loan Agreement and $5.6~~Credit Facility. Based on the Company’s outstanding balance of variable rate debt at March 31, 2024, a hypothetical change of 100 basis points could have resulted in a $0.6 million ~~under our Canadian Loan Agreement.~~increase to total interest expense for the three months ended March 31, 2024.

Foreign Currency Exchange Risk

Our ~~results~~customers are generally invoiced in the currency of ~~operations and cash flows~~the country in which they are ~~subject to fluctuations due to changes in foreign currency exchange rates, which expose us to foreign exchange rate risk.~~located. In addition, we incur a portion of our operating expenses in foreign currencies, including Australian dollars, Canadian dollars, Indian Rupees, British pounds, Euros, and ~~Euros,~~Israeli New Shekels and in the future as we expand into other foreign countries, we expect to incur operating expenses in other foreign currencies. ~~In addition, our customers are generally invoiced in the currency of the country in which they are located. We~~As a result, we are exposed to foreign exchange rate fluctuations as the financial results of our international operations ~~are translated from the local functional currency into U.S. dollars upon consolidation. A decline in the U.S. dollar relative to foreign functional currencies would increase our non-U.S. revenue~~ and ~~improve our operating results. Conversely, if the U.S. dollar strengthens relative to foreign functional currencies,~~ our revenue and operating results ~~would~~could be adversely affected. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business ~~would~~could have resulted in a change in revenue of ~~$7.0 million~~0.4% for the ~~nine~~three months ended ~~September 30, 2017. To date, we~~March 31, 2024. We have not previously engaged in any currency hedging strategies. If we decide to hedge our foreign currency exchange rate exposure, we may not be able to hedge effectively due to lack of experience, unreasonable costs, or illiquid markets. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in foreign currency exchange rates.

The non-financial assets and liabilities of our foreign subsidiaries are translated into United States dollars using the exchange rates in effect at the balance sheet date. The related translation adjustments are recorded in a separate component of stockholders' equity in accumulated other comprehensive income (loss). In addition, we have intercompany loans that are used to fund the acquisition of foreign subsidiaries. Due to the long-term nature of these loans, the foreign currency gains (losses) resulting from remeasurement are recognized as a component of accumulated other comprehensive income (loss).

~~Inflation~~

~~We do not believe that inflation had a material effect on our business, financial condition or results~~

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~~operations in the last three fiscal years. If our costs were to become subject to significant inflationary pressures, we~~

~~may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm~~

~~our business, financial condition and results of operations.~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

~~Under the supervision and~~Our management, with the participation of ~~our management, including~~ our Chief Executive Officer and Chief Financial Officer, ~~we conducted an evaluation~~has evaluated the effectiveness of our disclosure controls and procedures as ~~such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as~~ of March 31, 2024, the end of the period covered by this ~~Report.~~Quarterly Report on Form 10-Q. Based ~~on this~~upon such evaluation, ~~the~~our Chief Executive Officer and Chief Financial Officer have concluded that ~~as of the end of the period covered by this Report,~~ our disclosure controls and procedures were effective atas of such date. Our management has concluded that the ~~reasonable assurance level.~~condensed consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with GAAP.

Changes in Internal Control over Financial Reporting

Subsequent to the filing of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, we identified and successfully remediated a material weakness in the operating effectiveness of the review control over the evaluation of certain complex and non-routine debt modifications. Management has completed the following improvements to this review control over the evaluation of certain complex and non-routine debt modifications:

Conducted training regarding the design and operation of controls with those responsible for performing and reviewing the process level control activities over the evaluation of certain complex and non-routine debt modifications, in connection with amendments of our credit facilities, for modification versus extinguishment accounting under ASC 470, Debt, based on the application of the cash flow test.

~~Enhanced review controls over non-routine debt transactions,~~

Management has assessed the above identified changes to the review control over the evaluation of certain complex and non-routine debt modifications to ensure that the changes have been properly designed and implemented and are operating effectively. The assessment performed has allowed management to conclude that as of the end of the period covered by this Report, the Company's disclosure controls and procedures were effective at the reasonable assurance level. The process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.

There were no ~~other~~ changes into our internal control over financial reporting (as defined in Rules 13a- 15(f) and 15d- 15(f) of the Exchange Act) during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal ~~controls~~control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, the risk.

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PART II – OTHER INFORMATION

Item 1A. Risk Factors

~~The risk factor~~In addition to the other information set forth ~~below replaces~~in this report, you should carefully consider the ~~risk factor~~factors discussed in Part I, “Item 1A. Risk Factors” in our 2023 Annual Report on Form 10-K, ~~for the year ended December 31, 2016, entitled "Our loan facility contains operating and financial covenants that may restrict~~which could materially affect our business, ~~and financing activities." Other than the risk factor set forth below, there~~financial condition or future results. There have been no material changes ~~from~~during 2024 to the risk factors ~~disclosed~~that were included in ~~our~~the Company's Annual Report on Form 10-K filed with the SEC on February 22, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

On September 1, 2023 and October 31, 2023, the Board of Directors authorized the Stock Repurchase Plan (as defined in Note 10. Stockholders' Equity) in the aggregate amount of up to $15,000,000 and $10,000,000, respectively, for a total of $25,000,000 authorized, which allows the Company to repurchase shares of its issued and outstanding Common Stock, from time to time in the open market or otherwise including pursuant to a Rule 10b5-1 trading plan and in compliance with Rule10b-18 under the Exchange Act. The authorization does not have a specified expiration date. Accordingly, unless terminated earlier by resolution of the Board, the stock repurchase program will expire when the Company has repurchased all shares authorized for repurchase. The Company is not obligated to acquire any particular amount of Common Stock and may modify or suspend the repurchases at any time in the Company’s discretion.

In the three months ended March 31, 2024, the Company purchased 2,242,654 shares as part of the Stock Repurchase Plan at an average price of $3.50 per shares, excluding commission costs and the impact of excise taxes.

The following table provides information about purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act during the three months ended March 31, 2024.


Period	Total number of shares purchased	Average price paid per share (2)		Total number of shares purchased as part of the publicly announced plan	Maximum approximate dollar value of shares that may yet be purchased under the plan
1/1/2024 - 1/31/2024	691,096	$	4.12	691,096	$	7,901,000
2/1/2024 - 2/29/2024	681,570	$	3.93	681,570	$	5,172,000
3/1/2024 - 3/31/2024 (1)	1,006,609	$	2.66	869,988	$	2,801,000
	2,379,275			2,242,654

(1) The total number of shares repurchased includes 136,621 shares withheld from employees to satisfy the statutory withholding tax liability upon the vesting of share-based awards.

(2) Average price paid per share excludes commission costs and excise taxes associated with the above mentioned repurchases.

Item 5. Other Information

Rule 10b5-1 Trading Plans

On February 27, 2024, Timothy Mattox, a director on the Company’s Board of Directors, adopted a written plan for the ~~year ended December 31, 2016.~~

~~Our Credit Facility contains operating and financial covenants that may restrict our business and financing activities.~~

~~On May 14, 2015, we entered into a credit facility with Wells Fargo Capital Finance, which has been amended though a series~~sale of ~~redeterminations and expanded~~up to include a syndicate of banks (as amended, the "Credit Facility"). In 2017, the Credit Facility was amended on April 21, 2017 with the Fourth Amendment to the Credit Agreement (the Fourth Amendment") and further amended on August 2, 2017 with the Fifth Amendment to Credit Agreement ("the Fifth Amendment").

Effective as of the Fourth Amendment executed on April 21, 2017, the Credit Facility was comprised of a $44.4 million term loan, a $10.0 million revolving credit facility, a $10.0 million delayed draw term loan for acquisitions. Additionally, the facility provided for uncommitted increases in the maximum size of the loan facility by an aggregate principal amount of $20.0 million to further support future acquisitions and an additional $16.7 million of subordinated seller notes for acquisitions.

Effective as of the Fifth Amendment executed on August 2, 2017, the Credit Facility now provides for a $200.0 million credit facility, including a $94.4 million outstanding term loan, a $40.0 million delayed draw term loan commitment, a $10.0 million revolving loan commitment, and a $55.0 million uncommitted accordion.

~~Specifically, the Fifth Amendment provides for, among other things, (i) the expansion~~13,843 shares of the Company’s ~~delayed draw term facility from $10.0 million~~Common Stock that was intended to ~~$40.0 million, (ii) an increase in~~satisfy the ~~Company’s uncommitted accordion amount from $20.0 million to $55.0 million, (iii) reduces principal installments to 2.5% per annum~~affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The written plan will expire on December 31, 2024, or ~~before June 30, 2019 with the existing 5.0% per annum due thereafter until the facility’s maturity~~on any earlier date of August 2, 2022, (iv) favorable adjustment of leverage ratio to exclude excess of $2.5 million and up to $15.0 million in qualified cash from such calculation, and (v) an increase in the maximum amount of purchase consideration payable in respect of an individual permitted acquisition from $20.0 million to $25.0 million and in respect ofon which all ~~permitted acquisitions from $75.0 million to $175.0 million.~~

~~Our obligations and the obligations~~ of the ~~co-borrowers and~~shares have been sold.

During the three months ended March 31, 2024, none of our other officers (as defined in Rule 16a-1(f)) or directors adopted or terminated any ~~guarantors~~Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K under the Credit Facility are secured by a security interest in substantially all of our assets and assets of the co-borrowers’ and of any guarantors, including intellectual property. The terms of the Credit Facility limits, among other things, our ability toSecurities Act).

~~sell, lease, license or otherwise dispose of assets;~~

~~undergo a change in control;~~

~~consolidate or merge with or into other entities;~~

~~make or own loans, investments and acquisitions;~~

~~create, incur or assume guarantees in respect of obligations of other persons;~~

~~create, incur or assume liens and other encumbrances; or~~

~~pay dividends or make distributions on, or purchase or redeem, our capital stock.~~

Furthermore, the Credit Facility requires us and our subsidiaries to comply with certain financial covenants. The operating and other restrictions and covenants in the Credit Facility, and in any future financing arrangements that we may enter into, may restrict our ability to finance our operations, engage in certain business activities, or expand or fully pursue our business strategies, or otherwise limit our discretion to manage our business. Our ability to comply with these restrictions and covenants may be affected by events beyond our control, and we may not be able to meet those restrictions and covenants. A breach of any of the restrictions and covenants could result in a default under the Credit Facility or any future financing arrangements, which could cause any outstanding

~~indebtedness under the credit facility or under any future financing arrangements to become immediately due and payable, and result in the termination of commitments to extend further credit.~~

As of September 30, 2017 there was $94.4 million outstanding under the Credit Facility, $94.4 million of which was outstanding under the term loan portion, none outstanding under the $40.0 million delayed draw term loan, none outstanding under the $10.0 million revolving portion of the Credit Facility and none outstanding under the $55.0 million uncommitted loan feature.

Item 6. Exhibits

See the Exhibit Index immediately following this page, which is incorporated herein by reference.

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EXHIBIT INDEX

Exhibit Number

Exhibit Description

~~Exhibit Number~~

~~Exhibit Description~~

10.1*

~~Fifth~~ Amendment # 3 to ~~Credit~~Employment Agreement between the Registrant and John T. McDonald, dated ~~as of August 2, 2017, among~~ ~~inter alia~~ ~~the Company and certain of its domestic and Canadian subsidiaries, as borrowers, and each of the lenders party thereto.~~January 30 , 2024

10.2*

Amendment # 1 to Employment Agreement between the Registrant and Karen Cummings, dated January 30 , 2024

31.1*

Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*

101.INS***

Inline XBRL ~~Instance Document~~

101.SCH***

~~XBRL Taxonomy Extension Schema Document~~

101.CAL***

~~XBRL Taxonomy Extension Calculation Linkbase Document~~

101.DEF***

~~XBRL Taxonomy Extension Definition Linkbase Document~~

101.LAB***

~~XBRL Taxonomy Extension Label Linkbase Document~~

101.PRE***

~~XBRL Taxonomy Extension Presentation Linkbase Document~~


*	~~Filed herewith.~~


**	~~Furnished herewith.~~


~~***~~	(Extensible Business Reporting Language). The ~~financial information contained~~following materials from this Quarterly Report on Form 10-Q for the periods ended March 31, 2024, formatted in ~~these XBRL documents is~~Inline XBRL: (i) condensed consolidated balance sheets of Upland Software, Inc., (ii) condensed consolidated statements of operations of Upland Software, Inc., (iii) condensed consolidated statements of comprehensive income/(loss) of Upland Software, Inc., (iv) condensed consolidated statement of stockholders’ equity of Upland Software, Inc., (v) condensed consolidated statements of cash flows of Upland Software, Inc. and (vi) notes to unaudited ~~and these are not the official publicly filed~~condensed consolidated financial statements of Upland Software, Inc. ~~Investors should continue to rely on~~The instance document does not appear in the ~~official filed version of~~interactive data file because its XBRL tags are embedded within the ~~furnished documents~~Inline XBRL document.

104*		Cover Page Interactive Data File (formatted as Inline XBRL and ~~not rely on this information~~contained in making investment decisions. In accordance with Rule 402 of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.Exhibit 101)

~~SIGNATURES~~

* Filed herewith.

** Furnished herewith.

Table of Contents

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.
Dated: ~~November 14, 2017~~May 2, 2024		/s/ Michael D. Hill
		Michael D. Hill
		Chief Financial Officer


	Amortization Expense
Year ending December 31:
Remainder of 2024	$	40,297
2025	38,796
2026	36,572
2027	27,680
2028	17,999
2029 and thereafter	5,644
Total	$	166,988



	Amortization Expense
Year ending December 31:
Remainder of 2017	$	2,445
2018	9,520
2019	8,452
2020	7,477
2021	7,082
2022 and thereafter	12,536
Total	$	47,512


					March 31, 2024
					March 31, 2024
					March 31, 2024		December 31, 2023
Senior secured loans (includes unamortized discount of $4,800 and $5,376 based on an imputed interest rate of 7.6% and 7.6%, at March 31, 2024 and December 31, 2023, respectively)

	September 30, 2017			December 31, 2016
Senior secured loans (includes unamortized discount of $2,699 and $1,442 based on an imputed interest rate of 7.5% and 6.6%, at September 30, 2017 and December 31, 2016, respectively)	$	91,707		$	47,929

Less current maturities

Less current maturities

Less current maturities	(1,701		)	(2,190		)
Total long-term debt	$	90,006		$	45,739



Year ending December 31:
Remaining 2017	$	594
2018	2,375
2019	3,563
2020	4,750
2021	4,750
Thereafter	78,374
	$	94,406


	March 31,
	2024	2023

Stock options	141,699	152,683

Restricted stock units	2,937,337	2,507,689
Performance restricted stock units	350,000	193,750
Series A Preferred Stock on an if-converted basis(1)	7,061,046	6,752,038
Total anti–dilutive common share equivalents	10,490,082	9,606,160



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue:
Subscription and support	$	23,169		$	17,029		$	60,711		$	48,490
Perpetual license	856			332			3,296			1,108
Total product revenue	24,025			17,361			64,007			49,598
Professional services	2,047			1,880			6,098			5,795
Total revenue	26,072			19,241			70,105			55,393
Cost of revenue:
Subscription and support	7,737			5,747			20,306			16,607
Professional services	1,376			1,045			3,838			3,775
Total cost of revenue	9,113			6,792			24,144			20,382
Gross profit	16,959			12,449			45,961			35,011
Operating expenses:
Sales and marketing	4,258			3,097			11,516			9,119
Research and development	4,092			3,737			11,572			11,701
Refundable Canadian tax credits	(195		)	(115		)	(424		)	(340		)
General and administrative	5,084			4,670			17,564			13,340
Depreciation and amortization	1,648			1,322			4,111			4,270
Acquisition-related expenses	4,399			1,047			10,368			4,855
Total operating expenses	19,286			13,758			54,707			42,945
Loss from operations	(2,327		)	(1,309		)	(8,746		)	(7,934		)
Other expense:
Interest expense, net	(2,277		)	(709		)	(4,372		)	(1,932		)
Loss on debt extinguishment	1,634			—			—			—
Other expense, net	(130		)	(64		)	(260		)	(1,105		)
Total other expense	(773		)	(773		)	(4,632		)	(3,037		)
Loss before provision for income taxes	(3,100		)	(2,082		)	(13,378		)	(10,971		)
Provision for income taxes	(406		)	(308		)	(1,553		)	(569		)
Net loss	$	(3,506	)	$	(2,390	)	$	(14,931	)	$	(11,540	)
Net loss per common share:
Net loss per common share, basic and diluted	$	(0.18	)	$	(0.14	)	$	(0.83	)	$	(0.71	)
Weighted-average common shares outstanding, basic and diluted	19,380,519			16,702,062			18,043,365			16,339,983



	Preliminary									Finalized
	Waterfall			RightAnswers			Omtool			API			HipCricket			LeadLander
Year Acquired	2017			2017			2017			2016			2016			2016
Cash	$	435		$	139		$	2,957		$	125		$	—		$	365
Accounts receivable	1,442			2,164			784			821			1,226			199
Other current assets	1,031			125			607			54			273			55
Property and equipment	74			158			63			68			—			5
Customer relationships	5,700			5,700			4,400			1,420			1,000			970
Trade name	110			200			170			40			70			70
Technology	2,800			2,600			3,180			810			900			1,410
Goodwill	18,747			20,100			13,933			3,420			8,531			13,104
Other assets	—			—			33			89			—			6
Total assets acquired	30,339			31,186			26,127			6,847			12,000			16,184
Accounts payable	(605		)	(139		)	(219		)	(11		)	(44		)	—
Accrued expense and other	(1,382		)	(1,321		)	(915		)	(137		)	—			(254		)
Deferred revenue	(1,220		)	(5,428		)	(2,779		)	(1,699		)	(356		)	(910		)
Total liabilities assumed	(3,207		)	(6,888		)	(3,913		)	(1,847		)	(400		)	(1,164		)
Total consideration	$	27,132		$	24,298		$	22,214		$	5,000		$	11,600		$	15,020



Ending balance at December 31, 2016	$	2,500
Additions - cash earnouts	5,226
Settlements - cash earnouts	(3,533		)
Ending balance at September 30, 2017	$	4,193



Balance at December 31, 2016	$	69,097
Acquired in business combinations	52,782
Adjustment due to prior year business combinations	17
Foreign currency translation adjustment	1,008
Balance at September 30, 2017	$	122,904



	September 30,
	2017	2016
Stock options	626,023	780,645
Restricted stock	1,349,279	1,055,738
Total anti–dilutive common share equivalents	1,975,302	1,836,383



	Number of Restricted Shares Outstanding		Weighted-Average Grant Date Fair Value
Unvested balances at December 31, 2016	839,477		$	7.55
Awards granted	804,415
Awards vested	(249,501	)
Awards forfeited	(45,112	)
Unvested balances at September 30, 2017	1,349,279		$	12.38



	Number of Options Outstanding		Weighted– Average Exercise Price
Outstanding at December 31, 2016	759,719		$	6.06
Options granted	26,100		$	23.60
Options exercised	(131,843	)	$	4.96
Options forfeited	(27,788	)	$	10.57
Options expired	(165	)	$	4.33
Outstanding at September 30, 2017	626,023		$	6.83


	Number of Units	Weighted-Average Grant Date Fair Value
Unvested restricted units outstanding as of December 31, 2023	1,858,847	$	9.76
Granted	2,017,687	4.23
Vested	(467,524)	8.70
Forfeited	(121,673)	9.92
Unvested restricted units outstanding as of March 31, 2024	3,287,337	$	6.51


	March 31, 2024	December 31, 2023
Expected volatility	62.1%	55.5%
Risk-free interest rate	4.0%	4.4%
Remaining performance period (in years)	3.08	2.86
Dividend yield	—	—


	Number of Options Outstanding	Weighted– Average Exercise Price
Outstanding at December 31, 2023	149,914	$	11.44



Options expired	(8,215)	6.22
Outstanding at March 31, 2024	141,699	$	11.72


Results of Operations

Consolidated Statements of Operations Data

The following tables set forth our results of operations for the specified periods, as well as our results of operations for the specified periods as a percentage of revenue. The period-to-period comparisons of results of operations are not necessarily indicative of results for future periods.

	Three Months Ended March 31,
	2024				2023
	Amount		Percent of Revenue		Amount		Percent of Revenue

	(dollars in thousands, except share and per share data)
Revenue:
Subscription and support	$	67,078	95	%	$	72,914	95	%
Perpetual license	1,470		2	%	1,571		2	%
Total product revenue	68,548		97	%	74,485		97	%
Professional services	2,188		3	%	2,571		3	%
Total revenue	70,736		100	%	77,056		100	%
Cost of revenue:
Subscription and support (1)(3)	19,829		28	%	23,485		30	%
Professional services and other (1)	1,220		2	%	2,051		3	%
Total cost of revenue	21,049		30	%	25,536		33	%
Gross profit	49,687		70	%	51,520		67	%
Operating expenses:
Sales and marketing (1)	17,018		24	%	14,289		19	%
Research and development (1)	12,455		18	%	12,530		16	%

General and administrative (1)(2)	13,232		19	%	17,189		22	%
Depreciation and amortization	11,396		16	%	15,094		20	%
Acquisition-related expenses	—		—	%	1,094		1	%
Impairment of goodwill	87,227		123	%	128,755		167	%
Total operating expenses	141,328		200	%	188,951		245	%
Loss from operations	(91,641)		(130)	%	(137,431)		(178)	%
Other Expense:
Interest expense, net	(4,958)		(7)	%	(5,461)		(7)	%

Other income (expense), net	(78)		—	%	1,425		2	%
Total other expense	(5,036)		(7)	%	(4,036)		(5)	%
Loss before provision for income taxes	(96,677)		(137)	%	(141,467)		(183)	%
Benefit from income taxes	547		1	%	1,422		1	%
Net loss	(96,130)		(136)	%	(140,045)		(182)	%


Preferred stock dividends and accretion	(1,375)		(2)	%	(1,315)		(2)	%
Net loss attributable to common shareholders	$	(97,505)	(138)	%	$	(141,360)	(184)	%
Net loss per common share:


Net loss per common share, basic and diluted	$	(3.37)			$	(4.38)
Weighted-average common shares outstanding, basic and diluted	28,917,897				32,259,110

(1) Includes stock-based compensation detailed under Share-based Compensation in “Item 1. Financial Statements—Note 10. Stockholders' Equity”.

(2) Includes general and administrative stock-based compensation of $2.3 million and $4.9 million for the three months March 31, 2024 and March 31, 2023, respectively. General and administrative expense excluding stock-based compensation as a percentage of total revenues was 15% and 16% for the three months ended March 31, 2024 and March 31, 2023, respectively..


(3) Includes depreciation and amortization of $2.4 million and $3.4 million for the three months ended March 31, 2024 and March 31, 2023, respectively.