Upland Software, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; it does not provide a clear standalone set of fourth-quarter financial results. Amounts below are in U.S. dollars.
Business context
Upland provides cloud-based software for functions including marketing, sales, contact centers, knowledge management, project management, IT, business operations, HR and legal. Its subscription-led business served more than 10,000 customers. The company continued its acquisition strategy, completing two acquisitions in 2022: Objectif Lune and BA Insight.
Key financial metrics
| Metric | FY2022 | FY2021 |
|---|---|---|
| Total revenue | $317.3 million | $302.0 million |
| Subscription and support revenue | $297.9 million | $287.6 million |
| Gross profit / margin | $213.6 million / 67% | $202.6 million / 67% |
| Operating loss | $40.2 million | $34.7 million |
| Net loss | $68.4 million | $58.2 million |
| Net loss attributable to common stockholders | $70.3 million | $58.2 million |
| Net loss per common share, diluted | $2.23 | $1.92 |
| Adjusted EBITDA (non-GAAP) | $97.1 million | $96.7 million |
| Cash provided by operating activities | $30.0 million | $41.7 million |
Subscription and support accounted for 94% of revenue. Annualized recurring revenue was $266.3 million, up from $257.1 million; annual net dollar retention was 95%, versus 94%. Remaining performance obligations were approximately $272.5 million, with about 69% expected to be recognized over the next 12 months.
At December 31, 2022, cash and cash equivalents were $248.7 million, working capital surplus was $170.1 million, and reported total liquidity—including the undrawn revolver—was $308.7 million. Debt principal was $522.5 million, with $514.98 million of notes payable net of unamortized discount on the balance sheet. The $60 million revolving facility was undrawn. Term-loan interest was effectively fixed at 5.4% through the August 2026 maturity; the revolver remains floating-rate.
Changes versus FY2021
Revenue increased 5%, but the increase was substantially acquisition-driven. Management reported that revenue from acquisitions not fully reflected in the prior-year comparison added $32.8 million. Core Organic Revenue, a company-defined non-GAAP measure excluding acquisitions and several other revenue categories, declined $3.8 million; excluding foreign-exchange effects, it declined $2.6 million. Subscription and support revenue rose 4% as reported, while its core organic measure also declined. Foreign exchange reduced reported revenue growth by 2%.
Gross margin held at 67%. Operating loss widened, including a $12.5 million goodwill impairment recorded in the fourth quarter after a decline in the company’s share price. Cash from operations fell by $11.8 million, principally due to working-capital uses, including lower accrued expenses, accounts payable and deferred revenue. Cash increased year over year largely because of the preferred-stock financing.
Outlook, commentary and risks
Management stated that existing cash, operating cash flows and available credit were expected to fund operations for at least the next 12 months. It intends to continue pursuing acquisitions. Management expected sales and marketing and R&D expenses to increase in 2023 as it invests in go-to-market activity and product development. The filing does not provide numerical revenue or earnings guidance.
In August 2022, Upland issued $115 million of Series A Convertible Preferred Stock. It carries cumulative dividends of 4.5% annually for the first seven years, rising to 7% thereafter, and ranks senior to common stock in distribution and liquidation rights. Dividends may be paid in cash or added to its liquidation preference; the year-end preference, including accrued dividends, was $116.8 million. Conversion, voting and change-of-control provisions may affect common-stock dilution and transaction flexibility.
Other material risks include acquisition integration and financing, high debt and credit-facility restrictions, customer retention and cross-selling, competitive pressure, cybersecurity and service-provider disruptions, foreign-exchange exposure, inflation and weaker customer IT spending. The company reported no material pending legal proceedings. The financial-statement and internal-control audits received unqualified opinions, and management and the auditor reported effective internal control over financial reporting as of year-end.
Important facts for investors to verify
- Assess whether acquisition-led growth can translate into improving core organic revenue, retention and profitability.
- Review the drivers of lower operating cash flow and whether cash generation can support debt obligations, preferred dividends and planned investment.
- Examine the Series A preferred stock’s cumulative dividend, senior claims, conversion terms and potential dilution.
- Monitor the $522.5 million debt principal, 2026 term-loan maturity, covenant headroom and refinancing conditions.
- Track the $12.5 million goodwill impairment and higher expected 2023 amortization, as well as management’s stated expense increases.