Upland Software, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed February 24, 2022. This is an annual report, not a standalone fourth-quarter filing. Upland provides cloud-based enterprise work-management software and pursues growth through acquisitions.
Financial performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $302.0 million | $291.8 million |
| Subscription and support revenue | $287.6 million | $277.5 million |
| Gross profit / margin | $202.6 million / 67% | $193.3 million / 66% |
| Operating loss | $34.7 million | $23.8 million |
| Net loss | $58.2 million | $51.2 million |
| Adjusted EBITDA (non-GAAP) | $96.7 million | $99.9 million |
| Cash from operating activities | $41.7 million | $35.6 million |
| Cash and cash equivalents at year-end | $189.2 million | $250.0 million |
- Revenue increased 4%. Subscription and support supplied 95% of revenue; perpetual licenses were 1% and professional services 4%.
- Management attributed reported revenue growth mainly to acquisitions. Revenue from the defined Organic Business fell $16.2 million; 2020 included $18.2 million of U.S. election-campaign usage revenue that did not recur. Annual recurring revenue value rose to $257.1 million from $220.5 million, while annual net dollar retention was 94% in both years.
- Operating loss widened as sales and marketing, R&D, general and administrative, and amortization expenses increased. Net loss per share was $1.92 in both years.
- Investing cash outflow was $93.5 million, including cash paid for three 2021 acquisitions. Financing cash outflow was $8.2 million; the prior year included $130.1 million of net proceeds from an equity offering.
Liquidity, debt, and capital commitments
- Year-end total liquidity was $249.2 million, comprising $189.2 million of cash and $60.0 million of undrawn revolving capacity. Working capital surplus was $106.5 million.
- Debt carrying value, net of discount, was $518.3 million; contractual principal outstanding was $527.9 million. Term loans mature in 2026, with $506.3 million due that year. Term-loan interest was effectively fixed at 5.4%; the undrawn revolver rate remains floating.
- The company reported compliance with credit-facility covenants and no financial covenants while less than 35% of the revolver is drawn. Management said cash, operating cash flows, and available financing were expected to cover needs for at least 12 months.
- Contractual obligations totaled $722.6 million, including debt principal, debt interest, operating leases, and purchase commitments. The latter include a $10.0 million 2022 commitment for software-development services from DevFactory.
Changes, outlook, and risks
- Upland completed acquisitions of Second Street, BlueVenn, and Panviva in 2021. Their reported post-acquisition revenue totaled approximately $26.7 million. Two further acquisitions—Objectif Lune and BA-Insight—closed after year-end, for cash consideration of $29.0 million and $33.4 million, respectively, before holdbacks.
- The filing provides no quantified revenue or earnings guidance. Management intends to continue acquisitions in its core cloud offerings and invest in products, customer expansion, and sales. It stated that COVID-19 continued to affect new bookings and churn in 2021; ongoing pandemic effects remain uncertain.
- Key risks include acquisition integration and financing, customer retention and cross-selling, competition and pricing, cybersecurity and service availability, high leverage and covenant restrictions, foreign-exchange exposure, and tax-attribute limitations. The company disclosed $365.8 million of tax net operating loss carryforwards, with stated ownership-change limits expected to cause $155.0 million of U.S. federal losses and $4.4 million of credits to expire unused.
- Unusual items include $53.9 million of stock-based compensation, including $6.3 million tied to the former co-President/COO’s departure; a $4.5 million gain from remeasurement of acquisition earnout liabilities; and an $8.3 million income-tax benefit, partly associated with acquired deferred tax liabilities. No material pending legal proceedings or goodwill impairment were reported.
- The independent auditor gave unqualified opinions on the financial statements and internal controls. Critical audit matters included acquisition valuation, revenue recognition for newly acquired products, and income-tax measurement.
Important facts for investors to verify
- Whether organic revenue and retention improve after excluding election-related 2020 usage revenue and acquisition effects.
- Whether the company can sustain operating cash flow while funding acquisitions, servicing debt, and meeting the large 2026 maturity.
- How the 2022 acquisitions affect cash, leverage, integration costs, and recurring revenue.
- The recurring and dilution effects of elevated stock-based compensation, and the sensitivity of results to acquisition accounting and tax benefits.
- Whether COVID-related booking and churn pressures, foreign-exchange movements, and customer-renewal trends materially change operating performance.