Upland Software Inc

Previous wording

This section and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties. 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. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the subsection entitled “Item 1A. Risk Factors” above, which are incorporated herein by reference. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. For a comparison of the years ended December 31, 2022 and 2021 refer to “Item 7. Management’s Discussion and Analysis” in the Company’s Annual Report on Form 10-K for the years ended December 31, 2022 filed with the SEC on February 28, 2023. All information presented herein is based on our fiscal calendar. Unless otherwise stated, references in this report to particular years or quarters refer to our fiscal years ended December 31 and the associated quarters of those fiscal years. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Current wording

This section and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties. 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. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the subsection entitled “Item 1A. Risk Factors” above, which are incorporated herein by reference. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. For a comparison of the years ended December 31, 2023 and 2022 referto “Item 7. Management’s Discussion and Analysis” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 22, 2024. All information presented herein is based on our fiscal calendar. Unless otherwise stated, references in this report to particular years or quarters refer to our fiscal years ended December 31 and the associated quarters of those fiscal years. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Previous wording

We service customers ranging from large global corporations and government agencies to small- and medium-sized businesses. We have more than 10,000 customers across a broad range of industries, including financial services, consulting services, technology, manufacturing, media, telecommunications, government, insurance, non-profit, healthcare, life sciences, retail and hospitality.

Current wording

We enable global businesses to work smarter with over 20 proven cloud software products that increase revenue, reduce costs, and deliver immediate value. Our AI-powered solutions cover knowledge management, content lifecycle and workflow automation, and digital marketing. We service over 10,000 customers ranging from large global corporations and various government agencies as well as small and medium-sized businesses. Our customers operate in a wide variety of industries, including financial services, consulting services, technology, manufacturing, media, telecommunications, government, insurance, non-profit, healthcare, life sciences, legal, retail and hospitality.

Previous wording

Through a series of acquisitions and integrations, we have established a library of diverse, cloud-based software applications under the Upland brand that address specific digital transformation needs. Our revenue has grown from $149.9 million in the year ended December 31, 2018 to $297.9 million in the year ended December 31, 2023, representing a compound annual growth rate of 15%. During each of the years ended December 31, 2023 and December 31, 2022, non-US revenue as a percent of total revenue was 30% .

Current wording

Through a series of acquisitions and integrations, we have established a library of diverse software applications under the Upland brand that address specific digital transformation needs. Our revenue has grown from $149.9 million in the year ended December 31, 2018 to $274.8 million in the year ended December 31, 2024, representing a compound annual growth rate of 11%. During the years ended December 31, 2024, 2023 and 2022, non-US revenue as a percent of total revenue was 29%, 30%, and 30%, respectively.

Previous wording

Our operating results in a given period can fluctuate based on the mix of subscription and support, perpetual license and professional services revenue. For the years ended December 31, 2023, 2022 and 2021, our subscription and support revenue represented 95%, 94% and 95% of our total revenue, respectively. Historically, we have sold certain of our applications under perpetual licenses, which also are paid in advance. For the years ended December 31, 2023, 2022 and 2021, our perpetual license revenue accounted for 2%, 2% and 1% of our total revenue, respectively. The support agreements related to our perpetual licenses are one-year in duration and entitle the customer to support and unspecified upgrades. The revenue related to such support agreements is included as part of our subscription and support revenue. Professional services revenue consists of fees related to implementation, data extraction, integration and configuration and training on our applications. For the years ended December 31, 2023, 2022 and 2021, our professional services revenue accounted for 3%, 4%, and 4% of our total revenue, respectively.

Current wording

Our operating results in a given period can fluctuate based on the mix of subscription and support, perpetual license and professional services revenue. For the years ended December 31, 2024, 2023 and 2022, our subscription and support revenue represented 95%, 95% and 94% of our total revenue, respectively. Historically, we have sold certain of our applications under perpetual licenses, which also are paid in advance. For the years ended December 31, 2024, 2023 and 2022, our perpetual license revenue accounted for 2%, 2% and 2% of our total revenue, respectively. The support agreements related to our perpetual licenses are one-year in duration and entitle the customer to support and unspecified upgrades. The revenue related to such support agreements is included as part of our subscription and support revenue. Professional services revenue consists of fees related to implementation, data extraction, integration and configuration and training on our applications. For the years ended December 31, 2024, 2023 and 2022, our professional services revenue accounted for 3%, 3%, and 4% of our total revenue, respectively.

Previous wording

To support continued growth, we intend to pursue acquisitions of complementary technologies, products and businesses. This will expand our product families, customer base and market access, resulting in increased benefits of scale. We will prioritize acquisitions within our current enterprise solution categories as described in “Item 1. Business” herein. Consistent with our growth strategy, we have completed a total of 31 acquisitions from February 2012 through December 31, 2023.

Current wording

To support continued growth, we may pursue acquisitions of complementary technologies and businesses. This may expand our product library, customer base and market access, resulting in increased benefits of scale.

Previous wording

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”).

Current wording

In connection with periodic reviews of our business in 2022 and 2023, we 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

Previous wording

During the three months ended December 31, 2022, we decided to classify as Sunset Assets certain non-strategic product offerings representing an estimated $27.9 million of 2023 annual total revenue. During the second quarter of 2023, we determined that certain product offerings that had previously been placed in Sunset Assets did have use cases that would be strategic and, as a result, we removed them from our Sunset Assets. At the same time, we identified other product offerings and certain non-strategic customer contracts to include in Sunset Assets. The net effect of these actions in the second quarter of 2023 resulted in the estimated addition of approximately $5.0 million in 2023 annual total revenues to our Sunset Assets. Subsequently, during the three months ended December 31, 2023, a non-strategic product offering was identified and included in Sunset Assets adding an additional estimated $9.9 million in 2023 annual total revenues to our Sunset Assets. As a result of the discontinuation of these Sunset Assets, the Company has established end of life targets and reduced certain expenditures related to the sales and marketing of the Sunset Assets.

Current wording

Assets”). As a result of the discontinuation of these Sunset Assets, the Company has established end of life targets and reduced certain expenditures related to the sales and marketing of the Sunset Assets.

Previous wording

Impairment of Goodwill. Goodwill impairment is recognized on a non-recurring basis when the Carrying Value (or GAAP basis book value) of our Company (which is our only reporting unit) exceeds the estimated fair value of our Company as determined by reference to a number of factors and assumptions, including the spot closing price of our Common Stock as of a certain reporting or measurement date. We assess Goodwill for impairment annually on October 1st, or more frequently when an event occurs which could cause the Carrying Value of our Company to exceed the estimated fair value of our Company. See “Note 5. Goodwill and Other Intangible Assets” in the notes to our consolidated financial statements for more information regarding our first quarter 2023 and our fourth quarter 2022 Goodwill impairment charges. We will continue to evaluate Goodwill impairment in future periods.

Current wording

Impairment of goodwill. Goodwill impairment is recognized on a non-recurring basis when the carrying value (or GAAP basis book value) of our Company (which is our only reporting unit) exceeds the estimated fair value of our Company as determined by reference to a number of factors and assumptions, including the spot closing price of our Common Stock as of a certain reporting or measurement date. We assess goodwill for impairment annually on October 1st, or more frequently when an event occurs which could cause the carrying value of our Company to exceed the estimated fair value of our Company. See “Note 5. Goodwill and Other Intangible Assets” in the notes to our consolidated financial statements for more information regarding our first quarter 2024, our first quarter 2023 and our fourth quarter 2022 goodwill impairment charges. We will continue to evaluate goodwill impairment in future periods.

Previous wording

(2) Includes depreciation and amortization of $13.4 million, $12.5 million and $11.6 million in the years ended December 31, 2023, 2022 and 2021, respectively.

Current wording

(2) Includes depreciation and amortization of $9.4 million, $13.4 million and $12.5 million in the years ended December 31, 2024, 2023 and 2022, respectively.

Previous wording

Subscription and support revenue was $281.6 million in the year ended December 31, 2023, compared to $297.9 million in the year ended December 31, 2022, a decrease of $16.3 million, or 5%. $13.9 million of the decrease relates to declining revenue from Sunset Assets as a result of reduced sales and marketing focus on those assets. Subscription and support revenues related to overage charges decreased by $1.1 million as a result of variable demand fluctuations in the year ended December 31, 2023. The subscription and support revenue decline includes a negative impact of $0.3 million from changes in foreign currency exchange rates. Additional decreases in Subscription and support revenue of $4.6 million are due to decreases in customer renewals across product lines and industries. These decreases are offset by revenue of $3.7 million from prior year acquisitions not fully reflected in the year ended December 31, 2022.

Current wording

Subscription and support revenue was $260.7 million in the year ended December 31, 2024, compared to $281.6 million in the year ended December 31, 2023, a decrease of $20.9 million, or 7%. $17.1 million of the decrease relates to declining revenue from Sunset Assets as a result of reduced sales and marketing focus on those assets. Subscription and support revenues related to overage charges decreased by $1.4 million as a result of variable demand fluctuations in the year ended December 31, 2024. Additional decreases in Subscription and support revenue of $2.4 million are due to decreases in customer renewals across product lines and industries.

Previous wording

Perpetual license revenue was $6.1 million in the year ended December 31, 2023, compared to $6.9 million in the year ended December 31, 2022, a decrease of $0.8 million, or 13%. The decrease is attributable to decreases in customer purchases of on-premise software.

Current wording

Perpetual license revenue was $5.8 million in the year ended December 31, 2024, compared to $6.1 million in the year ended December 31, 2023, a decrease of $0.3 million, or 4%. The decrease is attributable to decreases in customer purchases of on-premise software.

Previous wording

Professional services revenue was $10.2 million in the year ended December 31, 2023, compared to $12.5 million in the year ended December 31, 2022, a decrease of $2.3 million, or 18%. Professional services revenue related to our Sunset Assets decreased by $0.4 million. The remaining decrease in professional services revenue is attributable to fewer implementation projects in the year ended December 31, 2023.

Current wording

Professional services revenue was $8.3 million in the year ended December 31, 2024, compared to $10.2 million in the year ended December 31, 2023, a decrease of $1.9 million, or 19%. Professional services revenue related to our Sunset Assets decreased by $0.5 million. The remaining decrease in professional services revenue is attributable to fewer implementation projects in the year ended December 31, 2024.

Previous wording

Cost of subscription and support revenue was $88.9 million in the year ended December 31, 2023, compared to $93.9 million in the year ended December 31, 2022, a decrease of $5.0 million, or 5%. Variable telecom carrier costs decreased $6.5 million as a result of reduced customer demand and non-cash stock based compensation decreased $1.1 million. These decreases were offset by increased hosting expenses for all of our products and increased non-cash amortization of intangible assets associated with our Sunset Assets.

Current wording

Cost of subscription and support revenue was $76.0 million in the year ended December 31, 2024, compared to $88.9 million in the year ended December 31, 2023, a decrease of $12.9 million, or 14%. This decrease was the result of a decrease in non-cash amortization of intangible assets of $4.0 million associated with our Sunset Assets, a decrease of $4.9 million in hosting and infrastructure costs, a decrease of $2.9 million in personnel-related costs and a decrease of $1.4 million in variable telecom carrier costs and other expenses. These decreases were offset by an increase in professional fees of $0.4 million.

Previous wording

Cost of professional services revenue was $7.5 million in the year ended December 31, 2023, compared to $9.8 million in the year ended December 31, 2022, a decrease of $2.3 million, or 24%. The decrease in cost of professional services revenue is primarily related to a decrease in personnel-related costs resulting from decreased professional services delivered.

Current wording

Cost of professional services revenue was $5.1 million in the year ended December 31, 2024, compared to $7.5 million in the year ended December 31, 2023, a decrease of $2.4 million, or 32%. The decrease in cost of professional services revenue is related to a decrease in personnel-related costs resulting from decreased professional services delivered.

Previous wording

Sales and marketing expense was $64.3 million in the year ended December 31, 2023, compared to $59.4 million in the year ended December 31, 2022, an increase of $4.9 million, or 8%. Sales and marketing expense increased approximately $8.8 million as a direct result of our intentional investment in our go to market strategy, including increased marketing spend and increased sales headcount and personnel-related costs to strengthen our marketing and demand generation. This increase is partially offset by a $2.1 million decrease in stock based compensation expense and a decrease of $1.8 million in sales and marketing expense related to our Sunset Assets.

Current wording

Sales and marketing expense was $66.3 million in the year ended December 31, 2024, compared to $64.3 million in the year ended December 31, 2023, an increase of $2.0 million, or 3%. Sales and marketing expense increased $4.3 million as a direct result of our intentional investment in our go to market strategy, including increased marketing spend and personnel-related costs to strengthen our marketing and demand generation. This increase is partially offset by a decrease of $2.5 million in sales and marketing expense related to our Sunset Assets.

Previous wording

Research and development expense was $49.4 million in 2023, compared to $46.2 million in 2022, an increase of $3.2 million, or 7%. Research and development expense increased approximately $5.4 million due to product investments as part of our growth initiative by building our India Center of Excellence. This increase was partially offset by a decrease of $2.2 million of research and development costs related to our Sunset Assets.

Current wording

Research and development expense was $47.4 million in 2024, compared to $49.4 million in 2023, a decrease of $2.0 million, or 4%. Research and development expense decreased primarily due to a decrease of $2.0 million of research and development costs related to our Sunset Assets offset by a slight increase in personnel-related costs related to product development.

Previous wording

General and administrative expense was $61.3 million in 2023, compared to $70.5 million in 2022, a decrease of $9.2 million, or 13%. This decrease was driven primarily by $15.2 million in lower non-cash stock compensation expense due to lower grant date fair values partially offset by an increase in general and administrative expense of $3.7 million due to higher personnel-related costs and an increase in legal and professional fees of $2.3 million, which includes $1.1 million in non-recurring litigation costs.

Current wording

General and administrative expense was $49.5 million in 2024, compared to $61.3 million in 2023, a decrease of $11.8 million, or 19%. This decrease was driven primarily by lower non-cash stock compensation expense of $6.5 million due to lower grant date fair values, lower personnel-related costs of $2.9 million in response to intentional cost cutting measures, lower professional fees of $2.1 million primarily due to lower tax fees and legal fees related to non-recurring litigation and decreases in insurance and other costs of $0.2 million.

Previous wording

Depreciation and amortization expense was $58.6 million in 2023, compared to $43.7 million in 2022, an increase of $14.9 million, or 34%. The increase in amortization relates to the reduced useful life expected for the acquired intangible assets such as customer relationships and tradenames for our Sunset Assets. The offsetting decrease in depreciation is due to assets becoming fully depreciated during the period.

Current wording

Depreciation and amortization expense was $45.6 million in 2024, compared to $58.6 million in 2023, a decrease of $13.0 million, or 22%. The decrease in amortization expense relates to the 2023 reduction in the useful life expected for the acquired intangible assets such as customer relationships and tradenames for our Sunset Assets. The decrease in depreciation is due to assets becoming fully depreciated during 2024.

Previous wording

Acquisition-related expense was $3.1 million in 2023, compared to $21.6 million for 2022, a decrease of $18.5 million, or 86%. The decrease in expense was a result of no acquisitions in 2023 compared to two acquisitions in 2022. Expense in 2023 primarily related to final settlements of the 2022 acquisitions.

Current wording

Acquisition-related expense was $0.0 million in 2024, compared to $3.1 million for 2023, a decrease of $3.1 million, or 99%. The decrease in expense was a result of no acquisitions in 2024. Expense in 2023 primarily related to final settlements of the 2022 acquisitions.

Previous wording

Other income, net was $0.2 million in 2023, compared to other expense of $0.8 million in 2022, a change $1.0 million. The difference in other expense is primarily due to an increase in foreign currency exchange gains compared to 2022.

Current wording

Other income, net was $1.1 million in 2024, compared to other income of $0.2 million in 2023, a change $0.9 million. The difference in other expense is primarily due to an increase in foreign currency exchange gains compared to 2023.

Previous wording

Benefit from income taxes was $2.5 million in 2023, compared to a benefit for income taxes of $1.7 million in 2022, an increase in the benefit from income taxes of $0.8 million, or 43%. This increased benefit was related primarily to the reduction of uncertain tax positions due to expiration of related statute of limitation for a Canadian exposure and foreign income taxes associated with our combined non-U.S. operations which is offset in Australia and the UK by valuation allowances. These tax benefits are offset by the impact of a material goodwill impairment in 2023, changes in deferred tax liabilities associated with amortization of U.S. tax deductible goodwill and U.S. state taxes in certain states in which the Company does not file on a consolidated basis or have net operating loss carryforwards.

Current wording

Provision for income taxes was $2.6 million in 2024, compared to a benefit for income taxes of $2.5 million in 2023, an increase in the provision for income taxes of $5.1 million, or 206%. This increased expense was primarily related to the increased expense in Canada and reduced benefit in the UK for 2024. The 2024 increased expense was also impacted by a material goodwill impairment in 2024, changes in deferred tax liabilities associated with amortization of U.S. tax deductible goodwill and U.S. state taxes in certain states in which the Company does not file on a consolidated basis or have net operating loss carryforwards. The increase in tax expense was partially offset by reduced tax expense related to other international operations.

Previous wording

We define annualized recurring revenue (“ARR”) as the value as of December 31 that equals the monthly value of our recurring revenue under support and subscription contracts excluding month-to-month contracts measured as of December 31 multiplied by 12. This measure excludes the revenue value of uncontracted overage fees, on-demand or monthly usage service fees and Sunset Assets. As a metric, ARR mitigates fluctuations in revenue recognition due to certain factors, including contract term and the sales mix of recurring revenue contracts and perpetual licenses. ARR does not have any standardized meaning and may not be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenues and deferred revenues and is not intended to be combined with or to replace either of those elements of our financial statements. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our clients. Refer to “Note 3 Acquisitions” and “Note 5 Goodwill and Other Intangible Assets” in the notes to the consolidated financial statements for further discussion.

Current wording

We define annualized recurring revenue (“ARR”) as the value as of December 31 that equals the monthly value of our recurring revenue under support and subscription contracts excluding month-to-month contracts measured as of December 31 multiplied by 12. This measure excludes the revenue value of uncontracted overage fees, on-demand or monthly usage service fees. As a metric, ARR mitigates fluctuations in revenue recognition due to certain factors, including contract term and the sales mix of recurring revenue contracts and perpetual licenses. ARR does not have any standardized meaning and may not be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenues and deferred revenues and is not intended to be combined with or to replace either of those elements of our financial statements. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our clients. Refer to “Note 3 Acquisitions” and “Note 5 Goodwill and Other Intangible Assets” in the notes to the consolidated financial statements for further discussion.

Previous wording

Our ARR was $242.1 million, $266.3 million and $257.1 million as of December 31, 2023, 2022 and 2021, respectively.

Current wording

Our ARR was $225.6 million, $242.1 million and $266.3 million as of December 31, 2024, 2023 and 2022, respectively.

Previous wording

Our annual net dollar retention rate was 95%, 95% and 94% as of December 31, 2023, 2022 and 2021.

Current wording

Our annual net dollar retention rate was 96%, 95% and 95% as of December 31, 2024, 2023 and 2022, respectively.

Previous wording

For the three-month period ended December 31, 2023, our Core Organic Growth Rate was negative 0.9%.

Current wording

For the three-month period ended December 31, 2024, our Core Organic Growth Rate was 0.0%.

Previous wording

To date, we have financed our operations primarily through cash generated from operating activities, the raising of capital including sales of our common stock and our convertible preferred stock, and borrowings under our Credit Facility (as hereinafter defined). We believe that current cash and cash equivalents, cash flows from operating activities and availability under our existing Credit Facility will be sufficient to fund our operations for at least the next twelve months. In addition, we intend to utilize the sources of capital available to us under our Revolver to support our continued growth via acquisitions.

Current wording

To date, we have financed our operations primarily through cash generated from operating activities, the raising of capital including sales of our common stock and our convertible preferred stock, and borrowings under our Credit Facility (as hereinafter defined). We believe that current cash and cash equivalents and cash flows from operating activities will be sufficient to fund our operations for at least the next twelve months.

Previous wording

(1) Loans under the Revolver may be borrowed, repaid and reborrowed until August 6, 2024.

Current wording

(1) Loans under the Revolver could be borrowed, repaid and reborrowed until it matured on August 6, 2024.

Previous wording

The $12.1 million decrease in cash and cash equivalents from December 31, 2022 to December 31, 2023 was due primarily to the $35 million pay down on our outstanding borrowings and the $14.1 million paid to repurchase shares of the Company’s Common Stock, partially offset by the cash gain of $20.5 million from the sale of a portion of our interest rate swaps and other cash flows from operations.

Current wording

The $179.5 million decrease in cash and cash equivalents from December 31, 2023 to December 31, 2024 was due primarily to the $183.0 million additional principal pay down of amounts outstanding under our Term Loans during 2024 compared to $35 million additional principal payments in 2023. In addition, cash flow from operations was $25.7 million less than in prior year due primarily to the one time cash inflow of $20.5 million from the sale of a portion of our interest rate swaps and other net cash inflows from operations.

Previous wording

Our cash and cash equivalents held by our foreign subsidiaries was $29.2 million as of December 31, 2023. If these funds held by our foreign subsidiaries are needed for our domestic operations, we would be required to accrue and pay U.S. taxes to repatriate these funds to the U.S. However, our intent is to permanently reinvest these funds outside the U.S. and our current plans do not demonstrate a need to repatriate them to fund our domestic operations. We do not provide for federal income taxes on the undistributed earnings of our foreign subsidiaries.

Current wording

Our cash and cash equivalents held by our foreign subsidiaries was $32.4 million as of December 31, 2024. If these funds held by our foreign subsidiaries are needed for our domestic operations, we may be required to accrue and pay U.S. taxes to repatriate these funds to the U.S. However, our intent is to permanently reinvest these funds outside the U.S. and our current plans do not demonstrate a need to repatriate them to fund our domestic operations. We do not provide for federal income taxes on the undistributed earnings of our foreign subsidiaries.

Previous wording

As of December 31, 2023 and 2022, we had a working capital surplus of $169.6 million and $170.1 million, respectively.

Current wording

As of December 31, 2024 and 2023, we had a working capital deficit of $2.0 million and a working capital surplus of $169.6 million, respectively.

Previous wording

Our Credit Facility, as defined and described in“Note 7. Debt”, is comprised of fully drawn Term Loans as of December 31, 2023 and a $60.0 million revolving credit facility which was fully available as of December 31, 2023.

Current wording

Our Credit Facility, as defined and described in“Note 7. Debt”, is comprised of fully drawn Term Loans as of December 31, 2024. The Term Loans are repayable on a quarterly basis with any amount remaining unpaid due and payable in full on August 6, 2026. Our $60.0 million revolving credit facility matured on August 6, 2024 with no amounts drawn.

Previous wording

Cash provided by operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business. Included in net cash provided by operations are one-time acquisition related expenses incurred for up to four quarters after each acquisition to transact and transform the acquired business into the Company's UplandOne platform. Additionally, operating cash flows includes the impact of earnout payments in excess of original purchase accounting estimates. Our working capital consists primarily of cash, receivables from customers, prepaid assets, unbilled professional services, deferred commissions, accounts payable, accrued compensation and other accrued expenses, acquisition related earnout and holdback liabilities, lease liabilities and deferred revenues. The volume of professional services rendered, the volume and timing of customer bookings and contract renewals, and the related timing of collections and renewals on those bookings, as well as the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.

Current wording

Cash provided by operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business. Our working capital consists primarily of cash, receivables from customers, prepaid assets, unbilled professional services, deferred commissions, accounts payable, accrued compensation and other accrued expenses, acquisition related earnout and holdback liabilities, lease liabilities and deferred revenues. The volume of professional services rendered, the volume and timing of customer bookings and contract renewals, and the related timing of collections and renewals on those bookings, as well as the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.

Previous wording

Cash provided by operating activities was $49.9 million for 2023 compared to $30.0 million for 2022, an increase of $20.0 million. This increase in operating cash flow is generally attributable to the working capital sources of cash outweighing the working capital uses of cash outlined below. Working capital sources of cash for the year ended December 31, 2023 included a one-time $20.5 million cash gain on the sale of a portion of our interest rate swaps in August 2023.

Current wording

Cash provided by operating activities was $24.2 million for 2024 compared to $49.9 million for 2023, a decrease of $25.7 million. This decrease in operating cash flow is generally attributable to a one-time $20.5 million cash gain on the sale of a portion of our interest rate swaps in August 2023. The working capital sources of cash outweighed the working capital uses of cash but 2024 non-cash adjustments to net loss were less than 2023 due to decreases in goodwill impairment, depreciation and amortization, stock-based compensation and non-cash interest.

Previous wording

Our primary investing activities have consisted of acquisitions of complementary technologies, products and businesses. As our business grows, we expect our primary investing activities to continue to further expand our family of software applications and infrastructure and support additional personnel.

Current wording

Historically, our primary investing activities have consisted of acquisitions of complementary technologies and businesses. As our business grows and evolves, we expect our primary investing activities to continue to expand and refine our product library, customer base, and market access, as well as routine purchases of office equipment.

Previous wording

A valuation allowance is established against our deferred tax assets to reduce their carrying value to an amount that is more likely than not to be realized. As of December 31, 2023 we recorded a valuation allowance of $41.3 million against our deferred tax assets. If, in the future, we evaluate that our deferred tax assets are not more likely than not to be realized, an increase in the related valuation allowance could result in a material income tax expense in the period such determination is made.

Current wording

A valuation allowance is established against our deferred tax assets to reduce their carrying value to an amount that is more likely than not to be realized. As of December 31, 2024 we recorded a valuation allowance of $50.4 million against our deferred tax assets. If, in the future, we evaluate that our deferred tax assets are not more likely than not to be realized, an increase in the related valuation allowance could result in a material income tax expense in the period such determination is made.

Previous wording

As we operate as one reporting unit, the Goodwill impairment evaluation is performed at the consolidated entity level by comparing the estimated fair value of the Company to its Carrying Value. We first assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its Carrying Value. qualitative factors considered include: industry and market considerations; macroeconomic conditions; and other relevant events and factors. Based on the qualitative assessment, if it is determined that it is more likely than not that the Company's fair value is less than its Carrying Value, then we perform a quantitative analysis using a fair-value-based approach to determine if the fair value of our reporting unit is less than its Carrying Value. Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit and involves significant estimates and assumptions. These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables. See “Note 5. Goodwill and Other Intangible Assets” for more information regarding our 2022 and 2023 Goodwill impairments.

Current wording

As we operate as one reporting unit, the goodwill impairment evaluation is performed at the consolidated entity level by comparing the estimated fair value of the Company to its carrying value. We first assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying value. qualitative factors considered include: industry and market considerations; macroeconomic conditions; and other relevant events and factors. Based on the qualitative assessment, if it is determined that it is more likely than not that the Company's fair value is less than its carrying value, then we perform a quantitative analysis using a fair-value-based approach to determine if the fair value of our reporting unit is less than its carrying value. Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit and involves significant estimates and assumptions. These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, and future economic and market conditions. See “Note 5. Goodwill and Other Intangible Assets” for more information regarding our 2024, 2023, and 2022 goodwill impairments.