Upland Software, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 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, 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. These forward-looking statements include, but are not limited to, statements concerning the following:

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 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, 2025. 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.

Previous wording

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 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, 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 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, events or circumstances could differ materially from those described in the forward-looking statements.

Current wording

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 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, 2025. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

Previous wording

For the three-month period ended September 30, 2025, our Core Organic Growth Rate was 2.6%.

Current wording

For the three-month period ended March 31, 2026, our Core Organic Growth Rate was 0.25%.

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Current wording

Comparison of the Three Months Ended March 31, 2026 and 2025

Previous wording

See Note 12. Divestitures regarding product lines divested in the nine months ended September 30, 2025.

Current wording

See Note 12. Divestitures regarding product lines divested in the three months ended March 31, 2025.

Previous wording

Total revenue was $167.6 million in the nine months ended September 30, 2025, compared to $206.8 million in the nine months ended September 30, 2024, a decrease of $39.2 million, or 19%. This decrease is primarily due to the expected declines in revenue related to divested product lines of $36.8 million and related to Sunset Assets of $2.7 million. The remaining decrease results from declines in perpetual license revenue of $0.1 million and professional services revenue of $0.4 million, offset by an increase in subscription and support revenue of $0.8 million related to core products.

Current wording

Total revenue was $48.7 million in the three months ended March 31, 2026, compared to $63.7 million in the three months ended March 31, 2025, a decrease of $15.0 million, or 24%. This decrease is primarily due to the expected declines in revenue related to divested product lines of $14.0 million and Sunset Assets of $0.5 million. Declines in perpetual license revenue of $0.3 million and professional services revenue of $0.3 million in core products were partially offset by an increase in subscription and support revenue of $0.1 million related to core products.

Previous wording

Cost of subscription and support revenue was $10.8 million in the three months ended September 30, 2025, compared to $18.4 million in the three months ended September 30, 2024, a decrease of $7.6 million, or 42%. The decrease related to divested product lines was $7.0 million attributable to infrastructure costs, variable telecom carrier costs, personnel costs and non-cash amortization of divested intangibles. The decrease related to Sunset assets was $0.2 million and the remaining decrease related to a reduction of $0.4 million in non-cash amortization of intangibles in our on-going product lines.

Current wording

Cost of subscription and support revenue was $11.1 million in the three months ended March 31, 2026, compared to $17.0 million in the three months ended March 31, 2025, a decrease of $5.9 million, or 34%. The decrease related to divested product lines was $5.7 million attributable to infrastructure costs, variable telecom carrier costs, personnel costs and non-cash amortization of divested intangibles. The decrease related to Sunset assets was $0.2 million, primarily attributable to personnel-related costs. A decrease of $0.3 million in non-cash amortization of intangibles in our on-going product lines was offset by a $0.3 million increase in infrastructure costs.

Previous wording

Cost of professional services and other revenue was $0.9 million in the three months ended September 30, 2025, compared to $1.3 million in the three months ended September 30, 2024, a decrease of $0.4 million, or 28%. The decrease in cost of professional services and other revenue was comprised of a decrease in personnel-related expenses of $0.1 million in our divested product lines and $0.3 million in our on-going product lines.

Current wording

Cost of professional services and other revenue was $0.8 million in the three months ended March 31, 2026, compared to $1.1 million in the three months ended March 31, 2025, a decrease of $0.3 million, or 25%. The decrease in cost of professional services and other revenue was comprised of a decrease in personnel-related expenses of $0.1 million in our divested product lines and $0.2 million in our on-going product lines due to lower professional services revenue in our core products.

Previous wording

Research and development expense was $7.9 million in the three months ended September 30, 2025, compared to $11.4 million in the three months ended September 30, 2024, a decrease of $3.5 million, or 31.1%. The decrease in research and development expense is primarily attributable to a $2.4 million decrease in personnel-related costs in our divested product lines and a $1.1 million decrease in personnel-related costs in our remaining product lines. These decreases reflect the termination of our out-sourced research and development contract and the continued use of our efficient India Center of Excellence.

Current wording

Research and development expense was $8.0 million in the three months ended March 31, 2026, compared to $11.5 million in the three months ended March 31, 2025, a decrease of $3.5 million, or 30%. The decrease in research and development expense is primarily attributable to a $2.1 million decrease in personnel-related costs in our divested product lines and a $1.4 million decrease in personnel-related and contractor costs in our remaining product lines. The decrease in research and development expense in our core product lines reflects the 2025 termination of our out-sourced research and development contract and the continued use of our India Center of Excellence.

Previous wording

General and administrative expense was $8.8 million in the three months ended September 30, 2025, compared to $11.1 million in the three months ended September 30, 2024, a decrease of $2.3 million, or 20%. This decrease is primarily due to a decrease of $1.2 million in personnel-related costs related to our on-going product lines including a decrease of $0.3 million in non-cash stock compensation expense. Other decreases related to core product lines were decreased office lease expense of $0.4 million and decreased professional fees of $0.3 million. The decrease related to our divested product lines was $0.4 million inclusive of the effects of the TSA agreements related to divestitures which ended in July 2025.

Current wording

General and administrative expense was $8.5 million in the three months ended March 31, 2026, compared to $11.6 million in the three months ended March 31, 2025, a decrease of $3.1 million, or 27%. This decrease is primarily due to a decrease of $2.5 million in personnel-related costs related to our on-going product lines due to decreased headcount including a decrease of $1.2 million in non-cash stock-based compensation expense. Software costs related to core product lines declined $0.2 million due to cost savings and professional fees declined $0.1 million. The decrease related to our divested product lines was $0.3 million.

Previous wording

Depreciation and amortization expense was $6.4 million in the three months ended September 30, 2025, compared to $11.5 million in the three months ended September 30, 2024, a decrease of $5.1 million, or 45%. All of the decrease resulted from the decline in amortization from intangible assets associated with the divested product lines.

Current wording

Depreciation and amortization expense was $5.6 million in the three months ended March 31, 2026, compared to $8.0 million in the three months ended March 31, 2025, a decrease of $2.4 million, or 30%. $0.7 million of the decrease resulted from the decline in amortization from intangible assets associated with Sunset Assets and $1.7 million of the decrease resulted from the decline in amortization from intangible assets associated with our divested product lines.

Previous wording

Divestiture-related expenses were $0.8 million in the three months ended September 30, 2025, compared to nil in the three months ended September 30, 2024. In conjunction with the divestitures completed in 2025, we incurred an additional $0.2 million in professional fees, accrued $0.3 million in expected data center fees and recorded an additional cost of $0.3 million related to the cancellation of a legacy vendor contract for out-sourced research and development. No divestiture-related expenses were incurred in the three months ended September 30, 2024.

Current wording

Divestiture-related expenses were nominal in the three months ended March 31, 2026, compared to $1.7 million in the three months ended March 31, 2025. In conjunction with the divestitures completed in the first quarter of 2025, we incurred $1.7 million in legal, accounting and other professional fees. Limited divestiture-related expenses were incurred in the three months ended March 31, 2026 as final expenses were incurred related to the 2025 divestitures and no divestitures were executed in 2026.

Previous wording

Interest expense, net of interest income, was $4.2 million of net interest expense in the three months ended September 30, 2025 compared to $2.3 million of net interest income in the three months ended September 30, 2024, reflecting additional expense of $6.5 million. This was primarily due to the effects of our interest rate derivatives which reduced interest expense, net by $1.9 million in the three months ended September 30, 2025 and reduced interest expense, net by $10.6 million in the three months ended September 30, 2024, an increase in net interest expense of $8.7 million. In addition, interest income for the three months ended September 30, 2025 declined $1.3 million from interest income in the three months ended September 30, 2024 due to lower cash and cash equivalents. These changes were offset by a decrease in cash interest expense of $3.2 million due to the reduction of our outstanding debt balance which lowered cash interest expense. The remaining decrease in expense related to the amortization of deferred financing costs.

Current wording

Interest expense, net was $4.5 million in the three months ended March 31, 2026 compared to $2.4 million in the three months ended March 31, 2025, an increase of $2.1 million in net interest expense. This was primarily due to the effects of our interest rate derivatives which reduced interest expense by $1.2 million in the three months ended March 31, 2026 and by $3.4 million in the three months ended March 31, 2025, resulting in a $2.2 million year over year increase in interest expense. In addition, interest income for the three months ended March 31, 2026 declined $0.1 million from interest income in the three months ended March 31, 2025 due to lower cash and cash equivalents. These increases were offset by a $0.1 million decline in interest expense, driven by the decrease in our outstanding debt balance, which more than offset the impact of higher interest rates, as well as a $0.2 million reduction related to the amortization of deferred financing costs.

Previous wording

Loss on divestitures of businesses was $0.5 million in the three months ended September 30, 2025 compared to nil in the three months ended September 30, 2024. In the three months ended September 30, 2025, we finalized the divestitures of certain product lines in order to focus on our higher margin and higher growth potential product lines. No divestitures were closed in the three months ended September 30, 2024.

Current wording

No divestitures were closed in the three months ended March 31, 2026. In the three months ended March 31, 2025, we finalized the divestitures of certain product lines in order to focus on our higher margin and higher growth potential product lines.

Previous wording

The benefit from income taxes was $0.3 million in the three months ended September 30, 2025, compared to a provision for income taxes of $0.5 million in the three months ended September 30, 2024, resulting in an increase in benefit from income taxes of $0.8 million. The benefit from income taxes for the three months ended September 30, 2025 relates primarily to the tax benefit due to divestiture of businesses in the third quarter and the impact of U.S. tax legislation, the One Big Beautiful Bill Act, passed in July 2025. This tax benefit is partially offset by the income tax from non-U.S. and U.S. operations.

Current wording

The provision for income taxes was $1.0 million in the three months ended March 31, 2026, compared to a benefit from income taxes of $1.3 million in the three months ended March 31, 2025, resulting in an additional expense from income taxes of $2.3 million. The provision for income taxes for the three months ended March 31, 2026 relates primarily to income tax from non-U.S. operations. The benefit from income taxes in the three months ended March 31, 2025 relates primarily to the deferred tax benefit from the business divestitures in the first quarter of 2025. This tax benefit is partially offset by the income tax from non-U.S. and U.S. operations.

Previous wording

As of September 30, 2025, we had $23.4 million of cash, cash equivalents and restricted cash and $240.0 million of borrowings outstanding under our Credit Agreement. As of December 31, 2024, we had $57.1 million of cash, cash equivalents and restricted cash and $293.7 million of borrowings outstanding under our previous senior secured credit facility. The $33.7 million decrease in cash, cash equivalents and restricted cash from December 31, 2024 to September 30, 2025 was primarily due to $293.7 million in debt repayments made in the nine months ended September 30, 2025, netted with the proceeds of our new Credit Facility of $234.6 million. Other uses of cash included $1.3 million in purchases of leasehold improvements and equipment and $1.0 million taxes paid related to net settlement of shares which were offset by $9.1 million cash proceeds from divestitures of businesses, $18.5 million in cash inflows from operations and $1.5 million positive effect of exchange rates during the nine months ended September 30, 2025.

Current wording

As of March 31, 2026, we had $30.4 million of cash, cash equivalents and restricted cash and $233.7 million of debt outstanding under our Credit Agreement. As of December 31, 2025, we had $30.0 million of cash, cash equivalents and restricted cash and $238.5 million of borrowings outstanding under our previous senior secured credit facility. The $0.4 million increase in cash, cash equivalents and restricted cash from December 31, 2025 to March 31, 2026 was primarily due to $5.6 million in cash inflows from operations netted with $4.8 million in debt repayments made in the three months ended March 31, 2026. Other uses of cash included $0.1 million in purchases of leasehold improvements and equipment and $0.2 million negative effect of exchange rates during the three months ended March 31, 2026.

Previous wording

Our cash and cash equivalents held by our foreign subsidiaries was $14.3 million as of September 30, 2025 and $32.4 million as of December 31, 2024. 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 $13.2 million as of March 31, 2026 and $10.0 million as of December 31, 2025. Our intent is to either permanently reinvest these funds outside the U.S. or use these funds to repay certain long-term intercompany loans. We do not provide for federal income taxes on the undistributed earnings of our foreign subsidiaries.

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. 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, 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 on those bookings and renewals, 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 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, 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 on those bookings and renewals, 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 investing activities was $8.0 million for the nine months ended September 30, 2025 compared to cash used by investing activities of $0.6 million for the nine months ended September 30, 2024, an increase of $8.5 million. During the nine months ended September 30, 2025, the Company divested of certain products and received cash proceeds of $9.1 million. Other cash proceeds consisted $0.2 million in collections on the note receivable related to divestitures. Cash used in investing activities consisted of purchases of leasehold improvements and equipment of $1.3 million for the nine months ended September 30, 2025 compared to $0.6 million of purchases of property and equipment for the nine months ended September 30, 2024.

Current wording

Cash provided by investing activities was $0.1 million for the three months ended March 31, 2026 compared to cash provided by investing activities of $3.8 million for the three months ended March 31, 2025, a decrease of $3.7 million. Cash activity consisted of $0.2 million in collections on the note receivable related to divestitures and $0.1 million in purchases of leasehold improvements and equipment for the three months ended March 31, 2026 compared to cash proceeds from divestitures of businesses of $4.2 million and $0.4 million in purchases of leasehold improvements and equipment for the three months ended March 31, 2025.

Previous wording

We prepare our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United 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.

Current wording

We prepare our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United 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 policy discussed below is critical to understanding our historical and future performance, as this policy relates to a more significant area involving management’s judgments and estimates.

Previous wording

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 trends in the stock price of our Common Stock. 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. As a result of declines in our stock price during the three months ended March 31, 2024, we performed a goodwill impairment evaluation which resulted in a goodwill impairment of $87.2 million in the nine months ended September 30, 2024. We will continue to evaluate goodwill for impairment in 2025 and future impairments of goodwill could occur if we experience significant stock price declines.

Current wording

We assess goodwill for impairment annually on October 1st, or more frequently when an event occurs which could cause the carrying value of the Company to exceed the estimated fair value of the Company.

Previous wording

•impairments to goodwill and other intangible assets;

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, weighted average cost of capital, and future economic and market conditions. See “Note 4. Goodwill and Other Intangible Assets for more information.

Previous wording

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 November 6, 2025, 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.

Current wording

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 1, 2026, the date of issuance of this Quarterly Report on Form 10-Q. 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.

Previous wording

Our unaudited interim financial statements and other financial information for the three and nine months ended September 30, 2025, as presented herein and in “Item 1. Financial Statements” to this Quarterly Report on Form 10-Q, reflect no material changes in our critical accounting policies and estimates as set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”). Please refer to our Annual Report for a detailed description of our critical accounting policies that involve significant management judgment.

Current wording

Our unaudited interim financial statements and other financial information for the three months ended March 31, 2026, as presented herein and in “Item 1. Financial Statements” to this Quarterly Report on Form 10-Q, reflect no material changes in our critical accounting policies and estimates as set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”). Please refer to our Annual Report for a detailed description of our critical accounting policies that involve significant management judgment.