Business Wire | Nov 5, 2020 04:01PM EST

Upland Software Reports Third Quarter 2020 Financial Results

Nov. 05, 2020

AUSTIN, Texas--(BUSINESS WIRE)--Nov. 05, 2020--Upland Software, Inc. (Nasdaq: UPLD), a leader in cloud-based tools for digital transformation, today announced financial and operating results for the third quarter of 2020 and raised guidance for its fourth quarter and full year of 2020.

Third Quarter 2020 Financial Highlights

* Total revenue was $74.2 million, an increase of 35% from $55.1 million in the third quarter of 2019. * Subscription and support revenue was $71.0 million, an increase of 39% from $51.1 million in the third quarter of 2019. * GAAP net loss was $11.3 million, or a loss of $0.42 cents per share, compared to a GAAP net loss of $12.3 million, or a loss of $0.50 cents per share, in the third quarter of 2019. * Adjusted EBITDA was $25.0 million, or 34% of total revenue, an increase of 21% from $20.7 million, or 38% of total revenue, in the third quarter of 2019. * GAAP operating cash flow was $18.7 million, an increase from negative $0.3 million of GAAP operating cash flow in the third quarter of 2019. Free cash flow was $18.5 million, an increase from negative $0.7 million of free cash flow in the third quarter of 2019. * Completed follow-on equity offering raising $136.9 million ($130.1 million, net). * Cash on hand as of the end of the third quarter of 2020 was $233.0 million.

"In Q3, we posted record organic growth and free cash flow," said Jack McDonald, Upland's chairman and chief executive officer. "We also completed a transformational equity raise - and are now capitalized well enough to be able to grow double digits through a combination of organic growth and acquisitions and are no longer dependent on the equity capital markets due to our free cash flow generation," he said. "In particular, our goal in 2021 is to achieve our acquisition targets while also generating substantial free cash flow," he added. "Finally, based on strength we are seeing in our business, we have raised our revenue and Adjusted EBITDA guidance for Q4 and the full year."

Third Quarter Business Highlights

* Expanded 247 existing customer relationships, including 37 major expansions, and added 108 new customer relationships, including 34 major accounts. * Focused on accelerating customer productivity, with six major releases and 15 feature packs across Upland's cloud solutions. For example: in our Project & IT Management Cloud, we introduced a new resource request workflow to help users streamline resource allocation requests, resulting in greater utilization and profitability; and in our Enterprise Sales & Marketing Cloud, we added key Microsoft integrations that enable users to access their RFP and proposal library directly from within Word and Excel. * Announced a new offering that will bring Upland's end-to-end cloud-based workflow solution for document capture, image processing, and data extraction onto HP Workpath. This new offering is intended to meet the urgent market demand to rapidly digitize the document lifecycle process as companies work through the challenges of balancing remote and in-office teams. * Continued to invest in our go-to-market initiatives across sales, marketing, and customer success.

Business Outlook

For the quarter ending December 31, 2020, Upland expects reported total revenue to be between $70.0 and $74.0 million, including subscription and support revenue between $67.0 and $70.0 million, for growth in recurring revenue of 16% at the mid-point over the quarter-ended December 31, 2019. Fourth quarter 2020 Adjusted EBITDA is expected to be between $23.2 and $25.2 million, for an Adjusted EBITDA margin of 34% at the mid-point, representing a reduction of 3% at the mid-point over the quarter-ended December 31, 2019.

For the full year ending December 31, 2020, Upland expects reported total revenue to be between $283.5 and $287.5 million, including subscription and support revenue between $269.6 and $272.6 million, for growth in recurring revenue of 33% at the mid-point over the year ended December 31, 2019. Full year 2020 Adjusted EBITDA is expected to be between $96.5 and $98.5 million, for an Adjusted EBITDA margin of 34% at the mid-point, representing growth of 18% at the mid-point over the year ended December 31, 2019.

Conference Call Details

Upland's executive team will host a live conference call and webcast at 4:00 p.m. Central Time, 5:00 p.m. Eastern Time today to review Upland's financial results and outlook for the business. The call can be accessed via a webcast on investor.uplandsoftware.com, or by dialing 1-866-270-1533 in the United States or +1-412-317-0797 if outside the United States. This webcast will contain forward-looking statements and other material information regarding Upland's financial and operating results.

Following the completion of the conference call, a recording of the webcast will be made available at investor.uplandsoftware.com for twelve months.

About Upland Software

Upland Software (Nasdaq: UPLD) is a leader in cloud-based tools for digital transformation. The Upland Cloud enables thousands of organizations to engage with customers on key digital channels, optimize sales team performance, manage projects and IT costs, and automate critical document workflows. The Upland Cloud is backed by a 100% customer success commitment and the UplandOne platform, which puts customers at the center of everything we do. To learn more, visit www.uplandsoftware.com.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Adjusted EBITDA, non-GAAP net income (loss), non-GAAP net income (loss) per share and free cash flow.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results, such as our revenues excluding the impact for foreign currency fluctuations or our operating performance excluding not only non-cash charges, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and they are used by our institutional investors and the analyst community to help them analyze the health of our business. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the tables provided below in this release.

We are unable to reconcile any forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.

Upland defines Adjusted EBITDA as net income (loss), calculated in accordance with GAAP, plus net income (loss) from discontinued operations, depreciation and amortization expense, interest expense, net, other expense (income), net, provision for income taxes, stock-based compensation expense, acquisition-related expenses, non-recurring litigation costs, and purchase accounting adjustments for deferred revenue.

Upland defines non-GAAP net income (loss) as net income (loss), calculated in accordance with GAAP, plus, amortization of purchased intangible assets, amortization of debt discount, loss on debt extinguishment, stock-based compensation expenses, acquisition-related expenses, non-recurring litigation expenses, purchase accounting adjustments for deferred revenue, non-recurring provision for income tax, and the related tax effect of the adjustments above.

Upland defines free cash flow as GAAP operating cash flow less purchases of property and equipment.

Upland defines major accounts as accounts with greater than or equal to $25,000 in annual recurring revenue.

Upland defines major expansions as existing customers who expanded the amount of annual recurring revenue under their contract by at least $25,000.

Forward-looking Statements

This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance, including our guidance related to future performance, and are subject to substantial risks, uncertainties and assumptions. We may not actually achieve the plans, intentions, or expectations disclosed in 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. Accordingly, you should not place undue reliance on these forward-looking statements. Forward-looking statements include any statement that does not directly relate to any historical or current fact and often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "hope," "predict," "could," "should," "would," "project," or the negative or plural of these words or similar expressions, although not all forward-looking statements contain these words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but are not limited to: our financial performance and our ability to achieve, sustain or increase profitability or predict future results; our ability to attract and retain customers; our ability to deliver high-quality customer service; the growth of demand for enterprise work management applications; our plans regarding, and our ability to effectively manage, our growth; our plans regarding future acquisitions and our ability to consummate and integrate acquisitions; maintaining our senior management and key personnel; our ability to maintain and expand our direct sales organization; our ability to obtain financing in the future on acceptable terms or at all; the performance of our resellers; our ability to adapt to changing market conditions and competition; our ability to successfully enter new markets and manage our international expansion; the operation and reliability of our third-party data centers and other service providers; our ability to adapt to technological change and continue to innovate; our ability to integrate our applications with other software applications; our ability to comply with privacy laws and regulations; and factors that could affect our business and financial results identified in Upland's filings with the Securities and Exchange Commission (the "SEC"), including Upland's most recent 10-K and our recent Quarterly Report on Form 10-Q filed with the SEC. Additional information will also be set forth in Upland's future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that Upland makes with the SEC. The forward-looking statements herein represent Upland's views as of the date of this press release, and these views could change. However, while Upland may elect to update these forward-looking statements at some point in the future, Upland specifically disclaims any obligation to do so, except as required by law. These forward-looking statements should not be relied upon as representing the views of Upland as of any date subsequent to the date of this press release.

Upland Software, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)

Three Months Ended Nine Months Ended September September 30, 30,

2020 2019 2020 2019

Revenue:

Subscription and $ 70,992 $ 51,059 $ 202,582 $ 144,757 support

Perpetual license 411 975 1,263 2,207

Total product revenue 71,403 52,034 203,845 146,964

Professional services 2,781 3,031 9,686 9,607

Total revenue 74,184 55,065 213,531 156,571

Cost of revenue:

Subscription and 23,562 14,678 64,701 42,574 support

Professional services 2,021 1,995 6,755 5,470

Total cost of revenue 25,583 16,673 71,456 48,044

Gross profit 48,601 38,392 142,075 108,527

Operating expenses:

Sales and marketing 11,760 8,709 34,511 23,680

Research and 10,400 7,434 30,308 20,840 development

Refundable Canadian (433) (133) (929) (304) tax credits

General and 16,864 12,196 51,195 34,232 administrative

Depreciation and 9,117 6,427 27,425 17,430 amortization

Acquisition-related 3,574 7,457 24,513 24,444 expenses

Total operating 51,282 42,090 167,023 120,322 expenses

Loss from operations (2,681) (3,698) (24,948) (11,795)

Other expense:

Interest expense, net (8,078) (5,517) (23,594) (15,879)

Loss on debt - (2,317) - (2,317) extinguishment

Other income 598 (228) (819) (1,681) (expense), net

Total other expense (7,480) (8,062) (24,413) (19,877)

Loss before benefitfrom (provision for) (10,161) (11,760) (49,361) (31,672) income taxes

Benefit from(provision for) (1,149) (547) 3,811 6,166 income taxes

Net loss $ (11,310) $ (12,307) $ (45,550) $ (25,506)

Net loss per commonshare, basic and $ (0.42) $ (0.50) $ (1.77) $ (1.13) diluted

Weighted-averagecommon shares 27,220,134 24,568,483 25,725,495 22,550,232 outstanding, basicand diluted

Upland Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

September 30,

December 31,

2020

2019

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

232,972

$

175,024

Accounts receivable, net of allowance

41,126

50,938

Deferred commissions, current

4,758

3,059

Unbilled receivables

6,912

5,111

Prepaid and other

8,064

4,748

Total current assets

293,832

238,880

Tax credits receivable

4,175

4,186

Property and equipment, net

3,181

3,917

Operating lease right-of-use asset

10,831

8,056

Intangible assets, net

285,312

282,727

Goodwill

383,336

346,134

Deferred commissions, noncurrent

11,259

8,763

Other assets

2,394

4,165

Total assets

$

994,320

$

896,828

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

6,469

$

5,904

Accrued compensation

6,912

11,559

Accrued expenses and other current liabilities

13,228

15,344

Deferred revenue

78,503

76,558

Due to sellers

3,494

14,276

Operating lease liabilities, current

3,233

2,533

Current maturities of notes payable

3,185

3,193

Total current liabilities

115,024

129,367

Notes payable, less current maturities

519,339

521,881

Deferred revenue, noncurrent

1,493

496

Operating lease liabilities, noncurrent

9,224

5,862

Noncurrent deferred tax liability, net

27,299

25,685

Interest rate swap liabilities

33,073

-

Other long-term liabilities

624

676

Total liabilities

706,076

683,967

Stockholders' equity:

Common stock

3

3

Additional paid-in capital

504,425

345,127

Accumulated other comprehensive loss

(39,480)

(1,223)

Accumulated deficit

(176,704)

(131,046)

Total stockholders' equity

288,244

212,861

Total liabilities and stockholders' equity

$

994,320

$

896,828

Upland Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

September December 31, 30,

2020 2019

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 232,972 $ 175,024

Accounts receivable, net of allowance 41,126 50,938

Deferred commissions, current 4,758 3,059

Unbilled receivables 6,912 5,111

Prepaid and other 8,064 4,748

Total current assets 293,832 238,880

Tax credits receivable 4,175 4,186

Property and equipment, net 3,181 3,917

Operating lease right-of-use asset 10,831 8,056

Intangible assets, net 285,312 282,727

Goodwill 383,336 346,134

Deferred commissions, noncurrent 11,259 8,763

Other assets 2,394 4,165

Total assets $ 994,320 $ 896,828

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $ 6,469 $ 5,904

Accrued compensation 6,912 11,559

Accrued expenses and other current liabilities 13,228 15,344

Deferred revenue 78,503 76,558

Due to sellers 3,494 14,276

Operating lease liabilities, current 3,233 2,533

Current maturities of notes payable 3,185 3,193

Total current liabilities 115,024 129,367

Notes payable, less current maturities 519,339 521,881

Deferred revenue, noncurrent 1,493 496

Operating lease liabilities, noncurrent 9,224 5,862

Noncurrent deferred tax liability, net 27,299 25,685

Interest rate swap liabilities 33,073 -

Other long-term liabilities 624 676

Total liabilities 706,076 683,967

Stockholders' equity:

Common stock 3 3

Additional paid-in capital 504,425 345,127

Accumulated other comprehensive loss (39,480) (1,223)

Accumulated deficit (176,704) (131,046)

Total stockholders' equity 288,244 212,861

Total liabilities and stockholders' equity $ 994,320 $ 896,828

Upland Software, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Operating activities

Net loss

$

(11,310)

$

(12,307)

$

(45,550)

$

(25,506)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

11,696

8,570

35,091

23,722

Deferred income taxes

1,639

848

(3,346)

(11,176)

Amortization of deferred costs

1,252

820

3,172

2,555

Foreign currency re-measurement loss

(186)

367

311

155

Non-cash interest and other expense

561

414

1,669

979

Non-cash stock compensation expense

10,963

7,187

31,263

18,716

Non-cash loss on retirement of fixed assets

473

-

473

-

Non-cash loss on debt extinguishment

-

2,317

-

2,317

Changes in operating assets and liabilities, net of purchase business combinations:

Accounts receivable

7,952

(2,005)

13,140

6,405

Prepaids and other

(3,350)

(6,695)

(10,093)

(4,280)

Accounts payable

4,476

(420)

(1,782)

(903)

Accrued expenses and other liabilities

(1,688)

719

(8,789)

(5,037)

Deferred revenue

(3,822)

(157)

(1,407)

(2,893)

Net cash provided by (used in) operating activities

18,656

(342)

14,152

5,054

Investing activities

Purchase of property and equipment

(137)

(359)

(833)

(723)

Purchase of customer relationships

-

(438)

(201)

(438)

Purchase business combinations, net of cash acquired

-

(22,947)

(67,651)

(105,771)

Net cash used in investing activities

(137)

(23,744)

(68,685)

(106,932)

Financing activities

Payments on finance leases

(3)

(142)

(86)

(499)

Proceeds from notes payable, net of issuance costs

(27)

342,967

(169)

382,306

Payments on notes payable

(1,350)

(309,469)

(4,050)

(323,218)

Taxes paid related to net share settlement of equity awards

-

(1,297)

(2,140)

(6,108)

Issuance of common stock, net of issuance costs

130,133

14

130,174

151,549

Additional consideration paid to sellers of businesses

(2,072)

(2,546)

(11,652)

(5,886)

Net cash provided by financing activities

126,681

29,527

112,077

198,144

Effect of exchange rate fluctuations on cash

(138)

(496)

404

302

Change in cash and cash equivalents

145,062

4,945

57,948

96,568

Cash and cash equivalents, beginning of period

87,910

108,361

175,024

16,738

Cash and cash equivalents, end of period

$

232,972

$

113,306

$

232,972

$

113,306

Upland Software, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)



Three Months Ended Nine Months Ended September September 30, 30,

2020 2019 2020 2019

Operating activities

Net loss $ (11,310) $ (12,307) $ (45,550) $ (25,506)

Adjustments toreconcile net loss to net cash provided byoperating activities:

Depreciation and 11,696 8,570 35,091 23,722 amortization

Deferred income taxes 1,639 848 (3,346) (11,176)

Amortization of 1,252 820 3,172 2,555 deferred costs

Foreign currency (186) 367 311 155 re-measurement loss

Non-cash interest and 561 414 1,669 979 other expense

Non-cash stock 10,963 7,187 31,263 18,716 compensation expense

Non-cash loss onretirement of fixed 473 - 473 - assets

Non-cash loss on debt - 2,317 - 2,317 extinguishment

Changes in operatingassets andliabilities, net of purchase businesscombinations:

Accounts receivable 7,952 (2,005) 13,140 6,405

Prepaids and other (3,350) (6,695) (10,093) (4,280)

Accounts payable 4,476 (420) (1,782) (903)

Accrued expenses and (1,688) 719 (8,789) (5,037) other liabilities

Deferred revenue (3,822) (157) (1,407) (2,893)

Net cash provided by(used in) operating 18,656 (342) 14,152 5,054 activities

Investing activities

Purchase of property (137) (359) (833) (723) and equipment

Purchase of customer - (438) (201) (438) relationships

Purchase businesscombinations, net of - (22,947) (67,651) (105,771) cash acquired

Net cash used in (137) (23,744) (68,685) (106,932) investing activities

Financing activities

Payments on finance (3) (142) (86) (499) leases

Proceeds from notespayable, net of (27) 342,967 (169) 382,306 issuance costs

Payments on notes (1,350) (309,469) (4,050) (323,218) payable

Taxes paid related tonet share settlement - (1,297) (2,140) (6,108) of equity awards

Issuance of commonstock, net of 130,133 14 130,174 151,549 issuance costs

Additionalconsideration paid to (2,072) (2,546) (11,652) (5,886) sellers of businesses

Net cash provided by 126,681 29,527 112,077 198,144 financing activities

Effect of exchangerate fluctuations on (138) (496) 404 302 cash

Change in cash and 145,062 4,945 57,948 96,568 cash equivalents

Cash and cashequivalents, 87,910 108,361 175,024 16,738 beginning of period

Cash and cashequivalents, end of $ 232,972 $ 113,306 $ 232,972 $ 113,306 period

Upland Software, Inc.

Reconciliation of Adjusted EBITDA

(in thousands, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Reconciliation of net loss to Adjusted EBITDA:

Net loss

$

(11,310)

$

(12,307)

$

(45,550)

$

(25,506)

Add:

Depreciation and amortization expense

11,696

8,570

35,091

23,722

Interest expense, net

8,078

5,517

23,594

15,879

Other expense (income), net

(598)

228

819

1,681

Loss on debt extinguishment

-

2,317

-

2,317

Provision for (benefit from) income taxes

1,149

547

(3,811)

(6,166)

Stock-based compensation expense

10,963

7,187

31,263

18,716

Acquisition-related expense

3,574

7,457

24,513

24,444

Purchase accounting deferred revenue discount

1,408

1,176

7,381

2,458

Adjusted EBITDA

$

24,960

$

20,692

$

73,300

$

57,545

Upland Software, Inc.

Reconciliation of Adjusted EBITDA

(in thousands, unaudited)

Three Months Ended Nine Months Ended September September 30, 30,

2020 2019 2020 2019

Reconciliation of netloss to Adjusted EBITDA:

Net loss $ (11,310) $ (12,307) $ (45,550) $ (25,506)

Add:

Depreciation and 11,696 8,570 35,091 23,722 amortization expense

Interest expense, net 8,078 5,517 23,594 15,879

Other expense (598) 228 819 1,681 (income), net

Loss on debt - 2,317 - 2,317 extinguishment

Provision for(benefit from) income 1,149 547 (3,811) (6,166) taxes

Stock-based 10,963 7,187 31,263 18,716 compensation expense

Acquisition-related 3,574 7,457 24,513 24,444 expense

Purchase accountingdeferred revenue 1,408 1,176 7,381 2,458 discount

Adjusted EBITDA $ 24,960 $ 20,692 $ 73,300 $ 57,545

Upland Software, Inc.

Reconciliation of Non-GAAP Net Income and Non-GAAP EPS

(in thousands, except share and per share data, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Reconciliation of net loss to non-GAAP net income:

Net income (loss)

$

(11,310)

$

(12,307)

$

(45,550)

$

(25,506)

Add:

Stock-based compensation expense

10,963

7,187

31,263

18,716

Amortization of purchased intangibles

11,222

8,012

33,587

22,053

Amortization of debt discount

561

414

1,669

979

Acquisition-related expense

3,574

7,457

24,513

24,444

Loss on debt extinguishment

-

2,317

-

2,317

Purchase accounting deferred revenue discount

1,408

1,176

7,381

2,458

Tax effect of adjustments above

(1,275)

(1,065)

(4,660)

(3,804)

Non-GAAP net income

$

15,143

$

13,191

$

48,203

$

41,657

Weighted average ordinary shares outstanding, basic

27,220,134

24,568,483

25,725,495

22,550,232

Weighted average ordinary shares outstanding, diluted

27,751,221

25,425,335

26,149,617

23,383,406

Non-GAAP earnings per share, basic

$

0.56

$

0.54

$

1.87

$

1.85

Non-GAAP earnings per share, diluted

$

0.55

$

0.52

$

1.84

$

1.78

Upland Software, Inc.

Reconciliation of Non-GAAP Net Income and Non-GAAP EPS

(in thousands, except share and per share data, unaudited)

Three Months Ended Nine Months Ended September September 30, 30,

2020 2019 2020 2019

(unaudited) (unaudited) (unaudited) (unaudited)

Reconciliation of netloss to non-GAAP net income:

Net income (loss) $ (11,310) $ (12,307) $ (45,550) $ (25,506)

Add:

Stock-based 10,963 7,187 31,263 18,716 compensation expense

Amortization of 11,222 8,012 33,587 22,053 purchased intangibles

Amortization of debt 561 414 1,669 979 discount

Acquisition-related 3,574 7,457 24,513 24,444 expense

Loss on debt - 2,317 - 2,317 extinguishment

Purchase accountingdeferred revenue 1,408 1,176 7,381 2,458 discount

Tax effect of (1,275) (1,065) (4,660) (3,804) adjustments above

Non-GAAP net income $ 15,143 $ 13,191 $ 48,203 $ 41,657



Weighted averageordinary shares 27,220,134 24,568,483 25,725,495 22,550,232 outstanding, basic

Weighted averageordinary shares 27,751,221 25,425,335 26,149,617 23,383,406 outstanding, diluted

Non-GAAP earnings per $ 0.56 $ 0.54 $ 1.87 $ 1.85 share, basic

Non-GAAP earnings per $ 0.55 $ 0.52 $ 1.84 $ 1.78 share, diluted

Upland Software, Inc.

Reconciliation of Operating Cash Flow to Free Cash Flow

(in thousands, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Reconciliation of Operating Cash Flow to Free Cash Flow:

Net cash provided by (used in) operating activities

$

18,656

$

(342)

$

14,152

$

5,054

Less: Purchase of Property and Equipment

(137)

(359)

(833)

(723)

Free Cash Flow

$

18,519

$

(701)

$

13,319

$

4,331

Upland Software, Inc.

Reconciliation of Operating Cash Flow to Free Cash Flow

(in thousands, unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Reconciliation of Operating Cash Flow to Free Cash Flow:

Net cash provided by (used in) $ 18,656 $ (342) $ 14,152 $ 5,054 operating activities

Less: Purchase of Property and (137) (359) (833) (723) Equipment

Free Cash Flow $ 18,519 $ (701) $ 13,319 $ 4,331

Upland Software, Inc.

Supplemental Financial Information

(in thousands, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Stock-based compensation:

Cost of revenue

$

624

$

250

$

1,512

$

763

Research and development

1,005

683

2,639

1,637

Sales and marketing

968

508

2,415

1,012

General and administrative

8,366

5,746

24,697

15,304

Total

$

10,963

$

7,187

$

31,263

$

18,716

Upland Software, Inc.

Supplemental Financial Information

(in thousands, unaudited)

Three Months Ended Nine Months Ended September September 30, 30,

2020 2019 2020 2019

Stock-based compensation:

Cost of revenue $ 624 $ 250 $ 1,512 $ 763

Research and 1,005 683 2,639 1,637 development

Sales and marketing 968 508 2,415 1,012

General and 8,366 5,746 24,697 15,304 administrative

Total $ 10,963 $ 7,187 $ 31,263 $ 18,716

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Depreciation:

Cost of revenue

$

37

$

197

$

153

$

716

Operating expense

437

361

1,351

953

Total

$

474

$

558

$

1,504

$

1,669

Amortization:

Cost of revenue

$

2,542

$

1,946

$

7,513

$

5,576

Operating expense

8,680

6,066

26,074

16,477

Total

$

11,222

$

8,012

$

33,587

$

22,053

View source version on businesswire.com: https://www.businesswire.com/news/home/20201105006048/en/

CONTACT: Investor Relations Contact: Mike Hill investor-relations@uplandsoftware.com 512-960-1031

CONTACT: Media Contact: Kendell Kelton media@uplandsoftware.com 833-875-2631