Summary
Upland Software reported total revenue of $80.2 million for the second quarter of 2022, up 5% from the prior-year quarter. Revenue growth included a negative impact of 3 percentage points from changes in foreign currency exchange rates. Gross profit was $53.7 million, up 4.7% from the prior-year quarter. Gross margin was 66.9%, down from the prior-year quarter. The company said Non-GAAP Core Organic Revenue decreased $3.0 million, or $1.7 million after removing the negative FX impact.
Profitability remained under pressure. GAAP net loss was $16.4 million, or a loss of $0.52 per share. The net loss narrowed compared with the prior-year quarter. Operating loss was $10.9 million, and the operating loss widened. Operating margin was negative 13.6%, down from the prior-year quarter. Adjusted EBITDA was $24.5 million, or 31% of total revenue. That compares with $23.7 million, or 31% of total revenue, in the second quarter of 2021.
Cash generation improved. GAAP operating cash flow was $14.0 million, up from the prior-year quarter. Free cash flow was $13.9 million, compared with $10.6 million in the prior-year quarter. For the first six months of 2022, GAAP operating cash flow was $22.3 million, down from the prior-year period. Capital expenditures were $0.12 million. Deferred revenue was $103.4 million, up 8.6% from the prior-year quarter.
Operational momentum included 403 existing customers expanding their relationships, with 53 major expansions. Upland also added 123 new customers, including 27 new major customers. After the quarter closed, the company announced a $115 million strategic equity investment from HGGC. The investment is in a new class of preferred stock convertible into common stock at $17.50 per share and carries a 4.5% dividend, payable at the company's option in cash or in kind.
Guidance for the third quarter of 2022 calls for total revenue growth of 3% at the midpoint over the quarter ended September 30, 2021. Third quarter 2022 Adjusted EBITDA is expected to be between $23.2 and $26.2 million, for an Adjusted EBITDA margin of 31% at the midpoint. For the full year ending December 31, 2022, Upland expects total revenue growth of 5% at the midpoint over the year ended December 31, 2021. Full year 2022 Adjusted EBITDA is expected to be between $94.5 and $100.5 million, for an Adjusted EBITDA margin of 30% at the midpoint. The guidance includes an estimated currency headwind of about 1.5 percentage points to 2022 revenue growth and $1.5 million to 2022 Adjusted EBITDA.
Risks named in the filing include foreign currency exchange risk, inflation, the ongoing COVID-19 pandemic, economic and financial conditions, acquisition integration, competition, customer retention, and reliance on third-party data centers.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $80.2M | $78.7M | +1.9% | $76.3M | +5.2% |
| Gross profit | $53.7M | $54.0M | -0.5% | $51.3M | +4.7% |
| Gross margin | 66.9% | 68.5% | -1.6 pp | 67.2% | -0.3 pp |
| Research & development | $11.7M | $12.1M | -3.2% | $11.1M | +5.1% |
| Sales & marketing | $15.3M | $15.6M | -1.7% | $14.3M | +7.2% |
| General & administrative | $21.8M | $19.6M | +11.3% | $19.2M | +13.7% |
| Total operating expenses | $64.6M | $68.7M | -6.1% | $60.4M | +6.9% |
| Operating income (loss) | -$10.9M | -$14.8M | +26.3% | -$9.2M | -18.8% |
| Operating margin | -13.6% | -18.8% | +5.2 pp | -12.0% | -1.6 pp |
| Net income (loss) | -$16.4M | -$22.8M | +28.2% | -$19.0M | +13.9% |
| Net margin | -20.4% | -29.0% | +8.6 pp | -25.0% | +4.5 pp |
| Diluted EPS | -$0.52 | -$0.73 | +$0.21 | -$0.63 | +$0.11 |
| Customers | 10,000 | 10,000 | ±0.0% | 10,000 | ±0.0% |
Risks
Upland will issue 115,000 shares of Series A Preferred Stock at $1,000 per share for $115.0 million. The Series A ranks senior to common stock on distributions and liquidation, pays dividends at 4.5% per annum initially and 7% after seven years, may pay dividends in kind, and may be unredeemable at year seven, forcing the higher rate.
Total revenue increased 5.2% in Q2 2022 and 5.8% in the six months ended June 30, 2022, but Non-GAAP Core Organic Revenue decreased by $3.0 million in Q2 2022 and $3.9 million in the six months ended June 30, 2022. Overage Charges declined due to variable demand, and 2021 political revenue did not repeat.
The company expects the Series A Preferred Stock issuance to provide $115.0 million in additional liquidity for general corporate purposes and transaction fees, but closing is not assured and is subject to conditions including expiration of the Hart-Scott-Rodino notice period. The company can provide no assurances that the transaction will close on the expected timeline or at all.
The company added a new inflation risk, stating that inflation may adversely affect liquidity, business, financial condition, and results of operations by increasing its overall cost structure, particularly if it cannot achieve commensurate price increases. It notes inflation has resulted in higher interest rates, capital costs, shipping costs, supply shortages, labor costs, and weakening exchange rates.
Series A holders receive board nomination and observer rights tied to ownership thresholds and vote with common stock on an as-converted basis. These rights may grant additional control over the business and may adversely affect the trading price of Upland's common stock.
The fundamental change redemption feature of the Series A Preferred Stock requires redemption at 105% of liquidation preference plus a make-whole amount upon a change of control. This may discourage third-party acquisition proposals or delay or prevent change of control transactions that could otherwise provide common holders a premium.
Q2 2022 total revenue growth included a negative impact of 3 percentage points from changes in foreign currency exchange rates, and six-month growth included a negative impact of 1.5 percentage points. Foreign revenue as a percent of total revenue increased to 31% in the six months ended June 30, 2022 from 28% in the prior-year period.
Operating loss widened to $10.9 million in Q2 2022 from $9.2 million in Q2 2021, and operating margin declined 1.6 percentage points to -13.6%. For the six months ended June 30, 2022, operating loss narrowed to $25.7 million from $26.7 million and operating margin improved 1.6 percentage points to -16.1%.
Upland completed two acquisitions during 2022 and has made 31 acquisitions from February 2012 through June 30, 2022. Acquisition-related expenses can vary based on size, timing, and location, and transformational expenses may continue to affect results.
SaaS KPIs
All quarters →Adjusted EBITDA
Free Cash Flow
Major expansions
New customers
Adjusted EBITDA margin
New major customers
Total Customers
Enterprise Customers
Users
Existing customer expansions
Summary, forecast, risks and KPIs are extracted from Upland Software, Inc.'s SEC filings for Q2 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.