Summary
Upland Software reported third quarter 2025 total revenue of $50.5 million, down 24.2% from the prior-year quarter, a decline the company attributes mainly to divestitures completed earlier in the year. Gross profit was $38.8 million, down 17.3%, yet gross margin climbed to 76.9%, up 6.4 percentage points. Operating income was $5.3 million, a swing to profit from the prior-year quarter, and operating margin was 10.6%, up 15.5 percentage points. Net loss of $1.1 million narrowed from the prior-year quarter, and diluted EPS of -$0.09 was a narrower loss. The revenue drop is steep, but the cost base shrank faster once the divested product lines came out of the numbers.
For the first nine months of 2025, revenue was $167.6 million, down 19.0%. Gross profit was $124.4 million, down 14.5%, and gross margin was 74.2%, up 3.9 percentage points from the prior-year period. The operating loss was $2.7 million, and operating margin was -1.6%, up 46.9 percentage points. Net loss was $40.0 million, and diluted EPS was -$1.56. Both year-to-date loss figures narrowed from the prior-year period.
Cash generation improved. Operating cash flow was $6.9 million for the quarter, up 59.9%, and $18.5 million for the nine months, up 24.1%. Capital expenditures were $0.2 million for the quarter, up 97.1%, and $1.3 million year to date, up 125.1%. Free cash flow was $6.7 million for the quarter. Deferred revenue, current portion, was $66.9 million, down 27.9% from the prior-year quarter. Remaining performance obligations were $158.9 million, down 34.5%. Both forward-looking measures fell sharply.
Non-GAAP results show stronger margins. Adjusted EBITDA was $16.0 million, or 32% of total revenue, compared with $14.0 million, or 21% of total revenue, in the prior-year quarter. Core organic growth rate was 2.6%. Upland added 97 new customers, including 14 new major customers, and expanded relationships with 168 existing customers, 13 of which were major expansions. The company earned 49 badges in G2's Fall 2025 market reports and pointed to new multi-year AI wins with six- and seven-figure contract values. Upland RightAnswers and Upland BA Insight are now available in AWS Marketplace. The debt was refinanced, extending maturity by six years to July 2031 and adding a $30 million revolver.
Guidance points to more divestiture-driven revenue declines. For the fourth quarter of 2025, Upland expects total revenue to decline 27% at the midpoint from the quarter ended December 31, 2024. Fourth quarter Adjusted EBITDA is expected to be between $13.8 million and $16.8 million, a midpoint increase of 3% from the quarter ended December 31, 2024, with an Adjusted EBITDA margin of 31% at the midpoint, up 900 basis points from 22%. For the full year 2025, Upland expects total revenue to decline 21% at the midpoint from the year ended December 31, 2024. Full year Adjusted EBITDA is expected to be between $56.5 million and $59.5 million, a midpoint increase of 4% from the year ended December 31, 2024, with a margin of 27% at the midpoint, up 700 basis points from 20%.
Risks include the revenue decline tied to divestitures, lower deferred revenue and RPO, macroeconomic factors, foreign currency exchange risk, competition, the ability to build and deliver AI functionality, variable interest rate risk on the debt, and possible goodwill impairments if the stock price falls. Upland says it will continue to evaluate goodwill for impairment. The quarter delivered better margins and cash flow, but a smaller backlog leaves less cushion as the company runs a narrower product portfolio.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $50.5M | $53.4M | -5.4% | $66.7M | -24.2% |
| Gross profit | $38.8M | $39.9M | -2.8% | $47.0M | -17.3% |
| Gross margin | 76.9% | 74.8% | +2.1 pp | 70.5% | +6.4 pp |
| Research & development | $7.9M | $9.8M | -19.5% | $11.4M | -31.1% |
| Sales & marketing | $9.7M | $10.8M | -9.9% | $16.3M | -40.5% |
| General & administrative | $8.8M | $10.2M | -14.0% | $11.1M | -20.5% |
| Total operating expenses | $33.5M | $47.0M | -28.7% | $50.3M | -33.4% |
| Operating income (loss) | $5.3M | -$7.0M | +176.0% | -$3.3M | +261.5% |
| Operating margin | 10.6% | -13.2% | +23.8 pp | -5.0% | +15.5 pp |
| Net income (loss) | -$1.1M | -$13.0M | +91.4% | -$1.7M | +35.3% |
| Net margin | -2.2% | -24.4% | +22.2 pp | -2.6% | +0.4 pp |
| Diluted EPS | -$0.09 | -$0.51 | +$0.42 | -$0.12 | +$0.03 |
Risks
Total revenue fell 24% in the quarter ended September 30, 2025 versus the prior-year quarter, driven primarily by $16.8 million of expected declines from divested product lines and $0.5 million from Sunset Assets. Subscription and support revenue, the core recurring stream, declined 25% over the same period.
The company completed multiple product line divestitures in 2025, recording a $24.4 million loss on divestitures of businesses for the nine months ended September 30, 2025, and $9.4 million in divestiture-related expenses year to date. Further divestitures or Sunset Asset actions could continue to reduce revenue and disrupt operations.
Deferred revenue (current portion) decreased 27.9% year over year to $66.9 million as of September 30, 2025, and remaining performance obligations decreased 34.5% to $158.9 million. These declines suggest reduced bookings and backlog, which may pressure future revenue recognition.
As of September 30, 2025, the company had $240.0 million outstanding under a new credit facility and only $23.4 million of cash. Net interest expense was $4.2 million in the quarter ended September 30, 2025, compared to net interest income of $2.3 million in the prior-year quarter, reflecting exposure to variable interest rates.
The company recorded $2.5 million of impairment expense on Sunset intangible assets in the nine months ended September 30, 2025, after an $87.2 million goodwill impairment in the prior-year period. MD&A warns that future goodwill impairments could occur if the company experiences significant stock price declines.
The company positions itself as an AI-powered knowledge and content management provider, and its forward-looking statements cite the ability to incorporate and deliver AI functionality into products and services. Failure to deliver competitive AI features could harm its market position.
SaaS KPIs
All quarters →Adjusted EBITDA
Free Cash Flow
Major expansions
New customers
Adjusted EBITDA margin
New major customers
Enterprise Customers
Core Organic Growth Rate
Existing customers expanded
Summary, forecast, risks and KPIs are extracted from Upland Software, Inc.'s SEC filings for Q3 FY2025 (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.