Summary
Upland Software closed fiscal 2022 with fourth-quarter revenue of $78.8 million, up 4.1% from the prior-year quarter. Gross profit rose 3.1% to $52.1 million, but gross margin slipped to 66.1%, down 0.6 percentage points. The quarter's operating loss widened to $14.0 million. Operating margin was -17.8%, down 14.8 percentage points. Net loss widened to $22.7 million. Foreign currency was a real drag. Fourth-quarter total revenue growth included a negative impact of 3% from changes in FX rates, and without FX total revenue growth would have been 7%.
The full year tells a similar story. Revenue for fiscal 2022 was $317.3 million, up 5.1%. Gross profit was $213.6 million, up 5.4%. The operating loss widened to $40.2 million. Net loss was $68.4 million, and diluted EPS was -$2.23, with the loss widening 16.1%. Cash generation softened. Fourth-quarter operating cash flow was $5.8 million, down 55.4%. Full-year operating cash flow was $30.0 million, down 28.2%. Free cash flow was $5.7 million in the quarter, compared with free cash flow of $12.9 million a year earlier.
Contracted backlog and retention are worth watching. Deferred revenue, current portion, was $106.5 million, up 3.5%. Remaining performance obligations were $272.5 million, down 7.8%. Adjusted EBITDA was $24.3 million, or 31% of total revenue, against $25.1 million, or 33% of total revenue, in the prior-year quarter. Annualized recurring revenue at year-end was $266.3 million, and annual net dollar retention was 95%.
Business activity was mixed. Upland expanded relationships with 310 existing customers, 38 of which were major expansions, and added 204 new customers, including 21 major customers. RightAnswers released RightAnswers X, a browser extension for connected knowledge. The company marked the first anniversary of its India Center of Excellence and kept shifting research and development work there. After the quarter, Upland named Oliver Yates as Chief Sales Officer, Michael Frannea as head of marketing and demand generation, and promoted Karen Cummings to EVP and Senior GM. The quarter also carried a $12.5 million non-cash goodwill impairment charge, and the company decided to sunset certain non-strategic product offerings and customer contracts.
Management tied the quarter to a new growth plan. The plan sharpens product focus and leans on efficient digital marketing and inside sales plus an expanded offshore development platform. Management said those investments should drive higher core organic growth and higher Adjusted EBITDA margins over time. The 2022 acquisitions, BA Insight and Objectif Lune, were folded into the revenue base during the year.
Guidance calls for near-term contraction. For the quarter ending March 31, 2023, Upland expects total revenue to decline 5% at the midpoint over the quarter ended March 31, 2022. First quarter 2023 Adjusted EBITDA is expected to produce a 23% margin at the midpoint, a decrease of 27% from the quarter ended March 31, 2022. For the full year ending December 31, 2023, the company expects total revenue to decline 5% at the midpoint over the year ended December 31, 2022. Full year 2023 Adjusted EBITDA is expected to produce a 23% margin at the midpoint, a decrease of 29% over the year ended December 31, 2022. The guidance reflects the incremental sales, marketing and product investments tied to the growth plan, and management said it will discuss that plan on the earnings call.
Risks are familiar for a serial acquirer in a soft spending environment. They include foreign currency swings, inflation, supply chain constraints, customer retention, acquisition integration, goodwill impairment and credit facility covenants. The Series A convertible preferred stock adds dividend obligations on top of the debt load.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $78.8M | $79.5M | -0.9% | $75.7M | +4.1% |
| Gross profit | $52.1M | $53.8M | -3.2% | $50.5M | +3.1% |
| Gross margin | 66.1% | 67.7% | -1.5 pp | 66.7% | -0.6 pp |
| Research & development | $10.8M | $11.6M | -7.3% | $10.2M | +5.9% |
| Sales & marketing | $14.1M | $14.4M | -1.6% | $14.0M | +0.9% |
| General & administrative | $14.4M | $14.7M | -2.2% | $15.6M | -8.1% |
| Total operating expenses | $66.1M | $54.4M | +21.6% | $52.8M | +25.3% |
| Operating income (loss) | -$14.0M | -$554.0K | -2428.7% | -$2.2M | -524.3% |
| Operating margin | -17.8% | -0.7% | -17.1 pp | -3.0% | -14.8 pp |
| Net income (loss) | -$22.7M | -$6.5M | -248.2% | -$7.5M | -203.5% |
| Net margin | -28.8% | -8.2% | -20.6 pp | -9.9% | -18.9 pp |
| Diluted EPS | -$0.76 | -$0.22 | -$0.54 | -$0.25 | -$0.51 |
| Customers | 10,000 | 10,000 | ±0.0% | 10,000 | ±0.0% |
| Net retention rate | 95.0% | — | — | — | — |
Risks
The company recorded a $12.5 million goodwill impairment in Q4 2022 after a decline in its stock price. Management said it will continue to evaluate goodwill impairment in future periods, and the charge contributed to the Q4 operating loss widening to $14.01 million from $2.24 million in the prior-year quarter.
Core Organic Revenue decreased by $3.8 million in FY2022 compared to FY2021, and by $2.6 million after removing foreign currency effects, even though total revenue rose 5.1% to $317.3 million. RPO decreased 7.8% to $272.5 million at December 31, 2022 versus the prior year.
FY2022 net loss widened to $68.41 million from $58.21 million in FY2021, and Q4 net loss widened to $22.68 million from $7.47 million in the prior-year quarter. Operating cash flow decreased 28.2% year to date and 55.4% in Q4.
Annual net dollar retention rate was 95% as of December 31, 2022, below 100%, indicating existing customers reduced spending on a net basis even as the rate improved from 94% in 2021. Growth depends on renewals, upgrades, and cross-sells exceeding downgrades and non-renewals.
In July 2022 the company issued 115,000 shares of Series A Preferred Stock at $1,000 per share for $115.0 million. The preferred stock ranks senior to common stock in liquidation and distributions, pays a 4.5% dividend that rises to 7% after seven years, and carries governance rights and dilution risk.
All outstanding debt under the Credit Facility was variable rate as of December 31, 2022; while $540.0 million of term loans were swapped to a fixed 5.4% rate, the $60.0 million Revolver remains undrawn and not subject to interest rate instruments. Rising benchmark rates could increase debt service obligations and reduce cash flows.
Acquisitions are a primary growth strategy, with 31 acquisitions completed in the 11 years ending December 31, 2022, including two in 2022. Integration failures or inability to identify suitable targets on acceptable terms could disrupt operations and fail to realize expected synergies.
New privacy laws, including the CPRA effective January 2023 and other U.S. state laws, impose new obligations and rights. Australia increased maximum penalties for serious or repeated data breaches to the greater of AUS 50 million, three times the benefit obtained through misuse, or 30% of adjusted turnover, raising compliance and penalty exposure.
Inflation, rising interest rates, and recession fears could reduce customer spending on information technology or software, leading to longer sales cycles and lower prices. FY2022 total revenue growth included a negative 2% impact from changes in foreign currency exchange rates.
Sales cycles are lengthy and variable, and perpetual license revenue is unpredictable and can cause substantial variation in total revenue and earnings. Organic perpetual license revenue decreased by $0.3 million in FY2022 compared to FY2021.
SaaS KPIs
All quarters →Adjusted EBITDA
Free Cash Flow
Major expansions
New customers
Adjusted EBITDA margin
New major customers
Total Customers
Enterprise Customers
Existing customers expanded
Net Dollar Retention Rate
Summary, forecast, risks and KPIs are extracted from Upland Software, Inc.'s SEC filings for Q4 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.