10-Q 1 upld-20220331.htm 10-Q upld-20220331
000150515512/312022Q1false0.500015051552022-01-012022-03-3100015051552022-04-28xbrli:shares00015051552022-03-31iso4217:USD00015051552021-12-31iso4217:USDxbrli:shares0001505155upld:SubscriptionAndSupportMember2022-01-012022-03-310001505155upld:SubscriptionAndSupportMember2021-01-012021-03-310001505155upld:PerpetualLicenseMember2022-01-012022-03-310001505155upld:PerpetualLicenseMember2021-01-012021-03-310001505155us-gaap:ProductMember2022-01-012022-03-310001505155us-gaap:ProductMember2021-01-012021-03-310001505155upld:ProfessionalServicesMember2022-01-012022-03-310001505155upld:ProfessionalServicesMember2021-01-012021-03-3100015051552021-01-012021-03-310001505155us-gaap:CommonStockMember2021-12-310001505155us-gaap:AdditionalPaidInCapitalMember2021-12-310001505155us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001505155us-gaap:RetainedEarningsMember2021-12-310001505155us-gaap:CommonStockMember2022-01-012022-03-310001505155us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001505155us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001505155us-gaap:RetainedEarningsMember2022-01-012022-03-310001505155us-gaap:CommonStockMember2022-03-310001505155us-gaap:AdditionalPaidInCapitalMember2022-03-310001505155us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001505155us-gaap:RetainedEarningsMember2022-03-310001505155us-gaap:CommonStockMember2020-12-310001505155us-gaap:AdditionalPaidInCapitalMember2020-12-310001505155us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001505155us-gaap:RetainedEarningsMember2020-12-3100015051552020-12-310001505155us-gaap:CommonStockMember2021-01-012021-03-310001505155us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001505155us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001505155us-gaap:RetainedEarningsMember2021-01-012021-03-310001505155us-gaap:CommonStockMember2021-03-310001505155us-gaap:AdditionalPaidInCapitalMember2021-03-310001505155us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001505155us-gaap:RetainedEarningsMember2021-03-3100015051552021-03-310001505155upld:CreditFacilityMemberus-gaap:SecuredDebtMember2022-03-31xbrli:pure0001505155upld:CreditFacilityMemberus-gaap:SecuredDebtMember2022-01-012022-03-310001505155us-gaap:InterestRateSwapMember2022-03-310001505155us-gaap:InterestRateSwapMember2021-12-310001505155upld:BAInsightIncMember2022-02-222022-03-310001505155upld:ObjectifLuneIncMember2022-01-072022-03-310001505155upld:BAInsightIncMember2022-02-222022-02-220001505155upld:ObjectifLuneIncMember2022-01-072022-01-070001505155upld:PanvivaPtyLtdMember2021-06-242021-06-240001505155upld:BlueVennGroupLimitedMember2021-02-282021-02-280001505155upld:SecondStreetMediaIncMember2021-01-192021-01-190001505155upld:BAInsightIncMember2022-02-220001505155upld:ObjectifLuneIncMember2022-01-070001505155upld:PanvivaPtyLtdMember2021-06-240001505155upld:BlueVennGroupLimitedMember2021-02-280001505155upld:SecondStreetMediaIncMember2021-01-190001505155upld:BlueVennGroupLimitedMember2021-12-310001505155upld:SecondStreetMediaIncMember2021-12-310001505155upld:SecondStreetMediaIncMember2022-01-012022-03-310001505155upld:BlueVennGroupLimitedMember2022-01-012022-03-310001505155us-gaap:CustomerRelationshipsMemberupld:BAInsightIncMember2022-02-220001505155us-gaap:CustomerRelationshipsMemberupld:ObjectifLuneIncMember2022-01-070001505155us-gaap:CustomerRelationshipsMemberupld:PanvivaPtyLtdMember2021-06-240001505155upld:BlueVennGroupLimitedMemberus-gaap:CustomerRelationshipsMember2021-02-280001505155upld:SecondStreetMediaIncMemberus-gaap:CustomerRelationshipsMember2021-01-190001505155us-gaap:TradeNamesMemberupld:BAInsightIncMember2022-02-220001505155us-gaap:TradeNamesMemberupld:ObjectifLuneIncMember2022-01-070001505155us-gaap:TradeNamesMemberupld:PanvivaPtyLtdMember2021-06-240001505155upld:BlueVennGroupLimitedMemberus-gaap:TradeNamesMember2021-02-280001505155upld:SecondStreetMediaIncMemberus-gaap:TradeNamesMember2021-01-190001505155us-gaap:TechnologyBasedIntangibleAssetsMemberupld:BAInsightIncMember2022-02-220001505155us-gaap:TechnologyBasedIntangibleAssetsMemberupld:ObjectifLuneIncMember2022-01-070001505155us-gaap:TechnologyBasedIntangibleAssetsMemberupld:PanvivaPtyLtdMember2021-06-240001505155upld:BlueVennGroupLimitedMemberus-gaap:TechnologyBasedIntangibleAssetsMember2021-02-280001505155upld:SecondStreetMediaIncMemberus-gaap:TechnologyBasedIntangibleAssetsMember2021-01-190001505155us-gaap:CustomerRelationshipsMember2022-01-012022-03-310001505155us-gaap:CustomerRelationshipsMember2021-01-012021-06-300001505155us-gaap:TradeNamesMember2022-01-012022-03-310001505155us-gaap:TradeNamesMember2021-01-012021-06-300001505155us-gaap:DevelopedTechnologyRightsMember2022-01-012022-03-310001505155us-gaap:DevelopedTechnologyRightsMember2021-01-012021-06-3000015051552021-01-012021-06-3000015051552021-01-012022-03-310001505155us-gaap:CustomerRelationshipsMemberus-gaap:SeriesOfIndividuallyImmaterialAssetAcquisitionsMember2022-01-012022-03-310001505155us-gaap:CustomerRelationshipsMemberus-gaap:SeriesOfIndividuallyImmaterialAssetAcquisitionsMember2021-01-012021-03-310001505155us-gaap:FairValueInputsLevel3Member2022-03-310001505155us-gaap:FairValueInputsLevel3Member2021-12-310001505155us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2022-03-310001505155us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2022-03-310001505155us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2022-03-310001505155us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2022-03-310001505155us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2021-12-310001505155us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2021-12-310001505155us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2021-12-310001505155us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2021-12-310001505155us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001505155us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001505155us-gaap:CustomerRelationshipsMembersrt:MinimumMember2022-01-012022-03-310001505155us-gaap:CustomerRelationshipsMembersrt:MaximumMember2022-01-012022-03-310001505155us-gaap:CustomerRelationshipsMember2022-03-310001505155us-gaap:TradeNamesMembersrt:MinimumMember2022-01-012022-03-310001505155srt:MaximumMemberus-gaap:TradeNamesMember2022-01-012022-03-310001505155us-gaap:TradeNamesMember2022-03-310001505155srt:MinimumMemberus-gaap:DevelopedTechnologyRightsMember2022-01-012022-03-310001505155srt:MaximumMemberus-gaap:DevelopedTechnologyRightsMember2022-01-012022-03-310001505155us-gaap:DevelopedTechnologyRightsMember2022-03-310001505155us-gaap:NoncompeteAgreementsMember2022-01-012022-03-310001505155us-gaap:NoncompeteAgreementsMember2022-03-310001505155us-gaap:CustomerRelationshipsMembersrt:MinimumMember2021-01-012021-12-310001505155us-gaap:CustomerRelationshipsMembersrt:MaximumMember2021-01-012021-12-310001505155us-gaap:CustomerRelationshipsMember2021-12-310001505155us-gaap:TradeNamesMembersrt:MinimumMember2021-01-012021-12-310001505155srt:MaximumMemberus-gaap:TradeNamesMember2021-01-012021-12-310001505155us-gaap:TradeNamesMember2021-12-310001505155srt:MinimumMemberus-gaap:DevelopedTechnologyRightsMember2021-01-012021-12-310001505155srt:MaximumMemberus-gaap:DevelopedTechnologyRightsMember2021-01-012021-12-310001505155us-gaap:DevelopedTechnologyRightsMember2021-12-310001505155us-gaap:NoncompeteAgreementsMember2021-01-012021-12-310001505155us-gaap:NoncompeteAgreementsMember2021-12-310001505155upld:SeniorSecuredNotesMember2022-03-310001505155upld:SeniorSecuredNotesMember2021-12-310001505155upld:CreditFacilityMemberus-gaap:SecuredDebtMember2019-08-060001505155upld:CreditFacilityMemberus-gaap:SecuredDebtMember2019-08-062019-08-060001505155us-gaap:RevolvingCreditFacilityMemberupld:CreditFacilityMember2019-08-060001505155us-gaap:RevolvingCreditFacilityMemberupld:CreditFacilityMember2019-08-062019-08-060001505155upld:CreditFacilityMemberus-gaap:SecuredDebtMember2019-11-260001505155us-gaap:BaseRateMemberupld:CreditFacilityMemberus-gaap:SecuredDebtMember2019-08-062019-08-060001505155upld:EurodollarDepositsRateMembersrt:MinimumMemberupld:CreditFacilityMemberus-gaap:SecuredDebtMember2019-08-062019-08-060001505155upld:EurodollarDepositsRateMemberupld:CreditFacilityMemberus-gaap:SecuredDebtMember2019-08-062019-08-060001505155srt:MinimumMemberupld:CreditFacilityMemberus-gaap:FederalFundsEffectiveSwapRateMemberus-gaap:SecuredDebtMember2019-08-062019-08-060001505155us-gaap:EurodollarMemberupld:CreditFacilityMemberus-gaap:SecuredDebtMember2019-08-062019-08-060001505155us-gaap:InterestRateSwapMember2022-01-012022-03-310001505155us-gaap:InterestRateSwapMember2021-01-012021-03-310001505155us-gaap:LetterOfCreditMemberupld:CreditFacilityMember2019-08-060001505155upld:CreditFacilityMember2019-08-060001505155upld:CreditFacilityMember2019-08-062019-08-060001505155upld:CreditFacilityMemberus-gaap:FederalFundsEffectiveSwapRateMemberus-gaap:SecuredDebtMember2019-08-062019-08-060001505155us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001505155us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001505155us-gaap:RestrictedStockMember2022-01-012022-03-310001505155us-gaap:RestrictedStockMember2021-01-012021-03-310001505155us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001505155us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001505155us-gaap:PerformanceSharesMember2022-01-012022-03-310001505155us-gaap:PerformanceSharesMember2021-01-012021-03-310001505155us-gaap:AccumulatedTranslationAdjustmentMember2022-03-310001505155us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310001505155upld:AccumulatedForeignCurrencyAdjustmentAttributableToParentForeignCurrencyDenominatedIntercompanyLoansMember2022-03-310001505155upld:AccumulatedForeignCurrencyAdjustmentAttributableToParentForeignCurrencyDenominatedIntercompanyLoansMember2021-12-310001505155us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-03-310001505155us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310001505155upld:AccumulatedForeignCurrencyAdjustmentAttributableToParentForeignCurrencyDenominatedIntercompanyLoansWithForeignSubsidiariesTaxMember2022-01-012022-03-310001505155upld:AccumulatedForeignCurrencyAdjustmentAttributableToParentForeignCurrencyDenominatedIntercompanyLoansTaxMember2022-01-012022-03-310001505155upld:AccumulatedForeignCurrencyAdjustmentAttributableToParentForeignCurrencyDenominatedIntercompanyLoansTaxMember2021-01-012021-03-310001505155upld:CostofSubscriptionandSupportRevenueMember2022-01-012022-03-310001505155upld:CostofSubscriptionandSupportRevenueMember2021-01-012021-03-310001505155us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310001505155us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310001505155us-gaap:SellingAndMarketingExpenseMember2022-01-012022-03-310001505155us-gaap:SellingAndMarketingExpenseMember2021-01-012021-03-310001505155us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310001505155us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310001505155us-gaap:RestrictedStockUnitsRSUMember2021-12-310001505155us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001505155us-gaap:RestrictedStockUnitsRSUMember2022-03-310001505155srt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001505155srt:ChiefExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-01-012021-12-310001505155srt:MinimumMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001505155srt:MaximumMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001505155us-gaap:PerformanceSharesMember2022-01-012022-03-310001505155us-gaap:PerformanceSharesMember2021-12-310001505155us-gaap:PerformanceSharesMember2022-03-310001505155us-gaap:PerformanceSharesMember2021-01-012021-12-310001505155upld:SubscriptionContractsMember2022-03-3100015051552022-04-012022-03-310001505155upld:SubscriptionAndSupportMembercountry:US2022-01-012022-03-310001505155upld:SubscriptionAndSupportMembercountry:US2021-01-012021-03-310001505155upld:SubscriptionAndSupportMembercountry:GB2022-01-012022-03-310001505155upld:SubscriptionAndSupportMembercountry:GB2021-01-012021-03-310001505155upld:SubscriptionAndSupportMembercountry:CA2022-01-012022-03-310001505155upld:SubscriptionAndSupportMembercountry:CA2021-01-012021-03-310001505155upld:SubscriptionAndSupportMemberupld:OtherInternationalMember2022-01-012022-03-310001505155upld:SubscriptionAndSupportMemberupld:OtherInternationalMember2021-01-012021-03-310001505155country:USupld:PerpetualLicenseMember2022-01-012022-03-310001505155country:USupld:PerpetualLicenseMember2021-01-012021-03-310001505155country:GBupld:PerpetualLicenseMember2022-01-012022-03-310001505155country:GBupld:PerpetualLicenseMember2021-01-012021-03-310001505155country:CAupld:PerpetualLicenseMember2022-01-012022-03-310001505155country:CAupld:PerpetualLicenseMember2021-01-012021-03-310001505155upld:OtherInternationalMemberupld:PerpetualLicenseMember2022-01-012022-03-310001505155upld:OtherInternationalMemberupld:PerpetualLicenseMember2021-01-012021-03-310001505155country:USupld:ProfessionalServicesMember2022-01-012022-03-310001505155country:USupld:ProfessionalServicesMember2021-01-012021-03-310001505155upld:ProfessionalServicesMembercountry:GB2022-01-012022-03-310001505155upld:ProfessionalServicesMembercountry:GB2021-01-012021-03-310001505155upld:ProfessionalServicesMembercountry:CA2022-01-012022-03-310001505155upld:ProfessionalServicesMembercountry:CA2021-01-012021-03-310001505155upld:ProfessionalServicesMemberupld:OtherInternationalMember2022-01-012022-03-310001505155upld:ProfessionalServicesMemberupld:OtherInternationalMember2021-01-012021-03-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 001-36720
upld-20220331_g1.jpg
UPLAND SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware27-2992077
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
401 Congress Ave., Suite 1850
Austin, Texas 78701
(Address, including zip code, of registrant’s principal executive offices)
(512960-1010
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.0001 per shareUPLDThe Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes     No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer(Do not check if a smaller reporting company)Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
As of April 28, 2022, 31,321,010 shares of the registrant’s Common Stock were outstanding. 


Upland Software, Inc.
Table of Contents 
Page
Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021
Condensed Consolidated Statements of Operations for the Three months ended March 31, 2022 and March 31, 2021
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three months ended March 31, 2022 and March 31, 2021
Condensed Consolidated Statements of Stockholders' Equity for the Three months ended March 31, 2022 and March 31, 2021
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and March 31, 2021
 





Item 1. Financial Statements
Upland Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share and per share information)March 31, 2022December 31, 2021
Assets(unaudited)
Current assets:
Cash and cash equivalents$130,443 $189,158 
Accounts receivable (net of allowance of $1,089 and $1,107 at March 31, 2022 and December 31, 2021, respectively)
48,725 50,499 
Deferred commissions, current10,169 9,824 
Unbilled receivables5,356 4,801 
Prepaid expenses and other current assets15,017 8,709 
Total current assets209,710 262,991 
Tax credits receivable3,388 3,345 
Property and equipment, net2,544 2,667 
Operating lease right-of-use asset6,932 6,454 
Intangible assets, net300,436 279,920 
Goodwill505,246 457,472 
Deferred commissions, noncurrent15,418 14,808 
Interest rate swap assets17,803  
Other assets1,284 1,350 
Total assets$1,062,761 $1,029,007 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$18,478 $20,362 
Accrued compensation11,664 9,829 
Accrued expenses and other current liabilities15,612 9,086 
Deferred revenue114,498 102,847 
Liabilities due to sellers of businesses12,342 7,607 
Operating lease liabilities, current4,021 3,546 
Current maturities of notes payable (includes unamortized discount of $2,234 and $2,233 at March 31, 2022 and December 31, 2021, respectively)
3,166 3,167 
Total current liabilities179,781 156,444 
Notes payable, less current maturities (includes unamortized discount of $6,735 and $7,287 at March 31, 2022 and December 31, 2021, respectively)
514,366 515,163 
Deferred revenue, noncurrent4,514 2,058 
Operating lease liabilities, noncurrent7,331 6,773 
Noncurrent deferred tax liability, net27,133 22,793 
Interest rate swap liabilities 8,409 
Other long-term liabilities1,052 1,079 
Total liabilities734,177 712,719 
Stockholders’ equity:
Common stock, $0.0001 par value; 50,000,000 shares authorized: 31,320,765 and 31,096,548 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively)
3 3 
Additional paid-in capital579,638 568,384 
Accumulated other comprehensive income (loss)12,359 (11,514)
Accumulated deficit(263,416)(240,585)
Total stockholders’ equity328,584 316,288 
Total liabilities and stockholders’ equity$1,062,761 $1,029,007 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1

Upland Software, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except for share and per share information)

 Three Months Ended March 31,
 20222021
Revenue:
Subscription and support$73,627 $70,653 
Perpetual license1,778 352 
Total product revenue75,405 71,005 
Professional services3,311 2,964 
Total revenue78,716 73,969 
Cost of revenue:
Subscription and support22,069 22,682 
Professional services and other2,686 1,745 
Total cost of revenue24,755 24,427 
Gross profit53,961 49,542 
Operating expenses:
Sales and marketing15,593 12,432 
Research and development12,067 10,940 
General and administrative19,614 24,369 
Depreciation and amortization11,051 9,743 
Acquisition-related expenses10,413 9,586 
Total operating expenses68,738 67,070 
Loss from operations(14,777)(17,528)
Other expense:
Interest expense, net(7,762)(7,787)
Other income (expense), net(418)237 
Total other expense (8,180)(7,550)
Loss before benefit from income taxes(22,957)(25,078)
Benefit from income taxes126 4,394 
Net loss$(22,831)$(20,684)
Net loss per common share:
Net loss per common share, basic and diluted$(0.73)$(0.69)
Weighted-average common shares outstanding, basic and diluted31,163,273 29,970,050 










The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2

Upland Software, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
(in thousands)

 Three Months Ended March 31,
 20222021
Net loss$(22,831)$(20,684)
Other comprehensive income:
Foreign currency translation adjustment(1,047)(2,387)
Unrealized translation gain (loss) on intercompany loans with foreign subsidiaries(1,293)840 
Unrealized gain on interest rate swaps26,213 15,451 
Other comprehensive income:$23,873 $13,904 
Comprehensive income (loss)$1,042 $(6,780)









































The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

Upland Software, Inc.
Condensed Consolidated Statement of Stockholders’ Equity
(unaudited)
(in thousands, except share amounts)


Three Months Ended March 31, 2022
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
 SharesAmount
Balance at December 31, 202131,096,548 $3 $568,384 $(11,514)$(240,585)$316,288 
Issuance of stock under Company plans, net of shares withheld for tax224,217 — (365)— — (365)
Stock-based compensation— — 11,619 — — 11,619 
Foreign currency translation adjustment— — — (1,047)— (1,047)
Unrealized translation loss on intercompany loans with foreign subsidiaries— — — (1,293)— (1,293)
Unrealized gain on interest rate swaps— — — 26,213 — 26,213 
Net loss— — — — (22,831)(22,831)
Balance at March 31, 202231,320,765 $3 $579,638 $12,359 $(263,416)$328,584 






Three Months Ended March 31, 2021
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
 SharesAmount
Balance at December 31, 202029,987,114 $3 $515,219 $(26,234)$(182,373)$306,615 
Issuance of stock under Company plans, net of shares withheld for tax104,551 — 1 — — 1 
Stock-based compensation— — 17,824 — — 17,824 
Foreign currency translation adjustment— — — (2,387)— (2,387)
Unrealized translation gain on intercompany loans with foreign subsidiaries— — — 840 — 840 
Unrealized gain on interest rate swaps— — — 15,451 — 15,451 
Net loss— — — — (20,684)(20,684)
Balance at March 31, 202130,091,665 $3 $533,044 $(12,330)$(203,057)$317,660 













The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Upland Software, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
 Three Months Ended March 31,
 20222021
Operating activities
Net loss$(22,831)$(20,684)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization14,262 12,468 
Change in fair value of liabilities due to sellers of businesses(75) 
Deferred income taxes(1,341)(5,340)
Amortization of deferred costs2,896 1,767 
Foreign currency re-measurement loss 14 
Non-cash interest and other expense555 554 
Non-cash stock compensation expense11,619 17,824 
Changes in operating assets and liabilities, net of purchase business combinations:
Accounts receivable9,182 3,575 
Prepaid expenses and other current assets1,787 (1,015)
Accounts payable(4,145)4,540 
Accrued expenses and other liabilities(4,790)(1,776)
Deferred revenue1,103 576 
Net cash provided by operating activities8,222 12,503 
Investing activities
Purchase of property and equipment(176)(282)
Purchase business combinations, net of cash acquired(62,333)(72,618)
Net cash used in investing activities(62,509)(72,900)
Financing activities
Payments on finance leases (4)
Proceeds from notes payable, net of issuance costs(3) 
Payments on notes payable(1,350)(1,350)
Taxes paid related to net share settlement of equity awards(547) 
Issuance of common stock, net of issuance costs182 1 
Additional consideration paid to sellers of businesses(2,493)(742)
Net cash used in financing activities(4,211)(2,095)
Effect of exchange rate fluctuations on cash(217)(865)
Change in cash and cash equivalents(58,715)(63,357)
Cash and cash equivalents, beginning of period189,158 250,029 
Cash and cash equivalents, end of period$130,443 $186,672 
Supplemental disclosures of cash flow information:
Cash paid for interest, net of interest rate swaps$7,207 $7,282 
Cash paid for taxes$772 $493 
Non-cash investing and financing activities:
Business combination consideration including holdbacks and earnouts$7,511 $11,061 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


Upland Software, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(unaudited)
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of Upland Software, Inc. and its wholly owned subsidiaries (collectively referred to as “Upland”, the “Company”, “we”, “us” or “our”). All intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation.
The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management of the Company, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, in all material respects, and include all adjustments of a normal recurring nature necessary for a fair presentation. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other period.
The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022.
Use of Estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include those related to revenue recognition, deferred commissions, allowance for credit losses, stock-based compensation, contingent consideration, acquired intangible assets, the useful lives of intangible assets and property and equipment, the fair value of the Company’s interest rate swaps and income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ from those estimates.
We assessed the impact of COVID-19 on the estimates and assumptions and determined there was no material impact. Upland is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of May 4, 2022, 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.
Concentrations of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable and the Company’s interest rate swap hedges. The Company’s cash and cash equivalents are placed with high-quality financial institutions, which, at times, may exceed federally insured limits. The Company has not experienced any losses in these accounts, and the Company does not believe it is exposed to any significant credit risk related to cash and cash equivalents. The Company provides credit, in the normal course of business, to a number of its customers. To manage accounts receivable credit risk, the Company performs periodic credit evaluations of its customers and maintains current expected credit losses which considers such factors as historical loss information, geographic location of customers, current market conditions, and reasonable and supportable forecasts.
No individual customer represented more than 10% of total revenues for the three months ended March 31, 2022, or more than 10% of accounts receivable as of March 31, 2022 or December 31, 2021.
6


Derivatives
Cash Flow Hedges—Interest Rate Swap Agreements
In connection with borrowing funds under the Company’s credit facility, the Company has entered into a floating-to-fixed interest rate swap agreements to limit exposure to interest rate risk related to our debt. These interest rate swaps effectively converted the entire balance of the Company's $540 million original principal term loans from variable interest payments to fixed interest rate payments, based on an annualized fixed rate of 5.4%, for a 7 year term of debt. ASC 815, Derivatives and Hedging, requires entities to recognize derivative instruments as either assets or liabilities in the statement of financial position at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. The Company assessed the effectiveness of the hedging relationship under the hypothetical derivative method and noted that all of the critical terms of the hypothetical derivative and hedging instrument were the same. The hedging relationship continues to limit the Company’s exposure to the variability in interest rates under the Company’s term loans and related cash outflows. As such, the Company has deemed this hedging relationship as highly effective in offsetting cash flows attributable to hedged risk (variability in forecasted monthly interest payments) for the term of the term loans and interest rate swap agreements. All derivative financial instruments are recorded at fair value as a net asset or liability in the accompanying condensed consolidated balance sheets. As of March 31, 2022, the fair value of the interest rate swaps included in assets in the Company's condensed consolidated balance sheets was $17.8 million. As of December 31, 2021, the fair value of the interest rate swaps included in liabilities in the Company's condensed consolidated balance sheets was $8.4 million.

The interest rate swap has been designated as a cash flow hedge. As such, the change in the fair value of the hedging instruments is recorded in Other comprehensive income (loss) in the accompanying condensed consolidated statements of comprehensive income (loss). Amounts deferred in Other comprehensive income (loss) will be reclassified to Interest expense in the accompanying condensed consolidated statements of operations in the period in which the hedged item affects earnings.
Fair Value of Financial Instruments
The Company recognizes financial instruments in accordance with the authoritative guidance on fair value measurements and disclosures for financial assets and liabilities. This guidance defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. The guidance also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
These tiers include Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions.
The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and debt. The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value, primarily due to short maturities. The carrying values of the Company’s debt instruments approximated their fair value based on rates currently available to the Company.
Recent Accounting Pronouncements
Recently issued accounting pronouncements not yet adopted
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is evaluating the impact of this standard on our consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which creates an exception to the general recognition and measurement principle for contract assets and contract liabilities from contracts with customers acquired in a business combination. The new guidance will require companies to apply the definition of a performance obligation under accounting standard codification
7


(“ASC”) Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Under current GAAP, an acquirer in a business combination is generally required to recognize and measure the assets it acquires and the liabilities it assumes at fair value on the acquisition date. The new guidance will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. These amendments are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is evaluating the impact of this standard on our consolidated financial statements.
2. Acquisitions
The Company performs quantitative and qualitative analyses to determine the significance of each acquisition to the financial statements the Company. Based on these analyses the below acquisitions were deemed to be insignificant on an individual and cumulative basis.
2022 Acquisitions
Acquisitions completed during the three months ended March 31, 2022 include the following:
BA Insight - On February 22, 2022, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of BA Insight Inc., (“BA Insight”), a cloud-based enterprise knowledge management solution. Revenues recorded since the acquisition date through March 31, 2022 were approximately $0.8 million.
Objectif Lune - On January 07, 2022, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Objectif Lune Inc., a Quebec proprietary company (“Objectif Lune”), cloud-based document workflow product. Revenues recorded since the acquisition date through March 31, 2022 were approximately $4.8 million.
2021 Acquisition
The acquisition completed during the year ended December 31, 2021 were:
Panviva - On June 24, 2021, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Panviva Pty Ltd, an Australian proprietary company (“Panviva”), a cloud-based enterprise knowledge management solution.
BlueVenn - On February 28, 2021 the Company entered into an agreement to purchase the shares comprising the entire issued share capital of BlueVenn Group Limited, a company limited by shares organized and existing under the laws of England and Wales (“BlueVenn”), a cloud-based customer data platform.
Second Street - On January 19, 2021, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Second Street Media, Inc., a Missouri corporation (“Second Street”), an audience engagement platform.
Consideration
The following table summarizes the consideration transferred for the acquisitions described above (in thousands):
BA InsightObjectif LunePanvivaBlueVennSecond Street
Cash$33,355 $29,750 $19,931 $53,535 $25,436 
Holdback (1)
645 5,250 3,517 2,429 5,000 
Contingent consideration (2)
   2,535 1,650 
Working capital and other adjustments1,616  379 (537)(1,365)
Total consideration$35,616 $35,000 $23,827 $57,962 $30,721 
(1)Represents the cash holdbacks subject to indemnification claims that are payable 12 months following closing for Objectif Lune, Panviva and Second Street, 15 months following closing for BA Insight and 18 months following closing for BlueVenn.
(2)Represents the acquisition date fair value of anticipated earnout payments, which are based on the estimated probability of attainment of the underlying future performance-based conditions at the time of acquisition. The maximum potential payout for the BlueVenn and Second Street earn-outs were $21.7 million and $3.0 million, respectively. As of December 31, 2021, the fair value of the earnouts for BlueVenn and Second Street were zero. As of March 31, 2022, the earnout payments for BlueVenn and Second Street were finalized resulting in no payments made.
8


Fair Value of Assets Acquired and Liabilities Assumed
The Company recorded the purchase of the acquisitions described above using the acquisition method of accounting and, accordingly, recognized the assets acquired and liabilities assumed at their fair values as of the date of the acquisition. The purchase accounting for the 2022 acquisitions of BA Insight and Objectif Lune and the 2021 acquisition of Panviva are preliminary as the Company has not finalized the overall impact of these acquisitions. Management has recorded the purchase price allocations based upon acquired company information that is currently available. Management expects to complete the purchase accounting for BA Insight and Objectif Lune no later than the first quarter of 2023 and no later than the second quarter of 2022 for Panviva.
The following condensed table presents the preliminary and finalized acquisition-date fair value of the assets acquired and liabilities assumed for the acquisitions during the year ended December 31, 2021 and through the three months ended March 31, 2022, as well as assets and liabilities (in thousands):
PreliminaryFinal
BA InsightObjectif LunePanvivaBlueVennSecond Street
Year Acquired20222022202120212021
Cash$4 $768 $132 $1,115 $ 
Accounts receivable2,474 5,193 2,122 1,289 1,105 
Other current assets4,081 7,174 4,985 2,002 89 
Operating lease right-of-use asset110 1,905 197 1,357 489 
Property and equipment18 286 26 611 156 
Customer relationships10,500 16,850 9,757 18,888 14,600 
Trade name150 362 76 238 200 
Technology2,000 5,827 2,194 4,337 3,400 
Goodwill25,522 23,246 16,604 44,892 16,586 
Other assets25 585 33 24 13 
Total assets acquired44,884 62,196 36,126 74,753 36,638 
Accounts payable(236)(2,028)(1,257)(2,772)(230)
Accrued expense and other(4,193)(8,690)(5,053)(2,429)(378)
Deferred tax liabilities (6,200)(2,395)(3,640)(4,320)
Deferred revenue(4,729)(8,373)(3,397)(6,593)(500)
Operating lease liabilities(110)(1,905)(197)(1,357)(489)
Total liabilities assumed(9,268)(27,196)(12,299)(16,791)(5,917)
Total consideration$35,616 $35,000 $23,827 $57,962 $30,721 
The Company uses third party valuation consultants to determine the fair values of assets acquired and liabilities assumed. Tangible assets are valued at their respective carrying amounts, which approximates their estimated fair value. The valuation of identifiable intangible assets reflects management’s estimates based on, among other factors, the use of established valuation methods. Customer relationships are valued using the multi-period excess earnings method. Developed technology and trade names are valued using the relief-from-royalty method.
The following table summarizes the weighted-average useful lives, by major finite-lived intangible asset class, for intangibles acquired during the three months ended March 31, 2022 and the year ended December 31, 2021 (in years):
Useful Life
March 31, 2022December 31, 2021
Customer relationships7.07.0
Trade name2.32.0
Developed technology6.25.0
Total weighted-average useful life6.86.6
During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill based on changes to management's estimates and assumptions.
9


The goodwill of $126.9 million for the above acquisitions is primarily attributable to the synergies expected to arise after the acquisition and the value of the acquired workforce. Goodwill that is deductible for tax purposes at the time of the acquisitions was $2.0 million.
Total transaction related expenses incurred with respect to acquisition activity during the three months ended March 31, 2022 and March 31, 2021 were $4.5 million and $4.0 million, respectively. Transaction related expenses, excluding transformation costs, include expenses such as banker fees, legal and professional fees, insurance costs, and deal bonuses. Transaction costs are included in acquisition-related expenses in our condensed consolidated statement of operations.
Other Acquisitions and Divestitures
From time to time we may purchase or sell customer relationships that meet certain criteria. We had no purchase or sale of customer relationships during the three months ended March 31, 2022 and March 31, 2021.
3. Fair Value Measurements
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. GAAP sets forth a three–tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three tiers are Level 1, defined as observable inputs, such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, which therefore requires an entity to develop its own assumptions.
As of March 31, 2022 and December 31, 2021, the Company had no accrued earnout business acquisition contingent consideration liabilities for which fair values are measured as Level 3 instruments. These contingent consideration liabilities were recorded at fair value on the acquisition date and are remeasured periodically based on the then assessed fair value and adjusted if necessary. The increases or decreases in the fair value of contingent consideration payable can result from changes in anticipated revenue levels, changes in assumed discount periods and rates and changes in foreign exchange rates. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3. Any adjustment related to subsequent changes in the fair value of contingent consideration is recorded in acquisition-related expense or other income (expense) in the Company's condensed consolidated statement of operations based on management's assessment of the nature of the liability. Earnout consideration liabilities are reported in “Due to sellers in businesses” in the Company's condensed consolidated balance sheets. As of March 31, 2022, the earnout payments for BlueVenn and Second Street were finalized resulting in no payments made.
In connection with entering into, and expanding, the Company's current credit facility, as discussed further in “Note 5—Debt”, the Company entered into interest rate swaps for the full 7 year term of the Company's term loans, effectively fixing our interest rate at 5.4% for the full value $540 million of the original principal term loans. The fair value of the Company's swaps are measured at the end of each interim reporting period based on the then assessed fair value and adjusted if necessary. As the fair value measure is based on the market approach, they are categorized as Level 2. As of March 31, 2022 the fair value of the interest rate swap is included in the “Interest rate swap assets” section compared to December 31, 2021 in which the fair value of the interest rate swaps included in the liabilities section on the Company's condensed consolidated balance sheets.
Liabilities measured at fair value on a recurring basis are summarized below (in thousands):
 Fair Value Measurements at March 31, 2022
(unaudited)
 Level 1Level 2Level 3Total
Assets:
Interest rate swap assets$ $17,803 $ $17,803 
 Fair Value Measurements at December 31, 2021
 Level 1Level 2Level 3Total
Liabilities:
Interest rate swap liabilities$ $8,409 $ $8,409 
Debt
The Company believes the carrying value of its long-term debt at March 31, 2022 approximates its fair value based on the variable interest rate feature or based upon interest rates currently available to the Company. The estimated fair value of the Company's debt, before debt discount, at March 31, 2022 and December 31, 2021 are $526.5 million and $527.9 million, respectively.
10


4. Goodwill and Other Intangible Assets
Changes in the Company’s goodwill balance for the three months ended March 31, 2022 are summarized in the table below:
($ in thousands)Goodwill
Balance at December 31, 2021$457,472 
Acquired in business combinations48,768 
Adjustment related to prior year business combinations1,467 
Foreign currency translation adjustment(2,461)
Balance at March 31, 2022$505,246 
Net intangible assets include the estimated acquisition-date fair values of customer relationships, marketing-related assets, developed technology, and non-compete agreements that the Company recorded as part of its business acquisitions.
The following is a summary of the Company’s intangible assets, net (in thousands):
Estimated Useful
Life (Years)
Gross
Carrying Amount
Accumulated
Amortization
Net Carrying
Amount
March 31, 2022:
Customer relationships
1-10
$384,542 $136,092 $248,450 
Trade name
1.5-10
10,175 6,020 4,155 
Developed technology
4-9
96,046 48,215 47,831 
Non-compete agreements
3
1,148 1,148  
Total intangible assets$491,911 $191,475 $300,436 
Estimated Useful
Life (Years)
Gross
Carrying Amount
Accumulated
Amortization
Net Carrying
Amount
December 31, 2021:
Customer relationships
1-10
$358,943 $126,329 $232,614 
Trade name
1.5-10
9,714 5,752 3,962 
Developed technology
4-9
88,548 45,204 43,344 
Non-compete agreements
3
1,148 1,148  
Total intangible assets$458,353 $178,433 $279,920 
The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value or revised useful life. Management recorded no impairments of intangible assets or goodwill during the three months ended March 31, 2022 or the three months ended March 31, 2021. Total amortization expense during the three months ended March 31, 2022 and March 31, 2021 was $13.8 million and $12.0 million, respectively.
As of March 31, 2022, the estimated annual amortization expense for the next five years and thereafter is as follows (in thousands):
Amortization
Expense
Year ending December 31:
Remainder of 2022$40,450 
202352,157 
202449,649 
202546,342 
202643,310 
2027 and thereafter68,528 
Total$300,436 

11


5. Income Taxes
The Company’s income tax benefit for the three months ended March 31, 2022 and March 31, 2021 reflects its estimate of the effective tax rates expected to be applicable for the full years, adjusted for any discrete events that are recorded in the period in which they occur. The estimates are re-evaluated each quarter based on the estimated tax expense for the full year.
The tax benefit of $0.1 million recorded for the three months ended March 31, 2022 is primarily related to foreign income taxes associated with our combined non-U.S. operations. These tax benefits are offset by changes in deferred tax liabilities associated with amortization of United States tax deductible goodwill and state taxes in certain states in which the Company does not file on a consolidated basis or have net operating loss carryforwards and the impact, recorded as discrete, of the deferred tax provision attributable to the tax gain associated with the transfer of goodwill between foreign and domestic jurisdictions.
The tax benefit of $4.4 million recorded for the three months ended March 31, 2021 is primarily related to the deferred tax benefit attributable to the release of valuation allowance related to the acquisition of deferred tax liabilities associated with the Second Street business combination, as discussed in “Note 2. Acquisitions”, and foreign income taxes associated with our combined non-U.S. operations. These tax benefits are offset by changes in deferred tax liabilities associated with amortization of United States tax deductible goodwill, state taxes in certain states in which the Company does not file on a consolidated basis or have net operating loss carryforwards. The release of valuation allowance is attributable to ASC 805-740-30-3 and acquisitions of domestic entities with deferred tax liabilities that, upon acquisition, allowed us to recognize certain deferred tax assets of approximately $4.3 million during the three months ended March 31, 2021 that had previously been offset by a valuation allowance.
The Company has historically incurred operating losses in the United States and, given its cumulative losses and limited history of profits, has recorded a valuation allowance against its United States net deferred tax assets, exclusive of tax deductible goodwill, at March 31, 2022 and March 31, 2021, respectively.
The Company has reflected any uncertain tax positions primarily within its long-term taxes payable and a portion within deferred tax assets. The Company and its subsidiaries file tax returns in the U.S. federal jurisdiction and in several state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years ending before December 31, 2018 and is no longer subject to state and local or foreign income tax examinations by tax authorities for years ending before December 31, 2017, other than where cross-border transactions extend the statute of limitations. The Company is not currently under audit for federal, state or any foreign jurisdictions. U.S. operating losses generated in years prior to 2018 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized.
6. Debt
Long-term debt consisted of the following at March 31, 2022 and December 31, 2021 (in thousands):
March 31, 2022December 31, 2021
Senior secured loans (includes unamortized discount of $8,969 and $9,520 based on an imputed interest rate of 5.8% and 5.8%, at March 31, 2022 and December 31, 2021, respectively)
$517,532 $518,330 
Less current maturities(3,166)(3,167)
Total long-term debt$514,366 $515,163 

Credit Facility
On August 6, 2019, the Company entered into a credit agreement (the “Credit Facility”) which provides for (i) a fully-drawn $350 million, 7 year, senior secured term loan B facility (the “Term Loan”) and (ii) a new $60 million, 5 year, revolving credit facility (the “Revolver”) that was fully available as of March 31, 2022. The Credit Facility replaced the Company's previous credit agreement. All outstanding balances under our previous credit facility were paid off using proceeds from our new Credit Facility.
On November 26, 2019 (the “Closing Date”), the Company entered into a First Incremental Assumption Agreement (the “Incremental Assumption Agreement”) which provides for a term loan facility to be established under the Credit Facility in an aggregate principal amount of $190.0 million (the “2019 Incremental Term Loan”) which is in addition to the existing $350.0 million term loans outstanding under the Credit Facility and the $60.0 million revolving credit facility under the Credit Facility.
Payment terms
12


The Term Loans (including the 2019 Incremental Term Loan) are repayable on a quarterly basis beginning on December 31, 2019 by an amount equal to 0.25% (1.00% per annum) of the aggregate principal amount of such loan. Any amount remaining unpaid is due and payable in full on August 6, 2026 (the “Term Loan Maturity Date”).
At the option of the Company, the Term Loans (including the 2019 Incremental Term Loan) accrue interest at a per annum rate based on (i) the Base Rate plus a margin of 2.75% or (ii) the rate (not less than 0.00%) for Eurodollar deposits quoted on the LIBOR01 or LIBOR02 pages on the Reuters Screen, or as otherwise determined in accordance with the Credit Facility (based on a period equal to 1, 2, 3 or 6 months or, if available and agreed to by all relevant Lenders and the Agent, 12 months or such period of less than 1 month) plus a margin of 3.75%. The Base Rate for any day is a rate per annum equal to the greatest of (i) the prime rate in effect on such day, (ii) the federal funds effective rate (not less than 0.00%) in effect on such day plus ½ of 1.00%, and (ii) the Eurodollar rate for a one month interest period beginning on such day plus 1.00%.
Accrued interest on the loans will be paid quarterly or, with respect to loans that are accruing interest based on the Eurodollar rate, at the end of the applicable interest rate period.
Interest rate swaps
On August 6, 2019, the Company entered into an interest rate hedge instrument for the full 7 year term, effectively fixing our interest rate at 5.4% for the Term Loan. In addition, on November 26, 2019, the Company entered into interest rate swap agreements to hedge the interest rate risk associated with the Company’s floating rate obligations under the 2019 Incremental Term Loan. These interest rate swaps fix the Company's interest rate (including the hedge premium) at 5.4% for the term of the Credit Facility. The interest rate associated with our new $60 million, 5 year, Revolver remains floating.
The interest rate swap has been designated as a cash flow hedge and is valued using a market approach, which is a Level 2 valuation technique. At March 31, 2022, the fair value of the interest rate swap was a $17.8 million asset as a result of an increase in short term interest rates since entering into the swap agreements. The increase in the fair value of the interest rate swap asset during the three months ended March 31, 2022 is the result of an increase in short term interest rates during the respective periods. In the next twelve months, the Company estimates that $4.1 million will be reclassified from Accumulated other comprehensive income (loss) to Interest expense, net on our condensed consolidated statement of operations.
Three Months Ended March 31,
20222021
Gain recognized in Other comprehensive income on derivative financial instruments$26,213 $15,451 
Loss on interest rate swap (included in Interest expense on our consolidated statement of operations)$(1,972)$(2,010)
Revolver
Loans under the Revolver are available up to $60 million. The Revolver provides a sub-facility whereby the Company may request letters of credit (the “Letters of Credit”) in an aggregate amount not to exceed, at any one time outstanding, $10.0 million for the Company. The aggregate amount of outstanding Letters of Credit are reserved against the credit availability under the Maximum Revolver Amount. The Company incurs a 0.50% per annum unused line fee on the unborrowed balance of the Revolver which is paid quarterly.
Loans under the Revolver may be borrowed, repaid and reborrowed until August 6, 2024 (the “Maturity Date”), at which time all amounts borrowed under the Revolver must be repaid. As of March 31, 2022, the Company had no borrowings outstanding under the Revolver or related sub-facility.
Covenants
The Credit Facility contains customary affirmative and negative covenants. The negative covenants limit the ability of the Loan Parties to, among other things (in each case subject to customary exceptions for a credit facility of this size and type):
Incur additional indebtedness or guarantee indebtedness of others;
Create liens on their assets;
Make investments, including certain acquisitions;
Enter into mergers or consolidations;
Dispose of assets;
Pay dividends and make other distributions on the Company’s capital stock, and redeem and repurchase the Company’s capital stock;
Enter into transactions with affiliates; and
Prepay indebtedness or make changes to certain agreements.

13


The Credit Facility has no financial covenants as long as less than 35% of the Revolver is drawn as of the last day of any fiscal quarter. If 35% of the Revolver is drawn as of the last day of a given fiscal quarter the Company will be required to maintain a Total Leverage Ratio (the ratio of funded indebtedness as of such date less the amount of unrestricted cash and cash equivalents of the Company and its guarantors in an amount not to exceed $50.0 million, to adjusted EBITDA (calculated on a pro forma basis including giving effect to any acquisition)), measured on a quarter-end basis for each four consecutive fiscal quarters then ended, of not greater than 6.00 to 1.00.
In addition, the Credit Facility contains customary events of default subject to customary cure periods for certain defaults that include, among others, non-payment defaults, inaccuracy of representations and warranties, covenant defaults, cross-defaults to certain other material indebtedness, change in control, bankruptcy and insolvency defaults and material judgment defaults. The occurrence of an event of default could result in the acceleration of Term Loans and Revolver and a right by the agent and lenders to exercise remedies. At the election of the lenders, a default interest rate shall apply on all obligations during an event of default, at a rate per annum equal to 2.00% above the applicable interest rate. The Term Loan and Revolver are secured by substantially all of the Company's assets. As of March 31, 2022 the Company was in compliance with all covenants under the Credit Facility.
Cash interest costs averaged 5.4% and 5.4% for the three months ended March 31, 2022 and 2021, respectively. In addition, as of March 31, 2022 and December 31, 2021 the Company had $9.0 million and $9.5 million, respectively, of unamortized deferred financing costs associated with the Credit Facility. These financing costs will be amortized to non-cash interest expense over the remaining term of the Credit Facility.
7. Net Loss Per Share
The following table sets forth the computations of loss per share (in thousands, except share and per share amounts):
Three Months Ended March 31,
20222021
Numerator:
Net Loss$(22,831)$(20,684)
Denominator:
Weighted–average common shares outstanding, basic and diluted31,163,273 29,970,050 
Net loss per common share, basic and diluted$(0.73)$(0.69)
Due to the net losses for the three months ended March 31, 2022 and March 31, 2021, respectively, basic and diluted loss per share were the same. The following table sets forth the anti–dilutive common share equivalents as of March 31, 2022 and March 31, 2021:
 March 31,
 20222021
Stock options191,212 263,186 
Restricted stock awards(1)
 34,508 
Restricted stock units
2,318,089 2,234,764 
Performance restricted stock units155,187 127,734 
Total anti–dilutive common share equivalents2,664,488 2,660,192 
(1) All outstanding restricted stock awards became fully vested as of December 31, 2021.

8. Commitments and Contingencies
Purchase Commitments
The Company has purchase commitments related to hosting services, third-party technology used in the Company's solutions and for other services the Company purchases as part of normal operations. In certain cases these arrangements require a minimum annual purchase commitment.
14


Litigation
In the normal course of business, the Company may become involved in various lawsuits and legal proceedings. At this time, the Company is not involved in any current or pending legal proceedings, and does not anticipate any legal proceedings, that may have a material adverse effect on the Company's condensed consolidated balances sheets or condensed consolidated statement of operations.
In addition, when we acquire companies, we require that the sellers provide industry standard indemnification for breaches of representations and warranties contained in the acquisition agreement and we will withhold payment of a portion of the purchase price for a period of time in order to satisfy any claims that we may make for indemnification. In certain transactions, we agree with the sellers to purchase a representation and warranty insurance policy that will pay such claims for indemnification. From time to time we may have one or more claims for indemnification pending. Similarly, we may have one or more ongoing negotiations related to the amount of an earnout. Gain contingencies related to indemnification claims are not recognized in our condensed consolidated financial statements until realized.
9. Stockholders' Equity
Registration Statement
On August 10, 2020, we filed a registration statement on Form S-3 (File No. 333-243728) (the “2020 S-3”), which became effective automatically upon its filing and covers an unlimited amount of securities. The 2020 S-3, will remain effective through August 2023.
Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) consists of two elements, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) items are recorded in the stockholders’ equity section of our condensed consolidated balance sheets and are excluded from net income (loss). Our other comprehensive income (loss) consists primarily of foreign currency translation adjustments for subsidiaries with functional currencies other than the U.S. dollar, unrealized translation gains (losses) on intercompany loans with foreign subsidiaries, and unrealized gains (losses) on interest rate swaps.
The following table shows the components of accumulated other comprehensive income (loss), net of income taxes, (“AOCI”) in the stockholders’ equity section of our condensed consolidated balance sheets at the dates indicated (in thousands):
March 31, 2022December 31, 2021
Foreign currency translation adjustment$(6,704)$(5,657)
Unrealized translation gain on intercompany loans with foreign subsidiaries1,260 2,552 
Unrealized gain (loss) on interest rate swaps17,803 (8,409)
Total accumulated other comprehensive income (loss)$12,359 $(11,514)
The unrealized translation gains (losses) on intercompany loans with foreign subsidiaries as of March 31, 2022 is net of income tax expense of $1.4 million. The tax benefit related to unrealized translation gains (losses) on intercompany loans for the three months ended March 31, 2022 was $0.5 million and a tax expense of $0.2 million for the three months ended March 31, 2021. The income tax expense/benefit allocated to each component of other comprehensive income (loss) for all other periods and components is not material. The Company reclassifies taxes from AOCI to earnings as the items to which the tax effects relate are similarly reclassified.
The functional currency of our foreign subsidiaries are primarily the local currencies. Results of operations for foreign subsidiaries are translated into United States dollars (“USD”) using the average exchange rates on a monthly basis during the year. The assets and liabilities of those subsidiaries are translated into USD using the exchange rates in effect at the balance sheet date. The related translation adjustments are recorded in a separate component of stockholders' equity in accumulated other comprehensive income (loss).
The Company has intercompany loans that were used to fund the acquisitions of foreign subsidiaries. Due to the long-term nature of the loans, the unrealized translation gains (losses) resulting from re-measurement are recognized as a component of accumulated other comprehensive income (loss).
15


Stock-Based Compensation
The Company recognizes stock-based compensation expense from all awards in the following expense categories included in our condensed consolidated statements of income were as follows (in thousands):
Three Months Ended March 31,
20222021
Cost of revenue$402 $442 
Research and development748 714 
Sales and marketing1,474 1,137 
General and administrative (1)
8,995 15,531 
Total$11,619 $17,824 
(1)In March 2021 our former co-President and Chief Operating Officer (“COO”) resigned from his positions and entered into an advisory agreement with the Company pursuant to which he will serve as a strategic advisor to the Company through December 31, 2022. Stock-based compensation for the three months ended March 31, 2021 includes $6.3 million in incremental stock-based compensation expense related to the deemed modification of the unvested portion of grants held by our former COO at the time of transition, even though these shares continue to vest over their existing vesting schedule through 2022. In accordance with ASC 718, Compensation—Stock Compensation, the fair value of these awards were modified and all related expense accelerated on the date of modification as a result of the reduction in required service.
2014 Equity Incentive Plan
Beginning in 2019, the Company began granting restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) under its 2014 Equity Incentive Plan (the “2014 EIP”), in lieu of restricted stock awards, primarily for stock plan administrative purposes.
Restricted Stock Units
RSU activity during the three months ended March 31, 2022 was as follows:
Number of
Restricted Stock Units Outstanding
Weighted-Average Grant Date Fair Value
Unvested balances at December 31, 20211,379,747 $44.69 
Units granted1,232,525 20.82 
Units vested(220,550)43.24 
Awards forfeited(73,633)38.12 
Unvested balances at March 31, 20222,318,089 $32.35 
Performance-Based Restricted Stock Units
In 2022 and 2021, fifty percent of the awards granted to our Chief Executive Officer were PRSUs. The 2022 and 2021 PRSU agreements provide that the quantity of units subject to vesting may range from 0% to 300% of the units granted per the table below based on the Company's absolute total shareholder return (“TSR”) at the end of the eighteen month performance periods.
Units granted per the table below are based on a 100% target payout. Compensation expense is recognized over the required service period of the grant and is determined based on the grant date fair value of the award (valued using the Monte Carlo simulation model) and is not subject to fluctuation due to achievement of the underlying market-based target.
16


PRSU activity during the three months ended March 31, 2022 was as follows:
Number of
PRSUs Outstanding
Weighted-Average Grant Date Fair Value
Unvested balances at December 31, 202163,537 $84.87 
Units granted93,750 54.03 
Awards forfeited(2,100)35.45 
Unvested balances at March 31, 2022155,187 $66.91 
Significant assumptions used in the Monte Carlo simulation model for the PRSUs granted during the three months ended March 31, 2022 and year ended December 31, 2021 are as follows:
March 31, 2022December 31, 2021
Expected volatility49.5%53.6%
Risk-free interest rate0.7%0.1%
Remaining performance period (in years)1.461.35
Dividend yield
Stock Option Activity
Stock option activity during the three months ended March 31, 2022 was as follows:
Number of
Options
Outstanding
Weighted–
Average
Exercise
Price
Outstanding at December 31, 2021227,605 $9.15 
Options exercised(36,393)